NTN BUZZTIME INC (Form: 8-K, Received: 03/20/2019 16:17:09)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): March 19, 2019

NTN BUZZTIME, INC.

(Exact name of Registrant as Specified in Charter)

Delaware

001-11460

31-1103425

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

1800 Aston Ave., Suite 100
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 is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

[ ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operation and Financial Condition.

On March 20, 2019, we issued a press release announcing our financial results for the three and twelve months ended December 31, 2018. The press release is furnished as Exhibit 99.1.

The information set forth under this Item 2.02 and in Exhibit 99.1 is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not to be incorporated by reference into any filing of the registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof, regardless of any general incorporation language in any such filing, except as shall be expressly set forth by specific reference in such a filing.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On March 19, 2019, the Nominating and Corporate Governance/Compensation Committee (the “Committee”) of our Board of Directors adopted the NTN Buzztime, Inc. Executive Incentive Plan for Eligible Employees of NTN Buzztime, Inc. Fiscal Year 2019 (the “2019 Plan”). The 2019 Plan provides for performance-based, at-risk compensation.

The 2019 Plan period is from January 1, 2019 to December 31, 2019. The Committee will administer and interpret the 2019 Plan. The 2019 Plan participants include those individuals with the title of Chief Executive Officer, Chief Financial Officer, and VP of Finance (as Chief Accounting Officer), and any individual who we hire, promote or transfer to an executive level position, as determined by the Committee, during 2019. Individuals who are eligible to participate in the 2019 Plan must be employed by us on or before October 1, 2019, on active, full-time, paid status, and must not be a participant in any of our other incentive compensation programs. Any individual who becomes eligible to participate in the 2019 Plan after January 1, 2019 (either through new hire, promotion or transfer) will be eligible to earn incentive compensation under the 2019 Plan on a prorated basis.

The 2019 Plan participants will be eligible to earn incentive compensation based on the level of achievement of the following performance measures:

	●	targeted earnings before interest, tax, depreciation and amortization (EBITDA), as approved by the Committee (weighted up to 10%);

	●	targeted revenue, as approved by the Committee (weighted up to 15%); and

	●	certain strategic milestones, as evaluated and approved by the Committee (weighted up to 75%).

Each 2019 Plan participant will have a target payout amount, based on a percentage of his or her annual base salary (excluding benefits) as of December 31, 2019, that is assigned according to such participant’s position and job level. The target payout amounts for current 2019 Plan participants are: Chief Executive Officer—75%; Chief Financial Officer and Executive Vice President—50%; and VP of Finance (as Chief Accounting Officer)—10%.

The Committee will determine the achievement level of the performance measures and the actual incentive payout amount awarded to a participant. If the performance measures are exceeded, the Committee, in its sole discretion, may choose to pay out a larger pool amount. The Committee’s determination will be made as soon as practicable following December 31, 2019. Subject to the other terms of the 2019 Plan, the incentive payout, if any, will be paid at the discretion and in the sole determination of the Committee, either in (i) cash, (ii) shares of our common stock issued under the NTN Buzztime, Inc. Amended 2010 Performance Incentive Plan or any successor long-term incentive plan, or (iii) any combination of (i) and (ii). Such payment will be made within 30 days after the date we receive our independent auditor’s report on our annual financial statements for 2019, but no later than March 15, 2020.

The table below sets out the target payout amount for each of our named executive officers under the 2019 Plan, assuming all performance measures are achieved at a rate of 100%:

Named Executive Officer	Target Payout Amount ($)
Ram Krishnan, Chief Executive Officer		262,500
Allen Wolff, Chief Financial Officer and Executive Vice President		132,500
Sandra Gurrola, Vice President of Finance		17,500

In order for a participant to earn and receive any incentive payout under the 2019 Plan, the Committee must have approved such incentive payout as evidenced in the Committee meeting minutes and the participant must be employed by us on the payout date.

The 2019 Plan may be amended, modified or terminated at any time at the discretion of the Committee with or without advance notice. If the 2019 Plan is amended prior to the end of the plan period, participants will be paid according to any amending or terminating documents. The 2019 Plan will automatically terminate at the end of the plan period, except that the payout provisions will continue in effect until satisfied.

The foregoing summary description of the 2019 Plan does not purport to be complete and is qualified in its entirety by reference to the 2019 Plan, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

	10.1	The NTN Buzztime, Inc. Executive Incentive Plan for Eligible Employees of NTN Buzztime, Inc. Fiscal Year 2019 dated March 19, 2019.

	99.1	Press Release of NTN Buzztime, Inc. dated March 20, 2019 (financial results for the three and twelve months ended December 31, 2018).

SIGNATURES

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

	NTN BUZZTIME, INC.

Date: March 20, 2019	By:	/s/ Allen Wolff
		Allen Wolff
		Chief Financial Officer

NTN Buzztime, Inc. Executive Incentive Plan for Eligible Employees of NTN Buzztime, Inc.

Fiscal Year 2019

Section		Description

1	Approval	This Plan has been approved by the Nominating and Corporate Governance/ Compensation Committee (“the Committee”). This Plan may be changed or modified at any time at the discretion of the Committee.

2	Effective Dates	The Plan Period is January 1, 2019 – December 31, 2019.

3	Eligibility	To be an eligible participant in the Plan, the individual must be employed by Buzztime on or before October 1, 2019, on active, full-time, paid status and not be a participant in any other Buzztime incentive compensation program and must serve as Buzztime’s Chief Executive Officer, Chief Financial Officer, VP of Finance (as Chief Accounting Officer) or in another executive-level position as determined by the Committee. (All eligible employees are referred to in this Plan as “Participant(s)”). Only Participants may earn incentive compensation under this Plan. Additionally, Participants must confirm they have read, understood, and agree to abide by the term and conditions in their respective Personal Incentive Memo and this Plan. Any newly hired employee who becomes eligible to participate in the Plan during the year may be eligible to receive a prorated incentive amount. This Plan supersedes any previous contractual agreements or prior incentive plans.

4	Plan Design	(1) Prerequisites to Earning Incentive Compensation To earn incentive compensation under this Plan, subject to provisions of Section 6 (Prorated Participation), the following criteria must be satisfied : (a) The Plan must be funded, based on the achievement of the Corporate Goals during the Plan Period, as outlined below; and (b) the Participant must be employed by Buzztime on the Payout Date. (2) Corporate Goals Our 2019 Corporate Goals are as follows:

	A.	To meet target EBITDA as approved by the Committee. EBITDA is defined as earnings before interest, tax, depreciation and amortization as disclosed in Buzztime’s financial reports. Payout weighted up to 10% of payout pool.

	B.	To meet target revenue, as approved by the Committee. Payout weighted up to 15% of payout pool.

	C.	To achieve certain strategic milestones, as approved by the Committee. Payout weighted up to 75% of payout pool.

		If the Corporate Goals are exceeded, the Committee, at its sole discretion, may choose to pay out a larger pool amount.

(3) Target Payout

Each Participant will have a Target Payout, assigned by his/her position and job level, and will be paid, at the discretion and in the sole determination of the Committee, in either (i) cash, (ii) shares of the Company’s common stock (“Shares”) issued under the NTN Buzztime, Inc. Amended 2010 Performance Incentive Plan (as amended from time to time, the “2010 PIP”), or any successor long-term incentive plan, or (iii) any combination of (i) and (ii), and expressed as a percentage of his/her annual base salary, excluding benefits, as of December 31, 2019. If a Target Payout is settled in Shares, the value of such Shares at the time of settlement shall not, when combined with any cash paid to settle such Target Payout, exceed the maximum amount of such Target Payout. The Target Payout amount will be adjusted when warranted pursuant to Sections 5 (Payout Details) and 6 (Prorated Participation).

(4) Plan Terms

The Incentive Payout amount is based on the following terms:

	●	% of Corporate Goals Achievement - Overall percent achieved of the Corporate Goals.

	●	Participant’s Target Payout Amount - Participant’s annual base salary x the Target Payout. Please refer to your personal incentive memo.

	●	Individual Incentive Payout – The incentive payout amount an individual is awarded after the payout formula is completed subject to all sections of this Plan.

(5) Performance Determination

Buzztime’s actual performance against the Corporate Goals for the Plan Period will be determined and approved by the Committee as soon as practicable after the Plan Period ends, subject to the completion and approval by Buzztime of the relevant financial or other Buzztime reports upon which the Corporate Goals are measured.

(6) Payout Formula

Please refer to your personal incentive memo for formula payout examples.

Payout Details

Payout Date(s): Subject to Section 8 (Company Management Rights), and provided all the of prerequisites to earning incentive compensation are met pursuant to Section 4 (Plan Design), the Target Payout will be paid in accordance with paragraph (3) of Section 4(Plan Design) within 30 days after receipt of the independent auditor’s report on Buzztime’s annual financial statements for 2019, but no later than March 15, 2020.

Prorated Payouts: The Individual Incentive Payout that otherwise would have been earned in the Plan Period will be prorated when the provisions of Section 6 (Prorated Participation) apply.

Plan Administration and Interpretation: This Plan shall be administered and interpreted by the Committee in its sole discretion. The Committee must approve any exceptions to the term and conditions of this Plan.

Notwithstanding the generality of the foregoing, the Committee also has sole discretion to determine the impact of any merger, acquisition or similar transaction or of any activities related thereto and/or of investments made beyond the core business of Buzztime as they relate to this Plan.

401k deferrals: In accordance with the NTN Buzztime, Inc. 401k Plan, no 401k deductions will be withheld from incentive (“bonus”) wages.

Taxes: Incentive payments are in addition to the Participant’s base salary and are included as total cash compensation and, as such, recorded on the Participant’s W-2 (or applicable country statement) statement of wages. Individual Incentive Payouts are considered taxable income and are reported as Gross Income (not “after taxes”). Participants will have all appropriate payroll taxes and withholdings deducted from these incentive payments at the IRS supplemental tax rate. Deductions from a payout in the form of Shares shall be governed by the 2010 PIP (or any successor long-term incentive plan), and the applicable grant documentation, if any

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6	Prorated Participation	Late Entry into the Plan: An employee who enters into an eligible position and, therefore, becomes a Participant after the beginning of the Plan Period (either through new hire, promotion or transfer) will be assigned a Target Payout and will be able to earn prorated incentive payment on that basis. Effect of Termination: A Participant must be employed on the Payout Date(s) to earn an incentive payment. If a Participant voluntarily resigns from employment prior to the Payout Date , no incentive payment is earned. If Buzztime terminates a Participant’s employment prior to the Payout Date(s) , no incentive payment is earned. Effect of Disciplinary Action: Any Participant under disciplinary action (any level of performance counseling, warning and/or performance improvement plan) will be ineligible to participate in the Plan. If the employee upon reevaluation, however, is released from disciplinary action, he/she will at that same time resume eligibility under the Plan and may be eligible to receive a prorated incentive amount that excludes the period of time he/she was under disciplinary action. Internal Promotions and Transfers: Employees who transfer within Buzztime and/or are promoted into new positions that are not eligible to participate in this Plan will be paid a prorated Individual Incentive Payout. Participants who transfer within and/or promoted into new positions will be re-evaluated to ensure they are at the appropriate incentive level based on their position and job level. The incentive payment during the time in the Plan Period he or she was a Participant is subject to the prerequisites to earning incentive compensation. Approved Time Off: The Individual Incentive Payout will not be prorated to account for time off due to personal time off not associated with a leave of absence. Leave of Absence: The Individual Incentive Payout for Participants who are on an approved leave of absence from Buzztime will be prorated based on the length of the approved leave during the Plan Period . During the time an employee is on an approved leave of absence, he or she will not be considered a Participant .

7	At Will Employment	Employment with Buzztime is at-will. This means that just as a Participant is free to resign at any time, Buzztime reserves the right to discharge a Participant at any time, with or without cause or advance notice. In connection with the “at-will” employment relationship, Buzztime also reserves the right to exercise its managerial discretion in reassigning, transferring, promoting or demoting an employee, at any time. Participation in the Plan does not guarantee continued employment for any particular period of time or otherwise change Buzztime’s policy of employment at-will.

8	Company Management Rights	Buzztime reserves the right to amend or terminate this Plan, at any time, at the Committee’s discretion, with or without advance notice. Any amendments to the Plan will be in writing and approved by the Committee. If this Plan is amended or terminated prior to the end of the Plan Period , Participants will be paid, according to any amending or terminating documents. This Plan will automatically terminate at the end of the Plan Period , except that the Payout provisions will continue in effect until satisfied. However, Buzztime, at its discretion, may elect to re-issue the Plan, in writing, with new Effective Dates.

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Acknowledgement

Your signature below indicates that you have read, understood, and agreed to the entire NTN Buzztime, Inc. Executive Incentive Plan for Eligible Employees of NTN Buzztime, Inc. Fiscal Year 2019, which includes the preceding 3 pages and the Personal Incentive Memo for your position. Different positions are eligible for different incentives and not all positions are eligible for the same level of incentive. Information contained in these documents is strictly confidential and shall under no circumstances be shared with other employees of NTN Buzztime or with anyone outside the Company without the express consent of the Chief Financial Officer or Director of Human Resources of the Company unless required to do so under Sarbanes Oxley Act or the Securities Exchange Commission.


Plan Participant Name (Please Print)


Plan Participant Signature


Date

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NTN Buzztime, Inc. Reports Fourth Quarter and Full Year 2018 Results

– Grew Q4 2018 Revenue 12% to $5.9 Million –

– Reported Q4 2018 GAAP Net Income Attributable to Common Shareholders of $44,000 –

– Posted $732,000 in Q4 2018 EBITDA, Marking Eleventh Consecutive Quarter Positive –

CARLSBAD, Calif., March 20, 2019, — NTN Buzztime, Inc. (NYSE American: NTN), reported financial results for the fourth quarter and year ended December 31, 2018.

“Our business momentum delivered another strong quarter, including positive net income, and closed 2018 with the company’s best bottom line annual performance in 24 years,” said Ram Krishnan, NTN Buzztime CEO. “In 2018, we grew revenue 10%, driven by increased equipment sales while increasing cash from operations by approximately 150%. These improvements reflect the impact of our revenue diversification strategy and continued progress in all facets of the business.

“More importantly, we continue to invest for future growth by advancing our entertainment platform and bringing new offerings to the market. During 2018, we introduced our hardware platform appealing to new markets and attracting new customers. We have made progress with our SiteHub – the dramatically smaller form factor management system that improves functionality, eliminates wires and lowers costs – and are planning live beta sites in 2019. Our ‘Trivia for Cash’ promotions increased player engagement and boosted business at our partner locations. So, we are rolling out additional campaigns to continue with this progress. In the first quarter of 2019, we joined a new ad exchange, which broadens advertising buyer access to our inventory in multiple marketplaces. Additionally, we are in the process of launching our mobile app, which increases convenience for players and engagement for venues on- and off-premise.

“With these efforts to expand our product offering and revenue channels, we are confident in our ability to bring new sustainable growth to the company. While we continue to explore and evaluate strategic alternatives focused on maximizing shareholder value, our priority is building scalable distribution along with innovative products,” concluded Krishnan.

Financial Results for the Fourth Quarter Ended December 31, 2018

Total revenues were $5.9 million, up 11.8% from $5.3 million in the fourth quarter of 2017, due to increases in hardware revenue offset by lower subscription revenue. Direct costs were $2.1 million and gross margin was 65%, compared to $1.7 million and 67% for the same period in 2017, reflecting the product mix shift. Selling, general and administrative expense decreased to $3.4 million, or 57% of revenue, down from $4.0 million, or 75% of revenue, in the prior year quarter, reflecting cost management measures. During the fourth quarter of 2018, the company incurred a goodwill impairment loss of $261,000 related to its Canadian business and did not in the comparable period. Net income attributable to common shareholders was $44,000, or $0.02 per diluted share, improved from a net loss attributable to common shareholders of $647,000, or $0.31 per share, in the prior year quarter. EBITDA was $732,000 for the fourth quarter of 2018, compared to $117,000 in the prior year quarter.

EBITDA is defined as earnings before interest, taxes, depreciation and amortization and is not intended to represent a measure of performance in accordance with accounting principles generally accepted in the United States (GAAP). Although EBITDA is positive this quarter, it may not be positive in future quarters. A detailed description and reconciliation of EBITDA and management’s reasons for using this measure is set forth at the end of this press release.

Metric Review for the Quarter Ended December 31, 2018

The site count was 2,639 at December 31, 2018, compared to 2,666 at September 30, 2018. Management anticipates that net site count will continue to fluctuate. The tablet platform installations remained flat at 84% of the installed base, when compared to the install base as of September 30, 2018.

Liquidity

Cash and cash equivalents were $2.5 million at December 31, 2018, compared to $3.4 million at December 31, 2017. 2018 cash flow from operations reached $1.4 million, increasing $800,000 from $549,000 in 2017. Total deferred revenue was $1.4 million, down from $3.6 million at December 31, 2017. Working capital was $2.8 million at December 31, 2018, improving $3.9 million from negative $1.1 million at December 31, 2017.

Financial Results for the Full Year Ended December 31, 2018

Total revenues were $23.3 million, up 9.7% from $21.3 million in 2017, reflecting increases in professional development, advertising and hardware revenue. Net loss attributable to common shareholders for 2018 was $275,000, or $0.10 per share, improved from a net loss attributable to common shareholders of $1.1 million, or $0.45 per share for 2017. EBITDA was $2.8 million for 2018, compared to $1.8 million for 2017.

Conference Call

Management will review the results on a conference call with a live question and answer session today, March 20, 2019, at 4:30 p.m. ET. To access the call, please use passcode 9359779 and dial:

	●	(877) 307-1373 for the live call and (855) 859-2056 for the replay, if calling from the United States or Canada; or
	●	(678) 224-7873 for the live call and (404) 537-3406 for the replay, if calling internationally.

The call will also be accompanied live by webcast that will be accessible at the company’s website at http://www.buzztime.com. The replay of the call will be available until March 27, 2019.

Forward-looking Statements

This release contains forward-looking statements that reflect management’s current views of future events and operations, including statements regarding management’s expectations regarding future sustainable growth, new offerings, market expansion, strategic opportunities, the ability of the company’s new lighter offerings to enhance the value and attractiveness of the company’s offerings, and the company’s ability to scale and to create shareholder value. These risks and uncertainties include the risks of unsuccessful execution or launch of products, platforms or brands, risks associated with customer retention and growth plans, the impact of alternative entertainment options and technologies and competitive products, brands, technologies and pricing, adverse economic conditions, the regulatory environment and changes in the law, failure of customer and/or player acceptance or demand for new or existing products, lower market acceptance of both existing and new offerings by particular demographic groups or audiences as a whole, termination of partnership and contractual relationships and technical problems or outages. Please see NTN Buzztime, Inc.’s recent filings with the Securities and Exchange Commission for information about these and other risks that may affect the Company. All forward-looking statements included in this release are based on information available to us on the date hereof. These statements speak only as of the date hereof and NTN Buzztime, Inc. does not undertake to publicly update or revise any of its forward-looking statements, even if experience or future changes show that the indicated results or events will not be realized, except as required by law.

About Buzztime:

Buzztime (NYSE American: NTN) delivers interactive entertainment and innovative technology, including performance analytics and secure payment with Europay, MasterCard® and Visa® (EMV) chip card readers or with near-field communication (NFC) technology to accept Apple, Android and Samsung Pay. Most frequently used in bars and restaurants in North America, the Buzztime tablets and technology offer engaging solutions to establishments that have guests who experience dwell time, such as casinos, senior living and more. Casual dining venues license Buzztime’s customizable solution to differentiate themselves via competitive fun by offering guests trivia, card, sports and arcade games, customized menus and self-service dining features. Buzztime’s platform improves operating efficiencies, creates connections among the players and venues, and amplifies guests’ positive experiences. The Buzztime platform has also been recently resold and the content licensed for other businesses serving other markets. For more information, please visit http://www.buzztime.com or follow us on Facebook or Twitter @buzztime.

IR AGENCY CONTACT:

Kirsten Chapman, LHA Investor Relations, buzztime@lhai.com , 415-433-3777

NTN BUZZTIME, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except par value amount)

	December 31, 2018			December 31, 2017
ASSETS
Current Assets:
Cash and cash equivalents	$	2,536		$	3,378
Restricted cash		50			—
Accounts receivable, net		1,143			714
Site equipment to be installed		2,539			4,866
Prepaid expenses and other current assets		517			680
Total current assets		6,785			9,638

Restricted cash, long-term		200			—
Fixed assets, net		4,667			3,678
Software development costs, net		2,018			1,459
Deferred costs		424			775
Goodwill		667			1,004
Other assets		103			16
Total assets	$	14,864		$	16,570

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	271		$	390
Accrued compensation		572			646
Accrued expenses		444			418
Sales taxes payable		87			107
Income taxes payable		1			13
Current portion of long-term debt		1,000			5,059
Current portion of obligations under capital leases		45			176
Current portion of deferred revenue		1,371			3,564
Deferred rent		—			182
Other current liabilities		233			192
Total current liabilities		4,024			10,747

Long-term debt		2,729			8
Obligations under capital leases		41			164
Deferred revenue		30			63
Deferred rent		1,123			—
Other liabilities		—			52
Total liabilities		7,947			11,034

Commitments and contingencies

Shareholders’ equity:
Series A 10% cumulative convertible preferred stock, $0.005 par value, $156 liquidation preference, 156 shares authorized; 156 shares issued and outstanding at December 31, 2018 and 2017		1			1
Common stock, $0.005 par value, 15,000 shares authorized at December 31, 2018 and 2017; 2,875 and 2,521 shares issued and outstanding at December 31, 2018 and 2017, respectively		14			13
Treasury stock, at cost, 10 shares at December 31, 2018 and 2017		(456	)		(456	)
Additional paid-in capital		136,552			134,752
Accumulated deficit		(129,394	)		(129,119	)
Accumulated other comprehensive income		200			345
Total shareholders’ equity		6,917			5,536
Total liabilities and shareholders’ equity	$	14,864		$	16,570

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except per share data)

	Three months ended December 31,						Years ended December 31,
	2018			2017			2018			2017
Revenues
Subscription revenue	$	3,920		$	4,212		$	16,031		$	16,949
Hardware revenue		1,162			246			3,589			770
Other revenue		837			838			3,715			3,555
Total revenues		5,919			5,296			23,335			21,274

Operating expenses:
Direct operating costs (includes depreciation and amortization)		2,051			1,742			8,070			6,755
Selling, general and administrative		3,363			3,959			14,486			15,587
Impairment of goodwill		261			—			261			—
Depreciation and amortization (excluding depreciation and amortization included in direct costs		71			84			315			334
Total operating expenses		5,746			5,785			23,132			22,676
Operating income (loss)		173			(489	)		203			(1,402	)
Other (expense) income:
Interest expense, net		(84	)		(110	)		(389	)		(498	)
Other (expense) income		(137	)		5			(137	)		889
Total other (expense) income, net		(221	)		(105	)		(526	)		391
Loss before income taxes		(48	)		(594	)		(323	)		(1,011	)
Income tax benefit (provision)		100			(45	)		64			(66	)
Net income (loss)	$	52			(639	)		(259	)		(1,077	)
Series A preferred stock dividend		(8	)		(8	)		(16	)		(16	)
Net income (loss) attributable to common shareholders	$	44		$	(647	)	$	(275	)	$	(1,093	)

Net income (loss) per common share – basic and diluted	$	0.02		$	(0.31	)	$	(0.10	)	$	(0.45	)

Weighted average shares outstanding – basic and diluted		2,864			2,094			2,688			2,442

Comprehensive loss:
Net income (loss)	$	52		$	(639	)	$	(259	)	$	(1,077	)
Foreign currency translations adjustment		(93	)		(14	)		(145	)		122
Total comprehensive loss	$	(41	)	$	(653	)	$	(404	)	$	(955	)

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Years ended December 31,
	2018			2017
Cash flows provided by operating activities:
Net loss	$	(259	)	$	(1,077	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		2,764			2,317
Provision for doubtful accounts		78			72
Scrap expense		30			226
Transfer of fixed assets to sales-type lease		23			—
Stock-based compensation		443			457
Amortization of debt issuance costs		59			60
Common stock issued for compensation in lieu of cash payment		—			209
Loss on sale or disposition of assets		212			13
Impairment of goodwill		261			—
Loss from disposition of capitalized software		23			5
Changes in assets and liabilities:
Accounts receivable		(507	)		142
Site equipment to be installed		431			(3,932	)
Prepaid expenses and other liabilities		29			443
Accounts payable and accrued expenses		(186	)		(586	)
Income taxes payable		(10	)		9
Deferred costs		350			130
Deferred revenue		(2,227	)		2,349
Deferred rent		(190	)		(189	)
Other liabilities		41			(99	)
Net cash provided by operating activities		1,365			549

Cash flows used in investing activities:
Capital expenditures		(648	)		(728	)
Capitalized software development expenditures		(964	)		(724	)
Proceeds from sale of assets		33			—
Net cash used in investing activities		(1,579	)		(1,452	)

Cash flows used in financing activities:
Net proceeds from issuance of common stock related to registered direct offering		1,375			1,773
Proceeds from long-term debt		4,000			50
Payment on long-term debt		(5,373	)		(3,038	)
Debit issuance costs of long-term deb		(23	)		(82	)
Principal payments on capital lease		(249	)		(155	)
Tax withholding related to net share settlement of vested restricted stock units		(17	)		—
Payment of preferred stockholder dividends		(16	)		(16	)
Net cash used in financing activities		(303	)		(1,468	)

Net decrease in cash, cash equivalents and restricted cash		(517	)		(2,371	)
Effect of exchange rate on cash		(75	)		63
Cash, cash equivalents and restricted cash at beginning of period		3,378			5,686
Cash, cash equivalents and restricted cash at end of period		2,786			3,378

Non-GAAP Information

A reconciliation of the Company’s consolidated net income (loss) calculated in accordance with GAAP to EBITDA is in the table below. The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization. EBITDA is not intended to represent a measure of performance in accordance with GAAP, nor should EBITDA be considered as an alternative to statements of cash flows as a measure of liquidity. EBITDA is included herein because the Company believes it is a measure of operating performance that financial analysts, lenders, investors and other interested parties find to be a useful tool for analyzing companies like Buzztime that carry significant levels of non-cash depreciation and amortization charges in comparison to their net income or loss calculation in accordance with GAAP.

	Three months ended December 31,						Years ended December 31,
	2018			2017			2018			2017
Net income (loss) per GAAP	$	52		$	(639	)	$	(259	)	$	(1,077	)
Interest expense		84			110			389			498
Income tax (benefit) provision		(100	)		45			(64	)		66
Depreciation and amortization		696			601			2,764			2,317
Total EBITDA	$	732		$	117		$	2,830		$	1,804