Exhibit 99.1
NTN Buzztime, Inc. Announces Financial Results for Third Quarter 2006
| • | Consolidated revenues for the quarter improve by 5% over prior year |
| • | Core business grew 8% year on year |
| • | Cash balance increased by $1,251,000 during the third quarter |
CARLSBAD, Calif., Nov. 8 — NTN Buzztime, Inc. (Amex: NTN), today announced results for the three and nine months ended September 30, 2006. NTN will host a live webcast and conference call today at 4:30 pm EST to discuss the results (see conference call details below).
Consolidated Results
Consolidated revenues for the third quarter of 2006 were $10,938,000, an improvement of $513,000 or 5% compared to revenues of $10,425,000 for the third quarter of 2005. The company reported a consolidated net loss of $55,000, or $0.00 per common share for the third quarter of 2006, compared to net income of $246,000, or $0.00 per common share for the third quarter of 2005. The consolidated net loss for the third quarter of 2006 reflects the combination of net income of $327,000 from the NTN Entertainment Division, which is composed of the Buzztime iTV Network and Buzztime Distribution segments, and a net loss of $382,000 from the NTN Hospitality Division, which is composed of the NTN Wireless and Software Solutions segments.
Third quarter 2006 results include a charge of $278,000 for stock option expense related to the adoption of SFAS 123R effective January 1, 2006; no such charge was taken during the third quarter of 2005.
Consolidated Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges including stock-based compensation; see reconciliation of Adjusted EBITDA to US GAAP Net Income or Loss below) for the third quarter of 2006 was $1,348,000, an increase of $37,000 compared to Adjusted EBITDA of $1,311,000 for the third quarter of 2005.
Cash and cash equivalents increased by $1,251,000 during the third quarter of 2006.
“NTN Buzztime’s cash balance stood at nearly $8 million on September 30, 2006,” said Dario L. Santana, Chief Executive Officer. “This solid financial position provides us with the foundation we need to execute on our growth vision.”
Entertainment Division Results
The Entertainment Division revenues for the third quarter of 2006 were $8,332,000, an increase of $432,000 or 6% compared to the third quarter of 2005. The Entertainment Division net income for the third quarter of 2006 was $327,000, an increase of $21,000 compared to the third quarter of 2005. The Entertainment Division includes the Buzztime iTV Network and Buzztime Distribution (formerly known as Buzztime Entertainment) segments.
The Buzztime iTV Network revenues for the third quarter of 2006 were $7,978,000, an increase of $593,000 or 8% compared to the third quarter of 2005. The Network’s world-wide site count reached a new high watermark of 4,093 sites at the end of the quarter. The September 30, 2006 site count consisted of 4,042 sites in North America and 51 sites in the UK. The Buzztime iTV Network net income for the third quarter of 2006 was $518,000, an increase of $43,000 compared to the third quarter of 2005.
“We refer to the Buzztime iTV Network as our core business; it is our largest business and accounts for nearly three quarters of consolidated revenues.” said Santana. “During the coming quarters, we expect to roll out new growth initiatives aimed at this business and expect to see acceleration in site growth across our network resulting from those initiatives – our long-term vision is to reach 10,000 sites throughout North America and the UK.”
The Buzztime Distribution revenues for the third quarter of 2006 were $354,000, a decrease of $161,000 compared to the third quarter of 2005. The Buzztime Distribution net loss for the third quarter of 2006 was $191,000, an increase in net loss of $22,000 compared to the third quarter of 2005.
“Buzztime Distribution and in particular cable television deployment represents an important growth opportunity for our company,” said Santana. “NTN Buzztime will continue to invest in retaining its leadership position in this space and expects to capitalize on this opportunity when cable operators broadly deploy the middleware necessary to support interactive games.”
Hospitality Division Results
The Hospitality Division revenues for the third quarter of 2006 were $2,606,000, representing an increase of $81,000 compared to the third quarter of 2005. The Hospitality Division net loss for the third quarter of 2006 of $382,000 compares to a net loss of $60,000 for the third quarter of 2005. The Hospitality division consists of two segments, NTN Wireless and NTN Software Solutions.
The NTN Wireless segment had revenues of $1,483,000 and net income of $47,000 for the third quarter of 2006, representing a revenue increase of $214,000 and a reduction in net income of $31,000 compared to the third quarter of 2005. The Software Solutions segment had revenues of $1,123,000 and a net loss of $429,000 for the third quarter of 2006, representing a revenue decrease of $133,000 and an increase in the net loss of $291,000 compared to the third quarter of 2005.
“We remain committed to the sale of these operations,” said Santana. “In the last few months, we intensified our efforts to find buyers and earlier in the quarter engaged an investment advisor with a solid track record in these types of transactions.”
Guiding Principles – An Update from the CEO
“During the last quarterly update, I introduced four principles that would guide all future actions of the organization; these four principles are increased focus on core business, customer intimacy, increased ROI and improved brand equity,” said Santana. “Since then, the management team at NTN Buzztime has developed a strategic roadmap, which is consistent with these principles and is expected to drive sustained growth in 2007 and beyond. Key initiatives and expected benefits of this strategy include:
| • | Grow the Buzztime player community through media promotions, tournaments, prizing and rewards |
| • | Increase gameplay by improving the ‘look & feel’ and the entertainment value of our content |
| • | Improve value proposition for our sites through the creation of a field promotions effort, which will provide marketing support to our venues and offset costs by generating local advertising and tournament play revenue |
| • | Increase new Buzztime iTV Network sales and reduce churn through new product and price segmentation; broaden our offering |
| • | Grow national account sales by promoting customized solutions for major restaurant chains |
| • | Increase national and regional advertising revenue by implementing best practices in alternative media advertising sales – recently hired co-founder of AccentHealth as consultant (see November 2, 2006 announcement) |
| • | Reduce operational costs in the short term through the introduction of lower-cost hardware and the launch of a strategic sourcing initiative; in the longer term, decrease transport costs and reduce business and network complexity.” |
Conference Call
A conference call to review the third quarter earnings is scheduled for today at 4:30 pm EST. Investors may access the teleconference call by dialing (866) 393-3594 approximately 15 minutes prior to the starting time and asking to be connected to the NTN Buzztime Third Quarter Earnings Conference Call. International callers please dial (763) 416-8576. The conference ID number is 1176018. The call is also being simultaneously webcast and can be accessed at the NTN Buzztime web site at www.buzztime.com.
A replay will be available immediately following the conclusion of the conference call through November 22, 2006 at 5:00 p.m. EST. Please dial (800) 642-1687 to access the replay. International callers please dial (706) 645-9291.
An archive of the webcast will also be available on the Company’s web site atwww.buzztime.com.
About NTN Buzztime, Inc.
Based in Carlsbad, CA, NTN Buzztime, Inc. has been a leader in interactive television entertainment for over 20 years and distributes its Play Along TV games and technology through numerous platforms including its own Buzztime iTV Network, which is available on TVs in over 4,000 restaurants, sports bars and pubs throughout North America and the United Kingdom, as well as cable TV, satellite TV, mobile phones, electronic games and books. For more information, please see www.buzztime.com.
NTN Buzztime cautions you that statements included in this press release that are not a description of historical facts are forward-looking statements that involve risks, uncertainties, assumptions and other factors, which if they do not materialize or prove correct, could cause NTN Buzztime’s results to differ materially from historical results or those expressed or implied by such forward-looking statements. These statements may include, among others, plans, strategies and objectives of management for future operations; any statements regarding proposed new products or developments; any statements regarding future economic conditions or financial or operating performance; statements of belief, and any statements of assumptions underlying any of the foregoing. The potential risks and uncertainties that could cause actual growth and results to differ materially include, but are not limited to: the rapidly changing and competitive nature of the interactive entertainment and game industry, as well as the wireless paging and software applications industries, customer acceptance and adoption of the company’s products and technology, unfavorable legislative and regulatory changes in the laws and regulations that govern games of skill and chance, risks related to ownership and enforcement of intellectual
property, changes in domestic and international market and political conditions, and other risks and uncertainties more fully described in NTN Buzztime’s public filings with the Securities and Exchange Commission, available at www.sec.gov. NTN Buzztime, Inc. does not undertake to publicly update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it was made, even if experience or future changes show that the indicated results or events will not be realized.
Buzztime and Play-Along TV® are registered trademarks of NTN Buzztime, Inc.
CONTACT:
Kendra Berger
Chief Financial Officer
NTN Buzztime, Inc.
(760) 438-7400
Kendra.Berger@ntn.com
SOURCE NTN Buzztime, Inc.
CONTACT: Kendra Berger, Chief Financial Officer of NTN Buzztime, Inc., +1-760-438-7400, Kendra.Berger@ntn.com/
Web site: http://www.buzztime.com/
Web site: http://www.ntnbuzztime.com/
NTN BUZZTIME, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(thousands, except share data)
September 30, 2006 | December 31, 2005 | |||||||
| (Unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 7,997 | $ | 5,982 | ||||
Restricted cash | 59 | 69 | ||||||
Accounts receivable, net | 2,833 | 3,630 | ||||||
Inventory | 376 | 371 | ||||||
Investments available-for-sale | 262 | 258 | ||||||
Deposits on broadcast equipment | 553 | 799 | ||||||
Deferred costs | 1,148 | 1,118 | ||||||
Prepaid expenses and other current assets | 856 | 955 | ||||||
Total current assets | 14,084 | 13,182 | ||||||
Broadcast equipment and fixed assets, net | 6,952 | 8,085 | ||||||
Software development costs, net | 842 | 706 | ||||||
Deferred costs | 1,041 | 1,256 | ||||||
Goodwill | 3,658 | 3,658 | ||||||
Intangible assets, net | 2,383 | 2,946 | ||||||
Other assets | 183 | 185 | ||||||
Total assets | $ | 29,143 | $ | 30,018 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 839 | $ | 725 | ||||
Accrued expenses | 1,336 | 1,799 | ||||||
Sales tax payable | 909 | 714 | ||||||
Accrued salaries | 819 | 643 | ||||||
Accrued vacation | 584 | 619 | ||||||
Income taxes payable | 68 | 147 | ||||||
Obligations under capital leases - current portion | 412 | 436 | ||||||
Deferred revenue | 2,317 | 2,024 | ||||||
Deferred revenue — Buzztime | 380 | 632 | ||||||
Revolving line of credit | — | 700 | ||||||
Total current liabilities | 7,665 | 8,439 | ||||||
Obligations under capital leases, excluding current portion | 55 | 366 | ||||||
Deferred revenue | 298 | 321 | ||||||
Total liabilities | 8,018 | 9,126 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Series A 10% cumulative convertible preferred stock | 1 | 1 | ||||||
Common stock | 271 | 268 | ||||||
Additional paid-in capital | 111,246 | 109,860 | ||||||
Accumulated deficit | (90,623 | ) | (88,788 | ) | ||||
Accumulated other comprehensive income (loss) | 231 | (449 | ) | |||||
Total shareholders’ equity | 21,126 | 20,892 | ||||||
Total liabilities and shareholders’ equity | $ | 29,143 | $ | 30,018 | ||||
NTN BUZZTIME, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(thousands, except share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenues | $ | 10,938 | $ | 10,425 | $ | 32,856 | $ | 29,561 | ||||||||
Direct operating costs (includes depreciation of $985 and $821 for the three months ended September 30, 2006 and 2005, respectively, and $2,926 and $2,386 for the nine months ended September 30, 2006 and 2005, respectively) | 3,579 | 3,249 | 10,778 | 10,107 | ||||||||||||
Selling, general and administrative | 6,700 | 6,396 | 21,195 | 19,624 | ||||||||||||
Litigation, legal and professional fees | 454 | 267 | 1,168 | 837 | ||||||||||||
Depreciation and amortization (excluding depreciation included in direct costs) | 205 | 212 | 622 | 632 | ||||||||||||
Research and development | 56 | 70 | 178 | 195 | ||||||||||||
Non-cash charge related to software product sale | — | — | — | 276 | ||||||||||||
Total operating expenses | 10,994 | 10,194 | 33,941 | 31,671 | ||||||||||||
Operating income (loss) | (56 | ) | 231 | (1,085 | ) | (2,110 | ) | |||||||||
Other income (expense): | ||||||||||||||||
Interest income | 45 | 20 | 94 | 71 | ||||||||||||
Interest expense | (19 | ) | (55 | ) | (104 | ) | (128 | ) | ||||||||
Impairment on investments available-for-sale | — | — | (652 | ) | — | |||||||||||
Total other income (expense) | 26 | (35 | ) | (662 | ) | (57 | ) | |||||||||
Income (loss) from operations before income taxes | (30 | ) | 196 | (1,747 | ) | (2,167 | ) | |||||||||
Provision (benefit) for income taxes | 25 | (50 | ) | 88 | 26 | |||||||||||
Net income (loss) | $ | (55 | ) | $ | 246 | $ | (1,835 | ) | $ | (2,193 | ) | |||||
Net income (loss) per share: | ||||||||||||||||
Basic and diluted | $ | (0.00 | ) | $ | 0.00 | $ | (0.03 | ) | $ | (0.04 | ) | |||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 54,427 | 53,604 | 54,173 | 53,411 | ||||||||||||
Diluted | 54,427 | 60,632 | 54,173 | 53,411 | ||||||||||||
NTN BUZZTIME, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(thousands, except share data)
| Nine Months Ended September 30, | ||||||||
| 2006 | 2005 | |||||||
Cash flows from operating activities: | ||||||||
Net loss from operations | $ | (1,835 | ) | $ | (2,193 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 3,548 | 3,018 | ||||||
Provision for doubtful accounts | 583 | 801 | ||||||
Non-cash stock-based compensation | 912 | 239 | ||||||
Impairment on investments | 652 | — | ||||||
Loss from disposition of equipment | 146 | 216 | ||||||
Non-cash charge related to software product sale | — | 276 | ||||||
Provision for sales returns | — | (1 | ) | |||||
Changes in assets and liabilities: | ||||||||
Restricted cash | 10 | — | ||||||
Accounts receivable | 214 | (791 | ) | |||||
Inventory | (5 | ) | 96 | |||||
Deferred costs | 185 | (498 | ) | |||||
Prepaid expenses and other assets | 99 | 12 | ||||||
Accounts payable and accrued expenses | 30 | (493 | ) | |||||
Income taxes payable | (79 | ) | (72 | ) | ||||
Deferred revenue | 19 | 1,025 | ||||||
Net cash provided by operating activities | 4,479 | 1,635 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (920 | ) | (3,241 | ) | ||||
Software development expenditures | (339 | ) | (321 | ) | ||||
Deposits on broadcast equipment | (620 | ) | (136 | ) | ||||
Net cash used in investing activities | (1,879 | ) | (3,698 | ) | ||||
Cash flows from financing activities: | ||||||||
Principal payments on capital leases | (335 | ) | (266 | ) | ||||
Principal payments on revolving line of credit | (700 | ) | — | |||||
Proceeds from exercise of stock options and warrants | 477 | 406 | ||||||
Principal payments on equipment notes payable | — | (541 | ) | |||||
Borrowings against revolving line of credit | — | 700 | ||||||
Net cash (used in) provided by financing activities | (558 | ) | 299 | |||||
Net increase (decrease) in cash and cash equivalents | 2,042 | (1,764 | ) | |||||
Effect of exchange rate on cash | (27 | ) | 28 | |||||
Cash and cash equivalents at beginning of period | 5,982 | 6,710 | ||||||
Cash and cash equivalents at end of period | $ | 7,997 | $ | 4,974 | ||||
Adjusted EBITDA
A detailed schedule reconciling net income and loss, the nearest GAAP measure, to Adjusted EBITDA is included in the supplemental tables below. Adjusted EBITDA is included herein because management believes that certain investors find it to be a useful tool for measuring a company’s operating performance. Adjusted EBITDA should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for, or superior to, GAAP results. Non-GAAP financial information such as Adjusted EBITDA, by its nature, departs from traditional accounting conventions; accordingly, its use can make it difficult to compare NTN’s current results with results from other reporting periods and with the results of other companies.
The following table reconciles our net loss per GAAP to Adjusted EBITDA (in thousands):
Adjusted EBITDA Calculation
| Three Months Ended September 30, | ||||||||
Adjusted EBITDA Calculation (in 000’s) | 2006 | 2005 | ||||||
Net income (loss) per GAAP | $ | (55 | ) | $ | 246 | |||
Interest expense (net) | (26 | ) | 35 | |||||
Depreciation and amortization | 1,190 | 1,033 | ||||||
Non-cash stock-based compensation and payments | 214 | 47 | ||||||
Income taxes | 25 | (50 | ) | |||||
Adjusted EBITDA | $ | 1,348 | $ | 1,311 | ||||