Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 06, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | NTN BUZZTIME INC | |
Entity Central Index Key | 748,592 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 92,439,174 | |
Trading Symbol | NTN | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 3,549 | $ 3,223 |
Accounts receivable, net of allowances of $210 and $266, respectively | 769 | 919 |
Site equipment to be installed | 3,763 | 3,990 |
Prepaid expenses and other current assets | 1,054 | 978 |
Total current assets | 9,135 | 9,110 |
Fixed assets, net | 3,799 | 3,915 |
Software development costs, net of accumulated amortization of $2,498 and $2,381, respectively | 924 | 943 |
Deferred costs | 1,300 | 1,328 |
Goodwill | 972 | 909 |
Intangible assets, net | 67 | 79 |
Other assets | 119 | 124 |
Total assets | 16,316 | 16,408 |
Current Liabilities: | ||
Accounts payable | 171 | 211 |
Accrued compensation | 941 | 1,024 |
Accrued expenses | 647 | 670 |
Sales taxes payable | 129 | 192 |
Income taxes payable | 23 | 22 |
Current portion of long-term debt (Note 4) | 3,044 | 1,072 |
Current portion of obligations under capital leases | 79 | 78 |
Deferred revenue | 1,275 | 1,214 |
Other current liabilities | 534 | 639 |
Total current liabilities | 6,843 | 5,122 |
Long-term debt | 5,473 | 6,366 |
Long-term obligations under capital leases | 138 | 138 |
Deferred revenue, excluding current portion | 325 | 393 |
Deferred rent | 501 | $ 541 |
Other liabilities | 3 | |
Total liabilities | 13,283 | $ 12,560 |
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, 2016 and December 31, 2015 | 1 | 1 |
Common stock, $.005 par value, 168,000 shares authorized at March 31, 2016 and December 31, 2015; 92,439 shares issued and outstanding at March 31, 2016 and December 31, 2015 | 462 | 462 |
Treasury stock, at cost, 503 shares at March 31, 2016 and December 31, 2015 | (456) | (456) |
Additional paid-in capital | 128,869 | 128,756 |
Accumulated deficit | (126,128) | (125,087) |
Accumulated other comprehensive income (Note 5) | 285 | 172 |
Total shareholders' equity | 3,033 | 3,848 |
Total liabilities and shareholders' equity | $ 16,316 | $ 16,408 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts - accounts receivable | $ 210 | $ 266 |
Software accumulated amortization | $ 2,498 | $ 2,381 |
Preferred Stock Series A par value per share | $ 0.005 | $ 0.005 |
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 | $ 0.005 | $ 0.005 |
Common stock shares authorized | 168,000,000 | 168,000,000 |
Common stock shares issued | 92,439,000 | 92,439,000 |
Common stock shares outstanding | 92,439,000 | 92,439,000 |
Treasury stock shares | 503,000 | 503,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues | ||
Subscription revenue | $ 4,374 | $ 4,200 |
Sales-type lease revenue | 396 | 840 |
Other revenue | 712 | 686 |
Total revenue | 5,482 | 5,726 |
Operating expenses: | ||
Direct operating costs (includes depreciation and amortization of $643 and $580, respectively) | 2,036 | 2,649 |
Selling, general and administrative | 4,200 | 5,162 |
Depreciation and amortization (excluding depreciation and amortization included in direct operating costs) | 114 | 121 |
Total operating expenses | 6,350 | 7,932 |
Operating loss | (868) | (2,206) |
Other expense, net | (154) | (43) |
Loss before income taxes | (1,022) | (2,249) |
Provision for income taxes | (19) | (14) |
Net loss | $ (1,041) | $ (2,263) |
Net loss per common share - basic and diluted | $ (0.01) | $ (0.02) |
Weighted average shares outstanding - basic and diluted | 91,936 | 91,876 |
Comprehensive loss | ||
Net loss | $ (1,041) | $ (2,263) |
Foreign currency translation adjustment | 113 | (153) |
Total comprehensive loss | $ (928) | $ (2,416) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
Depreciation and amortization - part of Direct operating costs | $ 643 | $ 580 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows used in operating activities: | ||
Net loss | $ (1,041) | $ (2,263) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 757 | 701 |
Provision for doubtful accounts | 24 | (39) |
Excess and obsolete site equipment to be installed expense | 25 | 163 |
Stock-based compensation | 113 | $ 99 |
Amortization of debit issuance costs | $ 10 | |
Issuance of common stock to consultant in lieu of cash payment | $ 1 | |
Loss from disposition of equipment | $ 5 | 1 |
Changes in assets and liabilities: | ||
Accounts receivable | 126 | 1,459 |
Site equipment to be installed | (115) | 154 |
Prepaid expenses and other assets | (76) | 100 |
Accounts payable and accrued liabilities | (209) | 312 |
Income taxes payable | (1) | (13) |
Deferred costs | 29 | (70) |
Deferred revenue | (7) | 518 |
Deferred rent | (40) | (36) |
Other liabilities | (104) | (92) |
Net cash used in (provided by) operating activities | (504) | 995 |
Cash flows used in investing activities: | ||
Capital expenditures | (177) | (215) |
Software development expenditures | (99) | (222) |
Net cash used in investing activities | (276) | (437) |
Cash flows provided by (used in) financing activities: | ||
Principal payments on capital lease | (21) | (7) |
Proceeds from long-term debt | 2,114 | 74 |
Payments on long-term debt | (1,035) | $ (699) |
Debt issuance costs on long-term debt | (5) | |
Net cash provided by (used in) financing activities | 1,053 | $ (632) |
Net increase (decrease) in cash and cash equivalents | 273 | (74) |
Effect of exchange rate on cash | 53 | 52 |
Cash and cash equivalents at beginning of year | 3,223 | 7,185 |
Cash and cash equivalents at end of year | 3,549 | 7,163 |
Supplemental disclosures of cash flow information: Cash paid during the period for: | ||
Interest | 84 | 103 |
Income taxes | 20 | 27 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Site equipment transferred to fixed assets | 317 | 240 |
Equipment acquired under capital lease | $ 22 | $ 160 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | (1) BASIS OF PRESENTATION Description of Business NTN Buzztime, Inc. (the Company) delivers interactive entertainment and innovative dining technology to bars and restaurants in North America. Customers license the Companys customizable solution to differentiate themselves via competitive fun by offering guests trivia, card, sports and arcade games, nationwide competitions, and self-service dining features including dynamic menus, touchscreen ordering and secure payment. The Companys platform can improve operating efficiencies, create connections among the players and venues and amplify guests positive experiences. Built on an extended network platform, the Companys interactive entertainment system has historically allowed multiple players to interact at the venue, and now also enables competition between venues, referred to as massively multiplayer gaming. The Companys current platform, which it refers to as Buzztime Entertainment On Demand, or BEOND, was first introduced as a pilot program in December 2012, was expanded commercially during 2013, and the expansion was scaled during 2014. The Company continues to enhance its network architecture and the BEOND tablet platform and player engagement paradigms. The Company also continues to support its legacy network product line, which it refers to as Classic. The Company currently generates revenue by charging subscription fees for its service to its network subscribers, by leasing equipment (including tablets used in its BEOND tablet platform and the cases and charging trays for the tablets) to certain network subscribers, by hosting live trivia events, and by selling advertising aired on in-venue screens and as part of customized games. In 2014, the Company began offering pay-to-play premium content to certain customers via its BEOND tablet platform, such as paid arcade. During the second quarter of 2015, the Company made a strategic change in its premium content model by making the arcade offering available on both a free-to-consumer and pay-to-play basis. This change required the Company to delay the general availability of the pay-to-play arcade offering as it retooled the offerings content, workflow and positioning. As a result, during 2015, the Company generated additional subscription fee revenue from those venues offering free-to-consumer arcade. The Company anticipates rolling out the new pay-to-play arcade offering during the second quarter of 2016. Currently, approximately 2,900 venues in the U.S. and Canada subscribe to the Companys interactive entertainment network, of which approximately 65% are using the BEOND tablet platform. The Company was incorporated in Delaware in 1984 as Alroy Industries and changed its corporate name to NTN Communications, Inc. in 1985. The Company changed its name to NTN Buzztime, Inc. in 2005 to better reflect the growing role of the Buzztime consumer brand. 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 Companys annual report on Form 10-K for the fiscal year ended December 31, 2015. The accompanying condensed balance sheet as of December 31, 2015 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, 2016 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2016, or any other period. Reclassifications The Company reclassified the condensed consolidated statement of cash flows for the three months ended March 31, 2015 to conform to the 2016 presentation. Reclassifications had no impact on net loss or cash flows. |
Basic and Diluted Earnings Per
Basic and Diluted Earnings Per Common Share | 3 Months Ended |
Mar. 31, 2016 | |
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 Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) No. 260, Earnings per Share |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Share-based Compensation [Abstract] | |
Stock-Based Compensation | (3) STOCK-BASED COMPENSATION The Companys stock-based compensation plans include the NTN Buzztime, Inc. 2004 Performance Incentive Plan (the 2004 Plan), the NTN Buzztime, Inc. Amended 2010 Performance Incentive Plan (the Amended 2010 Plan) and the NTN Buzztime, Inc. 2014 Inducement Plan (the 2014 Plan). The 2004 Plan expired in September 2009. From and after the date it expired, no awards could be granted under that plan and all awards that had been granted under that plan before it expired are governed by that plan until they are exercised or expire in accordance with that plans terms. The Amended 2010 Plan provides for the grant of up to 12,000,000 share-based awards and expires in February 2020. As of March 31, 2016, approximately 7,160,000 of share-based awards were available to be issued under the Amended 2010 Plan. The 2014 Plan, which provides for the grant of up to 4,250,000 share-based awards to a new employee as an inducement material to the new employee entering into employment with the Company, was approved by the Nominating and Corporate Governance/Compensation Committee of the Companys Board of Directors (the Committee) in September 2014 in connection with the appointment of Ram Krishnan as the Companys Chief Executive Officer. As of March 31, 2016, there were no share-based awards available to be granted under the 2014 Plan. The Companys stock-based compensation plans are administered by the Committee, which selects persons to receive awards and determines the number of shares subject to each award and the terms, conditions, performance measures, if any, and other provisions of the award. The Company records stock-based compensation in accordance with ASC No. 718 , Compensation Stock Compensation Equity Equity-Based Payments to Non-Employees. 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 Companys history and expectation of dividend payouts. The following weighted-average assumptions were used for grants issued during the three months ended March 31, 2016 and 2015 under the ASC No. 718 requirements. Three months ended March 31, 2016 2015 Weighted average risk-free rate 1.26 % 1.17 % Weighted average volatility 110.71 % 81.38 % Dividend yield 0.00 % 0.00 % Expected life 6.02 years 4.45 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, 2016 and 2015 was $113,000 and $99,000, respectively, and is expensed in selling, general and administrative expenses and credited to additional paid-in-capital. The Company granted stock options to purchase 775,000 and 785,000 shares of common stock during the three months ended March 31, 2016 and 2015, respectively. Stock options issued under all of the Companys stock-based compensation plans may be exercised on a net-exercise arrangement, where shares of common stock equal to the value of the amount of the exercise price of the stock options being exercised are withheld as payment of the exercise price instead of cash. Under such net-exercise arrangements, for the three months ended March 31, 2015, options to purchase approximately 34,000 shares of common stock were exercised and approximately 8,000 shares of common stock were issued. No options were exercised and paid with cash during the three months ended March 31, 2015. During the three months ended March 31, 2016, no options were exercised. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt | (4) DEBT Revolving Line of Credit In April 2015, the Company entered into a loan and security agreement (the Original Loan Agreement) with East West Bank (the Lender), pursuant to which, the Company may request advances in an aggregate outstanding amount at any time up to the lesser of $7,500,000, which is referred to as the revolving line, or an amount equal to its borrowing base, in each case, less the aggregate outstanding principal amount of prior advances. So long as there is no event of default, the Company may make a one-time request to increase the revolving line by up to $2,500,000, which the Lender may accept or decline. In March 2016, the Company and the Lender entered into an amendment (the Amendment) to the Original Loan Agreement. The Original Loan Agreement as amended by the Amendment is referred to as the Amended Loan Agreement. Under the Amended Loan Agreement, through March 31, 2017, the Company may request advances in an aggregate outstanding amount at any time up to the lesser of (a) the revolving line (or $7,500,000) or (b) the sum of $2,000,000 (which the Company refers to as the sublimit) plus the amount equal to the Companys borrowing base, in each case, less the aggregate outstanding principal amount of prior advances. On March 31, 2017, the sublimit becomes zero. If the aggregate amount of advances as of March 31, 2017 exceeds the lesser of the revolving line or the amount equal to the Companys borrowing base, then it must pay the Lender the amount of such excess. Under the Original Loan Agreement, the Companys borrowing base was, as of the date of determination, an amount equal to the product of: (a) the average monthly recurring revenue for the immediately preceding three months; times (b) one plus the average churn rate for the immediately preceding three months (not to exceed zero); times (c) 300%. The churn rate, with respect to any month, is the quotient of the Companys monthly net revenue change calculated with respect to such month, divided by its monthly revenue from subscriptions for the month. The manner in which the borrowing base is determined is unchanged under the Amendment, except that the monthly recurring revenue is limited to all recurring subscription revenue attributable to software that the Company sold or licensed and all recurring revenue relating to services it delivered and 50% of all revenue attributable to the Companys Stump product line. In addition, under the Amended Loan Agreement, the Company is required to meet a minimum adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), target and churn rate targets, in each case, as specified in the Amended Loan Agreement. Adjusted EBITDA is the sum (a) net profit (or loss), after provision for taxes, plus (b) interest expense, plus (c) to the extent deducted in the calculation of net profit (or loss), depreciation expense and amortization expense, plus (d) income tax expense, plus (e) non-cash stock compensation expenses, plus (f) other non-cash expenses and charges, plus (g) to the extent approved by the Lender, other one-time charges, plus (h) to the extent approved by the Lender, any losses arising from the sale, exchange, transfer or other disposition of assets not in the ordinary course of business. Under the Original Loan Agreement, the Adjusted EBITDA target was measured as of the last day of each fiscal quarter with respect to the immediately prior six-month period. Under the Amended Loan Agreement, the Adjusted EBITDA target is measured as of the last day of each fiscal quarter with respect to the immediately prior three-month period. The churn rate targets, which were unchanged in the Amendment, are measured on a monthly and trailing three-month basis. The Company met the Adjusted EBITDA and the trailing three-month churn rate targets as of the quarter ended March 31, 2016. The Company did not meet the monthly churn rate for the month ended January 31, 2016, which constituted an event of default under the Original Loan Agreement, however, the Lender waived that event of default. The Amended Loan Agreement requires: (a) that the Company maintain a balance on deposit with the Lender equal to (i) on March 31, 2017, 100% of the aggregate outstanding principal amount of the advances at such time, and (ii) at all times after March 31, 2017, an amount determined by the Lender based on the Companys 2017 financial projections; and (b) that the sum of the following be not less than $2,000,000: (i) the aggregate amount of unrestricted cash that the Company holds in accounts maintained with the Lender and (ii) the amount available to the Company under the Amended Loan Agreement. Under the Amended Loan Agreement, all then-outstanding advances are due on December 31, 2017 (under the Original Loan Agreement, the due date was April 14, 2018). On or before March 31, 2017, advances will bear interest, at the Companys option, at the rate of either (A) a variable rate per annum equal to the prime rate as set forth in The Wall Street Journal As of March 31, 2016, the Company requested and received advances in the aggregate of $6,500,000, all of which were advanced at the LIBOR rate plus the applicable margin with a three-month interest period. Each time the interest period expired on these advances, the Company elected to renew the advance at the LIBOR rate plus the applicable margin with a three-month interest period. Prior to the Amendment, the interest rate on advances ranged from 4.313% to 4.688% per annum. The interest rate on advances since the Amendment have ranged from 6.125% to 6.188% per annum. As of March 31, 2016, $6,500,000 remained outstanding under this credit facility, of which, $2,000,000 is recorded in current portion of long-term debt on the accompanying consolidated balance sheet. The Company had approximately $103,000 available to borrow as of March 31, 2016 based on its borrowing base calculated as of that date. The Company used approximately $3,381,000 of the total amount borrowed under this credit facility to pay down existing indebtedness that was owed to an equipment lender (see Equipment Notes Payable, below). Under the Amended Loan Agreement, the amount that the Company may owe under its current credit facility with that equipment lender is not limited to any specified amount. In addition, with the Lenders consent, the Company may incur additional indebtedness with other equipment lenders of up to $2,000,000 in the aggregate for equipment financing. Pursuant to the Amended Loan Agreement, the Company continues to grant and pledge to the Lender a first-priority security interest in all the Companys existing and future personal property. The Company has paid $37,500 to the Lender as a facility fee at the time of closing in April 2014, and has accrued approximately $5,000 for fees associated with the Amendment. An additional facility fee (equal to the product of (x) 0.50% of the increase in the revolving line times (y) the quotient of the number of days remaining between the effective date of such increase and December 31, 2017, divided by 1,095) will be due if the revolving line is increased pursuant to the Companys request. The Company also pays an unused line fee equal to 0.50% per year of the difference between the amount of the revolving line as in effect from time to time and the average monthly balance in each month, which is payable monthly in arrears. The average monthly balance is calculated by adding the ending outstanding balance under the revolving line for each day in the month divided by the number of days in the month. Equipment Notes Payable In May 2013, the Company entered into a financing arrangement with a lender under which the Company may borrow up to $500,000 to purchase certain equipment. Over time, the lender has increased the maximum amount the Company may borrow, and as of March 31, 2016, the maximum amount was $9,853,000. The Company may borrow up to the maximum amount in tranches as needed. Each tranche borrowed through August 2015 incurred interest at 8.32% per annum; the interest for tranches borrowed thereafter was reduced to 7.75% per annum. With respect to the first $1,000,000 in the aggregate borrowed, principal and interest payments are due in 36 equal monthly installments. With respect to amounts borrowed in excess of the first $1,000,000 in the aggregate, the first monthly payment will be equal to 24% of the principal amount outstanding, and the remaining principal and interest due is payable in 35 equal monthly installments. The Company granted the lender a first security interest in the equipment purchased with the funds borrowed. In April 2015, the Company used approximately $3,381,000 of the proceeds received from the East West Bank credit facility to pay down a portion of the principal amount the Company had borrowed under this financing arrangement, accrued interest and a prepayment fee. Through March 31, 2016, the Company borrowed approximately $9,302,000 of the $9,853,000 maximum amount available under this financing arrangement. As of March 31, 2016, approximately $2,017,000 of principal remained outstanding under this financing arrangement, of which, $1,044,000 is recorded in current portion of long-term debt on the accompanying consolidated balance sheet, and approximately $551,000 was available for borrowing. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 3 Months Ended |
Mar. 31, 2016 | |
Shareholders' Equity: | |
Accumulated Other Comprehensive Income | (5) ACCUMULATED OTHER COMPREHENSIVE INCOME The United States dollar is the Companys 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 Companys foreign subsidiaries are measured using the foreign subsidiarys local currency as the functional currency. In accordance with ASC No. 830, Foreign Currency Matters |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | (6) RECENT ACCOUNTING PRONOUNCEMENTS Management has considered all recent accounting pronouncements issued since the last audit of the Companys consolidated financial statements, and believes that these recent pronouncements will not have a material effect on the Companys consolidated financial statements. |
Concentrations of Risk
Concentrations of Risk | 3 Months Ended |
Mar. 31, 2016 | |
Risks and Uncertainties [Abstract] | |
Concentrations of Risk | (7) CONCENTRATIONS OF RISK Significant Customer For the three months ended March 31, 2016 and 2015, the Company generated approximately $2,292,000 and $2,389,000, respectively, of total revenue from Buffalo Wild Wings corporate-owned restaurants and its franchisees, which represented approximately 42% of total revenue in each of those years. As of March 31, 2016 and December 31, 2015, approximately $170,000 and $172,000, respectively, was included in accounts receivable from Buffalo Wild Wings corporate-owned restaurants and its franchisees. Equipment Suppliers The tablet used in the Companys BEOND product line is manufactured by one unaffiliated third party. The Company currently purchases the BEOND tablets from various unaffiliated third parties. The Company also currently purchases each piece of the tablet equipment (consisting of cases and charging trays for the tablet) from a different unaffiliated third party. 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 equipment. As of March 31, 2016 and December 31, 2015, approximately $82,000 and $127,000, respectively, were included in accounts payable or accrued expenses for equipment suppliers. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business NTN Buzztime, Inc. (the Company) delivers interactive entertainment and innovative dining technology to bars and restaurants in North America. Customers license the Companys customizable solution to differentiate themselves via competitive fun by offering guests trivia, card, sports and arcade games, nationwide competitions, and self-service dining features including dynamic menus, touchscreen ordering and secure payment. The Companys platform can improve operating efficiencies, create connections among the players and venues and amplify guests positive experiences. Built on an extended network platform, the Companys interactive entertainment system has historically allowed multiple players to interact at the venue, and now also enables competition between venues, referred to as massively multiplayer gaming. The Companys current platform, which it refers to as Buzztime Entertainment On Demand, or BEOND, was first introduced as a pilot program in December 2012, was expanded commercially during 2013, and the expansion was scaled during 2014. The Company continues to enhance its network architecture and the BEOND tablet platform and player engagement paradigms. The Company also continues to support its legacy network product line, which it refers to as Classic. The Company currently generates revenue by charging subscription fees for its service to its network subscribers, by leasing equipment (including tablets used in its BEOND tablet platform and the cases and charging trays for the tablets) to certain network subscribers, by hosting live trivia events, and by selling advertising aired on in-venue screens and as part of customized games. In 2014, the Company began offering pay-to-play premium content to certain customers via its BEOND tablet platform, such as paid arcade. During the second quarter of 2015, the Company made a strategic change in its premium content model by making the arcade offering available on both a free-to-consumer and pay-to-play basis. This change required the Company to delay the general availability of the pay-to-play arcade offering as it retooled the offerings content, workflow and positioning. As a result, during 2015, the Company generated additional subscription fee revenue from those venues offering free-to-consumer arcade. The Company anticipates rolling out the new pay-to-play arcade offering during the second quarter of 2016. Currently, approximately 2,900 venues in the U.S. and Canada subscribe to the Companys interactive entertainment network, of which approximately 65% are using the BEOND tablet platform. The Company was incorporated in Delaware in 1984 as Alroy Industries and changed its corporate name to NTN Communications, Inc. in 1985. The Company changed its name to NTN Buzztime, Inc. in 2005 to better reflect the growing role of the Buzztime consumer brand. |
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 Companys annual report on Form 10-K for the fiscal year ended December 31, 2015. The accompanying condensed balance sheet as of December 31, 2015 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, 2016 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2016, or any other period. |
Reclassifications | Reclassifications The Company reclassified the condensed consolidated statement of cash flows for the three months ended March 31, 2015 to conform to the 2016 presentation. Reclassifications had no impact on net loss or cash flows. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Share-based Compensation [Abstract] | |
Summary of Weighted-Average Assumptions of Stock Based Compensation | The following weighted-average assumptions were used for grants issued during the three months ended March 31, 2016 and 2015 under the ASC No. 718 requirements. Three months ended March 31, 2016 2015 Weighted average risk-free rate 1.26 % 1.17 % Weighted average volatility 110.71 % 81.38 % Dividend yield 0.00 % 0.00 % Expected life 6.02 years 4.45 years |
Basic and Diluted Earnings Pe16
Basic and Diluted Earnings Per Common Share (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Antidilutive shares excluded from earnings per share | 14,322,000 | 14,459,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock-based compensation expense | $ 113 | $ 99 |
Stock purchased from proceeds of options exercised | 775,000 | 785,000 |
Number of options exercised | 0 | 0 |
Net-Exercise Arrangement [Member] | ||
Number of options exercised | 34,000 | |
Option issued to purchase number of additional common stock | 8,000 | |
Selling, General and Administrative Expenses [Member] | ||
Stock-based compensation expense | $ 113 | $ 99 |
2010 Plan [Member] | ||
Stock options granted | 12,000,000 | |
Shares authorized under plan | 7,160,000 | |
2014 Plan [Member] | ||
Stock options granted | 4,250,000 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Weighted-Average Assumptions of Stock Based Compensation (Details) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Share-based Compensation [Abstract] | ||
Weighted-average risk-free rate | 1.26% | 1.17% |
Weighted-average volatility | 110.71% | 81.38% |
Dividend yield | 0.00% | 0.00% |
Expected life | 6 years 7 days | 4 years 5 months 12 days |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Apr. 30, 2015 | Mar. 31, 2016 | Apr. 30, 2016 | May. 31, 2013 | |
Credit line amount outstanding | $ 103 | |||
Maximum borrowing capacity | 6,500 | |||
Line of credit remaining borrowing capacity | 6,500 | |||
Equipment Notes Payable [Member] | ||||
Credit line amount outstanding | $ 9,302 | |||
Line of credit interest rate | 8.32% per annum; the interest for tranches borrowed thereafter was reduced to 7.75% per annum | |||
Maximum borrowing capacity | $ 9,853 | $ 500 | ||
Line of credit facility interest rate | 24.00% | |||
Line of credit remaining borrowing capacity | $ 551 | |||
Proceeds to pay down existing indebtedness | $ 3,381 | |||
Amount borrowed during period | 2,017 | |||
Line of credit current | $ 1,044 | |||
Minimum [Member] | Prior to Amendment [Member] | ||||
Line of credit facility interest rate | 4.313% | |||
Minimum [Member] | Post Amendment [Member] | ||||
Line of credit facility interest rate | 6.125% | |||
Maximum [Member] | Prior to Amendment [Member] | ||||
Line of credit facility interest rate | 4.688% | |||
Maximum [Member] | Post Amendment [Member] | ||||
Line of credit facility interest rate | 6.188% | |||
East West Bank [Member] | ||||
Credit line amount outstanding | $ 7,500 | |||
Increase the revolving line of credit | $ 2,500 | |||
Advance due date | Mar. 31, 2017 | |||
Line of credit facility, description | The Original Loan Agreement as amended by the Amendment is referred to as the Amended Loan Agreement. Under the Amended Loan Agreement, through March 31, 2017, the Company may request advances in an aggregate outstanding amount at any time up to the lesser of (a) the revolving line (or $7,500,000) or (b) the sum of $2,000,000 (which the Company refers to as the sublimit) plus the amount equal to the Companys borrowing base, in each case, less the aggregate outstanding principal amount of prior advances. | |||
Percentage of churn rate | 300.00% | |||
Line of credit interest rate | On or before March 31, 2017, advances will bear interest, at the Companys option, at the rate of either (A) a variable rate per annum equal to the prime rate as set forth in The Wall Street Journal plus 2.75%, up from 1.25% under the original terms, or (B) at a fixed rate per annum equal to the LIBOR rate for the interest period for the advance plus 5.50%, up from 4.00% under the original terms. After March 31, 2017, the interest rates will revert to their original terms. | |||
Proceeds to pay down existing indebtedness | $ 2,000 | |||
Facility fee to lender | $ 37 | |||
Increase in the revolving line times percentage | 0.50% | |||
Percenatge of pays an unused line fee | 0.50% | |||
Line of credit principal and interest payments due | $ 1,095 | |||
East West Bank [Member] | Minimum [Member] | ||||
Credit line amount outstanding | $ 2,000 | |||
East West Bank [Member] | Stump Product Line [Member] | ||||
Concentration risk percentage | 50.00% | |||
Line of credit interest rate | The Amended Loan Agreement requires: (a) that the Company maintain a balance on deposit with the Lender equal to (i) on March 31, 2017, 100% of the aggregate outstanding principal amount of the advances at such time, and (ii) at all times after March 31, 2017, an amount determined by the Lender based on the Companys 2017 financial projections; and (b) that the sum of the following be not less than $2,000,000: | |||
First Line Of Credit [Member] | ||||
Line of credit principal and interest payments due | $ 1,000 | |||
Line of credit, installment term | 36 months | |||
Second Line Of Credit [Member] | ||||
Line of credit principal and interest payments due | $ 1,000 | |||
Line of credit, installment term | 35 months |
Accumulated Other Comprehensi20
Accumulated Other Comprehensive Income (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Shareholders' Equity: | ||
Accumulated foreign currency translation adjustments | $ 285 | $ 172 |
Concentrations of Risk (Details
Concentrations of Risk (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounts receivable from customer | $ 769 | $ 919 | |
Sales Revenue, Net [Member] | Buffalo Wild Wings Corporate-owned Restaurants and Its Franchisees [Member] | |||
Revenues | 2,292 | $ 2,389 | |
Customer Concentration Risk [Member] | |||
Concentration risk percentage | 42.00% | 42.00% | |
Accounts Receivable | Buffalo Wild Wings Corporate-owned Restaurants and Its Franchisees [Member] | |||
Accounts receivable from customer | 170 | $ 172 | |
Supplier Concentration Risk [Member] | |||
Accounts payable | $ 82 | $ 127 |