SEC filing summary
Filing identity: The supplied filing is NTN Buzztime, Inc.’s unaudited Form 10-Q for the quarter ended June 30, 2017—not a filing for Ernexa Therapeutics Inc. Confirm the intended company and filing before relying on this summary.
Business context and reporting period
NTN Buzztime provides interactive entertainment and dining technology to bars and restaurants, including games, subscriptions, equipment leasing, advertising, and live events. It is developing digital menu, ordering, and payment capabilities for its BEOND tablet platform. Amounts below are in U.S. dollars; financial statement figures are generally in millions unless otherwise indicated.
Financial results and liquidity
| Metric | Q2 2017 | Q2 2016 | First half 2017 | First half 2016 |
|---|---|---|---|---|
| Revenue | $5.55 | $5.41 | $10.78 | $10.89 |
| Gross margin | $3.92; 71% | $3.57; 66% | $7.31; 68% | $7.01; 64% |
| Operating loss | $(0.03) | $(0.70) | $(0.86) | $(1.56) |
| Net loss | $(0.16) | $(0.85) | $(0.25) | $(1.89) |
| EBITDA (non-GAAP) | $0.52 | $0.04 | $1.17 | $(0.10) |
| Operating cash flow | Not presented by quarter | $2.81 | $0.01 |
Q2 subscription revenue was $4.23 million, down 2.8%; sales-type lease revenue was $0.22 million, down 25.9%; and other revenue was $1.09 million, up 45.7%. For the first half, subscription revenue fell 3.1% and lease revenue fell 41.5%, while other revenue rose 30.8%. Subscriber venues declined to 2,768 from 2,859 a year earlier. Management attributed subscription weakness primarily to lower average site count and lease revenue weakness to fewer BEOND installations.
At June 30, cash and cash equivalents were $6.83 million, versus $5.69 million at year-end 2016. Working capital was $0.58 million, down from $4.02 million. Six-month investing cash outflow was $0.70 million; financing cash outflow was $0.99 million. Operating cash generation included a substantial increase in deferred revenue, primarily from a Buffalo Wild Wings prepayment for future equipment and services, and should not be viewed as recurring operating performance without further analysis.
Total debt was approximately $5.46 million: $5.20 million classified as current and $0.26 million long-term. The East West Bank facility had $4.45 million outstanding, only about $0.05 million of borrowing availability, and a January 15, 2018 maturity. Equipment financing had $1.01 million outstanding. The company said it complied with facility covenants at quarter-end; a covenant required a deposit balance equal to outstanding advances. Verify the extent to which reported cash is available for general use.
Material changes, outlook, and risks
- Net loss improved year over year, supported by higher gross margin and lower operating expenses. First-half other income included a one-time supplier payment related to a resolved supply-chain matter; the company did not expect a repeat.
- Both registered direct offerings in March and April raised approximately $1.77 million net in total. The company issued 229,566 common shares in the offerings.
- Management expected second-half 2017 SG&A to be consistent with the first half and forecast full-year SG&A of approximately $16 million.
- NTN Buzztime expected to begin deploying Buffalo Wild Wings digital menu, ordering, and payment functionality in Q4 2017 or Q1 2018. It expected to increase equipment inventory to support the rollout. A casino-game licensing agreement with Scientific Games may generate per-game fees, but installations and timing were uncertain.
- Management stated it expected sufficient cash to meet operating needs and debt obligations for at least 12 months from issuance of the statements, while continuing to evaluate financing alternatives. It warned that additional financing might be unavailable or on unfavorable terms and that expense or capital-spending reductions might not cover a shortfall.
- Key risks include reliance on Buffalo Wild Wings, which represented 43% of Q2 revenue; dependence on a sole supplier for BEOND tablets and related equipment; limited borrowing availability and near-term debt maturity; competition and technology changes; and potential NYSE American delisting if listing standards are breached again within 12 months of regaining compliance.
Important facts for investors to verify
- Confirm that NTN Buzztime, rather than Ernexa Therapeutics, is the intended issuer.
- Review the East West Bank maturity, covenant deposit requirement, borrowing-base availability, and the actual availability of reported cash.
- Assess how much first-half operating cash flow depended on the Buffalo Wild Wings prepayment and whether delivery obligations and deferred revenue are being fulfilled.
- Track Buffalo Wild Wings deployment timing, equipment spending, customer concentration, and any revenue or costs from the Scientific Games agreement.
- Confirm progress toward maintaining NYSE American listing compliance and the company’s ability to secure future financing.