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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
Commission file number 1-11460
NTN COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 31-1103425
(State of incorporation) (I.R.S. Employer
Identification No.)
THE CAMPUS 5966 LA PLACE COURT, CARLSBAD, CALIFORNIA 92008
(Address of principal executive offices) (Zip Code)
(760) 438-7400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.
YES [X] NO [ ]
At July 12, 2001 the registrant had outstanding 36,852,000 shares of common
stock, $.005 par value.
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PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
NTN COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
JUNE 30,
2001 DECEMBER 31,
Assets (UNAUDITED) 2000
------------ ------------
Current assets:
Cash and cash equivalents $ 2,111,000 $ 2,188,000
Restricted cash 242,000 202,000
Accounts receivable, net 1,167,000 1,724,000
Investment available for sale 328,000 272,000
Deposits on broadcast equipment -- 112,000
Deferred costs 675,000 772,000
Prepaid expenses and other current assets 640,000 538,000
------------ ------------
Total current assets 5,163,000 5,808,000
Broadcast equipment and fixed assets, net 10,165,000 11,963,000
Software development costs, net 349,000 405,000
Deferred costs 423,000 565,000
Other assets 102,000 81,000
------------ ------------
Total assets $ 16,202,000 $ 18,822,000
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 613,000 $ 816,000
Accrued expenses 1,115,000 1,351,000
Accrual for litigation costs 75,000 57,000
Accrual for sales tax 237,000 399,000
Obligations under capital leases 273,000 579,000
Deferred revenue 2,371,000 1,575,000
Revolving line of credit 3,731,000 --
Note payable and other current liabilities -- 138,000
------------ ------------
Total current liabilities 8,415,000 4,915,000
Obligations under capital leases, excluding current portion 103,000 83,000
Deferred revenue 954,000 1,804,000
Revolving line of credit -- 3,919,000
4% senior convertible notes 3,878,000 3,987,000
Other long-term liabilities 12,000 32,000
------------ ------------
Total liabilities 13,362,000 14,740,000
------------ ------------
Minority interest in consolidated subsidiary 939,000 --
------------ ------------
Shareholders' equity:
Series A 10% cumulative convertible preferred stock,
$.005 par value, 5,000,000 shares authorized; 161,000
shares issued and outstanding at June 30, 2001 and
December 31, 2000 1,000 1,000
Common stock, $.005 par value, 70,000,000 shares
authorized; 36,787,000 and 36,046,000 shares issued and
outstanding at June 30, 2001 and December 31, 2000,
respectively 183,000 179,000
Additional paid-in capital 78,439,000 78,153,000
Accumulated deficit (75,761,000) (73,234,000)
Accumulated other comprehensive loss (489,000) (545,000)
Treasury stock, at cost, 111,000 shares at June 30, 2001
and December 31, 2000 (472,000) (472,000)
------------ ------------
Total shareholders' equity 1,901,000 4,082,000
------------ ------------
Total liabilities and shareholders' equity $ 16,202,000 $ 18,822,000
============ ============
See accompanying notes to unaudited consolidated financial statements
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NTN COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------- -----------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2001 2000 2001 2000
------------ ------------ ------------ ------------
Revenues:
NTN Network revenues $ 5,342,000 $ 5,118,000 $ 10,557,000 $ 10,462,000
Buzztime service revenues 3,000 102,000 66,000 184,000
Other revenues 5,000 4,000 12,000 20,000
------------ ------------ ------------ ------------
Total revenues 5,350,000 5,224,000 10,635,000 10,666,000
------------ ------------ ------------ ------------
Operating expenses:
Direct operating costs (includes depreciation of
$816,000, $1,406,000, $1,620,000 and $2,943,000
for the three months ended June 30, 2001 and 2000 and
for the six months June 30, 2001 and 2000, respectively) 2,112,000 3,050,000 4,357,000 6,131,000
Selling, general and administrative 3,498,000 4,233,000 7,567,000 8,316,000
Depreciation and amortization 432,000 471,000 869,000 864,000
Research and development 35,000 76,000 96,000 223,000
------------ ------------ ------------ ------------
Total operating expenses 6,077,000 7,830,000 12,889,000 15,534,000
------------ ------------ ------------ ------------
Operating loss (727,000) (2,606,000) (2,254,000) (4,868,000)
------------ ------------ ------------ ------------
Other income (expense):
Interest income 12,000 27,000 38,000 37,000
Interest expense (228,000) (255,000) (452,000) (569,000)
Other (6,000) 15,000 141,000 161,000
------------ ------------ ------------ ------------
Total other expense (222,000) (213,000) (273,000) (371,000)
------------ ------------ ------------ ------------
Loss before and cumulative effect of accounting change (949,000) (2,819,000) (2,527,000) (5,239,000)
Cumulative effect of accounting change -- -- -- (448,000)
------------ ------------ ------------ ------------
Net loss $ (949,000) $ (2,819,000) $ (2,527,000) $ (5,687,000)
============ ============ ============ ============
Net loss per common share - basic and diluted:
Loss before cumulative effect of accounting change $ (0.03) $ (0.09) $ (0.07) $ (0.17)
Cumulative effect of accounting change -- -- -- (0.01)
------------ ------------ ------------ ------------
Net loss per common share - basic and diluted $ (0.03) $ (0.09) $ (0.07) $ (0.18)
============ ============ ============ ============
Weighted average shares outstanding - basic and
Diluted 36,660,000 33,061,000 36,499,000 31,788,000
============ ============ ============ ============
See accompanying notes to unaudited consolidated financial statements
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NTN COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------- -----------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2001 2000 2001 2000
------------ ------------ ------------ ------------
Cash flows provided by (used in) operating activities:
Net loss $ (949,000) $ (2,819,000) $ (2,527,000) $ (5,687,000)
Adjustments to reconcile net loss to
net cash provided by (used in) operating
activities:
Depreciation and amortization 1,248,000 1,877,000 2,489,000 3,807,000
Provision for doubtful accounts 73,000 173,000 265,000 548,000
Non-cash stock-based compensation charges 52,000 119,000 54,000 312,000
Cumulative effect of accounting change -- -- -- 448,000
Non-cash interest expense 50,000 82,000 120,000 169,000
Accreted interest expense 19,000 48,000 44,000 108,000
Gain on settlement of debt -- -- (146,000) --
Loss from disposition of equipment 58,000 -- 82,000 --
(Gain) loss on sale of investment available for sale -- 12,000 -- (65,000)
Changes in assets and liabilities:
Restricted cash (29,000) (157,000) (40,000) (20,000)
Accounts receivable 103,000 223,000 292,000 601,000
Prepaid expenses and other assets 85,000 331,000 (130,000) 132,000
Deferred costs 133,000 62,000 239,000 72,000
Accounts payable and accrued expenses (448,000) (913,000) (570,000) (631,000)
Deferred revenue (76,000) 162,000 (54,000) 575,000
Management severance and other long-term liabilities -- (131,000) -- (262,000)
------------ ------------ ------------ ------------
Net cash provided by (used in) operating activities 319,000 (931,000) 118,000 107,000
------------ ------------ ------------ ------------
Cash flows from investing activities:
Capital expenditures (280,000) (2,650,000) (629,000) (6,040,000)
Deposits on broadcast equipment 161,000 332,000 112,000 132,000
Notes receivable -- -- -- 138,000
Proceeds from sale of investment available for sale -- 134,000 -- 528,000
------------ ------------ ------------ ------------
Net cash used in investing activities (119,000) (2,184,000) (517,000) (5,242,000)
------------ ------------ ------------ ------------
Cash flows from financing activities:
Principal payments on capital leases (183,000) (235,000) (367,000) (453,000)
Borrowings from revolving line of credit 5,168,000 5,794,000 10,895,000 14,402,000
Principal payments on revolving line of credit (5,385,000) (5,801,000) (11,083,000) (13,195,000)
Proceeds from issuance of common and preferred
stock, net of offering expenses 860,000 5,163,000 810,000 5,163,000
Principal payments on note payable -- -- (25,000) (50,000)
Proceeds from exercise of stock options and warrants 4,000 78,000 92,000 571,000
------------ ------------ ------------ ------------
Net cash provided by financing activities 464,000 4,999,000 322,000 6,438,000
------------ ------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 664,000 1,884,000 (77,000) 1,303,000
------------ ------------ ------------ ------------
Cash and cash equivalents at beginning of period 1,447,000 463,000 2,188,000 1,044,000
------------ ------------ ------------ ------------
Cash and cash equivalents at end of period $ 2,111,000 $ 2,347,000 $ 2,111,000 $ 2,347,000
============ ============ ============ ============
See accompanying notes to unaudited consolidated financial statements
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THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------- -----------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2001 2000 2001 2000
------------ ------------ ------------ ------------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 167,000 $ 108,000 $ 304,000 $ 260,000
============ ============ ============ ============
Income taxes $ -- $ -- $ -- $ --
============ ============ ============ ============
Supplemental disclosure of non-cash investing and
financing activities:
Issuance of common stock in payment of interest $ 50,000 $ 82,000 $ 120,000 $ 168,000
============ ============ ============ ============
Equipment acquired under capital leases $ -- $ 39,000 $ 81,000 $ 277,000
============ ============ ============ ============
Unrealized holding loss on investments $ (81,000) $ (284,000) $ (56,000) $ 113,000
============ ============ ============ ============
Exchange of convertible notes to common stock $ -- $ -- $ -- $ 202,000
============ ============ ============ ============
Issuance of common stock in payment of dividends $ 8,000 $ 8,000 $ 8,000 $ 8,000
============ ============ ============ ============
Expiration of settlement warrant obligation $ -- $ -- $ -- $ 1,793,000
============ ============ ============ ============
See accompanying notes to unaudited consolidated financial statements.
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NTN COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2001
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying consolidated financial
statements include all adjustments that are necessary for a fair presentation of
the financial position of NTN Communications, Inc. and its majority-owned
subsidiaries (collectively, "we" or "NTN") and the results of operations and
cash flows of NTN for the interim periods presented. Management has elected to
omit substantially all notes to our consolidated financial statements as
permitted by the rules and regulations of the Securities and Exchange
Commission. The results of operations for the interim periods are not
necessarily indicative of results to be expected for any other interim period or
for the year ending December 31, 2001.
The consolidated financial statements for the three and six months ended
June 30, 2001 and 2000 are unaudited and should be read in conjunction with the
consolidated financial statements and notes thereto included in our Form 10-K
for the year ended December 31, 2000.
We have restated the results for the three and six months ended June 30,
2000 to reflect the adoption of Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements, in the fourth quarter of fiscal 2000,
effective as of January 1, 2000. Refer to Note 1 under "revenue recognition" in
the Form 10-K for the year ended December 31, 2000. We have reclassified certain
items in the prior period consolidated financial statements to conform to the
current period presentation.
2. CASH AND CASH EQUIVALENTS
For the purpose of financial statement presentation, NTN considers all
highly liquid investment instruments with original maturities of three months or
less to be cash equivalents. Of the June 30, 2001 cash position, $1.0 million
belonged to NTN's subsidiary, Buzztime Entertainment, Inc. ("Buzztime") and can
only be utilized for the development of the application for Scientific Atlanta,
Inc. ("S-A") and fulfillment of Buzztime's obligations under the development,
license and marketing agreement with S-A and is not available for general
corporate use. This $1.0 million was raised through the sale of preferred stock
of Buzztime to an affiliate of S-A (Note 7).
3. INCOME (LOSS) PER SHARE
Options, warrants, convertible preferred stock and convertible notes
representing approximately 13,175,000, 12,818,000, 13,141,000 and 14,440,000
potential common shares have been excluded from the computations of net loss per
share for the three months ended June 30, 2001 and 2000 and the six months ended
June 30, 2001 and 2000, respectively, as their effect was anti-dilutive.
4. SEGMENT INFORMATION
We develop, produce and distribute interactive entertainment. Our reportable
segments have been determined based on the nature of the services offered to
customers, which include, but are not limited to, revenue from the NTN
Network(R) and Buzztime(TM) units. NTN Network revenue is generated primarily
from broadcasting content to customer locations through two interactive
television networks and from advertising sold on the networks. NTN Network
revenues comprised over 99% of our total revenue for the three months ended June
30, 2001. Buzztime generates revenue primarily from the distribution of its
digital trivia game show content and "play-along" sports games as well as from
production services provided to third parties. Included in the operating loss
for both the NTN Network and Buzztime is an allocation of corporate expenses.
The following tables set forth certain information regarding our segments and
other operations:
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THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------ ------------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2001 2000 2001 2000
------------ ------------ ------------ ------------
Revenues
NTN Network $ 5,342,000 $ 5,118,000 $ 10,557,000 $ 10,462,000
Buzztime 3,000 102,000 66,000 184,000
Other 5,000 4,000 12,000 20,000
------------ ------------ ------------ ------------
Total revenue $ 5,350,000 $ 5,224,000 $ 10,635,000 $ 10,666,000
============ ============ ============ ============
Operating income (loss)
NTN Network $ 7,000 $ (1,329,000) $ (376,000) $ (2,590,000)
Buzztime (734,000) (1,277,000) (1,878,000) (2,278,000)
------------ ------------ ------------ ------------
Operating loss $ (727,000) $ (2,606,000) $ (2,254,000) $ (4,868,000)
============ ============ ============ ============
Net loss
NTN Network $ (212,000) $ (1,503,000) $ (624,000) $ (3,420,000)
Buzztime (737,000) (1,304,000) (1,903,000) (2,332,000)
IWN -- (12,000) -- 65,000
------------ ------------ ------------ ------------
Net loss $ (949,000) $ (2,819,000) $ (2,527,000) $ (5,687,000)
============ ============ ============ ============
5. PRIVATE PLACEMENT OFFERING AND CONVERTIBLE NOTES PAYABLE
On January 26, 2001, we reached an agreement with the purchasers in the
November 2000 private placement to revise the terms of the private placement in
exchange for the issuance of an additional 350,043 shares of our common stock.
The revisions eliminated the exercise price reset provisions contained in the
warrants and set the exercise price at $1.64125 per share. Furthermore, the
purchasers agreed to surrender and cancel their rights to additional contingent
warrants for 609,291 shares of our common stock.
On January 26, 2001, we reached agreement with the holders of the
convertible notes, affiliates of the purchasers in the November 2000 private
placement, to extend the maturity date of the aggregate $4 million in promissory
notes from February 1, 2001 to February 1, 2003 and to reduce the interest rate
from 7% to 4%. We may now convert the promissory notes into NTN common stock at
a conversion price of $1.25 per share upon the earlier to occur of (i) February
1, 2003 or (ii) any time after NTN common stock closes above $2.50 for more than
20 consecutive trading days.
We allocated the 350,043 shares between the 4% convertible notes payable and
the additional stock we issued to the purchasers in the November 2000 private
placement based on the relative fair value of the securities at the time of
issuance. As a result, during the quarter ended March 31, 2001, we recorded a
discount of approximately $153,000 against the convertible notes due to the
allocation. To recognize the discount over the term of the notes, we have
accreted additional interest expense of approximately $31,000 for the six months
ended June 30, 2001. As a result of the extension, we will record interest
expense, at an effective rate of 6% per year, throughout the term of the notes
which began on January 26, 2001.
6. SETTLEMENT OF DEBT
In April 1999, we purchased Internet Stations equipment and game licenses
for $400,000 from Sikander, Inc. We issued a promissory note to Sikander, Inc.
for $360,000 along with a $40,000 cash payment. In December 1999, the payment
provisions were revised including issuance of a replacement promissory note for
$178,000. No payments were made after March 31, 2000 on the promissory note. In
June 2000, we commenced litigation against Sikander, Inc. and related
defendants. As of December 31, 2000, the note balance was approximately $170,000
including accrued interest. We reached an agreement with Sikander, Inc. on March
31, 2001 to settle the balance of the promissory note and accrued interest for
$25,000. The results of operations for the six months ended June 30, 2001
include an elimination of the balance of the promissory note and accrued
interest totaling $146,000, which is presented as other income in the statement
of operations.
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7. STRATEGIC PARTNERSHIP AND INVESTMENT IN BUZZTIME
On June 8, 2001, our subsidiary, Buzztime, entered into a development,
license and marketing agreement (the "Marketing Agreement") with
Scientific-Atlanta, Inc. ("S-A") to co-develop an application to enable the
operation of a Buzztime interactive trivia game show channel on S-A's Explorer
digital interactive set-top network, for distribution by cable operators to
their subscribers. Buzztime will be responsible for the trivia game channel
content including ongoing programming and player promotions. The channel will
derive revenue from cable operator license fees, premium subscription fees and
advertising revenue. Under the Marketing Agreement, Buzztime and S-A have
predetermined commission arrangements based on sales and support of Buzztime's
products to the cable system operators.
In connection with the Marketing Agreement, Scientific-Atlanta Strategic
Investments, L.L.C., a Delaware limited liability company and affiliate of S-A,
invested $1.0 million in Buzztime for 636,943 shares of Buzztime's Series A
Convertible Preferred Stock, representing 6% of Buzztime's common shares
outstanding on an as-converted basis, and warrants to obtain an additional
159,236 shares of Series A Convertible Preferred Stock (the "S-A Warrants").
Each share of preferred stock is convertible into one share of Buzztime's common
stock, subject to future adjustment, and entitled to a non-cumulative dividend
of 8%, if, when and as declared by Buzztime's board of directors. The $1.0
million investment may only be used towards development of the application for
S-A and fulfillment of Buzztime's obligations under Marketing Agreement, which
are currently Buzztime's primary focus.
NTN agreed to grant S-A the right to exchange its shares of Buzztime's
preferred stock into shares of NTN common stock upon the earlier of (i) Buzztime
is unable to obtain additional equity financing of $2.0 million before June 8,
2002, (ii) the liquidation, dissolution or bankruptcy of Buzztime before June 8,
2002, (iii) the failure of Buzztime to conduct a qualified public offering by
June 8, 2004, or (iv) a change in control of Buzztime before June 8, 2002. The
exchange price will be the 20-day average closing price of NTN's common stock
immediately preceding the date S-A gives notice of its intent to exercise its
rights.
The exercise price of the S-A warrants is $1.57 per share. The warrants vest
in 10% increments as cable system operators sign on for the Buzztime game show
channel. No compensation expense has been recorded in the quarter ended June 30,
2001 as the warrants vesting provisions are contingent upon specified
performance-based conditions and the low end of the range of the aggregate fair
value of the warrants is zero as of June 30, 2001.
8. MINORITY INTEREST ACCOUNTING
NTN retained majority ownership of Buzztime and, as a result, will continue
to consolidate Buzztime's operations in its financial statements. No gain or
loss was recorded by NTN on this sale of Buzztime's shares in accordance with
Staff Accounting Bulletin Topic 5h - Miscellaneous Accounting, "Accounting for
Sales of Stock in a Subsidiary", as the realization of the gain is not assured
given Buzztime's history of losses from operations, net operating loss
carryforwards, which are generally not available to offset capital gains, and
the start-up nature of Buzztime's products designed for the interactive
television market. In addition, the ongoing business relationship with S-A
through the Marketing Agreement and restrictions placed on the use of proceeds
were additional factors considered in accounting for the sale of Buzztime's
shares. As a result, the investment was reflected as a capital transaction.
The investment in Buzztime is presented as a minority interest in
consolidated subsidiary on NTN's consolidated balance sheet. The minority
interest balance will be adjusted for S-A's share of Buzztime's net income or
loss in future periods.
9. BUZZTIME 2001 STOCK INCENTIVE PLAN
On May 31, 2001, Buzztime adopted an incentive stock option plan. The purpose
of the plan is to promote the success of the company and the interests of
stockholders by attracting, motivating, retaining and rewarding certain
officers, employees, directors and other eligible persons with awards and
incentives. Pursuant to the option plan, Buzztime may grant options of Buzztime
common stock, subject to applicable
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share limits, upon terms and conditions specified in the plan. To date, no
options have been granted under the plan.
10. CONTINGENT LIABILITY
The Company's Canadian licensee is currently in discussions with the Canada
Customs and Revenue Agency regarding a potential liability relating to
withholding tax on certain amounts previously paid to NTN by the Canadian
licensee. Our licensee has stated that no assessment has been made to date by
Canada Customs and Revenue Agency, but has further stated that such assessment
could range from zero to $460,000 Canadian dollars. If such an assessment is
made by the Canada Customs and Revenue Agency, it is unclear as to what, if any,
liability NTN might have in this matter.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Forward Looking Statements
This Quarterly Report contains forward looking statements regarding our
business strategies, projections, financing requirements and other matters,
which are subject to risks and uncertainties, including cash needs, competition,
market acceptance and other risk factors detailed in our Securities and Exchange
Commission filings, including our Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, and our Registration Statement on Form S-3 (File No.
333-51650), which risk factors are incorporated herein by reference.
GENERAL
We develop and distribute interactive game content. We operate our
businesses through two operating units, the NTN Network and our 94%-owned
subsidiary, Buzztime Entertainment, Inc. ("Buzztime").
The NTN Network is North America's largest "out-of-home" interactive
television network. Our unique private network broadcasts a variety of
multi-player sports and trivia games 365 days per year to hospitality locations
such as restaurants, sports bars, hotels, clubs and military bases totaling
approximately 3,500 locations in North America as of June 30, 2001. The NTN
Network earns revenue from delivering entertainment content to hospitality
locations in the United States for a monthly fee, including installation
revenue. The NTN Network also generates advertising revenue from third party
advertisers on the NTN Network and license fee revenue from our Canadian
licensee.
The NTN Network is the only television network that is specifically designed
to entertain the out-of-home viewer. Where other television broadcasts are
produced for the home viewer who is passively watching from six feet away, our
broadcast is easily viewed from a distance of 15 feet or more. In addition, our
content is not dependent upon audio, so it does not interfere with the
location's own sound system or with patrons' conversations. Our content is
designed to promote social interaction and stimulate conversation among the
patrons. Hospitality locations pay to use our interactive technology to receive
our entertainment broadcast.
In April 1999, we began upgrading the NTN Network by introducing a new
Windows 98-based "Digital Interactive TV" system to replace our decade-old
DOS-based system. The new digital system contains many new features, including a
Windows-based platform with full-motion video capabilities and high-resolution
graphics to allow more compelling content and better advertising opportunities.
In addition, we have introduced new, more consumer friendly Playmaker(R)
wireless game pads that operate at 900 MHz to increase transmission range and
have a longer battery life. The new Playmakers also feature a larger, eight line
LCD screen that displays sports scores and other ticker information and enables
electronic, text-based chat between patrons.
Buzztime was incorporated in the state of Delaware in December 1999.
Buzztime currently is the distributor of the largest known digital trivia game
show library and many unique "TV play-along" sports
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games. Our TV play-along sports games are played while watching a sporting event
on television. The games allow players to enter play call predictions and to be
ranked against other players. For example, while watching a NFL football game on
television, a player can predict whether the quarterback will pass or run the
ball. The play call prediction must be entered by the player prior to the ball
snap. Once the play has been completed, the player's score is tabulated and
ranked against other players.
Buzztime functions as a developer and distributor of game content. As a
developer, it continues to augment its expansive interactive game library. As a
distributor, Buzztime broadcasts live play-along game shows to a variety of
interactive platforms. Our mission is to take the Buzztime brand and online
services to a multitude of interactive platforms that will include Interactive
Television and wireless devices.
We have separate strategies for each of our two operating units. For the NTN
Network, our strategy is to continue to lower operating costs while increasing
the number of paying customers and advertising revenue. To lower costs, we
focused on reducing telecommunications and technology costs. To increase sales,
we are focused on increasing targeted sales efforts in the top twenty
metropolitan markets, using new forms of connectivity, to reach locations not
previously available to us through our satellite distribution network. Our
strategy also calls for using newly available and inexpensive broadband
connectivity and taking advantage of the availability of inexpensive wireless
Internet appliances to deliver new content and services, for additional
revenues, to locations and their consumers. For Buzztime, we intend to focus
increasingly on the distribution of Buzztime content to Interactive Television
markets and to wireless devices. These distribution channels should increase
future direct revenues while also increasing player registrations and loyalty,
regardless of the consumer's point of access. The NTN Network will continue to
be a key element in promoting the Buzztime brand. In addition, we expect to
generate revenues through a combination of direct consumer marketing,
advertising, game sponsorships, pay-to-play and subscription models across all
platforms. There can be no assurance, however, that we will be successful in
executing this strategy.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2001 AND JUNE 30, 2000
Operations for the three months ended June 30, 2001 resulted in a net loss
of $949,000 compared to a net loss of $2,819,000 for the three months ended June
30, 2000. The results for the quarter ended June 30, 2000 have been restated to
reflect the adoption of Staff Accounting Bulletin No. 101 in the fourth quarter
of fiscal 2000, effective as of January 1, 2000.
Total revenues increased 2% to $5,350,000 for the three months ended June
30, 2001 from $5,224,000 for the three months ended June 30, 2000. This increase
was primarily due to NTN Network revenues as shown in the following table (in
thousands):
JUNE 30
-------------------------
2001 2000
---------- ----------
NTN Network Revenues $ 5,342 $ 5,118
Buzztime Service Revenues 3 102
Other Revenues 5 4
---------- ----------
Total Revenues $ 5,350 $ 5,224
========== ==========
NTN Network revenues increased 4% to $5,342,000 for the three months ended
June 30, 2001 from $5,118,000 for the three months ended June 30, 2000. This
increase was due in part to installation, training and setup revenue which
increased approximately $104,000 due to an increase in amortization of
previously deferred fees. Hospitality subscription revenues increased by
approximately $196,000 due to an increase in the number of sites. The total
number of sites as of June 30, 2001 was approximately 3,500, representing a net
increase of 164 sites compared to June 30, 2000. Advertising revenue decreased
by approximately $71,000 due to fewer advertising contracts for the three months
ended June 30, 2001. At June 30, 2001, approximately 92% of the sites have been
converted to the digital network compared to approximately 76% of the sites
converted as of June 30, 2000.
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Buzztime revenues were $3,000 for the three months ended June 30, 2001,
compared to $102,000 for the three months ended June 30, 2000. The second
quarter 2000 revenues arose out of production and advertising revenue which did
not recur in 2001.
Direct operating costs decreased 31% to $2,112,000 for the three months
ended June 30, 2001 from $3,050,000 for the three months ended June 30, 2000.
This is primarily due to a decrease in depreciation and amortization of
approximately $590,000 due to the DOS-based network equipment being fully
depreciated by June 2000, which was partially offset by an increase in
depreciation for the capitalized purchases of broadcast equipment associated
with the digital network. Advertising commissions also decreased approximately
$214,000 as a direct result of decreased NTN Network advertising revenue for the
three months ended June 30, 2001. Communication charges decreased by
approximately $120,000 due to technical changes made in 2000. Freight expenses
also decreased by approximately $64,000 due to 221 less installations of the
DITV equipment and less incoming shipments of Playmakers for the three months
ended June 30, 2001 compared to the three months ended June 30, 2000. Playmaker
repairs increased by approximately $62,000 due to the warranty expiring on some
of the Playmakers.
Selling, general and administrative expenses decreased 17% to $3,498,000 for
the three months ended June 30, 2001 from $4,233,000 for the three months ended
June 30, 2000. Salaries, payroll taxes, benefits, recruiting fees and other
employee related expenses decreased by approximately $316,000 during the three
months ended June 30, 2001 due to a decrease in the number of employees compared
to the three months ended June 30, 2000. Consulting expenses decreased by
approximately $144,000 due to various projects reaching completion in the past
year. Stock-based compensation decreased $67,000 due to the impact of marking
warrants to market at June 30, 2001, prior to their measurement dates. Bad debt
expense also decreased $100,000 due to continued collection efforts. Various
other expenses decreased due to general cost cutting measures that have been
implemented. These decreases have been partially offset by an increase of
approximately $71,000 in expenses related to the annual report and shareholder
meeting caused in part by the timing of the meeting being held in June this year
compared to July in 2000.
Depreciation and amortization expense decreased 8% to $432,000 for the three
months ended June 30, 2001 from $471,000 for the three months ended June 30,
2000, due to certain assets becoming fully depreciated.
Research and development expenses were $35,000 for the three months ended
June 30, 2001, compared to $76,000 for the three months ended June 30, 2000. The
current period expenses resulted from our research and development efforts
related to the next generation of the digital network and interactive television
initiatives. For the three-month period ended June 30, 2000, our research and
development efforts focused primarily on the upgrade of the NTN Network as well
as our Internet web site.
Interest expense decreased 11% to $228,000 for the three months ended June
30, 2001, compared to $255,000 for the three months ended June 30, 2000, due to
the expiration of various capitalized leases as well as the decrease in the
interest rate on the convertible notes payable from 7% to 4%.
SIX MONTHS ENDED JUNE 30, 2001 AND JUNE 30, 2000
Operations for the six months ended June 30, 2001 resulted in a net loss of
$2,527,000 compared to a net loss of $5,687,000 for the six months ended June
30, 2000. The results for the six months ended June 30, 2000 have been restated
to reflect the adoption of Staff Accounting Bulletin No. 101 in the fourth
quarter of fiscal 2000, effective as of January 1, 2000.
Total revenues decreased less than 1% to $10,635,000 for the six months
ended June 30, 2001 from $10,666,000 for the six months ended June 30, 2000.
This decrease was primarily due to a reduction in NTN Network advertising
revenues and Buzztime revenues as shown in the following table (in thousands):
SIX MONTHS ENDED
JUNE 30
-------------------------
2001 2000
---------- ----------
NTN Network Revenues ............ $ 10,557 $ 10,462
Buzztime Service Revenues ....... 66 184
Other Revenues .................. 12 20
---------- ----------
Total Revenues .................. $ 10,635 $ 10,666
========== ==========
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NTN Network revenues increased 1% to $10,557,000 for the six months ended
June 30, 2001 from $10,462,000 for the six months ended June 30, 2000. This
increase was due to installation, training and setup revenue which increased
approximately $319,000 due to an increase in amortization of previously deferred
fees. Hospitality subscription revenues also increased by approximately $91,000
due to an increase in the number of sites. The total number of sites as of June
30, 2001 was approximately 3,500, representing a net increase of 164 sites
compared to June 30, 2000. These increases were offset by a decrease of
approximately $339,000 in advertising revenue due to fewer advertising contracts
during the six months ended June 30, 2001. At June 30, 2001, approximately 92%
of the sites have been converted to the digital network compared to
approximately 76% of the sites converted as of June 30, 2000.
Buzztime revenues were $66,000 for the six months ended June 30, 2001,
compared to $184,000 for the six months ended June 30, 2000, due to production
and advertising revenue which did not recur in 2001.
Direct operating costs decreased 29% to $4,357,000 for the six months ended
June 30, 2001 from $6,131,000 for the six months ended June 30, 2000. This is
primarily due to a decrease in depreciation and amortization of approximately
$1,323,000 due to the DOS-based network equipment being fully depreciated by
June 2000, which is offset by an increase in depreciation for the capitalized
purchases of broadcast equipment associated with the digital network.
Advertising commissions also decreased approximately $367,000 as a direct result
of decreased NTN Network advertising revenue for the six months ended June 30,
2001. Communication charges decreased by approximately $261,000 due to technical
changes made in 2000. Freight expenses also decreased by approximately $108,000
due to 385 less installations of the DITV equipment and less incoming shipments
of Playmakers for the six months ended June 30, 2001 compared to the six months
ended June 30, 2000. The decreases were offset by increased playmaker repair
expense and hosting fee expenses. Playmaker repairs increased by approximately
$140,000 due to the warranty expiring on some of the Playmakers. Hosting fees
increased by $111,000 which are associated with Buzztime.com which did not
launch until the end of May 2000.
Selling, general and administrative expenses decreased 9% to $7,567,000 for
the six months ended June 30, 2001 from $8,316,000 for the six months ended June
30, 2000. Consulting expenses decreased by approximately $170,000 due to various
projects reaching completion in the past year. Stock-based compensation
decreased $258,000 due to the impact of marking warrants to market at June 30,
2001, prior to their measurement dates. Bad debt expense also decreased $283,000
due to continued collection efforts. Various other expenses decreased due to
general cost cutting measures that have been implemented. These decreases in
expense have been offset by an increase of approximately $71,000 in expenses
related to the annual report and shareholder meeting caused in part by the
timing of the meeting being held in June this year compared to July 2000.
Research and development expenses were $96,000 for the six months ended June
30, 2001, compared to $223,000 for the six months ended June 30, 2000. The
current period expenses resulted from our research and development efforts
related to the next generation of the digital network and interactive television
initiatives. For the six-month period ended June 30, 2000, our research and
development efforts focused primarily on the upgrade of the NTN Network as well
as our Internet web site.
Interest expense decreased 21% to $452,000 for the six months ended June 30,
2001, compared to $569,000 for the six months ended June 30, 2000, due to the
expiration of various capitalized leases as well as the decrease in the interest
rate on the convertible notes payable from 7% to 4%.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2001, we had cash and cash equivalents of $2,111,000 and a
working capital deficit of $3,252,000, compared to cash and cash equivalents of
$2,188,000 and working capital of $893,000 at December 31, 2000. The cash
balance at June 30, 2001 includes $1.0 million which can only be utilized for
the development of the application for S-A and fulfillment of Buzztime's
obligations under the
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development, license and marketing agreement and is not available for general
corporate use. The primary reason for the working capital deficit was the
reclassification of the revolving line of credit from a long-term liability to a
short-term liability as the line of credit matures on June 30, 2002. Net cash
provided by operations was $118,000 for the six months ended June 30, 2001 and
$107,000 for the six months ended June 30, 2000. The principal uses of cash from
operations for the six months ended June 30, 2001 were to fund our net loss,
which includes Buzztime initiatives. Depreciation, amortization and other
non-cash charges offset the net loss.
Net cash used in investing activities was $517,000 for the six months ended
June 30, 2001 and $5,242,000 for the six months ended June 30, 2000. Included in
net cash used in investing activities for the six months ended June 30, 2001 was
$619,000 in capital expenditures which was partially offset by $112,000 for
deposits on broadcast equipment received and $10,000 in capitalized software
expenditures.
Net cash provided by financing activities was $322,000 for the six months
ended June 30, 2001 and $6,438,000 for the six months ended June 30, 2000. Net
cash provided by financing activities for the six months ended June 30, 2001
included $1.0 million raised by Buzztime offset by issuance costs of $61,000,
$129,000 of equity issuance costs related to the capital raised in November 2000
and $92,000 of proceeds from the exercise of stock options and warrants. The
cash provided by financing activities were offset by $367,000 of principal
payments on capital leases, $25,000 in principal payments on a note payable, and
$188,000 of net payments on the revolving line of credit.
We currently have a revolving line of credit agreement with Coast Business
Credit, which was amended in May 2001. The line of credit provides for
borrowings not to exceed the lesser of a designated maximum amount or three
times trailing monthly collections or three times annualized trailing adjusted
EBITDA. The maximum line of credit will be gradually reduced from $4.0 million
at April 1, 2001 to $2,750,000 at December 31, 2001. As of July 1, 2001, the
maximum line of credit was $3,800,000. Our availability under the revolving line
of credit may be further reduced if our monthly collections or operating income
falls below certain levels. The line of credit is secured by substantially all
of our assets.
The amendments to our revolving line of credit in May 2001 also allow equity
raised by us to be added to the EBITDA calculation and permit us to exclude the
effect of Staff Accounting Bulletin No. 101 for the fiscal 2000. The amendments
also require us to raise $1.0 million in equity by June 30, 2001, maintain a
minimum cash level of $0.4 million each month and to limit our cash burn to not
more than $1.0 million from April 1, 2001 onward without receiving additional
equity. The line of credit matures on June 30, 2002. The recent investment in
Buzztime by an affiliate of Scientific-Atlanta, Inc., discussed below, satisfied
the $1.0 million equity requirement.
Our liquidity and capital resources remain limited and this may constrain
our ability to operate and grow our business. Any reduction in availability
under our revolving line of credit may further constrain our liquidity.
We will require additional financing to implement our plan of:
o converting our entire existing U.S. customer base to the digital
network;
o expanding the digital network; and
o developing Buzztime into a leading content provider for interactive
television platforms
We will need to raise additional equity or debt financing to execute our
business plans for the NTN Network and Buzztime as well as to comply with our
recently amended revolving line of credit agreement. Based on our projected cash
requirements, we will need $2.0 million in financing within the next twelve
months in order to fund any Buzztime growth initiatives (in addition to the $1.0
million from Scientific-Atlanta that has been already received). Based on
slowness in the economy and a lengthening of our sales cycle for adding new
sites to the NTN Network, we now plan to increase our number of sites to 3,600
in the U.S. and Canada by the end of 2001, which is a reduction from the
previous goal of 4,000. This lowered
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sales goal has reduced the cash required for the NTN network. The NTN Network
currently generates cash flow sufficient to sustain its operations on this
reduced growth scenario for the next twelve months. However, we will need to
raise additional capital in the form of senior debt, subordinated debt and/or
equity to meet the line of credit reductions and to eventually pay off the line
of credit facility, which expires in June 2002. We may not be able to obtain
additional financing on terms favorable to us or at all.
As part of our financing plan, we will try to obtain additional direct
investments in Buzztime. We will begin growth initiatives only if we succeed in
raising capital at an appropriate cost. If additional financing is not obtained,
our growth plans will be deferred. If additional financing for Buzztime is not
obtained and we do not reduce cash expenditures at Buzztime sufficiently, we may
not be able to sustain the operations of Buzztime. If our cash flows are less
than anticipated or if we incur unanticipated expenses, we may not be able to
continue improvement, development and expansion of our new digital network or
pursue our Buzztime initiatives.
RECENT DEVELOPMENTS
On June 8, 2001, Buzztime entered into a development, license and marketing
agreement (the "Marketing Agreement") with Scientific-Atlanta, Inc. to
co-develop an application to enable operation of a Buzztime interactive trivia
game show channel on Scientific-Atlanta's Explorer digital interactive set-top
network for distribution by cable operators to their subscribers. Buzztime will
be responsible for the trivia game channel content including ongoing programming
and player promotions. The channel will derive revenue from cable operator
license fees, premium subscription fees and advertising revenue. Under the
Marketing Agreement, Buzztime and Scientific-Atlanta have predetermined
commission arrangements based on sales and support of Buzztime's products to the
cable system operators
In connection with the Marketing Agreement, an affiliate of
Scientific-Atlanta invested $1.0 million in Buzztime for 636,943 shares of its
preferred stock, representing 6% of Buzztime's capitalization on an as-converted
basis, and warrants to obtain an additional 159,236 shares of its preferred
stock. Each share of Buzztime preferred stock is initially convertible into one
share of Buzztime common stock, subject to future adjustment, and entitled to a
non-cumulative dividend of 8%, if, when and as declared by Buzztime's board of
directors. The $1.0 million in net proceeds may only be used towards development
of the application for Scientific-Atlanta and fulfillment of Buzztime's
obligations under the Marketing Agreement.
NTN granted Scientific-Atlanta the right to exchange its shares of Buzztime
preferred stock into shares of NTN common stock if (i) Buzztime does not obtain
additional equity financing of $2.0 million before June 8, 2002, (ii) the
liquidation, dissolution or bankruptcy of Buzztime before June 8, 2002, (iii)
the failure of Buzztime to conduct a qualified public offering by June 8, 2004,
or (iv) a change in control of Buzztime before June 8, 2002. The exchange price
will be the 20-day average closing price of NTN's common stock immediately
preceding the date Scientific-Atlanta gives notice of its intent to exercise its
rights.
The exercise price of the S-A warrants is $1.57 per share. However, the
warrants vest in 10% increments only as cable system operators sign on for the
Buzztime game show channel.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to risks related to currency exchange rates, stock market
fluctuations, and interest rates. As of June 30, 2001, we owned common stock of
an Australian company that is subject to market risk. At June 30, 2001, the
carrying value of this investment was $328,000, which is net of a $489,000
unrealized loss. This investment is exposed to further market risk in the future
based on the operating results of the Australian company and stock market
fluctuations. Additionally, the value of the investment is further subject to
changes in Australian currency exchange rates. At June 30, 2001, a hypothetical
10% decline in the value of the Australian dollar would result in a reduction of
$33,000 in the carrying value of the investment.
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We have outstanding convertible notes which bear interest at 4% per annum
and line of credit borrowings which bear a rate equal to the prime rate plus
1.5% per annum, which cannot be less than 9% per annum. At June 30, 2001, a
hypothetical one-percentage point increase in the prime rate would result in an
increase of $38,000 in annual interest expense.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
As previously reported in our Quarterly Report on Form 10-Q for the period
ended March 31, 2001, in February 1998, an action entitled Dorman vs. NTN
Communications, Inc. was filed in the Superior Court of San Diego County for the
State of California alleging a fraud and negligent misrepresentation claim based
upon purported omissions from our filings with the Securities and Exchange
Commission. On May 3 and 4, 2001, the parties participated in a mediation with a
court-appointed mediator during which the parties reached an agreement to settle
the litigation. Pursuant to the settlement, on May 17, 2001, the sum of $42,000,
which is fully covered by insurance, was paid to Dorman and the litigation was
dismissed by the court on May 18, 2001.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On April 2, 2001, we issued approximately 121,000 shares of common stock in
a private transaction in payment of interest of approximately $50,000 on the
outstanding 4% senior convertible notes.
On April 2, 2001, we granted a warrant to purchase 20,000 shares of common
stock to Baron Enterprises, Inc., a corporation wholly-owned and operated by a
member of our board of directors, as a component of compensation pursuant to an
Advertising Sales Representative Agreement. The terms of the agreement are
further discussed in Item 5 of Part II. The warrant enables the holder to
purchase 20,000 common shares at a price of $0.50 per share for a period of
three years. The warrant vests as to 1/12 of the total shares on the last
business day of each of twelve consecutive months of the contract.
On June 1, 2001, we issued approximately 13,000 shares of common stock in
lieu of a cash payment of approximately $8,000 of dividends on our Series A
Preferred Stock.
On June 8, 2001, Buzztime sold 636,943 shares of its preferred stock and
warrants to obtain an additional 159,236 shares of its preferred stock. In
connection with Buzztime's offering of its preferred stock, we granted the
purchaser the right to exchange its shares of Buzztime preferred stock into
shares of NTN common stock if (i) Buzztime does not obtain additional equity
financing of $2.0 million before June 8, 2002, (ii) the liquidation, dissolution
or bankruptcy of Buzztime before June 8, 2002, (iii) the failure of Buzztime to
conduct a qualified public offering by June 8, 2004, or (iv) a change in control
of Buzztime before June 8, 2002. The exchange price will be the 20-day average
closing price of NTN common stock immediately preceding the date the purchaser
gives notice of its exercise of its rights.
Each offering was made without registration under the Securities Act of
1933, as amended (the "Act") in reliance upon the exemption from registration
afforded by Section 4(2) of the Act and Rule 506 of Regulation D promulgated
thereunder.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
We held our annual meeting of stockholders on June 29, 2001. The following
matters were voted upon at such meeting:
1. To elect two directors to hold office until the 2004 annual meeting of
stockholders and until their respective successors are duly elected and
qualified:
ROBERT M. BENNETT
-------------------
Votes In Favor.. 32,961,295
Abstentions..... 0
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ESTHER L. RODRIGUEZ
-------------------
Votes In Favor.. 32,961,206
Abstentions..... 0
Both Mr. Bennett and Ms. Rodriguez were elected as directors to hold office
until the annual meeting of stockholders in 2004 and until each respective
successor is duly elected and qualified. The following directors were not
subject to election and their term of office continued after the meeting: Gary
H. Arlen, Barry Bergsman, Vincent A. Carrino and Stanley B. Kinsey.
2. To ratify the appointment of KPMG LLP as independent accountants of NTN for
the fiscal year ending December 31, 2001.
Votes In Favor .................. 33,121,242
Votes Against ................... 52,650
Abstentions ..................... 46,738
The proposal for ratification of the appointment of KPMG LLP was approved.
ITEM 5. OTHER INFORMATION.
On May 8, 2001, we entered in an Advertising Sales Representative Agreement
with Baron Enterprises, Inc. ("Baron"), a corporation wholly-owned and operated
by Barry Bergsman, a member of our board of directors, pursuant to which Baron
will provide advertising sales representation services to us under the direction
of the NTN Network's president and chief operating officer. For Baron's services
under the Advertising Sales Representative Agreement, we granted Baron a three
year warrant to purchase 20,000 shares of NTN common stock at an exercise price
of $0.50 per share. The warrant vests and becomes exercisable as to 1/12 of the
total shares on the last business day of each of the twelve months commencing
April 2001, subject to Baron continuing to provide services to us. In addition,
Baron will receive a commission in the amount of 35% of net advertising revenues
received by the NTN Network from any advertising contract solicited by Baron. We
will pay to Baron a monthly recoverable cash advance against commissions to be
earned in the amount of $5,000 per month, not to exceed an aggregate of $60,000
per year. The Advertising Sales Representative Agreement expires on April 1,
2002.
In June 2001, we entered a Contribution Agreement with Buzztime, effective
retroactive to January 1, 2001, whereby we contributed certain of our assets to
Buzztime. The assets contributed to Buzztime include the interactive trivia game
show libraries, the play along sports game libraries, related technology and
certain intangible assets.
Further, in June 2001, we entered into a Licensing and Marketing Agreement
with Buzztime, effective retroactive to January 1, 2001, whereby Buzztime
granted us an exclusive, royalty-free, perpetual license to the game libraries
and related technology for distribution to the commercial market. Buzztime will
continue to provide us with new game content created during the ordinary course
of business, as well as maintenance and upgrades to existing content and related
technologies, during the next five years; this obligation is subject to a
termination right at the option of Buzztime, upon one year's prior notice to us.
In addition, Buzztime will continue to produce Predict the Play(TM) applications
for the NTN Network during the next five years. Pursuant to the terms of the
agreement, the NTN Network will promote Buzztime during broadcast of Buzztime
programming on the NTN Network as long as Buzztime continues to supply new game
content for distribution by us. Buzztime shall promote the NTN Network to the
best of its ability in the consumer market, including Interactive Television and
wireless devices.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
4.1 NTN Communications, Inc. Warrant Certificate, #WE-022, issued to Baron
Enterprises, Inc. (1)
10.1 Contribution Agreement, dated January 1, 2001, by and between NTN
Communications, Inc. and Buzztime, Inc. (1)
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10.2 Licensing and Marketing Agreement, dated January 1, 2001, by and
between NTN Communications, Inc. and Buzztime, Inc. (1)
10.3 Series A Preferred Stock Purchase Agreement, dated June 8, 2001, by and
among Buzztime Entertainment, Inc., NTN Communications, Inc., and
Scientific-Atlanta Strategic Investments, L.L.C. (1)
10.4 Warrant Agreement, dated June 8, 2001, by and between Buzztime
Entertainment, Inc. and Scientific-Atlanta Strategic Investments,
L.L.C. (1)
10.5 Right of First Refusal and Exchange Agreement, dated June 8, 2001, by
and among Buzztime Entertainment, Inc., NTN Communications, Inc. and
Scientific-Atlanta Strategic Investments, L.L.C. (1)
10.6 Advertising Sales Representative Agreement, dated May 8, 2001, by and
between NTN Communications, Inc. and Baron Enterprises, Inc. (1)
(b) Reports on Form 8-K
On June 29, 2001, we filed a Current Report on Form 8-K (event date
June 11, 2001) to report under Item 5 (other events).
- ----------
(1) Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NTN COMMUNICATIONS, INC.
Date: July 20, 2001 By: /s/ James Frakes
------------------------------------
James Frakes
Authorized Signatory and Chief
Financial Officer
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.1 NTN Communications, Inc. Warrant Certificate, #WE-022, issued to
Baron Enterprises, Inc. (1)
10.1 Contribution Agreement, dated January 1, 2001, by and between NTN
Communications, Inc. and Buzztime, Inc. (1)
10.2 Licensing and Marketing Agreement, dated January 1, 2001, by and
between NTN Communications, Inc. and Buzztime, Inc. (1)
10.3 Series A Preferred Stock Purchase Agreement, dated June 8, 2001, by
and among Buzztime Entertainment, Inc., NTN Communications, Inc.,
and Scientific-Atlanta Strategic Investments, L.L.C. (1)
10.4 Warrant Agreement, dated June 8, 2001, by and between Buzztime
Entertainment, Inc. and Scientific-Atlanta Strategic Investments,
L.L.C. (1)
10.5 Right of First Refusal and Exchange Agreement, dated June 8, 2001,
by and among Buzztime Entertainment, Inc., NTN Communications, Inc.
and Scientific-Atlanta Strategic Investments, L.L.C. (1)
10.6 Advertising Sales Representative Agreement, dated May 8, 2001, by
and between NTN Communications, Inc. and Baron Enterprises, Inc. (1)
- ----------
(1) Filed herewith.
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