Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 13-May-14 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'NTN BUZZTIME INC | ' |
Entity Central Index Key | '0000748592 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 91,608,471 |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2014 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current Assets: | ' | ' |
Cash and cash equivalents | $4,761 | $5,455 |
Accounts receivable, net of allowances of $186 (unaudited) and $184, respectively | 1,115 | 641 |
Prepaid expenses and other current assets | 1,935 | 1,822 |
Total current assets | 7,811 | 7,918 |
Broadcast equipment and fixed assets, net | 3,423 | 3,237 |
Software development costs, net of accumulated amortization of $2,593 (unaudited) and $2,371, respectively | 2,261 | 2,317 |
Deferred costs | 706 | 562 |
Goodwill | 1,139 | 1,179 |
Intangible assets, net | 95 | 160 |
Other assets | 85 | 84 |
Total assets | 15,520 | 15,457 |
Current Liabilities: | ' | ' |
Accounts payable | 795 | 553 |
Accrued compensation | 815 | 647 |
Accrued expenses | 736 | 660 |
Sales taxes payable | 162 | 181 |
Income taxes payable | 73 | 81 |
Notes payable - current portion | 702 | 631 |
Obligations under capital lease - current portion | 26 | 25 |
Deferred revenue | 1,059 | 593 |
Other current liabilities | 187 | 237 |
Total current liabilities | 4,555 | 3,608 |
Notes payable, exluding current portion | 1,216 | 962 |
Obligations under capital leases, excluding current portion | 51 | 58 |
Deferred revenue, excluding current portion | 362 | 798 |
Deferred rent | 797 | 829 |
Total liabilities | 6,981 | 6,255 |
Commitments and contingencies (Note 8) | ' | ' |
Shareholders' Equity: | ' | ' |
Series A 10% cumulative convertible preferred stock, $.005 par value, $156 liquidation preference, 5,000 shares authorized; 156 shares issued and outstanding at March 31, 2014 and December 31, 2013. | 1 | 1 |
Common stock, $.005 par value, 168,000 shares authorized; 78,723 and 78,649 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively. | 394 | 393 |
Treasury stock, at cost, 503 shares at March 31, 2014 and December 31, 2013, respectively | -456 | -456 |
Additional paid-in capital | 121,480 | 121,432 |
Accumulated deficit | -113,448 | -112,799 |
Accumulated other comprehensive income (Note 9) | 568 | 631 |
Total shareholders' equity | 8,539 | 9,202 |
Total liabilities and shareholders' equity | $15,520 | $15,457 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ' | ' |
Allowance for doubtful accounts - accounts receivable | $186 | $184 |
Software accumulated amortization | $2,593 | $2,371 |
Preferred Stock Series A par value per share | $0.01 | $0.01 |
Preferred Stock Series A liquidation preference | $156 | $156 |
Preferred Stock Series A shares authorized | 5,000,000 | 5,000,000 |
Preferred Stock Series A shares outstanding | 156,000 | 156,000 |
Preferred stock shares issued | 156,000 | 156,000 |
Common stock par value | $0.01 | $0.01 |
Common stock shares authorized | 168,000,000 | 168,000,000 |
Common stock shares issued | 78,723,000 | 78,649,000 |
Common stock shares outstanding | 78,723,000 | 78,649,000 |
Treasury stock shares | 503,000 | 503,000 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Income Statement [Abstract] | ' | ' |
Revenues | $6,418 | $6,116 |
Operating expenses: | ' | ' |
Direct operating costs (includes depreciation and amortization of $533 and $590, respectively) | 2,530 | 2,000 |
Selling, general and administrative | 4,390 | 4,283 |
Depreciation and amortization (excluding depreciation and amortization included in direct operating costs) | 152 | 199 |
Total operating expenses | 7,072 | 6,482 |
Operating loss | -654 | -366 |
Other income, net | 15 | 5 |
Loss before income taxes | -639 | -361 |
Provision for income taxes | -10 | -8 |
Net loss | -649 | -369 |
Net loss per common share - basic and diluted | ($0.01) | ($0.01) |
Weighted average shares outstanding - basic and diluted | 78,178,000 | 70,862,000 |
Comprehensive loss | ' | ' |
Net loss | -649 | -369 |
Foreign currency translation adjustment | -63 | -42 |
Total comprehensive loss | ($712) | ($411) |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Income Statement [Abstract] | ' | ' |
Depreciation and amortization - part of Direct operating costs | $533 | $590 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash flows (used in) provided by operating activities: | ' | ' |
Net loss | ($649) | ($369) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ' | ' |
Depreciation and amortization | 685 | 789 |
Provision for doubtful accounts | 20 | 23 |
Stock-based compensation | 52 | 26 |
Issuance of common stock to consultant in lieu of cash payment | 6 | 0 |
Loss from disposition of equipment and capitalized software | 22 | 65 |
Changes in assets and liabilities: | ' | ' |
Accounts receivable | -494 | 14 |
Prepaid expenses and other assets | -113 | -95 |
Accounts payable and accrued liabilities | 421 | 35 |
Income taxes payable | -6 | 0 |
Deferred costs | -145 | 86 |
Deferred revenue | 29 | -381 |
Deferred rent | -32 | -27 |
Net cash (used in) provided by operating activities | -204 | 166 |
Cash flows used in investing activities: | ' | ' |
Capital expenditures | -572 | -123 |
Software development expenditures | -198 | -361 |
Net cash used in investing activities | -770 | -484 |
Cash flows provided by (used in) financing activities: | ' | ' |
Proceeds from notes payable | 764 | 0 |
Payments on notes payable | -439 | -10 |
Principal payments on capital lease | -6 | -47 |
Proceeds from exercise of stock options | 6 | 0 |
Tax withholding related to net-share settlements of restricted stock units | -15 | -4 |
Net cash provided by (used in) financing activities | 310 | -61 |
Net decrease in cash and cash equivalents | -664 | -379 |
Effect of exchange rate on cash | -30 | -18 |
Cash and cash equivalents at beginning of period | 5,455 | 2,721 |
Cash and cash equivalents at end of period | 4,761 | 2,324 |
Supplemental disclosures of cash flow information: | ' | ' |
Interest | 25 | 7 |
Income taxes | 18 | 7 |
Supplemental disclosure of non-cash investing and financing activities: | ' | ' |
Issuance of common stock in connection with acquisition | $0 | $1 |
1_BASIS_OF_PRESENTATION
1. BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
BASIS OF PRESENTATION | ' |
(1) BASIS OF PRESENTATION | |
Description of Business | |
NTN Buzztime, Inc. (the “Company”), provides an entertainment and marketing services platform for hospitality venues that offer games, events, and entertainment experiences to their consumers. The Company’s interactive entertainment network helps its network subscribers to acquire, engage and retain their consumers. The Company generates revenues by charging subscription fees for its service to its network subscribers, leasing equipment (including tablets used in its Buzztime Entertainment on Demand, or BEOND, line and the cases and charging trays for such tablets) to certain network subscribers, hosting live trivia events, and from selling advertising aired on in-venue screens and as part of customized games. Currently, over 3,100 venues in the U.S. and Canada subscribe to the Company’s interactive entertainment network. | |
The Company was incorporated in Delaware in 1984 as Alroy Industries and changed its 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. | |
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, 2013. The accompanying condensed balance sheet as of December 31, 2013 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 months ended March 31, 2014 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2014, 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 the Company’s 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 $24,000 and $7,000 in foreign currency gains for the three months ended March 31, 2014 and 2013, respectively, due to settlements of intercompany transactions, re-measurement of intercompany balances with the Company’s Canadian subsidiary and other non-functional currency denominated transactions, which are included in other income, net in the accompanying statements of operations. Exchange rate fluctuations between the United States dollar and Canadian dollar may affect the Company’s results of operations and period-to-period comparisons of its operating results. The Company does not currently engage in hedging or similar transactions to reduce these risks. For the three months ended March 31, 2014, the net impact to the Company’s results of operations from the effect of exchange rate fluctuations was immaterial. |
2_BASIC_AND_DILUTED_EARNINGS_P
2. BASIC AND DILUTED EARNINGS PER COMMON SHARE | 3 Months Ended |
Mar. 31, 2014 | |
Earnings Per Share [Abstract] | ' |
BASIC AND DILUTED EARNINGS PER COMMON SHARE | ' |
(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 the Company’s earnings. The total number of shares of the Company’s common stock subject to options, warrants, convertible preferred stock and restricted stock units that were excluded from computing diluted net loss per common share was approximately 10,086,000 and 6,915,000 shares for the three months ended March 31, 2014 and 2013, respectively, as their effect was anti-dilutive. |
3_GOODWILL_AND_OTHER_INTANGIBL
3. GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ' |
GOODWILL AND OTHER INTANGIBLE ASSETS | ' |
(3) GOODWILL AND OTHER INTANGIBLE ASSETS | |
Goodwill | |
The Company’s goodwill balance relates to the purchase of NTN Canada. The Company performed its quarterly qualitative assessment of goodwill impairment for NTN Canada as of March 31, 2014 and determined that there were no indications of impairment. | |
Other Intangible Assets | |
The Company has other intangible assets comprised predominantly of developed technology, trivia databases, trademarks, and acquired customer relationships. 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 $66,000 and $110,000 for the three months ended March 31, 2014 and 2013, respectively. |
4_SOFTWARE_DEVELOPMENT_COSTS
4. SOFTWARE DEVELOPMENT COSTS | 3 Months Ended |
Mar. 31, 2014 | |
Software Development Costs | ' |
SOFTWARE DEVELOPMENT COSTS | ' |
(4) 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 $222,000 and $245,000 for the three months ended March 31, 2014 and 2013, respectively. As of March 31, 2014 and December 31, 2013, approximately $827,000 and $934,000, 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 review of software development projects for the three months ended March 31, 2014, and determined to abandon certain 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. As a result, the Company recognized an impairment loss of $22,000 and $65,000 for the three months ended March 31, 2014 and 2013, respectively, which is included in selling, general and administrative expenses. |
5_FAIR_VALUE_OF_FINANCIAL_INST
5. FAIR VALUE OF FINANCIAL INSTRUMENTS | 3 Months Ended |
Mar. 31, 2014 | |
Fair Value Disclosures [Abstract] | ' |
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' |
(5) 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 months ended March 31, 2014. |
6_STOCKBASED_COMPENSATION
6. STOCK-BASED COMPENSATION | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||
STOCK-BASED COMPENSATION | ' | ||||||||
(6) 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 months ended March 31, 2014 and 2013 under the ASC No. 718 requirements. | |||||||||
Three months ended March 31, | |||||||||
2014 | 2013 | ||||||||
Weighted average risk-free rate | 1.24 | % | 0.57 | % | |||||
Weighted average volatility | 81.77 | % | 80.59 | % | |||||
Dividend yield | 0 | % | 0 | % | |||||
Expected life | 4.64 years | 4.57 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 for the Company. Stock-based compensation expense for the three months ended March 31, 2014 and 2013 was $52,000 and $26,000, respectively, and is included in selling, general and administrative expenses and credited to additional paid-in-capital. The Company granted stock options to purchase 850,000 and 330,000 shares during the three months ended March 31, 2014 and 2013, respectively. |
7_NOTES_PAYABLE
7. NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2014 | |
Debt Disclosure [Abstract] | ' |
NOTES PAYABLE | ' |
(7) NOTES PAYABLE | |
In May 2013, the Company entered into a financing agreement with a lender under which the Company may borrow up to $500,000 to purchase certain equipment. In August 2013, the maximum amount the Company may borrow was increased to $1,000,000, and in December 2013, the maximum amount the Company may borrow was further increased to $3,000,000. The Company may borrow amounts in tranches as needed. Each tranche bears interest at 8.32% per annum and is payable in 36 equal monthly installments. The Company granted the lender a first security interest in the equipment purchased with the funds borrowed under the agreement. Through March 31, 2014, the Company borrowed approximately $2,371,000. As of March 31, 2014, $1,900,000 remained outstanding, which reflects payments made through March 31, 2014. | |
In July 2011, the Company entered into an equipment financing agreement with a bank in the amount of $123,000, which is recorded in short-term and long-term notes payable on the accompanying consolidated balance sheet. The amounts borrowed were used to finance certain equipment purchases and other services related to the relocation of the Company’s Carlsbad, California office. The amount borrowed bears interest at 5.85% per annum and is collateralized by a first priority security interest in the equipment purchased. The amount borrowed is payable over a 36 month period in equal payments of $3,705, which includes interest, until fully paid in August 2014. As of March 31, 2014, approximately $18,000 remained outstanding. |
8_COMMITMENTS_AND_CONTINGENCIE
8. COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
COMMITMENTS AND CONTINGENCIES | ' |
(8) COMMITMENTS AND CONTINGENCIES | |
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 subject more activities to tax. 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 with certain states and provinces. As a result of those inquiries, the Company recorded a total net liability of $26,000 and $27,000 as of March 31, 2014 and December 31, 2013, 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 determined that the likelihood that the Company will be required to pay all or part of these assessments is reasonably possible. |
9_ACCUMULATED_OTHER_COMPREHENS
9. ACCUMULATED OTHER COMPREHENSIVE INCOME | 3 Months Ended |
Mar. 31, 2014 | |
Stockholders' Equity Note [Abstract] | ' |
ACCUMULATED OTHER COMPREHENSIVE INCOME | ' |
(9) 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 March 31, 2014 and December 31, 2013, $568,000 and $631,000 of foreign currency translation adjustments were recorded in accumulated other comprehensive income, respectively. |
10_RECENT_ACCOUNTING_PRONOUNCE
10. RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2014 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ' |
RECENT ACCOUNTING PRONOUNCEMENTS | ' |
(10) RECENT ACCOUNTING PRONOUNCEMENTS | |
In April 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360). This update provides guidance on recognizing and disclosing discontinued operations. The update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, which for the Company is January 1, 2015. The Company does not anticipate that adopting this update will have a material impact to the Company’s consolidated financial statements. | |
In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740). This update improves the reporting for unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The update is expected to reduce diversity in practice by providing guidance on the presentation of unrecognized tax benefits and will better reflect the manner in which an entity would settle at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. The update is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013, which for the Company is January 1, 2014. Adopting this update did not have a material impact on the Company’s consolidated financial statements. | |
In April 2013, the FASB issued ASU No. 2013-07, Presentation of Financial Statements (Topic 205) - Liquidation Basis of Accounting. This update addresses the requirements and methods of applying the liquidation basis of accounting and the disclosure requirements within ASC Topic 205 for the purpose of providing consistency among liquidating entities reporting under GAAP. Generally, this update provides guidance for the preparation of financial statements and disclosures when liquidation is imminent. This update is effective for periods beginning after December 15, 2013, which for the Company is January 1, 2014. Adopting this update did not have a material impact on the Company’s consolidated financial statements. | |
In March 2013, FASB issued ASU No. 2013-05, Foreign Currency Matters. The amendments in this update resolve the diversity in practice about whether current literature applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, the amendments in this update resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. This update is effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2013, which for the Company is January 1, 2014. Adopting this update did not have a material impact on the Company’s consolidated financial statements. |
11_CONCENTRATIONS_OF_RISK
11. CONCENTRATIONS OF RISK | 3 Months Ended |
Mar. 31, 2014 | |
Risks and Uncertainties [Abstract] | ' |
CONCENTRATIONS OF RISK | ' |
Significant Customer | |
For the three months ended March 31, 2014 and 2013, the Company generated approximately $2,646,000 and $1,489,000, respectively, of total revenue from Buffalo Wild Wings company-owned restaurants and Buffalo Wild Wings franchised restaurants combined. The Company generates such revenue through orders submitted by each of the individual restaurants. As of March 31, 2014 and December 31, 2013, approximately $542,000 and $259,000, respectively, was included in accounts receivable from Buffalo Wild Wings company-owned restaurants and Buffalo Wild Wings franchised restaurants. | |
Equipment Suppliers | |
The tablet used in the Company’s BEOND product line is manufactured by one unaffiliated third party. The Company currently purchases the BEOND tablets from unaffiliated third parties, and it currently purchases tablet playmaker equipment (consisting of cases and charging trays for the tablet playmaker) from an unaffiliated manufacturer located in China. The Company currently purchases its Classic playmakers from an unaffiliated manufacturer located in Taiwan pursuant to a supply agreement, the term of which automatically renews for one year periods. The Company currently does not have an alternative manufacturer of the tablet or an alternative device to the tablet or alternative manufacturing sources for its tablet playmaker equipment or Classic playmakers. | |
As of March 31, 2014 and December 31, 2013, approximately $141,000 and $32,000, respectively, were included in accounts payable or accrued expenses for equipment suppliers. The Company is committed to purchasing up to 30,000 tablets by December 31, 2014. |
12_GEOGRAPHICAL_INFORMATION
12. GEOGRAPHICAL INFORMATION | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
GEOGRAPHICAL INFORMATION | ' | ||||||||
(12) GEOGRAPHICAL INFORMATION | |||||||||
Geographic breakdown of the Company’s revenue for the three months ended March 31, 2014 and 2013 is as follows: | |||||||||
For the three months ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
United States | $ | 6,155,000 | $ | 5,771,000 | |||||
Canada | 263,000 | 345,000 | |||||||
Total revenue | $ | 6,418,000 | $ | 6,116,000 | |||||
Geographic breakdown of the Company’s long-term tangible assets as of March 31, 2014 and December 31, 2013 is as follows: | |||||||||
As of March 31, | |||||||||
2014 | 2013 | ||||||||
United States | $ | 3,405,000 | $ | 3,220,000 | |||||
Canada | 18,000 | 17,000 | |||||||
Total assets | $ | 3,423,000 | $ | 3,237,000 |
13_PRIVATE_PLACEMENT
13. PRIVATE PLACEMENT | 3 Months Ended |
Mar. 31, 2014 | |
Private Placement | ' |
PRIVATE PLACEMENT | ' |
(13) PRIVATE PLACEMENT | |
In November 2013, the Company completed a private placement of units (consisting of shares of common stock and warrants to purchase shares of common stock) to accredited investors. The purchase price of each unit was $0.40 for gross proceeds of $2,400,000. In the aggregate, the Company issued 6,000,000 shares of common stock and warrants to purchase 3,600,000 shares. The warrants have an exercise price of $0.40 per share and are exercisable beginning on the six-month anniversary of the issuance date and expire on the five-year anniversary of the issuance date. | |
Pursuant to the registration rights agreement entered into in connection with the private placement, the Company filed a registration statement with the Securities and Exchange Commission under the Securities Act of 1933 to register for resale by the investors the shares of common stock, and the shares of common stock issuable upon exercise of the warrants, sold to the investors in the private placement. The registration statement was declared effective on December 5, 2013. The Company is obligated to pay to each investor a monthly payment of 1% (not to exceed 10%) of the aggregate purchase price paid by such investor as liquidation damages if the registration statement ceases to be effective for more than a specified number of days. The Company has determined that the likelihood of the registration statement ceasing to be effective is remote. Accordingly, the Company did not record a loss contingency for the 1% liquidation damages payments. |
14_SUBSEQUENT_EVENTS
14. SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
(14) SUBSEQUENT EVENTS | |
On April 11, 2014, the Company entered into an underwriting agreement with Roth Capital Partners, LLC, as representative of several underwriters, relating to the issuance and sale of 11,100,000 shares of the Company’s common stock at a public offering price of $0.55 per share. | |
Under the terms of the underwriting agreement, the underwriters agreed to purchase the common stock at a discounted price of $0.5115 per share, representing a 7% discount to the public offering price. The Company also granted the underwriters a 30-day over-allotment option to purchase up to an additional 1,665,000 shares of common stock at the public offering price, less underwriting discounts, to cover over-allotments, if any, made in connection with the offering. | |
On April 16, 2014, the Company issued 11,100,000 shares of common stock to the underwriters and received gross proceeds of $6,105,000. On April 17, 2014, the underwriters exercised their over-allotment option to purchase an additional 1,665,000 shares of common stock, and the Company received additional gross proceeds of $915,750 for such issuance. The net proceeds to the Company from the offering are expected to be approximately $6.4 million, after deducting underwriting discounts and estimated offering expenses payable by the Company. |
1_BASIS_OF_PRESENTATION_Polici
1. BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
Description of Business | ' |
Description of Business | |
NTN Buzztime, Inc. (the “Company”), provides an entertainment and marketing services platform for hospitality venues that offer games, events, and entertainment experiences to their consumers. The Company’s interactive entertainment network helps its network subscribers to acquire, engage and retain their consumers. The Company generates revenues by charging subscription fees for its service to its network subscribers, leasing equipment (including tablets used in its Buzztime Entertainment on Demand, or BEOND, line and the cases and charging trays for such tablets) to certain network subscribers, hosting live trivia events, and from selling advertising aired on in-venue screens and as part of customized games. Currently, over 3,100 venues in the U.S. and Canada subscribe to the Company’s interactive entertainment network. | |
The Company was incorporated in Delaware in 1984 as Alroy Industries and changed its 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. | |
Basis of Accounting Presentation | ' |
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, 2013. The accompanying condensed balance sheet as of December 31, 2013 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 months ended March 31, 2014 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2014, 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 the Company’s 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 $24,000 and $7,000 in foreign currency gains for the three months ended March 31, 2014 and 2013, respectively, due to settlements of intercompany transactions, re-measurement of intercompany balances with the Company’s Canadian subsidiary and other non-functional currency denominated transactions, which are included in other income, net in the accompanying statements of operations. Exchange rate fluctuations between the United States dollar and Canadian dollar may affect the Company’s results of operations and period-to-period comparisons of its operating results. The Company does not currently engage in hedging or similar transactions to reduce these risks. For the three months ended March 31, 2014, the net impact to the Company’s results of operations from the effect of exchange rate fluctuations was immaterial. |
6_STOCKBASED_COMPENSATION_Tabl
6. STOCK-BASED COMPENSATION (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||
Weighted-Average Assumptions of Stock Based Compensation | ' | ||||||||
Three months ended March 31, | |||||||||
2014 | 2013 | ||||||||
Weighted average risk-free rate | 1.24 | % | 0.57 | % | |||||
Weighted average volatility | 81.77 | % | 80.59 | % | |||||
Dividend yield | 0 | % | 0 | % | |||||
Expected life | 4.64 years | 4.57 years |
12_GEOGRAPHICAL_INFORMATION_Ta
12. GEOGRAPHICAL INFORMATION (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Geographic breakdown of revenue | ' | ||||||||
For the three months ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
United States | $ | 6,155,000 | $ | 5,771,000 | |||||
Canada | 263,000 | 345,000 | |||||||
Total revenue | $ | 6,418,000 | $ | 6,116,000 | |||||
Geographic breakdown of long-term tangible assets | ' | ||||||||
As of March 31, | |||||||||
2014 | 2013 | ||||||||
United States | $ | 3,405,000 | $ | 3,220,000 | |||||
Canada | 18,000 | 17,000 | |||||||
Total assets | $ | 3,423,000 | $ | 3,237,000 |
1_BASIS_OF_PRESENTATION_Detail
1. BASIS OF PRESENTATION (Details Narrative) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Accounting Policies [Abstract] | ' | ' |
Gain (Loss) on foreign currency | $24 | $7 |
2_BASIC_AND_DILUTED_EARNINGS_P1
2. BASIC AND DILUTED EARNINGS PER COMMON SHARE (Details Narrative) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Earnings Per Share [Abstract] | ' | ' |
Options, warrants, convertible preferred stock and restricted stock units excluded from per share calculation | 10,086,000 | 6,915,000 |
3_GOODWILL_AND_OTHER_INTANGIBL1
3. GOODWILL AND OTHER INTANGIBLE ASSETS (Details Narrative) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
Amortization expense relating to all intangible assets | $66 | $110 |
4_SOFTWARE_DEVELOPMENT_COSTS_D
4. SOFTWARE DEVELOPMENT COSTS (Details Narrative) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Software Development Costs | ' | ' | ' |
Amortization expense related to capitalized software development costs | $222 | $245 | ' |
Capitalized software costs were not subject to amortization | 827 | ' | 934 |
Software Impairment losses | $22 | $65 | ' |
6_STOCKBASED_COMPENSATION_Deta
6. STOCK-BASED COMPENSATION (Details) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Summary of weighted-average assumptions used for grants issued | ' | ' |
Weighted-average risk-free rate | 1.24% | 0.57% |
Weighted-average volatility | 81.77% | 80.59% |
Dividend yield | 0.00% | 0.00% |
Expected life | '4 years 7 months 21 days | '4 years 6 months 26 days |
6_STOCK_BASED_COMPENSATION_Det
6. STOCK BASED COMPENSATION (Details Narrative) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Stock Based Compensation | ' | ' |
Stock-based compensation expense | $52 | $26 |
Stock options granted | 850 | 330 |
7_NOTES_PAYABLE_Details_Narrat
7. NOTES PAYABLE (Details Narrative) (USD $) | Mar. 31, 2014 |
In Thousands, unless otherwise specified | |
Financing Agreement | ' |
Maximum borrowing capacity | $3,000 |
Amount outstanding | 1,900 |
Equipment Financing | ' |
Maximum borrowing capacity | 123 |
Amount outstanding | $18 |
8_COMMITMENTS_AND_CONTINGENCIE1
8. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
Sales tax payable increase | $26 | $27 |
9_ACCUMULATED_OTHER_COMPREHENS1
9. ACCUMULATED OTHER COMPREHENSIVE INCOME (Details Narrative) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Stockholders' Equity Note [Abstract] | ' | ' |
Foreign currency translation adjustments recorded in accumulated other comprehensive income | $568 | $631 |
11_CONCENTRATIONS_OF_RISK_Deta
11. CONCENTRATIONS OF RISK (Details Narrative) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Accounts receivable from customer | $1,115 | ' | $641 |
Purchase commitment | 141 | ' | 32 |
Revenues | 6,418 | 6,116 | ' |
One Customer | Accounts Receivable | ' | ' | ' |
Accounts receivable from customer | 542 | ' | 259 |
One Customer | Revenues | ' | ' | ' |
Revenues | $2,646 | $1,489 | ' |
12_GEOGRAPHICAL_INFORMATION_De
12. GEOGRAPHICAL INFORMATION (Details-Revenues) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenue | $6,418 | $6,116 |
United States | ' | ' |
Revenue | 6,155 | 5,771 |
Canada | ' | ' |
Revenue | $263 | $345 |
12_GEOGRAPHICAL_INFORMATION_De1
12. GEOGRAPHICAL INFORMATION (Details-Assets) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Long-term tangible assets | $3,423 | $3,237 |
United States | ' | ' |
Long-term tangible assets | 3,405 | 3,220 |
Canada | ' | ' |
Long-term tangible assets | $18 | $17 |