Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 07, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | NTN BUZZTIME INC | |
Entity Central Index Key | 748,592 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 2,873,340 | |
Trading Symbol | NTN | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 3,078 | $ 3,378 |
Accounts receivable, net of allowances of $361 and $463, respectively | 1,279 | 714 |
Site equipment to be installed | 3,600 | 4,866 |
Prepaid expenses and other current assets | 572 | 680 |
Total current assets | 8,529 | 9,638 |
Fixed assets, net | 3,645 | 3,678 |
Software development costs, net of accumulated amortization of $2,877 and $2,651, respectively | 1,840 | 1,459 |
Deferred costs | 470 | 775 |
Goodwill | 976 | 1,004 |
Other assets | 84 | 16 |
Total assets | 15,544 | 16,570 |
Current Liabilities: | ||
Accounts payable | 341 | 390 |
Accrued compensation | 360 | 646 |
Accrued expenses | 792 | 418 |
Sales taxes payable | 137 | 107 |
Income taxes payable | 36 | 13 |
Current portion of long-term debt | 1,104 | 5,059 |
Current portion of obligations under capital leases | 156 | 176 |
Current portion of deferred revenue | 2,487 | 3,564 |
Deferred rent | 33 | 182 |
Other current liabilities | 96 | 192 |
Total current liabilities | 5,542 | 10,747 |
Long-term debt | 2,977 | 8 |
Long-term obligations under capital leases | 48 | 164 |
Long-term deferred revenue | 31 | 63 |
Other liabilities | 50 | 52 |
Total liabilities | 8,648 | 11,034 |
Shareholders’ Equity: | ||
Series A 10% cumulative convertible preferred stock, $0.005 par value, $156 liquidation preference, 156 shares authorized; 156 shares issued and outstanding at September 30, 2018 and December 31, 2017 | 1 | 1 |
Common stock, $0.005 par value, 15,000 shares authorized at September 30, 2018 and December 31, 2017; 2,872 and 2,521 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 14 | 13 |
Treasury stock, at cost, 10 shares at September 30, 2018 and December 31, 2017 | (456) | (456) |
Additional paid-in capital | 136,482 | 134,752 |
Accumulated deficit | (129,438) | (129,119) |
Accumulated other comprehensive income | 293 | 345 |
Total shareholders’ equity | 6,896 | 5,536 |
Total liabilities and shareholders’ equity | $ 15,544 | $ 16,570 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts - accounts receivable | $ 361 | $ 463 |
Software accumulated amortization | $ 2,877 | $ 2,651 |
Series A cumulative preferred stock, percentage | 10.00% | 10.00% |
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 | 156 | 156 |
Preferred stock series A, shares issued | 156 | 156 |
Preferred stock series A, shares outstanding | 156 | 156 |
Common stock, par value | $ 0.005 | $ 0.005 |
Common stock, shares authorized | 15,000 | 15,000 |
Common stock, shares issued | 2,872 | 2,521 |
Common stock, shares outstanding | 2,872 | 2,521 |
Treasury stock, shares | 10 | 10 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | ||||
Total Revenue | $ 6,004 | $ 5,198 | $ 17,416 | $ 15,978 |
Operating expenses: | ||||
Direct operating costs (includes depreciation and amortization of $657 and $509 for the three months ended September 30, 2018 and 2017, respectively, and $1,824 and $1,466 for the nine months ended September 30, 2018 and 2017, respectively) | 2,115 | 1,539 | 6,019 | 5,013 |
Selling, general and administrative | 3,444 | 3,636 | 11,123 | 11,628 |
Depreciation and amortization (excluding depreciation and amortization included in direct operating costs) | 75 | 76 | 244 | 250 |
Total operating expenses | 5,634 | 5,251 | 17,386 | 16,891 |
Operating income (loss) | 370 | (53) | 30 | (913) |
Other (expense) income, net | (138) | (122) | (305) | 496 |
Income (loss) before income taxes | 232 | (175) | (275) | (417) |
Provision for income taxes | (10) | (9) | (36) | (21) |
Net income (loss) | $ 222 | $ (184) | $ (311) | $ (438) |
Net income (loss) per common share - basic and diluted | $ 0.08 | $ (0.07) | $ (0.12) | $ (0.18) |
Weighted average shares outstanding - basic and diluted | 2,857 | 2,505 | 2,628 | 2,419 |
Comprehensive income (loss) | ||||
Net income (loss) | $ 222 | $ (184) | $ (311) | $ (438) |
Foreign currency translation adjustment | 39 | 80 | (52) | 136 |
Total comprehensive income (loss) | 261 | (104) | (363) | (302) |
Subscription Revenue [Member] | ||||
Revenues | ||||
Total Revenue | 4,005 | 4,279 | 12,111 | 12,737 |
Hardware Revenue [Member] | ||||
Revenues | ||||
Total Revenue | 1,158 | 116 | 2,427 | 524 |
Other Revenue [Member] | ||||
Revenues | ||||
Total Revenue | $ 841 | $ 803 | $ 2,878 | $ 2,717 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Depreciation and amortization - part of direct operating costs | $ 657 | $ 509 | $ 1,824 | $ 1,466 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows provided by operating activities: | ||
Net loss | $ (311) | $ (438) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 2,068 | 1,716 |
Provision for doubtful accounts | 53 | 47 |
Scrap expense | 30 | 30 |
Transfer of fixed assets to sales-type lease | 10 | |
Stock-based compensation | 368 | 347 |
Amortization of debt issuance costs | 57 | 39 |
Issuance of common stock in lieu of cash for bonus compensation | 178 | |
Impairment of capitalized software | 23 | 5 |
Loss from disposition of equipment | 30 | 8 |
Changes in assets and liabilities: | ||
Accounts receivable | (617) | 254 |
Site equipment to be installed | (56) | (3,047) |
Prepaid expenses and other assets | 40 | 37 |
Accounts payable and accrued liabilities | 69 | (350) |
Income taxes payable | 24 | (2) |
Deferred costs | 305 | 36 |
Deferred revenue | (1,109) | 2,521 |
Deferred rent | (148) | (140) |
Other liabilities | (97) | (185) |
Net cash provided by operating activities | 739 | 1,056 |
Cash flows used in investing activities: | ||
Capital expenditures | (502) | (562) |
Capitalized development expenditures | (690) | (556) |
Net cash used in investing activities | (1,192) | (1,118) |
Cash flows provided by (used in) financing activities: | ||
Proceeds from long-term debt | 4,000 | |
Payments on long-term debt | (5,019) | (2,857) |
Debt issuance costs on long-term debt | (23) | (22) |
Principal payments on capital lease | (132) | (116) |
Net proceeds from issuance of common stock related to registered direct offering | 1,375 | 1,773 |
Tax withholding payments for net share settlement of vested restricted stock units | (12) | |
Payment of preferred stockholders dividends | (8) | (8) |
Net cash provided by (used in) financing activities | 181 | (1,230) |
Net decrease in cash and cash equivalents | (272) | (1,292) |
Effect of exchange rate on cash | (28) | 70 |
Cash and cash equivalents at beginning of period | 3,378 | 5,686 |
Cash and cash equivalents at end of period | 3,078 | 4,464 |
Supplemental disclosures of cash flow information: | ||
Interest | 255 | 301 |
Income taxes | 17 | 33 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Site equipment transferred to fixed assets | 1,292 | 1,361 |
Equipment acquired under capital lease | $ 5 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | (1) BASIS OF PRESENTATION Description of Business NTN Buzztime, Inc. (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. The Company delivers interactive entertainment and innovative technology, including performance analytics and secure payment with Europay, MasterCard® and Visa® (EMV) chip card readers or with near-field communication (NFC) technology to accept Apple, Android and Samsung Pay. Generally used in bars and restaurants in North America, the Company’s tablets and technology offer engaging solutions to establishments with guests who experience dwell time, such as casinos and senior living centers. Casual dining venues subscribe to the Company’s customizable solution to differentiate themselves via competitive fun by offering guests trivia, card, sports and arcade games, customized menus and self-service dining features. The Company’s platform improves operating efficiencies, creates connections among the players and venues, and amplifies guests’ positive experiences. The Company’s tablet platform was commercially launched during 2013 and then scaled during 2014. The Company also continues to support its legacy network product line, which it calls its Classic platform. The Company generates revenue by charging subscription fees for its service to network subscribers, by leasing equipment to certain network subscribers, by selling equipment, by hosting live trivia events, by selling advertising aired on in-venue screens and as part of customized games, by licensing its content for use with third-party equipment, from providing professional services (such as developing certain functionality within the Company’s platform for customers), and from pay-to-play single player games. At September 30, 2018, 2,666 venues in the U.S. and Canada subscribed to the Company’s interactive entertainment network, of which approximately 84% were using the tablet platform. 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 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, 2017. The accompanying condensed balance sheet as of December 31, 2017 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 and nine months ended September 30, 2018 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2018, or any other period. In connection with preparing its financial statements as of and for the period ended September 30, 2018, the Company evaluated whether there are conditions and events, considered in the aggregate, that are known and reasonably knowable that would raise substantial doubt about its ability to continue as a going concern within twelve months after the date that such financial statements are issued. The Company believes it has sufficient cash to meet its operating cash requirements and to fulfill its debt obligations for at least the next twelve months after the date that such financial statements are issued. To increase the likelihood that the Company will be able to successfully execute its operating and strategic plan and to position the Company to better take advantage of market opportunities for growth, it is continuing to evaluate additional financing alternatives, including additional equity financings and alternative sources of debt. If the Company’s cash and cash equivalents are not sufficient to meet future cash requirements, it may have to reduce planned capital expenses, reduce operational cash uses or raise capital on terms that are not as favorable to the Company as they otherwise might be. Any actions the Company may undertake to reduce planned capital purchases or reduce expenses might not cover shortfalls in available funds. If the Company requires additional capital, it may not secure additional financing on terms acceptable to the Company, or at all. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2018 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | (2) Revenue Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date The Company adopted the new standard effective January 1, 2018 using the full retrospective approach. This update outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized: 1. Identify the contract(s) with customers 2. Identify the performance obligations 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations 5. Recognize revenue when the performance obligations have been satisfied Topic 606 requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. The Company completed the process of evaluating the effect of adopting this update and has determined that the timing and amount of revenue recognized based on Topic 606 is consistent with the Company’s revenue recognition policy under previous guidance, and accordingly, there was no transition adoption adjustment necessary upon the adoption of the Topic 606 guidance. The Company generates revenue by charging subscription fees for its service to network subscribers, by leasing equipment to certain network subscribers, by selling equipment, by hosting live trivia events, by selling advertising aired on in-venue screens and as part of customized games, by licensing its content for use with third-party equipment, from providing professional services (such as developing certain functionality within the Company’s platform for customers), and from pay-to-play single player games. In general, when multiple performance obligations are present in a customer contract, the transaction price is allocated to the individual performance obligation based on the relative stand-alone selling prices, and the revenue is recognized when or as each performance obligation has been satisfied. Discounts are treated as a reduction to the overall transaction price and allocated to the performance obligations based on the stand-alone selling prices. All revenues are recognized net of sales tax collected from the customer. The following describes how the Company recognizes its revenue streams under Topic 606. Subscription Revenue Costs associated with installing the equipment are considered direct costs. Costs associated with sales commissions are considered incremental costs for fulfilling the contract because such costs would not have been incurred without obtaining the contract. The Company expects to recover both costs through future fees it collects and both costs are recorded in deferred costs on the balance sheet and amortized on a straight-line basis. For costs that are of an amount that is less than or equal to the deferred revenue for the related contract, the amortization period approximates the longer of the contract term and the expected term of the customer relationship. For any excess costs that exceed the deferred revenue, the amortization period of the excess cost is the initial term of the contract, which is generally one year because the Company can still recover that excess cost in the initial term of the contract. Sales-type Lease Revenue Leases. Equipment Sales Live Hosted Trivia Revenue Advertising Revenue Pay-to-Play Revenue Content Licensing Professional Development Revenue |
Basic and Diluted Earnings Per
Basic and Diluted Earnings Per Common Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings Per Common Share | (3) Basic and Diluted Earnings Per Common Share The Company computes basic and diluted earnings per common share in accordance with the provisions of FASB ASC No. 260, Earnings per Share Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Numerator: Net income (loss) $ 222,000 $ (184,000 ) $ (311,000 ) $ (438,000 ) Denominator: Weighted average common shares outstanding - basic 2,857,000 2,505,000 2,628,000 2,419,000 Effects of diluted common shares - - - - Weighted average common shares outstanding - diluted 2,857,000 2,505,000 2,628,000 2,419,000 Net income (loss) per common share - basic $ 0.08 $ (0.07 ) $ (0.12 ) $ (0.18 ) Net income (loss) per common share - diluted $ 0.08 $ (0.07 ) $ (0.12 ) $ (0.18 ) |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Shareholders’ Equity: | |
Stockholders' Equity | (4) SHAREHOLDERS’ EQUITY Stock-based Compensation The Company’s stock-based compensation plans include 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 Amended 2010 Plan provides for the grant of up to 240,000 share-based awards and expires in February 2020. The 2014 Plan provides for the grant of up to 85,000 share-based awards to a new employee as an inducement material to the new employee entering into employment with the Company and expires in September 2024. As of September 30, 2018, approximately 66,000 share-based awards were available for grant under the Amended 2010 Plan and there were no share-based awards available for grant under the 2014 Plan. The nominating and corporate governance/compensation committee of the Company’s board of directors administers the Company’s stock-based compensation plans. Among other things, the committee 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. Until September 30, 2018, the Company also maintained the NTN Buzztime, Inc. 2004 Performance Incentive Plan. That plan expired in September 2009 and all awards granted under that plan expired as of September 30, 2018, in accordance with that plan’s terms. 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 Company’s history and expectation of dividend payouts. The following weighted-average assumptions were used for the stock options granted during the three and nine months ended September 30, 2018 and 2017 under the ASC No. 718 requirements: Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Weighted average risk-free rate 2.82 % 2.22 % 2.87 % 1.77 % Weighted average volatility 113.90 % 114.12 % 113.20 % 114.56 % Dividend yield 0.00 % 0.00 % 0.00 % 0.00 % Expected term 5.92 years 7.29 years 7.06 years 7.26 years The Company granted stock options to purchase approximately 250 and 1,000 shares of common stock during the three months ended September 30, 2018 and 2017, respectively, and stock options to purchase approximately 2,000 and 5,000 shares of common stock during the nine months ended September 30, 2018 and 2017, respectively. No options were exercised during either of the three or nine months ended September 30, 2018 or 2017. Outstanding restricted stock units are settled in an equal number of shares of common stock on the vesting date of the award. A stock unit award is settled only to the extent vested. Vesting generally requires the continued employment by the award recipient through the respective vesting date. Because restricted stock units are settled in an equal number of shares of common stock without any offsetting payment by the recipient, the measurement of cost is based on the quoted market price of the stock at the measurement date, which is the grant date. During the nine months ended September 30, 2018, the Company granted 53,000 restricted stock units with a grant date fair value of $6.04 per restricted stock unit. Of the 53,000 restricted stock units, 25,000 and 15,000 were granted to Messrs. Ram Krishnan and Allen Wolff, respectively, and are subject to accelerated vesting provisions in their respective employment agreements. The Company did not grant restricted stock units during the three months ended September 30, 2018, nor did it grant restricted stock units during the three or nine months ended September 30, 2017. Under the 2010 Plan, in lieu of paying cash to satisfy withholding taxes due upon the settlement of vested restricted stock units, an employee may elect to have shares of common stock withheld that would otherwise be issued at settlement, the value of which is equal to the amount of withholding taxes payable. During the three and nine months ended September 30, 2018, approximately 9,000 restricted stock units vested and were settled, and as a result of employees electing to satisfy applicable withholding taxes by having the Company withhold shares, approximately 6,000 shares of common stock were issued. The Company estimates forfeitures at the time of grant and revises 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 September 30, 2018 and 2017 was $117,000 and $113,000, respectively, and $368,000 and $347,000 for the nine months ended September 30, 2018 and 2017, respectively, and is expensed in selling, general and administrative expenses and credited to additional paid-in-capital. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | (5) DEBT Term Loan On September 28, 2018, the Company entered into a loan and security agreement with Avidbank. The following is a summary of the material terms of that agreement: ● Avidbank loaned the Company $4,000,000 as a one-time 48-month term loan, all of which the Company used to pay-off the $4,050,000 of principal it borrowed from East West Bank (“EWB”). The Company used its cash on hand to pay the remaining $50,000 it borrowed from EWB plus accrued and unpaid interest. ● The Company must make monthly principal payments of $83,333.33 plus accrued and unpaid interest on the last business day of each month commencing on October 31, 2018 and through the loan’s maturing date, September 30, 2022. ● Other than during the continuance of an event of default, the loan bears interest at a variable rate per annum equal to the prime rate as set forth in The Wall Street Journal ● The Company granted and pledged to Avidbank a first-priority security interest in all its existing and future personal property. ● The Company must comply with these financial covenants: o EBITDA (as defined below) must be at least $1,000,000 for the trailing six month period as of the last day of each fiscal quarter. “EBITDA” means (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) to the extent approved by Avidbank, other noncash expenses and charges, other onetime charges, and any losses arising from the sale, exchange, transfer or other disposition of assets not in the ordinary course of business. o The aggregate amount of unrestricted cash the Company has in deposit accounts or securities accounts maintained with Avidbank must be not less than $2,000,000 at all times. ● Subject to customary exceptions, the Company is prohibited from borrowing additional indebtedness. ● The Company paid $20,000 to Avidbank as a facility fee upon entering into the loan and security agreement. ● If the Company prepays the loan before September 28, 2019, it must pay a prepayment fee of 1.75% of the principal amount repaid, and if the Company prepays the loan after such date but before September 28, 2020, it must pay a prepayment fee of 1.00% of the principal amount prepaid. There is no prepayment fee if the Company prepays the loan after September 28, 2020. The loan and security agreement includes customary representations, warranties and covenants (affirmative and negative), including restrictive covenants that, subject to specified exceptions, limit the Company’s ability to: dispose of its business or property; merge or consolidate with or into any other business organization; incur or prepay additional indebtedness; create or incur any liens on its property; declare or pay any dividend or make a distribution on any class of the Company’s stock; or enter specified material transactions with its affiliates. The loan and security agreement also includes customary events of default, including: payment defaults; breaches of covenants following any applicable cure period; material breaches of representations or warranties; the occurrence of a material adverse effect; events relating to bankruptcy or insolvency; and the occurrence of an unsatisfied material judgment against the Company. Upon the occurrence of an event of default, Avidbank may declare all outstanding obligations immediately due and payable, do such acts as it considers necessary or reasonable to protect its security interest in the collateral, and take such other actions as are set forth in the loan and security agreement. As of September 30, 2018, $4,000,000 remained outstanding, with $1,000,000 recorded in current portion of long-term debt and the remaining $3,000,000 recorded as long-term debt on the Company’s balance sheet. The Company recorded debt issuance costs of $23,000, which includes the $20,000 facility fee. The debt issuance costs will be amortized to interest expense beginning in October 2018 using the effective interest rate method over the life of the loan. The debt issuance costs are recorded as a reduction of long term debt. As of September 30, 2018, the Company was in compliance with all covenants. In connection with entering into the loan and security agreement with Avidbank, the amended and restated loan and security agreement the Company entered into with EWB on November 29, 2017, as amended on March 12, 2018, terminated on September 28, 2018. Equipment Notes Payable In May 2013, the Company entered into a financing arrangement with a lender under which the Company may borrow funds to purchase certain equipment. Initially, the maximum amount the Company could borrow under this financing arrangement was $500,000. Over time, the lender increased that maximum amount, and as of September 30, 2018, the maximum amount was $9,690,000, all of which has been borrowed. In April 2015, the Company used approximately $3,381,000 of the proceeds borrowed under a prior credit facility with EWB to pay down a portion of the principal amount the Company had borrowed under this financing arrangement, accrued interest and a prepayment fee. The Company was able to borrow up to the maximum amount available under this financing arrangement 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 rates between 7.32% to 8.05% 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. This equipment lender entered into a subordination agreement with EWB. As of September 30, 2018, $104,000 was outstanding under this financing arrangement, all of which is recorded in current portion of long-term debt on the accompanying consolidated balance sheet. The Company does not expect the lender to lend any additional funds under this financing arrangement. |
New Lease
New Lease | 9 Months Ended |
Sep. 30, 2018 | |
Leases [Abstract] | |
New Lease | (6) NEW LEASE In August 2018, the Company entered into an agreement to lease approximately 16,000 square feet of office space in Carlsbad, California. The Company intends to relocate its corporate headquarters to this new location. The term of the lease is from December 2018 through April 2026. The Company has a one-time option to renew the lease for an additional five-year extension. Base rent is abated by 50% for months two through nine of the term. Base rent escalates annually beginning in December 2019 by approximately 3.5% per year. The Company will pay its share of the lessor’s operating expenses, which includes utilities, insurance, taxes, and other operating expenses. The minimum annual rent payments under this lease are as follows: Year Ending December 31, Minimum Payments 2018 $ 47,000 2019 377,000 2020 584,000 2021 604,000 2022 625,000 Thereafter 2,249,000 Total $ 4,486,000 The lease requires the Company to issue a letter of credit to the lessor in the amount of $250,000 as security, which amount will reduce by $50,000 each year beginning December 1, 2019, provided there has been no default under the lease. The Company is currently working with Avidbank to issue the letter of credit, which the Company expects will be issued during the fourth quarter of 2018. Avidbank will require the Company to deposit $250,000 in a restricted cash account maintained with the bank, which amount will reduce in alignment with the amount required under the letter of credit each year. The Company will record the $250,000 deposit as restricted cash on its balance sheet once the deposit has been made, which the Company expects to occur during the fourth quarter of 2018. The amount deposited in such account will not count toward the covenant under the Avidbank loan and security agreement that requires the Company to have an aggregate amount of unrestricted cash in deposit accounts or securities accounts maintained with Avidbank of not less than $2,000,000 at all times. The Company’s existing office lease in Carlsbad, California expires in November 2018. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2018 | |
Shareholders’ Equity: | |
Accumulated Other Comprehensive Income | (7) ACCUMULATED OTHER COMPREHENSIVE INCOME 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 |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | (8) RECENT ACCOUNTING PRONOUNCEMENTS In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 842) In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 In the first quarter of 2018, the Company adopted ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash In June 2018, the FASB issued ASU No. 2018-07 (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting. |
Concentrations of Risk
Concentrations of Risk | 9 Months Ended |
Sep. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentrations of Risk | (9) CONCENTRATIONS OF RISK Significant Customer The table below sets forth the approximate amount of revenue the Company generated from Buffalo Wild Wings corporate-owned restaurants and its franchisees during the periods indicated and the percentage of total revenue that such amount represents for such periods: Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Revenue $ 1,971,000 $ 2,033,000 $ 7,209,000 $ 6,517,000 % of total revenue 33 % 39 % 41 % 41 % As of September 30, 2018 and December 31, 2017, approximately $200,000 and $191,000, respectively, was included in accounts receivable from Buffalo Wild Wings corporate-owned restaurants and its franchisees. Sole Equipment Supplier The Company purchases the tablets, cases and charging trays used for its tablet platform from one unaffiliated third-party manufacturer. The Company has no alternative manufacturer for its tablets and has no alternative manufacturer or device for the cases or charging trays. |
Basic and Diluted Earnings Pe_2
Basic and Diluted Earnings Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Securities Excluded from Computation of Diluted Net Loss Per Common Share | Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Numerator: Net income (loss) $ 222,000 $ (184,000 ) $ (311,000 ) $ (438,000 ) Denominator: Weighted average common shares outstanding - basic 2,857,000 2,505,000 2,628,000 2,419,000 Effects of diluted common shares - - - - Weighted average common shares outstanding - diluted 2,857,000 2,505,000 2,628,000 2,419,000 Net income (loss) per common share - basic $ 0.08 $ (0.07 ) $ (0.12 ) $ (0.18 ) Net income (loss) per common share - diluted $ 0.08 $ (0.07 ) $ (0.12 ) $ (0.18 ) |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Shareholders’ Equity: | |
Schedule of Weighted Average Assumptions | The following weighted-average assumptions were used for the stock options granted during the three and nine months ended September 30, 2018 and 2017 under the ASC No. 718 requirements: Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Weighted average risk-free rate 2.82 % 2.22 % 2.87 % 1.77 % Weighted average volatility 113.90 % 114.12 % 113.20 % 114.56 % Dividend yield 0.00 % 0.00 % 0.00 % 0.00 % Expected term 5.92 years 7.29 years 7.06 years 7.26 years |
New Lease (Tables)
New Lease (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Leases [Abstract] | |
Schedule of Future Minimum Rent Payments | The minimum annual rent payments under this lease are as follows: Year Ending December 31, Minimum Payments 2018 $ 47,000 2019 377,000 2020 584,000 2021 604,000 2022 625,000 Thereafter 2,249,000 Total $ 4,486,000 |
Concentrations of Risk (Tables)
Concentrations of Risk (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
Schedule of Concentration Risk | The table below sets forth the approximate amount of revenue the Company generated from Buffalo Wild Wings corporate-owned restaurants and its franchisees during the periods indicated and the percentage of total revenue that such amount represents for such periods: Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Revenue $ 1,971,000 $ 2,033,000 $ 7,209,000 $ 6,517,000 % of total revenue 33 % 39 % 41 % 41 % |
Basis of Presentation (Details
Basis of Presentation (Details Narrative) | 9 Months Ended |
Sep. 30, 2018Number | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of venues | 2,666 |
Percentage of entertainment network | 84.00% |
Basic and Diluted Earnings Pe_3
Basic and Diluted Earnings Per Common Share (Details Narrative) - shares | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share [Abstract] | ||
Antidilutive shares excluded from earnings per share | 419,000 | 393,000 |
Schedule of Securities Excluded
Schedule of Securities Excluded from Computation of Diluted Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Numerator: Net income (loss) | $ 222 | $ (184) | $ (311) | $ (438) |
Denominator: Weighted average common shares outstanding - basic | 2,857,000 | 2,505,000 | 2,628,000 | 2,419,000 |
Effects of diluted common shares | ||||
Denominator: Weighted average common shares outstanding - diluted | 2,857,000 | 2,505,000 | 2,628,000 | 2,419,000 |
Net income (loss) per common share - basic | $ 0.08 | $ (0.07) | $ (0.12) | $ (0.18) |
Net income (loss) per common share - diluted | $ 0.08 | $ (0.07) | $ (0.12) | $ (0.18) |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Stock options to purchase shares of common stock | 250 | 1,000 | 2,000 | 5,000 |
Option exercised during period, value | ||||
Restricted stock units vested and settled | 9,000 | 9,000 | ||
Common stock issued, withholding taxes | 6,000 | |||
Stock-based compensation | $ 117 | $ 113 | $ 368 | $ 347 |
Restricted Stock Units (RSUs) [Member] | ||||
Number of shares granted | 53,000 | |||
Grant date fair value, per share | $ 6.04 | |||
Restricted Stock Units (RSUs) [Member] | Employment Agreements [Member] | ||||
Number of shares granted | 53,000 | |||
Messrs. Ram Krishnan [Member] | Restricted Stock Units (RSUs) [Member] | Employment Agreements [Member] | ||||
Number of shares granted | 25,000 | |||
Allen Wolff [Member] | Restricted Stock Units (RSUs) [Member] | Employment Agreements [Member] | ||||
Number of shares granted | 15,000 | |||
Amended 2010 Performance Incentive Plan [Member] | ||||
Number of option available for grants | 66,000 | 66,000 | ||
Share-based awards, expiration date | Feb. 29, 2020 | |||
Amended 2010 Performance Incentive Plan [Member] | Maximum [Member] | ||||
Number of option available for grants | 240,000 | 240,000 | ||
2014 Inducement Plan [Member] | Maximum [Member] | New Employee [Member] | ||||
Number of option available for grants | 85,000 | 85,000 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Weighted Average Assumptions (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Shareholders’ Equity: | ||||
Weighted average risk-free rate | 2.82% | 2.22% | 2.87% | 1.77% |
Weighted average volatility | 113.90% | 114.12% | 113.20% | 114.56% |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Expected life | 5 years 11 months 1 day | 7 years 3 months 15 days | 7 years 22 days | 7 years 3 months 4 days |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | Sep. 28, 2018 | Apr. 30, 2015 | Aug. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | May 31, 2013 |
Aggregate amount of unrestricted cash to be maintained | $ 2,000,000 | |||||
Current portion of long-term debt | $ 1,104,000 | $ 5,059,000 | ||||
Line of credit principal and interest payments due | $ 50,000 | |||||
First Line Of Credit [Member] | ||||||
Line of credit principal and interest payments due | $ 1,000,000 | |||||
Line of credit, installment term | 36 months | |||||
Second Line Of Credit [Member] | ||||||
Line of credit principal and interest payments due | $ 1,000,000 | |||||
Line of credit, installment term | 35 months | |||||
Equipment Notes Payable [Member] | ||||||
Maximum borrowing capacity | $ 9,690,000 | |||||
Line of credit interest rate | Each tranche borrowed through August 2015 incurred interest at 8.32% per annum; the interest for tranches borrowed thereafter was reduced to rates between 7.32% to 8.05% per annum. | |||||
Line of credit facility interest rate | 24.00% | |||||
Loan and Security Agreement [Member] | ||||||
Term loan | $ 4,000,000 | $ 3,000,000 | ||||
Term of the loan | 48 months | |||||
Repayment of EWB loan | $ 4,050,000 | |||||
Accrued and unpaid interest, paid | 50,000 | |||||
Debt instrument monthly principal payments | $ 83,333 | |||||
Debt instrument maturity date | Sep. 30, 2022 | |||||
Debt instrument interest rate term | The loan bears interest at a variable rate per annum equal to the prime rate as set forth in The Wall Street Journal plus 1.75% | |||||
Minimum EBITDA | $ 1,000,000 | |||||
Aggregate amount of unrestricted cash to be maintained | 2,000,000 | |||||
Facility fee | $ 20,000 | |||||
Loan repayment description | If the Company prepays the loan before September 28, 2019, it must pay a prepayment fee of 1.75% of the principal amount repaid, and if the Company prepays the loan after such date but before September 28, 2020, it must pay a prepayment fee of 1.00% of the principal amount prepaid. There is no prepayment fee if the Company prepays the loan after September 28, 2020 | |||||
Remaining outstanding amount of loan | 4,000,000 | |||||
Current portion of long-term debt | 1,000,000 | |||||
Debt issuance costs | 23,000 | |||||
Loan and Security Agreement [Member] | September 28, 2019 [Member] | ||||||
Percentage of prepayment fee | 1.75% | |||||
Loan and Security Agreement [Member] | September 28, 2020 [Member] | ||||||
Percentage of prepayment fee | 1.00% | |||||
Loan and Security Agreement [Member] | After September 28, 2020 [Member] | ||||||
Percentage of prepayment fee | ||||||
Financing Arrangement [Member] | Equipment Notes Payable [Member] | ||||||
Maximum borrowing capacity | $ 500,000 | |||||
Debt instrument outstanding amount | $ 104,000 | |||||
Loan Agreement with EWB [Member] | Equipment Notes Payable [Member] | ||||||
Amount borrowed during period | $ 3,381,000 |
New Lease (Details Narrative)
New Lease (Details Narrative) | 1 Months Ended | 9 Months Ended |
Aug. 31, 2018USD ($)ft² | Sep. 30, 2018 | |
Leases [Abstract] | ||
Area of lease property | ft² | 16,000 | |
Term of lease | The term of the lease is from December 2018 through April 2026. | The Company's existing office lease of approximately 28,000 square feet in Carlsbad, California expires in November 2018. |
Lease extension term | 5 years | |
Base rent abatement, description | Base rent is abated by 50% for months two through nine of the term. Base rent escalates annually beginning in December 2019 by approximately 3.5% per year | |
Letter of credit amount | $ 250,000 | |
Letter of credit, reduction each year | 50,000 | |
Amount required to be deposited as restricted cash | 250,000 | |
Aggregate amount of unrestricted cash to be maintained | $ 2,000,000 |
New Lease - Schedule of Future
New Lease - Schedule of Future Minimum Rent Payments (Details) $ in Thousands | Aug. 31, 2018USD ($) |
Leases [Abstract] | |
2,018 | $ 47 |
2,019 | 377 |
2,020 | 584 |
2,021 | 604 |
2,022 | 625 |
Thereafter | 2,249 |
Total | $ 4,486 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Shareholders’ Equity: | ||
Accumulated foreign currency translation adjustments | $ 293 | $ 345 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details Narrative) $ in Thousands | Sep. 30, 2018USD ($) |
Accounting Changes and Error Corrections [Abstract] | |
Restricted cash | $ 250 |
Concentrations of Risk (Details
Concentrations of Risk (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts receivable from customer | $ 1,279 | $ 714 |
Accounts Receivable | Buffalo Wild Wings Corporate-owned Restaurants and Its Franchisees [Member] | ||
Accounts receivable from customer | $ 200 | $ 191 |
Concentrations of Risk - Schedu
Concentrations of Risk - Schedule of Concentration Risk (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | $ 6,004 | $ 5,198 | $ 17,416 | $ 15,978 |
Sales Revenue, Net [Member] | Buffalo Wild Wings Corporate-owned Restaurants and Its Franchisees [Member] | ||||
Revenues | $ 1,971 | $ 2,033 | $ 7,209 | $ 6,517 |
Concentration risk percentage | 33.00% | 39.00% | 41.00% | 41.00% |