NTN BUZZTIME INC (Form: 10-Q, Received: 11/09/2012 13:49:51)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

Commission file number 001-11460

NTN Buzztime, Inc.

(Exact name of registrant as specified in its charter)


DELAWARE	31-1103425
(State of incorporation)	(I.R.S. Employer Identification No.)


2231 RUTHERFORD ROAD, SUITE 200, CARLSBAD, CALIFORNIA	92008
(Address of principal executive offices)	(Zip Code)

(760) 438-7400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	£	Accelerated filer	£

Non-accelerated filer	£ (Do not check if a smaller reporting company)	Smaller reporting company	T

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

As of November 5, 2012 the registrant had outstanding 71,084,040 shares of common stock, $.005 par value per share.

NTN BUZZTIME, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

Item		Page
PART I

1.	Financial Statements

	Condensed Consolidated Balance Sheets as of September 30, 2012 (unaudited) and December 31, 2011	1

	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011 (unaudited)	2

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011 (unaudited)	3

	Notes to Condensed Consolidated Financial Statements (unaudited)	4

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

3.	Quantitative and Qualitative Disclosures About Market Risk	17

4.	Controls and Procedures	17

PART II

1.	Legal Proceedings	18

1A.	Risk Factors	18

2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

3.	Defaults Upon Senior Securities	18

4.	Mine Safety Disclosures	18

5.	Other Information	18

6.	Exhibits	18

	Signatures	20

PART I

Item 1. Financial Statements .

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amount)

	September 30,			December 31,
	2012			2011
ASSETS		(unaudited)
Current Assets:
Cash and cash equivalents	$	2,405		$	1,374
Restricted cash		–			50
Accounts receivable, net of allowances of $297 and $180, respectively		1,086			750
Prepaid expenses and other current assets		832			624
Total current assets		4,323			2,798
Broadcast equipment and fixed assets, net		3,915			4,255
Software development costs, net of accumulated amortization of $1,986 and $1,584, respectively		1,776			1,320
Deferred costs		711			1,132
Goodwill (Note 4)		1,281			1,236
Intangible assets, net (Note 4)		567			845
Other assets		53			61
Total assets	$	12,626		$	11,647

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	1,192		$	1,329
Accrued compensation		865			757
Sales taxes payable		645			764
Income taxes payable		112			77
Obligations under capital lease - current portion		160			286
Deferred revenue		611			463
Other current liabilities		285			192
Total current liabilities		3,870			3,868
Obligations under capital leases, excluding current portion		42			164
Deferred revenue, excluding current portion		199			186
Deferred rent		976			756
Other liabilities		269			323
Total liabilities		5,356			5,297

Commitments and contingencies (Note 11)

Shareholders' Equity:
Series A 10% cumulative convertible preferred stock, $.005 par value, $156 liquidation preference, 5,000 shares authorized; 156 and 161 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively		1			1
Common stock, $.005 par value, 84,000 shares authorized; 71,081 and 60,927 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively		355			305
Treasury stock, at cost, 503 shares at September 30, 2012 and December 31, 2011, respectively		(456	)		(456	)
Additional paid-in capital		118,926			116,497
Accumulated deficit		(112,351	)		(110,719	)
Accumulated other comprehensive income (Note 12)		795			722
Total shareholders' equity		7,270			6,350
Total shareholders' equity and liabilities	$	12,626		$	11,647

See accompanying notes to unaudited condensed consolidated financial statements.

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011

Revenues	$	6,050		$	5,872		$	18,131		$	17,766
Operating expenses:
Direct operating costs (includes depreciation and amortization of $542 and $550 for the three months ended September 30, 2012 and 2011, respectively, and $1,650 and $1,809 for the nine months ended September 30, 2012 and 2011, respectively.)		1,519			1,312			4,690			4,244
Selling, general and administrative		4,257			5,180			14,442			15,386
Depreciation and amortization (excluding depreciation and amortization included in direct operating costs)		175			175			540			504
Total operating expenses		5,951			6,667			19,672			20,134
Operating income (loss)		99			(795	)		(1,541	)		(2,368	)
Other (expense) income, net		(23	)		(5	)		(57	)		36
Income (loss) before income taxes		76			(800	)		(1,598	)		(2,332	)
Provision for income taxes		(22	)		(37	)		(26	)		(48	)
Net income (loss)	$	54		$	(837	)	$	(1,624	)	$	(2,380	)

Net income (loss) per common share - basic	$	0.00		$	(0.01	)	$	(0.02	)	$	(0.04	)

Net income (loss) per common share - diluted	$	0.00		$	(0.01	)	$	(0.02	)	$	(0.04	)

Weighted average shares outstanding - basic		70,876			60,404			68,537			60,394

Weighted average shares outstanding - diluted		71,373			60,404			68,537			60,394

See accompanying notes to unaudited condensed consolidated financial statements.

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Nine months ended September 30,
	2012			2011
Cash flows provided by (used in) operating activities:
Net loss	$	(1,624	)	$	(2,380	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		2,190			2,313
Provision for doubtful accounts		101			(16	)
Stock-based compensation		163			242
Loss on sales of securities available-for-sale		–			30
Loss from disposition of equipment and capitalized software		1			164
Changes in assets and liabilities:
Accounts receivable		(437	)		51
Prepaid expenses and other assets		(200	)		32
Accounts payable and accrued expenses		(34	)		461
Income taxes payable		32			(5	)
Deferred costs		422			(333	)
Deferred revenue		160			66
Deferred rent		220			76
Net cash provided by operating activities		994			701
Cash flows provided by (used in) investing activities:
Capital expenditures		(966	)		(1,302	)
Software development expenditures		(1,061	)		(760	)
Proceeds from sales of securities available-for-sale		–			134
Acquisitions		(50	)		–
Changes in restricted cash		50			–
Net cash used in investing activities		(2,027	)		(1,928	)
Cash flows provided by (used in) financing activities:
Proceeds from rights offering, net		2,310			–
Proceeds from note payable		–			123
Payments on note payable		(29	)		(4	)
Principal payments on capital lease		(247	)		(336	)
Proceeds from exercises of stock options		–			36
Tax withholding related to net-share settlements of restricted stock units		(1	)		–
Net cash provided by (used in) financing activities		2,033			(181	)
Net increase (decrease) in cash and cash equivalents		1,000			(1,408	)
Effect of exchange rate on cash		31			(36	)
Cash and cash equivalents at beginning of period		1,374			3,906
Cash and cash equivalents at end of period	$	2,405		$	2,462

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	35		$	36
Income taxes	$	45		$	55
Supplemental disclosure of non-cash investing and financing activities:

Unrealized holding loss on investments available-for-sale	$	–		$	20

Equipment acquired under capital leases	$	–		$	306

Issuance of common stock in lieu of payment of preferred dividends	$	8		$	8

Lease incentive paid by landlord	$	–		$	569

See accompanying notes to unaudited condensed consolidated financial statements.

NTN BUZZTIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1)

BASIS OF PRESENTATION

Description of Business

NTN Buzztime, Inc. (the “Company”) was incorporated in Delaware in 1984 as Alroy Industries and changed its corporate name to NTN Communications, Inc. in 1985. The Company changed its name to NTN Buzztime, Inc. in 2005 to better reflect the growing role of the Buzztime consumer brand.

The Company provides marketing services for hospitality venues through a combination of interactive games, live events, loyalty, digital signage and other marketing services. The Company has evolved from a developer and distributor of content to an interactive entertainment network providing games, live events and other marketing services. The Company generates revenues by charging subscription fees for its services to its Network Subscribers and also from the sale of advertising aired on in-venue screens as well as in conjunction with customized games. Its games are currently available in over 3,700 locations in the U.S. and Canada.

Basis of Accounting Presentation

The accompanying unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments that are necessary, which are of a normal and recurring nature, for a fair presentation for the periods presented of the financial position, results of operations and cash flows of the Company and its wholly-owned subsidiaries: IWN, Inc., IWN, L.P., Buzztime Entertainment, Inc., NTN Wireless Communications, Inc., NTN Software Solutions, Inc., NTN Canada, Inc., and NTN Buzztime, Ltd., all of which, other than NTN Canada, Inc., are dormant subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2011. The accompanying condensed balance sheet as of December 31, 2011 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. The results of operations for the three and nine months ended September 30, 2012 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2012, or any other period.

The United States dollar is the Company’s functional currency, except for its operations in Canada where the functional currency is the Canadian dollar. The financial position and results of operations of the Company’s foreign subsidiaries are measured using the foreign subsidiary’s local currency as the functional currency. In accordance with ASC No. 830, Foreign Currency Matters , revenues and expenses of our foreign subsidiaries have been translated into U.S. dollars at weighted average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded as a separate component of shareholders’ equity, unless there is a sale or complete liquidation of the underlying foreign investments. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. The Company recorded $13,000 in foreign currency losses and $5,000 in foreign currency gains for the three months ended September 30, 2012 and 2011, respectively, and $18,000 and $30,000 in foreign currency losses for the nine months ended September 30, 2012 and 2011, respectively, due to settlements of intercompany transactions, re-measurement of intercompany balances with our Canadian subsidiary and other non-functional currency denominated transactions, which are included in other expense, net in the accompanying statements of operations.

(2) Basic and Diluted Earnings Per Common Share

The Company computes basic and diluted earnings per common share in accordance with the provisions of ASC No. 260, Earnings per Share . Basic earnings per share excludes the dilutive effects of options, warrants and other convertible securities. Diluted earnings per share reflects the potential dilution of securities that could share in our earnings. Total options, warrants, convertible preferred stock and deferred stock units that were excluded from computing diluted net loss per common share represented approximately 6,555,000 and 9,243,000 shares of the Company’s common stock for the three months ended September 30, 2012 and 2011, respectively, and 7,346,000 and 9,243,000 shares of the Company’s common stock for the nine months ended September 30, 2012 and 2011, respectively, as their effect was anti-dilutive.

	Three months ended September 30,					Nine months ended September 30,
	2012		2011			2012			2011
Numerator:
Net income (loss)	$	54	$	(837	)	$	(1,624	)	$	(2,380	)
Denominator:
Weighted average common shares outstanding - basic		70,876		60,404			68,537			60,394
Effects of diluted common share equivalents		497		–			–			–
Weighted average common shares outstanding - diluted		71,373		60,404			68,537			60,394

Net income (loss) per common share - basic	$	0.00	$	(0.01	)	$	(0.02	)	$	(0.04	)
Net income (loss) per common share - diluted	$	0.00	$	(0.01	)	$	(0.02	)	$	(0.04	)

(3) ASSET ACQUISITION

On October 5, 2011, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Trailside Entertainment Corporation, a Massachusetts corporation (“Trailside Entertainment” or “Stump! Trivia”), in connection with the Company’s purchase of certain Trailside Entertainment assets used in the conduct of Trailside Entertainment’s business of providing live hosted trivia events at hospitality venues (the “Acquired Assets”). The asset purchase was also consummated on October 5, 2011.

In consideration for the Acquired Assets, the Company paid to Trailside Entertainment the sum of $250,000 in cash, $200,000 of which was paid on the closing date of the acquisition. The Company held back $50,000 (the “Holdback Amount”) of the purchase price for a period of six months to secure payment of the Company’s right to indemnification under the Asset Purchase Agreement. In April 2012, the Company delivered to Trailside Entertainment the $50,000 Holdback Amount in full.

In addition to the $250,000 cash payment, the Company agreed to pay additional consideration to Trailside Entertainment upon achieving certain gross profit objectives relating to the acquired business (as set forth in the Asset Purchase Agreement) for fiscal years 2012, 2013 and 2014. The Asset Purchase Agreement contains customary representations, warranties and covenants.

In connection with this transaction, the Company entered into employment agreements (the “Employment Agreements”) with two principal executives of Trailside Entertainment, Robert D. Carney and George Groccia, each of whom serve as a Vice President of the Company. The Company will use the acquired assets to complement its existing social entertainment offerings.

The Company accounted for the acquisition pursuant to ASC No. 805, Business Combinations . Accordingly, it recorded net assets and liabilities acquired at their fair values. As of December 31, 2011, the final purchase price allocation is as follows:

Intangible assets - customer relationships	$	435,000
Total assets		435,000

Earnout liability		(185,000	)
Total liabilities		(185,000	)

Purchase price allocated to assets and liabilities acquired	$	250,000

The purchase price may be increased or decreased if certain gross profit objectives relating to the acquired business deviate from the Company’s estimates in fiscal years 2012, 2013 and 2014. In that event, the earnout liability will be adjusted and the change will be reflected in current earnings in the period that the adjustment becomes necessary.

The Company incurred approximately $51,000 in acquisition-related expenses, which were recorded in selling, general and administrative expense during the third and fourth quarters of 2011.

The following unaudited pro forma information assumes that the October 5, 2011 asset acquisition occurred on January 1, 2011. These unaudited pro forma results have been prepared for comparative purposes only and are not indicative of the results of operations that would have actually resulted had the acquisition been in effect as of the period indicated above, or of future results of operations. The unaudited pro forma results for the three and nine months ended September 30, 2011 compared to the three and nine months ended September 30, 2012 are as follows:

	Three months ended September 30,					Nine months ended September 30,
	2012		2011			2012			2011
				(proforma)						(proforma)

Revenue	$	6,050	$	6,104		$	18,131		$	18,390
Net income (loss)	$	54	$	(806	)	$	(1,624	)	$	(2,420	)

Net income (loss) per share - basic	$	0.00	$	(0.01	)	$	(0.02	)	$	(0.04	)

Net income (loss) per share - diluted	$	0.00	$	(0.01	)	$	(0.02	)	$	(0.04	)

Weighted average shares - basic		70,876		60,404			68,537			60,394

Weighted average shares - diluted		71,373		60,404			68,537			60,394

The unaudited pro forma information presented above has been adjusted for material, nonrecurring items directly related to the asset acquisition such as recording amortization expense on the acquired intangible asset and increasing the salary expense for the two principal executives of Trailside Entertainment who became employees of the Company effective upon the acquisition date.

As a result of the acquisition, the Company recognized approximately $433,000 in additional revenue and $65,000 in net loss for the three months ended September 30, 2012 and $1,308,000 in additional revenue and $60,000 in net loss for the nine months ended September 30, 2012.

(4) GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The Company’s goodwill balance relates to the purchase of NTN Canada. The Company performed its annual qualitative assessment to determine if it is more likely than not that the fair value of NTN Canada’s goodwill is less than its carrying amount as of September 30, 2012 and determined that there were no indications of impairment at that time.

Other Intangible Assets

The Company has intangible assets comprised predominantly of a customer list from the Stump! Trivia asset acquisition in 2011, unpatented technology and customer relationships from asset acquisitions completed during 2009, developed technology, trivia databases and trademarks. All intangible assets are amortized on a straight line basis. The useful lives of the assets reflect the estimated period of time and method by which the underlying intangible asset benefits will be realized. Amortization expense relating to all intangible assets totaled $93,000 and $102,000 for the three months ended September 30, 2012 and 2011, respectively, and $280,000 and $304,000 for the nine months ended September 30, 2012 and 2011, respectively.

(5) SOFTWARE DEVELOPMENT COSTS

The Company capitalizes costs related to the development of certain of its software products in accordance with ASC No. 350, Intangibles – Goodwill and Other . Amortization expense relating to capitalized software development costs totaled $162,000 and $137,000 for the three months ended September 30, 2012 and 2011, respectively, and $492,000 and $437,000 for the nine months ended September 30, 2012 and 2011, respectively. As of September 30, 2012 and December 31, 2011, approximately $977,000 and $462,000, respectively, of capitalized software costs were not subject to amortization as the development of various software projects was not complete.

The Company performed its quarterly reviews of software development projects for the three and nine months ended September 30, 2012, and determined to abandon various software development projects that it concluded were no longer a current strategic fit or for which the Company determined that the marketability of the content had decreased due to obtaining additional information regarding the specific purpose for which the content was intended. There was no impairment loss related to these projects, as the assets were fully depreciated and had no net book value. Impairment losses of $18,000 and $155,000 were recognized for the three and nine months ended September 30, 2011 and are included in selling, general and administrative expenses.

(6) FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC No. 820, Fair Value Measurements and Disclosures, applies to certain assets and liabilities that are being measured and reported on a fair value basis. Broadly, the ASC No. 820 framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC No. 820 also establishes a fair value hierarchy for ranking the quality and reliability of the information used to determine fair values. This hierarchy is as follows:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis:

The Company does not have assets or liabilities that are measured at fair value on a recurring basis.

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis:

Certain assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments only in certain circumstances. Included in this category are goodwill written down to fair value when determined to be impaired, acquired assets and long-lived assets including capitalized software that are written down to fair value when they are held for sale or determined to be impaired. The valuation methods for goodwill, assets and liabilities resulting from acquisitions, and long-lived assets involve assumptions concerning interest and discount rates, growth projections, and/or other assumptions of future business conditions. As all of the assumptions employed to measure these assets and liabilities on a nonrecurring basis are based on management’s judgment using internal and external data, these fair value determinations are classified in Level 3 of the valuation hierarchy.

There were no transfers between fair value measurement levels during the three and nine months ended September 30, 2012.

(7) STOCK-BASED COMPENSATION

The Company records stock-based compensation in accordance with ASC No. 718 , Compensation – Stock Compensation . The Company estimates the fair value of stock options using the Black-Scholes option pricing model. The fair value of stock options granted is recognized as expense over the requisite service period. Stock-based compensation expense for all share-based payment awards is recognized using the straight-line single-option method.

The Company uses the historical stock price volatility as an input to value its stock options under ASC No. 718. The expected term of stock options represents the period of time options are expected to be outstanding and is based on observed historical exercise patterns of the Company, which the Company believes are indicative of future exercise behavior. For the risk-free interest rate, the Company uses the observed interest rates appropriate for the term of time options are expected to be outstanding. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts.

The following weighted-average assumptions were used for grants issued during the three and nine months ended September 30, 2012 and 2011 under the ASC No. 718 requirements.

	Three months ended September 30,		Nine months ended September 30,
	2012	2011	2012	2011
Weighted-average risk-free rate	0.49%	0.90%	0.54%	1.56%
Weighted-average volatility	95.08%	97.58%	95.33%	97.50%
Dividend yield	0.00%	0.00%	0.00%	0.00%
Expected life	5.59 years	6.61 years	5.72 years	5.18 years

ASC No. 718 requires forfeitures to be estimated at the time of grant and revised if necessary in subsequent periods if actual forfeiture rates differ from those estimates. Forfeitures were estimated based on historical activity of the Company. Stock-based compensation expense for the three months ended September 30, 2012 and 2011 was $26,000 and $88,000, respectively, and $163,000 and $242,000 for the nine months ended September 30, 2012 and 2011, respectively, and is expensed in selling, general and administrative expenses and credited to additional paid-in-capital. The Company granted 335,000 and 58,300 stock options during the three months ended September 30, 2012 and 2011, respectively, and 445,000 and 967,800 stock options during the nine months ended September 30, 2012 and 2011, respectively.

(8) RIGHTS OFFERING

In February 2012, the Company completed a rights offering to its stockholders of record as of February 2, 2012. The Company issued a total of 2,070,719 shares of its common stock at a subscription price of $0.25 per share. In connection with the rights offering, the Company entered into an investment agreement with Matador Capital Partners, LP, or Matador. Mr. Jeffrey A. Berg, one of the Company’s directors, is the managing member of the general partner of Matador. Under the terms of the investment agreement, upon expiration of the rights offering, Matador purchased for $0.25 per share 8,000,000 shares of our common stock not subscribed for and purchased by holders upon exercise of their subscription rights. The Company received gross proceeds of $2.5 million from the rights offering and under the investment agreement.

(9) Cumulative Convertible Preferred Stock

The Company has authorized 10,000,000 shares of preferred stock. The preferred stock may be issued in one or more series. The only series currently designated is a series of 5,000,000 shares of Series A Cumulative Convertible Preferred Stock (Series A Preferred Stock).

As of September 30, 2012 and December 31, 2011, there were 156,000 and 161,000 shares of Series A Preferred Stock issued and outstanding, respectively. The Series A Preferred Stock provides for a cumulative annual dividend of 10 cents per share, payable in semi-annual installments in June and December. Dividends may be paid in cash or with shares of common stock. For the nine months ended September 30, 2012 and 2011, the Company issued approximately 34,000 and 16,000 common shares, respectively, for payment of dividends.

The Series A Preferred Stock has no voting rights and has a $1.00 per share liquidation preference over common stock. The registered holder has the right at any time to convert shares of Series A Preferred Stock into that number of shares of common stock that equals the number of shares of Series A Preferred Stock that are surrendered for conversion divided by the conversion rate. The conversion rate is subject to adjustment in certain events and is established at the time of each conversion. For the nine months ended September 30, 2012, 5,000 shares of cumulative convertible preferred stock were converted into approximately 15,000 shares of common stock at a conversion rate of 0.3276. There were no conversions for the three months ended September 30, 2012, and there were no conversions for the three and nine months ended September 30, 2011. There is no mandatory conversion term, date or any redemption features associated with the Series A Preferred Stock.

(10) NOTE PAYABLE

In July 2011, the Company entered into an equipment financing agreement with a bank in the amount of $123,000, which is recorded in other current liabilities and other liabilities in the accompanying consolidated balance sheet. The proceeds of the note payable were used to finance certain equipment purchases and other services related to the relocation of the Company’s Carlsbad, California office. The note payable bears interest at 5.85% and is collateralized by a first priority security interest in the equipment purchased with the proceeds. The Company will make 36 equal monthly payments in the amount of approximately $3,700 each, which includes interest, until fully paid in August 2014. As of September 30, 2012, approximately $80,000 remained outstanding under this financing agreement.

(11) COMMITMENTS AND CONTINGENCIES

Sales and Use Tax

From time to time, state tax authorities will make inquiries as to whether or not a portion of the Company’s services require the collection of sales and use taxes from customers in those states. Many states have expanded their interpretation of their sales and use tax statutes to derive additional revenue. The Company evaluates such inquiries on a case-by-case basis and has favorably resolved the majority of these tax issues in the past without any material adverse consequences.

The Company is involved in ongoing sales tax inquiries, including certain formal assessments which total $665,000, with certain states and provinces. As a result of those inquiries, the Company’s total liability as of September 30, 2012 and December 31, 2011 was $450,000 and $604,000, respectively, which is included in the sales taxes payable balance in the accompanying consolidated balance sheets. Based on the guidance set forth by ASC No. 450, Contingencies, management has deemed the likelihood as reasonably possible that it will be required to pay all or part of these assessments.

(12) ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income includes the accumulated gains or losses from foreign currency translation adjustments. The Company translated the assets and liabilities of its Canadian statement of financial position into U.S. dollars using the period end exchange rate. Revenue and expenses were translated using the weighted-average exchange rates for the reporting period. As of September 30, 2012 and December 31, 2011, $795,000 and $722,000, respectively, of foreign currency translation adjustments were recorded in accumulated other comprehensive income.

(13) RECENT ACCOUNTING PRONOUNCEMENTS

There have been no recent accounting pronouncement updates since the Company’s last reporting period.

(14) CONCENTRATIONS OF RISK

Significant Customer

Buffalo Wild Wings together with its franchisees is a significant customer of the Company. For each of the three months ended September 30, 2012 and 2011, approximately 22% of the Company’s total revenue was generated from this national chain. For the nine months ended September 30, 2012 and 2011, approximately 23% and 21%, respectively, of the Company’s revenue was generated from this chain. As of September 30, 2012, approximately $356,000 was included in accounts receivable from this customer, of which approximately $193,000 was received in October 2012. As of December 31, 2011, approximately $95,000 was included in accounts receivable from this customer.

Single Source Playmaker Supplier

The Company currently purchases its traditional Playmakers from an unaffiliated Taiwanese manufacturer subject to the terms of a supply agreement dated April 23, 2007 with a term that automatically renews for one year periods. The Company currently does not have an alternative source for its playmaker devices. Management believes other manufacturers could be identified to produce the Playmakers on comparable terms. A change in manufacturers, however, could cause delays in supply and may have an adverse effect on the Company’s operations. As of September 30, 2012 and December 31, 2011, approximately $13,000 and $70,000, respectively, was included in accounts payable or accrued expenses for this supplier.

Tablet Supplier

The Company is in the process of developing a new tablet device that can be used at customer venues to access the Company’s network of services. In preparation for a test phase rollout, the Company has made a verbal commitment with a tablet manufacturer to purchase approximately $320,000 of tablets. As of September 30, 2012, the Company has purchased approximately $7,000 of tablets and is expected to purchase the remaining tablets during the fourth quarter of 2012.

(15) CAPITAL LEASE OBLIGATIONS

The Company has several capital lease obligations, one of which is a $1,000,000 equipment lease facility entered into with an equipment leasing company in October 2009. The terms of this agreement allow for use of the facility for 24 months and for use of the facility in multiple tranches with each individual tranche having a 24 month term. As of September 30, 2012, the Company had utilized $743,000 of this facility, which has been accounted for as a capital lease. As of September 30, 2012, $104,000 remained outstanding for those tranches that have not yet expired under this facility. Pursuant to the terms of the agreements related to this facility, the Company has given the equipment leasing company notice of its intent to terminate each individual lease that was reaching the 24 month term as well as its intent to purchase the equipment under the expiring lease at fair market value. The Company and the leasing company were in dispute over the terms of the lease agreements and the fair market value of the equipment, and as a result, the leasing company notified the Company that it was in default of the leasing agreements and filed suit against the Company in Minnesota federal court. The parties resolved the dispute in September 2012, and the negotiated cost to purchase the equipment under the expired leases is reflected in the Company’s accompanying consolidated financial statements. The negotiated cost to purchase such equipment was not materially different from the estimated cost previously recorded.

(16) GEOGRAPHICAL INFORMATION

Geographic breakdown of the Company’s revenue for the three and nine months ended September 30, 2012 and 2011 is as follows:

	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
United States	$	5,678,000	$	5,408,000	$	16,993,000	$	16,231,000
Canada		372,000		464,000		1,138,000		1,535,000
Total revenue	$	6,050,000	$	5,872,000	$	18,131,000	$	17,766,000

Geographic breakdown of the Company’s long-term tangible assets as of September 30, 2012 and December 31, 2011 is as follows:

	September 30, 2012		December 31, 2011
United States	$	3,897,000	$	4,226,000
Canada		18,000		29,000
Total assets	$	3,915,000	$	4,255,000

2. Management’s Discussion and Analysis of Financial Condition and Results of Operations .

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (including, but not limited to, the following discussion of our financial condition and results of operations) and the documents incorporated herein by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect future events, results, performance, prospects and opportunities, including statements related to our strategic plans and targets, revenue generation, product availability and offerings, reduction in cash usage, reliance on cash on hand and cash from operations, capital needs, capital expenditures, industry trends and financial position of NTN Buzztime, Inc. and its subsidiaries. Forward-looking statements are based on information currently available to us and our current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of management. Words such as “expects,” “anticipates,” “could,” “targets,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” “would,” variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements which refer to projections of our future financial performance, our anticipated growth and trends in our business, and other characterizations of future events or circumstances, are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that may be difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, under the section entitled “Risk Factors,” and in Item 1A of Part II of this Quarterly Report on Form 10-Q, and in other reports we file with the Securities and Exchange Commission from time to time. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.

Our trademarks, trade names and service marks referenced herein include Buzztime, iTV Network, Playmaker and Stump! Trivia. Each other trademark, trade name or service mark appearing in this quarterly report belongs to its owner.

OVERVIEW

We provide marketing services for hospitality venues through a combination of interactive games, live events, loyalty, digital signage and other marketing services. Founded in 1984, our company has evolved from a developer and distributor of content to an interactive entertainment network providing games, live events and other marketing services. Built on an extended network platform, this entertainment system not only allows multiple players to interact at the venue, but also enables competition between different venues. We generate revenues by charging subscription fees for our service to our Network Subscribers and also from the sale of advertising aired on in-venue screens as well as in conjunction with customized games. Our games are currently available in over 3,700 locations in the U.S. and Canada, where they are shown on approximately 20,000 screens daily. We have over 2.7 million registrations and over 52 million games are played each year. Approximately 35% of our Network Subscriber venues are related to national and regional restaurants and include well-known names such as Buffalo Wild Wings, Black Angus, Hooters, Native New Yorker and Old Chicago.

In October 2011, we acquired substantially all of the assets of the Stump! Trivia hosted live trivia business. Stump! Trivia currently conducts nearly 300 events per week, or over 14,000 annually, primarily in the Northeastern region of the U.S. We plan to expand this business into other regions of the U.S. We generated $433,000 and $1,308,000 in revenue related to the Stump! Trivia business during the three and nine months ended September 30, 2012, respectively.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to deferred costs and revenues, depreciation of broadcast equipment, the provision for income taxes including the valuation allowance, stock-based compensation, bad debts, investments, purchase price allocations related to acquisitions, including any earnout liability, impairment of software development costs, goodwill, broadcast equipment, intangible assets and contingencies, including the reserve for sales tax inquiries. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Critical accounting policies and estimates are defined as those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most subjective judgments.

There have been no material changes in our critical accounting policies, estimates and judgments during the three and nine months ended September 30, 2012 from those described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended December 31, 2011.

RESULTS OF OPERATIONS

Three months ended September 30, 2012 compared to the three months ended September 30, 2011

We generated net income of $54,000 for the three months ended September 30, 2012 compared to a net loss of $837,000 for the three months ended September 30, 2011.

Revenue

Revenue increased $178,000, or 3%, to $6,050,000 for the three months ended September 30, 2012 from $5,872,000 for the three months ended September 30, 2011 due primarily to $433,000 generated by the Stump! Trivia business we acquired in October 2011, offset by a decrease in subscription revenue of $264,000 related to lower average site count and lower average revenue generated per site. Comparative site count information for the Buzztime Network is as follows:

	Network Subscribers as of September 30,
	2012		2011
United States		3,511		3,669
Canada		228		241
Total		3,739		3,910

Direct Costs and Gross Margin

The following table compares direct costs and gross margin for the three months ended September 30, 2012 and 2011:

	For the three months ended September 30,
	2012		2011
Revenues	$	6,050,000	$	5,872,000
Direct Costs		1,519,000		1,312,000
Gross Margin	$	4,531,000	$	4,560,000

Gross Margin Percentage		75%		78%

Gross margin as a percentage of revenue decreased to 75% for the three months ended September 30, 2012 from 78% for the three months ended September 30, 2011. Direct costs increased $207,000, or 16%, to $1,519,000 for the three months ended September 30, 2012 from $1,312,000 for the three months ended September 30, 2011. The increase in direct costs was primarily due to direct expenses of $330,000 related to Stump! Trivia. These increases were offset by decreased freight expense of $54,000 due to fewer installations and deinstallations of customer sites during the three months ended September 30, 2012 compared to the same period in 2011, decreased content fees of $41,000 and decreased service provider fees of $33,000 primarily due to fewer service calls.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $923,000, or 18%, to $4,257,000 for the three months ended September 30, 2012 from $5,180,000 for the same period in 2011. The decrease in selling, general and administrative expenses was primarily due to a decrease of $881,000 for payroll and related expenses resulting from our reorganization that took place during the second quarter of 2012, decreased travel and entertainment expense of $196,000 also related to our reorganization and decreased selling and marketing expense of $193,000. These decreases were offset by increased consulting expense of $237,000 for product development and administrative services and increased software maintenance expense of $125,000 due to new maintenance contracts and license fees.

Depreciation and Amortization Expense

Depreciation and amortization expense (excluding depreciation and amortization included in direct operating costs) remained unchanged at $175,000 for both the three months ended September 30, 2012 and 2011. Fluctuations in depreciation and amortization included depreciation of tenant improvement assets acquired in connection with our new corporate headquarters lease and amortization of the Stump! Trivia intangible asset acquired during the fourth quarter of 2011, offset by decreased amortization related to an intangible asset acquired in 2009.

Other (Expense) Income, Net

Other (expense) income, increased in expense from $5,000 of other net expense during the three months ended September 30, 2011 to $23,000 of other net expense for the same period in 2012. The increase in other net expense was primarily due to foreign currency exchange losses related to our foreign operations.

Income Taxes

We expect to incur state income tax liability in 2012 related to our U.S. operations. We also expect to pay income taxes in Canada due to the profitability of NTN Canada. For the three months ended September 30, 2012, we recorded a tax provision of $22,000 as compared to a tax provision of $37,000 for the same period in 2011. We have established a full valuation allowance for substantially all deferred tax assets, including our net operating loss carryforwards, since we could not conclude that we were more likely than not able to generate future taxable income to realize these assets.

EBITDA

Earnings before interest, taxes, depreciation and amortization, or EBITDA, is not intended to represent a measure of performance in accordance with U.S. GAAP. Nor should EBITDA be considered as an alternative to statements of cash flows as a measure of liquidity. EBITDA is included herein because we believe it is a measure of operating performance that financial analysts, lenders, investors and other interested parties find to be a useful tool for analyzing companies like us that carry significant levels of non-cash depreciation and amortization charges in comparison to their GAAP earnings or loss.

The following table reconciles our consolidated net income (loss) per GAAP to EBITDA for the three months ended September 30, 2012 and 2011:

	For the three months ended September 30,
	2012		2011
Net income (loss) per GAAP	$	54,000	$	(837,000	)
Interest expense, net		10,000		8,000
Depreciation and amortization		717,000		725,000
Income taxes		22,000		37,000
EBITDA	$	803,000	$	(67,000	)

Nine months ended September 30, 2012 compared to the nine months ended September 30, 2011

We generated a net loss of $1,624,000 for the nine months ended September 30, 2012 compared to a net loss of $2,380,000 for the nine months ended September 30, 2011.

Revenue

Revenue increased $365,000, or 2%, to $18,131,000 for the nine months ended September 30, 2012 from $17,766,000 for the nine months ended September 30, 2011 due primarily to $1,308,000 generated by Stump! Trivia, offset by a decrease in subscription revenue of $890,000 related to lower average site count and lower average revenue generated per site as well as a decrease of approximately $53,000 in advertising and other miscellaneous revenues.

Direct Costs and Gross Margin

The following table compares direct costs and gross margin for the nine months ended September 30, 2012 and 2011:

	For the nine months ended September 30,
	2012		2011
Revenues	$	18,131,000	$	17,766,000
Direct Costs		4,690,000		4,244,000
Gross Margin	$	13,441,000	$	13,522,000

Gross Margin Percentage		74%		76%

Gross margin as a percentage of revenue decreased to 74% for the nine months ended September 30, 2012 from 76% for the nine months ended September 30, 2011. Direct costs increased $446,000, or 11%, to $4,690,000 for the nine months ended September 30, 2012 from $4,244,000 for the nine months ended September 30, 2011. The increase in direct costs was primarily due to direct expenses of $974,000 related to Stump! Trivia. This increase was offset by decreased direct depreciation and amortization expense of $158,000 due to assets becoming fully depreciated, decreased freight expense of $140,000 due to fewer installations and deinstallations of customer sites during the nine months ended September 30, 2012 compared to the same period in 2011, decreased content fees of $125,000 and decreased service provider fees of $110,000 primarily due to fewer service calls.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $944,000, or 6%, to $14,442,000 for the nine months ended September 30, 2012 from $15,386,000 for the same period in 2011. The decrease in selling, general and administrative expenses was primarily due to decreased payroll and related expenses of $720,000 due to our reorganization that took place during the second quarter of 2012, decreased selling and marketing expenses of $296,000, decreased occupancy expense of $295,000 resulting from lower rent related to our new facility lease, decreased travel and entertainment expense of $160,000 due to our reorganization, a decrease of $126,000 related to expenses incurred during the nine months ended September 30, 2011 in connection with moving our corporate headquarters and warehouse, decreased software development disposals of $155,000, decreased miscellaneous tax expense of $118,000 due to settlements of certain sales tax assessments as well as sales tax refunds in the current period and decreased research and development expense of $55,000. These decreases were offset by increased consulting fees of $480,000 for product development and administrative services, increased severance expense of $170,000 related to our reorganization, increased software maintenance expense of $193,000 for new maintenance contracts and license fees, increased bad debt expense of $117,000 and other net increases totaling $21,000.

Depreciation and Amortization Expense

Depreciation and amortization expense (excluding depreciation and amortization included in direct operating costs) increased $36,000 to $540,000 for the nine months ended September 30, 2012 from $504,000 for the same period in 2011 primarily due to depreciation of tenant improvement assets acquired in connection with our new corporate headquarters lease and amortization of the Stump! Trivia intangible asset acquired during the fourth quarter of 2011, offset by decreased amortization related to an intangible asset acquired in 2009.

Other (Expense) Income, Net

Other (expense) income, changed from $36,000 of other net income during the nine months ended September 30, 2011 to $57,000 of other net expense for the same period in 2012. The decrease in other income was primarily due to having recognized as income in the prior period a $59,000 reduction of an earnout liability related to an asset acquisition that we completed in 2009 and a $49,000 sales tax refund. The decrease in other income was offset by a decrease in foreign currency exchange losses of $12,000 related to our foreign operations and a decrease of $3,000 in other miscellaneous expenses.

Income Taxes

For the nine months ended September 30, 2012 and 2011, we recorded a net tax provision of $26,000 and $48,000, respectively.

EBITDA

EBITDA is not intended to represent a measure of performance in accordance with U.S. GAAP. Nor should EBITDA be considered as an alternative to statements of cash flows as a measure of liquidity. EBITDA is included herein because we believe it is a measure of operating performance that financial analysts, lenders, investors and other interested parties find to be a useful tool for analyzing companies like us that carry significant levels of non-cash depreciation and amortization charges in comparison to their GAAP earnings or loss.

The following table reconciles our consolidated net loss per GAAP to EBITDA for the nine months ended September 30, 2012 and 2011:

	For the nine months ended September 30,
	2012			2011
Net loss per GAAP	$	(1,624,000	)	$	(2,380,000	)
Interest expense, net		34,000			36,000
Depreciation and amortization		2,190,000			2,313,000
Income taxes		26,000			48,000
EBITDA	$	626,000		$	17,000

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2012, we had cash and cash equivalents of $2,405,000 compared to cash and cash equivalents of $1,374,000 as of December 31, 2011.

In February 2012, we completed a rights offering to our stockholders of record as of February 2, 2012. We issued a total of 2,070,719 shares of our common stock at a subscription price of $0.25 per share. In connection with the rights offering, we entered into an investment agreement with Matador Capital Partners, LP, or Matador. Mr. Jeffrey A. Berg, one of our directors, is the managing member of the general partner of Matador. Under the terms of the investment agreement, upon expiration of the rights offering, Matador purchased for $0.25 per share 8,000,000 shares of our common stock not subscribed for and purchased by holders upon exercise of their subscription rights. We received gross proceeds of $2.5 million from the rights offering and under the investment agreement.

We believe existing cash and cash equivalents together with funds generated from operations will be sufficient to meet our operating cash requirements for at least the next twelve months. We have no debt obligations other than capital leases and a note payable for certain equipment purchases. We may continue entering into capital lease or financing facilities for certain equipment requirements when economically advantageous. In the event that net cash provided by operating activities and cash on hand are not sufficient to meet future cash requirements, we may be required to reduce planned capital expenses, reduce operational cash uses, sell assets or seek financing. Any actions we may undertake to reduce planned capital purchases, reduce expenses, or generate proceeds from the sale of assets may be insufficient to cover shortfalls in available funds. If we require additional capital, we may be unable to secure additional financing on terms that are acceptable to us, or at all .

Working Capital

As of September 30, 2012, we had working capital (current assets in excess of current liabilities) of $453,000 compared to negative working capital (current liabilities in excess of current assets) of $1,070,000 as of December 31, 2011. The following table shows our changes in working capital from December 31, 2011 to September 30, 2012.

	Increase (Decrease)
Working capital as of December 31, 2011	$	(1,070,000	)
Changes in current assets:
Cash and cash equivalents		1,031,000
Restricted cash		(50,000	)
Accounts receivable, net of allowance		336,000
Prepaid expenses and other current assets		208,000
Total current assets		1,525,000
Changes in current liabilities:
Accounts payable and accrued expenses		(137,000	)
Accrued compensation		108,000
Sales taxes payable		(119,000	)
Income taxes payable		35,000
Obligations under capital lease		(126,000	)
Deferred revenue		148,000
Other current liabilities		93,000
Total current liabilities		2,000
Net change in working capital		1,523,000
Working capital as of September 30, 2012	$	453,000

Cash Flows

Cash flows from operating, investing and financing activities, as reflected in the accompanying consolidated statements of cash flows, are summarized as follows:

	For the nine months ended September 30,
	2012			2011
Cash provided by (used in):
Operating activities	$	994,000		$	701,000
Investing activities		(2,027,000	)		(1,928,000	)
Financing activities		2,033,000			(181,000	)
Effect of exchange rates		31,000			(36,000	)
Net increase (decrease) in cash and cash equivalents	$	1,031,000		$	(1,444,000	)

Net cash provided by operating activities. We are primarily dependent on cash flows from operations to meet our cash requirements. Net cash generated from operating activities was $994,000 for the nine months ended September 30, 2012 compared to net cash generated from operating activities of $701,000 for the same period in 2011. The $293,000 increase in cash provided by operations was primarily due to a decrease in net loss of $478,000, after giving effect to adjustments made for non-cash transactions, offset by a decrease of $185,000 in cash provided by operating assets and liabilities during the nine months ended September 30, 2012 compared to the same period in 2011.

Our largest use of cash is payroll and related costs. Cash used related to payroll increased $574,000 to $8,648,000 for the nine months ended September 30, 2012 from $8,074,000 during the same period in 2011 due primarily to having higher headcount related to Stump! Trivia as well as severance expenses related to our reorganization that took place during the second quarter of 2012. Our primary source of cash is cash we generate from customers. Cash received from customers increased $302,000 to $18,384,000 for the nine months ended September 30, 2012 from $18,082,000 during the same period in 2011.

Net cash used in investing activities. We used $2,027,000 in cash for investing activities for the nine months ended September 30, 2012 compared to a cash use of $1,928,000 for investing activities during the same period in 2011. The $99,000 increase in cash used in investing activities was primarily due to an increase in capitalized software development activities of $301,000 and a decrease of proceeds from sales of securities available-for-sale of $134,000, offset by a decrease in capital expenditures of $336,000 due primarily to decreased field equipment purchases.

Net cash provided by (used in) financing activities. Net cash provided by financing activities increased $2,214,000 to $2,033,000 for the nine months ended September 30, 2012 compared to net cash used in financing activities of $181,000 for the same period in 2011. The increase in cash provided by financing activities was due to net proceeds from the rights offering and the related investment agreement completed in February 2012 of $2,310,000 and decreased payments on our capital leases of $89,000, offset by a decrease in proceeds from a note payable of $123,000, an increase of $25,000 in principal payments on our note payable and a $36,000 decrease in proceeds from the exercise of stock options.

RECENT ACCOUNTING PRONOUNCEMENTS

There have been no recent accounting pronouncement updates since the Company’s last reporting period.

Item 3. Quantitative and Qualitative Disclosures About Market Risk .

Under SEC rules and regulations, as a smaller reporting company we are not required to provide the information otherwise required by this item.

Item 4. Controls and Procedures .

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, our management evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, or the Exchange Act) as to whether such disclosure controls and procedures were effective in providing reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and ensuring that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our interim chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on our evaluation, our interim chief executive officer and chief financial officer concluded that such disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings .

None

Item 1A. Risk Factors .

An investment in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described under Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2011 together with all other information contained or incorporated by reference in this report before you decide to invest in our common stock. If any of the risks described in our annual report occur, our business, financial condition, results of operations and our future growth prospects could be materially and adversely affected. Under these circumstances, the trading price of our common stock could decline, and you may lose all or part of your investment. As of the date of this report, we do not believe that there have been any material changes to the risk factors previously disclosed in our annual report.

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

None

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures .

Not Applicable

Item 5. Other Information .

None

Item 6. Exhibits.

Exhibit	Description
3.1	Amended and Restated Certificate of Incorporation of the Company, as amended (2)

3.2	Certificate of Designations, Rights and Preferences of Series B Convertible Preferred Stock (3)

3.3	Bylaws of the Company, as amended (4)

10.1*	Consulting Agreement, dated July 2, 2012, by and between NTN Buzztime, Inc. and JABAM (1)

10.2*	Form of stock unit agreement under the 2010 Performance Incentive Plan (1)
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)

31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (1)

32.1#	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)

32.2#	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)

Exhibit	Description
101.INS**	XBRL Instance Document

101.SCH**	XBRL Taxonomy Extension Schema Document


101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document


101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document


101.LAB**	XBRL Taxonomy Extension Label Linkbase Document


101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

	*	Management Contract or Compensatory Plan
	**	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.
	#	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.
	(1)	Filed or furnished herewith
	(2)	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.
	(3)	Previously filed as an exhibit to the registrant’s report on Form 8-K filed on November 7, 1997 and incorporated herein by reference.
	(4)	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.

SIGNATURES

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


	NTN BUZZTIME, INC.

Date: November 9, 2012	By:	/s/ Kendra Berger
		Kendra Berger
		Chief Financial Officer
		(on behalf of the Registrant, and as its Principal Financial and Accounting Officer)

Exhibit 10.1

CONSULTING AGREEMENT

This Consulting Agreement (" Agreement ") is made and entered into effective this 2nd day of July, 2012, by and between NTN Buzztime, Inc., a Delaware corporation (the " Company "), and JABAM, Inc. (“ JABAM”) on the following terms and conditions:

RECITALS

A. The Company desires to retain JABAM to provide certain services to the Company, all on the terms specifically described herein.

B. JABAM desires to perform such services by assigning Jeff Berg as the Consultant, and make his experience and expertise available to the Company, all on the terms specifically described herein.

AGREEMENT

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1. Engagement . The Company hereby engages JABAM to provide the Services (as defined below) to the Company, and JABAM hereby accepts such engagement, all on the terms and conditions specifically described herein.

2. Term .

2.1. The term of this Agreement shall commence on July 2, 2012 (the " Effective Date ") and, unless earlier terminated in accordance with Section 7 shall expire on December 31, 2012.

3. Scope of Service . In exchange for the compensation set forth in Section 3, Consultant shall serve the Company as its Interim Chief Executive Officer (the “ CEO ”) and shall have the powers, duties and obligations of management typically vested in the office of the CEO, of a corporation, subject to the directives of the Company’s Board of Directors (the “ Board ”) and the corporate policies of the Company as they are in effect and as amended from time to time throughout the period of the agreement (including, without limitation, the Company’s business conduct and ethics policies). Specifically, the CEO will work closely with the Board and senior management to launch and execute the overall strategic and operational direction for the Company. Moreover, the CEO will establish responsibilities and procedures for attaining objectives and reviews of operations and financial statements to evaluate achievement of those objectives. During the period of the agreement, Consultant shall report to the Board. Consultant shall not, without the prior written consent of the Company, subcontract, delegate or otherwise engage or permit any third party to perform any portion of the Services.

4. Service Fee . As full and complete compensation for Consultant's provision of the Services, the Company shall pay JABAM, Inc. a fee (" Service Fee ") in the amount of $8,250 per month in arrears (pro rated if necessary) payable on or before the 15 ^th of each month, with the first payment due on August 15, 2012 for services rendered from July 2, 2012 through July 31, 2012. In connection with performing the Services, Consultant is authorized to incur on behalf and for the benefit of, and shall be reimbursed by, the Company for reasonable business expenses, provided that such expenses are substantiated in accordance with the Company's policies.

5. No Other Benefits . Consultant is an independent contractor of the Company and as such is not entitled to any benefits, or to participate in any insurance plan or other fringe benefit program, that the Company may make available or furnish to its employees.

6. Relationship of the Parties . Notwithstanding any provision hereof, for all purposes of this Agreement, Consultant shall be and act as an independent contractor and not as an employee, partner, joint venturer or agent of the Company. Consultant shall not have authority to act on behalf of or to represent or bind the Company in any manner. Consultant is an independent contractor and is engaged to render professional services only and any payments made by the Company to Consultant are compensation solely for such services rendered. Consultant is solely responsible for all taxes, withholdings and other statutory or contractual obligations of any sort. Consultant agrees to defend, indemnify and hold the Company harmless from any and all claims, damages, liability, attorneys' fees and expenses on account of (i) an alleged failure by Consultant to satisfy any such obligations or any other obligation (under this Agreement or otherwise) or (ii) any other action or inaction of Consultant.

7. Termination . Either party may terminate this Agreement for any reason upon at least 30 days prior written notice. If the Company terminates this Agreement, upon receipt of the Company's written notice of termination, unless stated to the contrary in such notice, Consultant shall immediately cease performing any of the Services. If this Agreement is terminated pursuant to this Section 7, the Company's sole liability to Consultant shall be payment of that portion of the Service Fee earned through the date of termination set forth in the notice of termination, less any payments previously made to Consultant. If the Company paid any Service Fee to Consultant in advance, Consultant agrees to return to the Company any amount of the Service Fee to which Consultant it not entitled as a result of the termination of this Agreement.

8. Confidentiality and Proprietary Rights . Consultant hereby acknowledges that in performing the Services he will make use of, acquire and add to confidential information of a special and unique nature and value relating to the Company and its strategic plans and financial operations, including, without limitation, all information, data, plans, strategies, ideas, documents and all other business, professional or proprietary information of the Company, whether related to the performance of the Services or not. Consultant further recognizes and acknowledges that all such confidential information is the exclusive property of the Company, is material and confidential, and is critical to the successful conduct of the business of the Company. Consultant hereby covenants and agrees that he will use confidential information for the benefit of the Company only and shall not at any time, directly or indirectly, without the Company's prior written consent, divulge, reveal or communicate any confidential information to any person, firm, corporation or entity whatsoever, or use any confidential information for any reason other than the performance of the Services and not for his own benefit or for the benefit of others. Confidential information does not include any information which has become publicly and widely known and made generally available through no wrongful act of Consultant or of others who were under confidentiality obligations as to the information involved. All reports, plans, documents and other confidential information furnished to Consultant by the Company shall be returned upon completion of the Services to be performed hereunder.

9. Injunctive Relief . Consultant acknowledges that Consultant's breach of the covenants contained in Section 8 would cause irreparable injury to the Company and agrees that in the event of any such breach, the Company shall be entitled to seek temporary, preliminary and permanent injunctive relief without the necessity of proving actual damages or posting any bond or other security.

10. Agreement to Arbitrate . Any controversy arising out of or relating to this Agreement, the enforcement or interpretation of this Agreement, or because of an alleged breach, default or misrepresentation in connection with any of the provisions of this Agreement, shall be submitted to arbitration in San Diego County, California, before a sole arbitrator selected from Judicial Arbitration and Mediation Services, Inc. or its successor (" JAMS "), or if JAMS is no longer able to supply the arbitrator, such arbitrator shall be selected from the American Arbitration Association; provided, however, that provisional injunctive relief may, but need not, be sought in a court of law while arbitration proceedings are pending, and any provisional injunctive relief granted by such court shall remain effective until the matter is finally determined by the arbitrator. In no event shall the request for arbitration be made after the date when institution of legal or equitable proceedings based on such claims would be barred by the applicable statute of limitations. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures, subject to the following: the arbitrator shall permit adequate discovery and is empowered to award all remedies otherwise available in a court of competent jurisdiction (including injunctive relief as contemplated by Section 9 or otherwise); and the arbitrator shall issue an award in writing and state the essential findings and conclusions on which the award is based. Judgment on the award may be entered in any court having jurisdiction. The parties acknowledge and agree that they are hereby waiving any rights to trial by jury in any action, proceeding or counterclaim brought by either of the parties against the other in connection with any matter whatsoever arising out of or in any way connected with any of the matters referenced in the first sentence of the first paragraph of this section. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be awarded its reasonable attorneys' fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding to be paid for by the non-prevailing party.

11. Miscellaneous Provisions . The following provisions shall apply to this Agreement:

11.1 Survival . Sections 8 ("Confidentiality and Proprietary Rights"), 9 ("Injunctive Relief"), 10 ("Agreement to Arbitrate"), and 11 ("Miscellaneous Provisions") of this Agreement shall survive the termination of this Agreement.

11.2 Further Acts . Each party agrees to perform any further acts and to execute and deliver any further documents reasonably necessary or proper to carry out the intent of this Agreement.

11.3 Time . Time is of the essence with respect to all provisions of this Agreement.

11.4 Entire Agreement . This Agreement constitutes the entire agreement between the Company and Consultant concerning the subject matter hereof and supersedes any prior agreements between the parties concerning said subject matter. This Agreement may not be modified or amended except by writing signed by both parties.

11.5 Assignment . The respective rights and obligations of Consultant shall not be assignable. Subject to such restriction on assignment, this Agreement shall be binding upon and inure to the benefit of each party and its successors and assigns.

11.6 Choice of Law . This Agreement shall be deemed to be a contract under the laws of the State of California and for all purposes shall be construed and enforced in accordance with the internal laws of said state without regard to the principals of conflicts of law.

11.7 Severability . If any provision of this Agreement is determined to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other provision of this Agreement.

11.8 Counterparts; Facsimile. This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed one original. Facsimile and electronic (i.e., PDF) signatures shall be as effective as original signatures.

11.9 No Waiver . No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature.

(Signature Page Follows)

IN WITNESS THEREOF, the parties hereto have each executed or cased to be executed this Agreement as of the date first written above.

		Company:
JABAM, Inc., a Delaware corporation		NTN Buzztime, Inc., a Delaware corporation

/s/ Jeff Berg		/s/ Kendra Berger
By: Jeff Berg		By: Kendra Berger
Its: President		Its: Chief Financial Officer

Exhibit 10.2

NTN BUZZTIME, INC.
2010 PERFORMANCE INCENTIVE PLAN

STOCK UNIT AGREEMENT

NTN Buzztime, Inc., a Delaware corporation (the “Company”), hereby awards Stock Units to the Participant named below. The terms and conditions of the Award are set forth in this cover sheet, in the attached Stock Unit Agreement and in the NTN Buzztime, Inc. 2010 Performance Incentive Plan (the “Plan”).

Date of Award:

________________, 201__

Name of Participant:

Participant’s Social Security Number:

_____-____-_____

Number of Stock Units Awarded:

Vesting Schedule:

Subject to all the terms of the Agreement, as long as you render continuous Service, you will become vested as to 25% of the total number of Stock Units awarded, as shown above, on the date that is six months after the Date of Award (the “Six Month Vesting Date”). Thereafter, subject to your continuous Service, on each monthly anniversary of the Six Month Vesting Date for the eighteen months following the month of the Six Month Vesting Date, one-twenty-fourth (1/24) of the total number of Stock Units covered by this Award shall become incrementally vested. In all cases, the resulting aggregate number of vested Stock Units will be rounded down to the nearest whole number. Upon termination of your Service at any time and for any reason or no reason, all of your then unvested Stock Units shall be forfeited to the Company without consideration as of your Termination Date. No partial vesting credit will be provided no matter when your Termination Date occurs.

By signing this cover sheet, you agree to all of the terms and conditions described in the attached Stock Unit Agreement and in the Plan and the Plan's prospectus. You are also acknowledging receipt of this Agreement and a copy of the Plan and the Plan's prospectus.

Participant:
	(Signature)

Company:
	(Signature)

Name:

Title:

Attachment

NTN BUZZTIME, INC.

2010 PERFORMANCE INCENTIVE PLAN

STOCK UNIT AGREEMENT

The Plan and Other Agreements	The text of the Plan is incorporated in this Agreement by this reference. You and the Company agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement. Unless otherwise defined in this Agreement, certain capitalized terms used in this Agreement are defined in the Plan. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Award of Stock Units. Any prior agreements, commitments or negotiations are superseded.
Award of Stock Units	The Company awards you the number of Stock Units shown on the cover sheet of this Agreement. The Award is subject to the terms and conditions of this Agreement and the Plan.
Vesting	The Stock Units subject to this Award shall become vested pursuant to the Vesting Schedule shown in the cover sheet. Only vested Stock Units shall be eligible for settlement.
Settlement	To the extent a Stock Unit becomes vested and subject to your satisfaction of any tax withholding obligations as discussed below, each vested Stock Unit will entitle you to receive one Share which will be distributed to you upon the earlier to occur of: (i) a Change in Control or (ii) as soon as practicable after vesting but in any event within fifteen days of the date of vesting for such Stock Unit. Issuance of Shares shall be in complete satisfaction of such vested Stock Units. Such settled Stock Units shall be immediately cancelled and no longer outstanding and you shall have no further rights or entitlements related to those settled Stock Units.
No Assignment	Stock Units shall not be sold, anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily, involuntarily or by operation of law. If you attempt to do any of these things, this Award will immediately become invalid. However, this shall not preclude a transfer of vested Stock Units by will or by the laws of descent and distribution. In addition, pursuant to Company procedures, you may designate a beneficiary who will receive any outstanding vested Stock Units in the event of your death.
Leaves of Absence	For purposes of this Agreement, while you are a common-law employee, your Service does not terminate when you go on a bona fide leave of absence that was approved by the Company (or its Parent, Subsidiary or Affiliate) in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. Your Service terminates in any event when the approved leave ends, unless you immediately return to active work. The Company determines which leaves count for this purpose (along with determining the effect of a leave of absence on vesting of the Award), and when your Service terminates for all purposes under the Plan.

Voting and Other Rights

A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Subject to the terms of this Agreement, a holder of outstanding Stock Units has none of the rights and privileges of a stockholder of the Company, including no right to vote or to receive dividends (if any). Subject to the terms and conditions of this Agreement, Stock Units create no fiduciary duty of the Company to you and only represent an unfunded and unsecured contractual obligation of the Company. The Stock Units shall not be treated as property or as a trust fund of any kind.

You, or your estate or heirs, have no rights as a stockholder of the Company until a certificate for your Shares has been issued. No adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued, except as described in the Plan.

Restrictions on
Issuance

The Company will not issue any Shares if the issuance of such Shares at that time would violate any law or regulation .

Taxes and Withholding

You will be solely responsible for payment of any and all applicable taxes, including without limitation any penalties or interest based upon such tax obligations, associated with this Award.

The delivery to you of any Shares underlying vested Stock Units will not be permitted unless and until you have satisfied any withholding or other taxes that may be due. Any such tax withholding obligations may be settled in the Company's discretion by the Company withholding and retaining a portion of the Shares from the Shares that would otherwise be deliverable to you under the vesting Stock Units as provided in the next two sentences. Such withheld Shares will be applied to pay the withholding obligation by using the aggregate fair market value of the withheld Shares as of the date of vesting. You will be delivered the net amount of vested Shares after the Share withholding has been effected and you will not receive the withheld Shares.

It is intended that payments under this Agreement will be exempt from Code Section 409A but the Company makes no representation or covenant to ensure that the payments under this Agreement are so exempt from, or compliant with, Code Section 409A, and will have no liability to you or any other party if a payment under this Agreement that is intended to be exempt from, or compliant with, Code Section 409A is not so exempt or compliant. To the extent applicable, each payment provided to you shall be considered a separate payment and not one of a series of payments for purposes of Code Section 409A.

Notwithstanding anything to the contrary, if, upon your "separation from service" (as defined in Code Section 409A), you are then a Company “specified employee” (as defined in Code Section 409A), then to the extent necessary to comply with Code Section 409A, the Company shall defer payment of certain of the amounts owed to you under this Agreement until the earlier of (i) ten (10) days after the Company receives written confirmation of your death or (ii) the first business day of the seventh month following your separation from service. Any such delayed payments shall be made to you (or your beneficiaries) without interest.

Restrictions on Resale

By signing this Agreement, you agree not to sell, transfer, dispose of, pledge, hypothecate, make any short sale of, or otherwise effect a similar transaction of any Shares acquired under this Award (each a “Sale Prohibition”) at a time when applicable laws, regulations or Company or underwriter trading policies prohibit the disposition of Shares.

The Company shall have the right to designate one or more periods of time, each of which generally will not exceed one hundred eighty (180) days in length (provided however, that such period may be extended in connection with the Company’s release (or announcement of release) of earnings results or other material news or events), and to impose a Sale Prohibition, if the Company determines (in its sole discretion) that such limitation(s) is needed in connection with a public offering of Shares or to comply with an underwriter’s request or trading policy, or could in any way facilitate a lessening of any restriction on transfer pursuant to the Securities Act or any state securities laws with respect to any issuance of securities by the Company, facilitate the registration or qualification of any securities by the Company under the Securities Act or any state securities laws, or facilitate the perfection of any exemption from the registration or qualification requirements of the Securities Act or any applicable state securities laws for the issuance or transfer of any securities. The Company may issue stop/transfer instructions and/or appropriately legend any stock certificates issued pursuant to this Award in order to ensure compliance with the foregoing. Any such Sale Prohibition shall not alter the vesting schedule set forth in this Agreement.

If the sale of Shares under the Plan is not registered under the Securities Act, but an exemption is available which requires an investment or other representation, you shall represent and agree at the time of settlement of vested Stock Units that the Shares being acquired under this Award are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel.

You may also be required, as a condition of this Award, to enter into any Company stockholder agreement or other agreements that are applicable to stockholders.

No Retention Rights	Your Award or this Agreement does not give you the right to be retained by the Company (or any Parent or any Subsidiaries or Affiliates) in any capacity. The Company (or any Parent and any Subsidiaries or Affiliates) reserves the right to terminate your Service at any time and for any reason.
Extraordinary Compensation	This Award and the Shares subject to the Award are not intended to constitute or replace any pension rights or compensation and are not to be considered compensation of a continuing or recurring nature, or part of your normal or expected compensation, and in no way represent any portion of your salary, compensation or other remuneration for any purpose, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
Adjustments	In the event of a stock split, a stock dividend or a similar change in the Company stock, the number of outstanding Stock Units covered by this Award may be adjusted (and rounded down to the nearest whole number) pursuant to the Plan. Your Stock Units shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity.
Legends	All certificates representing the Common Stock issued under this Award may, where applicable, have endorsed thereon the following legend and any other legend the Company determines appropriate: “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE.” “THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

Notice	Any notice to be given or delivered to the Company relating to this Agreement shall be in writing and addressed to the Company at its principal corporate offices. Any notice to be given or delivered to you relating to this Agreement shall be in writing and addressed to you at such address of which you advise the Company in writing. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.
Voluntary Participant	You acknowledge that you are voluntarily participating in the Plan.
No Rights to Future Awards	Your rights, if any, in respect of or in connection with any future Awards are derived solely from the discretionary decision of the Company to permit you to participate in the Plan and to benefit from a discretionary future Award. By accepting this Award, you expressly acknowledge that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards to you or benefits in lieu of any other Awards even if Awards have been granted repeatedly in the past. All decisions with respect to future Awards, if any, will be at the sole and absolute discretion of the Committee.
Future Value	The future value of the underlying Shares is unknown and cannot be predicted with certainty. If the underlying Shares do not increase in value after the Date of Award, the Award will have less value (or even no value) than it may have on the Date of Award.
No Advice Regarding Award	The Company has not provided any tax, legal or financial advice, nor has the Company made any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares. You are hereby advised to consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.
Other Information	You agree to receive stockholder information, including copies of any annual report, proxy statement and periodic report, from the SEC Filings section in the Investor Relations section of the Company's website at www.ntnbuzztime.com. You acknowledge that copies of the Plan, Plan prospectus, Plan information and stockholder information are also available upon written or telephonic request to the Company's Plan Administrator.
Applicable Law	This Agreement will be interpreted and enforced under the laws of the State of Delaware.

By signing the cover sheet of this Agreement, you agree to all of the terms

and conditions described above and in the Plan and the Plan's prospectus.

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15(d)-14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeff Berg, certify that:

1. I have reviewed this report on Form 10-Q of NTN Buzztime, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

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;

(b)

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;

(c)

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

(d)

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

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

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

(b)

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.


Dated: November 9, 2012	/s/ Jeff Berg
	Jeff Berg
	Interim Chief Executive Officer
	NTN Buzztime, Inc.

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15(d)-14(a), AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kendra Berger, certify that:

1. I have reviewed this report on Form 10-Q of NTN Buzztime, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

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.


Dated: November 9, 2012	/s/ Kendra Berger
	Kendra Berger
	Chief Financial Officer
	NTN Buzztime, Inc.

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of NTN Buzztime, Inc. (the “Registrant”) on Form 10-Q for the period ended September 30, 2012 (the “Report”), I, Jeff Berg, Interim Chief Executive Officer of the Registrant, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)

the Report, as filed with the Securities and Exchange Commission, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


Dated: November 9, 2012	/s/ Jeff Berg
	Jeff Berg
	Interim Chief Executive Officer
	NTN Buzztime, Inc.

Exhibit 32.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of NTN Buzztime, Inc. (the “Registrant”) on Form 10-Q for the period ended September 30, 2012 (the “Report”), I, Kendra Berger, Chief Financial Officer of the Registrant, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)

the Report, as filed with the Securities and Exchange Commission, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


Dated: November 9, 2012	/s/ Kendra Berger
	Kendra Berger
	Chief Financial Officer
	NTN Buzztime, Inc.