PR Newswire | Aug 7, 2020 06:31AM EDT

08/07 05:30 CDT

NTN Buzztime, Inc. Reports Second Quarter 2020 Results CARLSBAD, Calif., Aug. 7, 2020

CARLSBAD, Calif., Aug. 7, 2020 /PRNewswire/ -- NTN Buzztime, Inc. (NYSE American: NTN) reported financial results for the second quarter ended June 30, 2020.

"The negative impact of the COVID-19 pandemic on our customers was abrupt and substantial, and it had a ripple-effect on our business. As a result, we took action to significantly reduce our operating costs," said Allen Wolff, CEO. "We have been focused on cash management and exploring and evaluating strategic alternatives."

Financial ResultsFor the second quarter 2020, total revenues were $754,000, compared to $5.2 million for the second quarter of 2019. The decrease reflects reduced site count and the impact of the COVID-19 pandemic on the company's business as a substantial number of the bars and restaurants that subscribe to the company's network suspended their subscriptions for at least a portion of the current year period. Through corporate restructuring and cost reductions, second quarter 2020 operating expense decreased to $2.4 million, from $5.2 million for the second quarter of 2019. Second quarter 2020 net loss attributable to common shareholders was $2.0 million, including $100,000 in capitalized software impairments, or $0.69 per share, compared to $98,000, or $0.03 per share, for the prior year quarter.

LiquidityCash, cash equivalents and unrestricted cash was $2.2 million at June 30, 2020, compared to $2.2 million at March 31, 2020 and $3.2 million at December 31, 2019. In April 2020, the company received $1.6 million under the Paycheck Protection Program of the CARES Act. At June 30, 2020, the principal balance of the company's term loan with its primary lender was $1.6 million, and working capital was $894,000. For additional information regarding the company's liquidity and capital resources, please see the company's quarterly report on Form 10-Q expected to be filed with the SEC today.

The company will not be hosting an earnings call for the recently completed quarter. The company's limited resources are being directed toward managing operations and liquidity in light of the substantial impact of the COVID-19 pandemic on its business and on exploring and evaluating strategic alternatives. No assurance are, or can be given, that a definitive agreement for a strategic transaction will result from the company's strategic process, or that even if such agreement is entered into, that the potential transaction will be consummated.

Forward-looking StatementsThis release may contain forward-looking statements that reflect management's current views of future events and operations, including challenges that we and our customers will face related to the COVID-19 pandemic and the potential meaningfulness of our product platform to our customers as they or if they re-open their businesses. Among the factors that could cause or contribute to material differences between our actual results and the expectations indicated by the forward-looking statements are risks and uncertainties that include, but are not limited to: (1) our ability to raise substantial capital in the very near-term to allow us to maintain operations and sustain the negative impact of the COVID-19 pandemic on our business and financial condition, and if we are able to sustain such impact, our ability to recover from the impact; (2) our ability to successfully manage our liquidity and our working capital deficit by managing the timing of payments to our third parties; (3) our ability to comply with our financial covenants in our loan and security agreement with Avidbank and its right to declare a default if we do not, which could lead to all payment obligations becoming immediately due and payable and which could lead to a foreclosure on our assets; (4) when, and the extent to which, the negative impact of the pandemic will improve, including when restaurants will be permitted to offer on-site dining or when bars will be permitted to re-open and to what degree, when our customers will re-open, or if they will subscribe to our service if and when they do; (5) the negative impact that measures we implemented and may implement to reduce our operating expenses and planned capital expenses (including investments in our business) may have on our ability to effectively manage and operate our business; (6) our ability to maintain or grow our revenue; (7) with respect to our strategic process, the risk that we may not enter into a definitive agreement for a potential transaction or, if we do, that the potential transaction will not be completed; (8) our ability to compete effectively within the highly competitive interactive games, entertainment and marketing services industries, including our ability to successfully commercially launch attractive product offerings, and the impact of new products and technological change, especially in the mobile and wireless markets, on our operations and competitiveness; (9) our ability to adequately protect our proprietary rights and intellectual property ; and (10) the other risks and uncertainties described in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and described in other documents we filed or file from time to time with the Securities and Exchange Commission thereafter, including in our Current Reports on Form 8-K filed with the SEC on March 30, 2020 and April 21, 2020, and our Quarterly Reports on Form 10-Q for each of the quarters ended March 31, 2020 and June 30, 2020. Please see our filings with the SEC for information about these and other risks that may affect us. All forward-looking statements included in this release are based on information available to us on the date hereof. These statements speak only as of the date hereof and NTN Buzztime, Inc. does not undertake to publicly update or revise any of its forward-looking statements, even if experience or future changes show that the indicated results or events will not be realized.

About Buzztime:Buzztime (NYSE American: NTN) delivers interactive entertainment and innovative technology that helps its customers acquire, engage and retain its patrons. Most frequently used in bars and restaurants in North America, the Buzztime tablets, mobile app and technology offer engaging solutions to establishments that have guests who experience dwell time, such as casinos, senior living, and more. Casual dining venues license Buzztime's customizable solution to differentiate themselves via competitive fun by offering guests trivia, card, sports and arcade games. Buzztime's platform creates connections among the players and venues and amplifies guests' positive experiences. Buzztime's in-venue TV network creates one of the largest digital out of home ad audiences in the US and Canada. Buzztime hardware solutions leverages the company's experience manufacturing durable tablets and charging systems, enabling a diverse group of businesses including corrections, point-of-sale and loyalty with product implementation. Buzztime games have also been recently licensed by other businesses serving other markets. For more information, please visit http://www.buzztime.com.

IR AGENCY CONTACT:Kirsten Chapman, LHA Investor Relations, buzztime@lhai.com 415-433-3777

NTN BUZZTIME, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except par value amount)

ASSETS June 30, December 31, 2020 2019

Current Assets: (unaudited)

Cash and cash equivalents $ 2,234 $ 3,209

Restricted cash 201 50

Accounts receivable, net 186 1,195

Site equipment to be installed 1,132 1,090

Prepaid expenses and other current assets 336 526

Total current assets 4,089 6,070

Restricted cash, long-term -- 150

Operating lease right-of-use assets 44 2,101

Fixed assets, net 928 2,822

Software development costs, net 1,515 1,915

Deferred costs 152 274

Goodwill -- 696

Other assets 62 97

Total assets $ 6,790 $ 14,125

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts payable $ 397 $ 835

Accrued compensation 116 588

Accrued expenses 385 490

Sales taxes payable -- 131

Income taxes payable 15 3

Current portion of long-term debt 1,620 2,739

Current portion of obligations under operating 28 409leases

Current portion of obligations under financing 24 21leases

Current portion of deferred revenue 377 460

Other current liabilities 233 419

Total current liabilities 3,195 6,095

Long-term debt 1,625 --

Obligations under operating leases 18 2,891

Obligations under financing leases 9 20

Deferred revenue 1 2

Other liabilities 11 26

Total liabilities 4,859 9,034

Commitments and contingencies

Shareholders' equity:

Series A 10% cumulative convertible preferredstock, $0.005 par value, $156 liquidationpreference, 156 shares authorized; 156 shares 1 1issued and outstanding at June 30, 2020 andDecember 31, 2019

Common stock, $0.005 par value, 15,000 sharesauthorized at June 30, 2020 and December 31, 15 142019; 2,938 and 2,901 shares issued at June,2020 and December 31, 2019, respectively

Treasury stock, at cost, 10 shares at June 30, (456) (456)2020 and December 31, 2019

Additional paid-in capital 136,837 136,721

Accumulated deficit (134,706) (131,457)

Accumulated other comprehensive income 240 268

Total shareholders' equity 1,931 5,091

Total liabilities and shareholders' equity $ 6,790 $ 14,125

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(In thousands, except per share data)

Three months ended Six months ended June 30, June 30,

2020 2019 2020 2019

Revenues

Subscription revenue $ 727 $ 3,800 $ 2,726 $ 7,633

Hardware revenue 26 595 42 800

Other revenue 1 831 380 1,625

Total revenues 754 5,226 3,148 10,058

Operating expenses:

Direct operating costs(includes depreciation 613 1,717 1,563 3,201and amortization)

Selling, general and 1,595 3,422 4,675 6,891administrative

Impairment of 100 -- 238 1capitalized software

Impairment of goodwill -- -- 662 --

Depreciation andamortization (excludingdepreciation and 78 89 163 185amortization includedin direct costs

Total operating 2,386 5,228 7,301 10,277expenses

Operating loss (1,632) (2) (4,153) (219)

Other (expense) income, (376) (88) 908 (173)net

Loss before income (2,008) (90) (3,245) (392)taxes

Income tax (provision) (15) -- 4 (11)benefit

Net loss (2,023) (90) (3,241) (403)

Series A preferred (8) (8) (8) (8)stock dividend

Net loss attributable $ (2,031) $ (98) $ (3,249) $ (411)to common shareholders

Net loss per commonshare - basic and $ (0.69) $ (0.03) $ (1.12) $ (0.14)diluted

Weighted average sharesoutstanding - basic and 2,925 2,870 2,913 2,868diluted

Comprehensive loss:

Net loss $ (2,023) $ (98) $ (3,241) $ (403)

Foreign currency 76 32 (28) 65translations adjustment

Total comprehensive $ (1,947) $ (58) $ (3,269) $ (338)loss

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In thousands)

Six months ended June 30,

2020 2019

Cash flows (used in) provided by operatingactivities:

Net loss $ (3,241) $ (403)

Adjustments to reconcile net loss to net cashprovided by operating activities:

Depreciation and amortization 1,058 1,454

Provision for doubtful accounts 133 27

Amortization of operating lease right-of-use assets 146 144

Common stock issued for compensation in lieu of 61 --cash payment

Transfer of fixed assets to sales-type lease -- 6

Stock-based compensation 82 109

Gain from the asset sale of Stump! Trivia and (1,265) --OpinioNation

Gain from the termination of operating lease $ (8) --

Loss from the disposition or sale of assets 502 19

Loss from impairment of capitalized software 238 1

Loss from impairment of goodwill 662 --

Amortization of debt issuance costs 9 5

Changes in assets and liabilities:

Accounts receivable 975 384

Site equipment to be installed (286) 465

Operating lease liabilities (120) (58)

Prepaid expenses and other liabilities 190 12

Accounts payable and accrued expenses (1,436) (20)

Income taxes 13 (10)

Deferred costs 122 47

Deferred revenue (84) (866)

Other liabilities (201) 23

Net cash (used in) provided by operating activities (2,450) 1,339

Cash flows used in investing activities:

Capital expenditures (20) (79)

Capitalized software development expenditures (130) (639)

Net cash used in investing activities (150) (718)

Cash flows provided by (used in) financingactivities:

Net proceeds from the sale of Stump! Trivia and 1,166 --OpinoNation

Proceeds on long-term debt 1,625 --

Payment on long-term debt (1,125) (417)

Debt issuance costs on long-term debt (3) --

Principal payments on financing leases (8) (30)

Payment of preferred stockholder dividends (8) (8)

Payroll taxes remitted on net share settlement of (27) (13)equity awards

Net cash provided by (used in) financing activities 1,620 (468)

Effect of exchange rate on cash 6 39

Net (decrease) increase in cash and cash (974) 192equivalents

Cash, cash equivalents and restricted cash at 3,409 2,786beginning of period

Cash, cash equivalents and restricted cash at end 2,435 2,978of period

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SOURCE NTN Buzztime, Inc.