SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported)
July 31, 2003
NTN Communications, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 001-11460 31-1103425
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification No.)
5966 La Place Court
Carlsbad, California 92008
(Address of Principal Executive Offices) (Zip Code)
(760) 438-7400
(Registrant's telephone number, including Area Code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 31, 2003, NTN Communications, Inc. ("NTN"), through its newly
created subsidiary NTN Software Solutions, Inc., incorporated in the state of
Delaware on July 16, 2003, completed the acquisition of substantially all of the
assets and certain liabilities of Breakaway International, Inc. ("Breakaway"), a
privately held leading provider of restaurant industry hardware and software
enterprise solutions based in Arlington, Texas. NTN consummated the acquisition
pursuant to an asset purchase agreement entered into on July 31, 2003 with
Breakaway and all of Breakaway's existing shareholders.
Under the terms of the agreement, NTN acquired Breakaway's assets for
$25,000 in cash, 1,292,614 shares of unregistered NTN common stock (representing
$2.275 million and valued at $1.76 per share) and the assumption of
approximately $542,000 in certain existing liabilities set forth on Breakaway's
premininary closing balance sheet dated as of July 31, 2003. The amount of the
cash component of the purchase price is subject to post closing adjustment
balances on a final closing date balance sheet accepted by NTN.
NTN will pay additional contingent earn-out amounts in shares of
unregistered NTN common stock and/or cash for each of the years ending June 30,
2004, June 30, 2005 and June 30, 2006, provided that certain targets for
earnings before taxes are met for the acquired assets. The targeted amounts
increase by 25% each year. NTN also entered into employment agreements with five
of the executives of Breakaway. NTN agreed to file a registration statement
covering the resale of the unregistered NTN common stock with the Securities and
Exchange Commission within 30 days following the transaction closing date.
The amount of consideration given by NTN was derived from arm's-length
negotiations among the parties and based on a number of factors, including NTN's
evaluation of Breakaway's past financial performance, the number of Breakaway
clients and contract terms with such clients, and the strategic fit with the
future expansion plans of NTN's hospitality technologies division.
Breakaway products are currently used by more than 300 companies in more
than 3,300 locations in 43 countries. Breakaway's customers include Domino's
Pizza, The Cheesecake Factory, MGM Mirage and Gaylord Entertainment. The
software and hardware product line acquired by NTN includes Breakaway VISION, a
flagship point-of-sale solution; Breakaway ProHost, a wait list management/table
management system; Breakaway RSViP, a reservation management system; and
Breakaway Enterprise, a communications portal that allows restaurants to manage
their operations through the web.
The cash portion of the consideration paid to Breakaway at closing was
financed from NTN's working capital. Other than the employment agreements with
certain Breakaway executives offering post-acquisition employment with NTN,
neither Breakaway nor any of Breakaway's shareholders had any material
relationship with NTN or any of NTN's affiliates, any director or officer of
NTN, or any associate of such director or officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired
NTN will file the financial statements of the acquired business required under
this Item 7(a) under cover of Form 8-K/A as soon as practicable, but not later
than 60 days after the date that the initial report of this Form 8-K was
required to have been filed.
(b) Pro forma financial information
NTN will file the pro forma financial information required
under this Item 7(b) under cover of Form 8-K/A as soon as practicable, but not
later than 60 days after the date that the initial report of this Form 8-K was
required to have been filed.
(c) Exhibits
2.1 Asset Purchase Agreement by and among NTN Software Solutions, Inc., NTN
Communications, Inc., Breakaway International, Inc., and the Seller
Shareholders dated as of July 31, 2003. The schedules (or similar
attachments) to this agreement have been omitted pursuant to Item 601(b)(2)
of Regulation S-K. NTN agrees to furnish supplementally to the Securities
and Exchange Commission, upon request, a copy of any omitted schedule (or
similar attachment).
99.1 Press Release dated August 4, 2003.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
NTN COMMUNICATIONS, INC.
By: /s/ James B. Frakes
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James B. Frakes
Chief Financial Officer
Date: August 14, 2003