Business Context and Reporting Period
The filing is NTN Buzztime, Inc.’s Form 10-K for the fiscal year ended December 31, 2019, not a quarterly report. The request metadata names Ernexa Therapeutics Inc.; that does not match the registrant identified in the filing. NTN Buzztime provides interactive entertainment, trivia, hardware, and advertising services, primarily to hospitality venues in the U.S. and Canada.
Venue subscriptions fell to 1,440 at year-end from 2,639 a year earlier, largely following the termination of most Buffalo Wild Wings relationships in November 2019. Buffalo Wild Wings represented 34% of 2019 revenue ($6.82 million), compared with 44% in 2018.
Financial Results and Liquidity
| Metric | 2019 | 2018 |
|---|---|---|
| Revenue | $19.806 million | $23.335 million |
| Gross profit and margin | $12.323 million; 62.2% | $15.265 million; 65.4% |
| Operating income (loss) | $(1.762) million | $0.203 million |
| Net income (loss) | $(2.047) million | $(0.259) million |
| EBITDA (non-GAAP) | $1.106 million | $2.830 million |
| Cash provided by operating activities | $2.744 million | $1.365 million |
| Cash used in investing activities | $(1.065) million | $(1.579) million |
| Cash used in financing activities | $(1.098) million | $(0.303) million |
Revenue declined 15.1% year over year. Subscription revenue decreased 10.9% to $14.278 million, hardware revenue decreased 34.5% to $2.350 million, and other revenue decreased 14.5% to $3.178 million. The net loss widened substantially; the 2019 result included a $550,000 software impairment charge and approximately $689,000 of losses from asset disposals.
At December 31, 2019, cash and cash equivalents were $3.209 million, with another $200,000 in restricted cash. Working capital was negative $25,000, versus positive $2.761 million at year-end 2018. Debt principal outstanding was $2.750 million; the balance sheet reported $2.739 million of current debt, net of debt issuance costs. Operating lease liabilities totaled $3.300 million. Stockholders’ equity was $5.091 million.
Material Changes, Outlook, and Risks
- Customer and revenue exposure: Buffalo Wild Wings relationships ended for corporate-owned locations and most franchisees in November 2019. Management expected a material revenue decline from the first quarter of 2020 unless replacement subscribers or revenue sources offset the loss.
- Debt and going concern: The March 12, 2020 Avidbank amendment accelerated the loan’s maturity from September 2022 to December 31, 2020. After a $433,000 payment, including a $350,000 principal prepayment, principal outstanding was $2.0 million. Monthly principal payments from April through December 2020 ranged from $125,000 to $300,000. The auditor’s report highlights substantial doubt about the company’s ability to continue as a going concern; management said financing sources were not assured.
- COVID-19: The filing describes uncertainty from restaurant and bar restrictions, potential customer suspensions or cancellations, weaker advertising, and supplier delays. It warns that pandemic effects could worsen revenue and cash flow and could trigger impairment of Canadian goodwill.
- Cost reductions and strategic process: Since January 1, 2020, the company reduced headcount from 74 to 39 employees, representing approximately $2.2 million in annualized salaries, and cut planned spending. Management cautioned that reductions could impair operations and growth. The board continued to evaluate strategic and financing alternatives without a timetable or assurance of a transaction.
- Other developments: The company sold its Stump! Trivia and OpinioNation assets for approximately $1.36 million in January 2020 and recorded an approximately $1.265 million gain. Live hosted trivia operations ended after January 31, 2020. Management expected lower SG&A in 2020; it also estimated approximately $180,000 of public-exchange advertising revenue for first-quarter 2020, despite having about 40% fewer sites than during most of 2019.
- Additional risks: The company relied on a sole supplier for customized tablets and related equipment, faced potential NYSE American listing noncompliance, and had $5.091 million of stockholders’ equity. It reported effective disclosure controls and internal control over financial reporting.
Important Facts for Investors to Verify
- Confirm the registrant and period: this source is NTN Buzztime’s FY2019 10-K, not an Ernexa Therapeutics filing or a standalone 2019 Q4 report.
- Review subsequent filings for cash runway, compliance with Avidbank’s monthly asset-coverage and liquidity covenants, and the company’s ability to repay or refinance the loan by December 31, 2020.
- Track actual post-termination subscriber counts and revenue replacement, including the performance of Buzztime Basic, advertising, and hardware contracts.
- Check the realized proceeds and use of the trivia asset-sale cash, and whether the strategic review or other financing produced committed funding.
- Assess COVID-19 impacts on venue operations, advertising demand, equipment supply, and the carrying value of Canadian goodwill.