SEC Info - NTN Buzztime Inc - ‘10-Q/A’ for 3/31/97

SEC Info℠

Home

Help

Please Sign In

NTN Buzztime Inc – ‘10-Q/A’ for 3/31/97

As of: Tuesday, 11/25/97 · For: 3/31/97 · Accession #: 944209-97-1636 · File #: 1-11460

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

11/25/97  NTN Buzztime Inc                  10-Q/A      3/31/97    1:33K                                    RR Donelley Financial/FA

Amendment to Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q/A      Amendment to Quarterly Report                         16     63K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Exhibits and Reports on Report 8-K Financial Statements Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations Submission of Matters to A Vote of Security Holders
1	1st Page - Filing Submission
2	Item 1. Financial Statements
11	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
15	Item 1. Legal Proceedings
"	Item 4. Submission of Matters to A Vote of Security Holders
"	Item 6. Exhibits and Reports on Report 8-K

10-Q/A 1st Page of 16 TOC ↑Top Previous Next ↓Bottom Just 1st
 
UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION  
WASHINGTON, D.C. 20549  

FORM 10-Q/A 

AMENDMENT NO. 1 

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF  
THE SECURITIES EXCHANGE ACT OF 1934         

For the quarterly period ended March 31, 1997 

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                 
---     ---         

    Number of shares outstanding of each of the registrant's classes of common
stock, as of November 21, 1997: 23,672,000 shares of common stock, $.005 par    
value.                                                                          

1 

10-Q/A 2nd Page of 16 TOC 1st Previous Next ↓Bottom Just 2nd
 PART I--FINANCIAL INFORMATION
 -----------------------------

Item 1.  FINANCIAL STATEMENTS.                                                  

2 

10-Q/A 3rd Page of 16 TOC 1st Previous Next ↓Bottom Just 3rd
NTN COMMUNICATIONS, INC. AND SUBSIDIARIES 
Consolidated Balance Sheets 
March 31, 1997 (Unaudited) and December 31, 1996  

                                                                [Download Table]

                                                        March 31,   December 31,
                               Assets                     1997          1996    
                               ------                 ------------  ------------
                                                                                
Current assets:                                                                 
   Cash and cash equivalents                           $ 3,466,000     6,579,000
   Accounts receivable - trade, net of allowance for                            
     doubtful accounts                                   2,283,000     2,031,000
   Accounts receivable - officers and directors                 --       199,000
   Prepaid expenses and other current assets             3,894,000     1,846,000
                                                       -----------   -----------

                  Total current assets                   9,643,000    10,655,000

Broadcast equipment and fixed assets, net                9,929,000    10,103,000
Software development costs, net                          4,288,000     4,400,000
Retirement plan assets                                          --     2,527,000
Other assets                                               707,000       819,000
                                                       -----------   -----------

                  Total assets                          24,567,000    28,504,000
                                                       ===========   ===========

                                                                     (Continued)

3 

10-Q/A 4th Page of 16 TOC 1st Previous Next ↓Bottom Just 4th
 NTN COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
March 31, 1997 (Unaudited) and December 31, 1996

                                                        [Enlarge/Download Table]

                                                                             March 31,     December 31, 
                     Liabilities and Shareholders' Equity                      1997           1996      
                     ------------------------------------                   ------------   ------------ 
                                                                                                        
Current liabilities:                                                                                    
   Accounts payable and accrued liabilities                                 $  5,238,000      6,182,000 
   Short-term borrowings                                                       5,215,000      5,060,000 
   Deferred revenue                                                              469,000        254,000 
   Customer deposits                                                           1,161,000      1,279,000 
                                                                            ------------   ------------ 

                  Total current liabilities                                   12,083,000     12,775,000 

Deferred revenue - long term                                                     740,000      1,000,000 
Accrual for settlement warrants                                                1,347,000      1,291,000 
Other long-term liabilities                                                    4,425,000      3,216,000 
                                                                            ------------   ------------ 

                  Total liabilities                                           18,595,000     18,282,000 
                                                                            ------------   ------------ 

Shareholders' equity:                                                                                   
   10% Cumulative convertible preferred stock, $.005 par value, 10,000,000                              
     shares authorized; issued and outstanding 161,000 in 1997 and 1996            1,000          1,000 
   Common stock, $.005 par value, 50,000,000 shares authorized; shares                                  
     issued and outstanding 23,314,000 in 1997 and 23,177,000 in 1996            116,000        116,000 
   Treasury stock, 782,000 shares in 1997 and 1996 at cost                    (3,339,000)    (3,339,000)
   Additional paid-in capital                                                 61,680,000     59,583,000 
   Accumulated deficit                                                       (52,486,000)   (46,139,000)
                                                                            ------------   ------------ 

                  Total shareholders' equity                                   5,972,000     10,222,000 

                  Total liabilities and shareholders' equity                $ 24,567,000     28,504,000 
                                                                            ============   ============ 

See accompanying notes to unaudited consolidated financial statements.

4 

10-Q/A 5th Page of 16 TOC 1st Previous Next ↓Bottom Just 5th
NTN COMMUNICATIONS, INC. AND SUBSIDIARIES 
Consolidated Statements of Operations 
Three Months Ended March 31, 1997and 1996 
 (Unaudited)

                                                                [Download Table]

                                               Three Months   Three Months 
                                                March 31,      March 31,   
                                                   1997          1996      
                                               ------------   ------------ 
                                                                           
Network services                               $  4,969,000      4,868,000 
Online/Internet services                            848,000        234,000 
Advertising revenues                                245,000        237,000 
Equipment sales, net                                187,000        488,000 
License and royalty fees and other revenue          291,000        249,000 
                                               ------------   ------------ 

                  Total revenues                  6,540,000      6,076,000 

Operating expenses:                                                        
    Operating costs                               2,209,000      1,356,000 
    Selling, general and administrative           8,675,000      5,128,000 
    Litigation, legal and professional fees         344,000        323,000 
    Equipment lease expense                         234,000      1,152,000 
    Depreciation                                    876,000        152,000 
    Research and development                        400,000        863,000 
                                               ------------   ------------ 

                  Total operating expenses       12,738,000      8,974,000 

Operating loss                                   (6,198,000)    (2,898,000)

Other income (expense)                                                     
  Interest income                                    62,000        120,000 
  Interest expense                                 (211,000)       (48,000)
                                               ------------   ------------ 

                                                   (149,000)        72,000 

Loss from continuing operations before income                              
  taxes                                          (6,347,000)    (2,826,000)
Provision for income taxes                               --             -- 
                                               ------------   ------------ 

Loss from continuing operations                  (6,347,000)    (2,826,000)

Earnings from discontinued operations                    --         29,000 
                                               ------------   ------------ 

                  Net loss                     $ (6,347,000)    (2,797,000)
                                               ============   ============ 

Net loss per share:                                                        
     Continuing operations                     $      (0.27)         (0.12)
     Discontinued operations                             --             -- 
                                               ============   ============ 
     Net loss                                  $      (0.27)         (0.12)
                                               ============   ============ 

Weighted average number of shares outstanding    23,239,000     22,924,000 
                                               ============   ============ 

See accompanying notes to unaudited consolidated financial statements.

5 

10-Q/A 6th Page of 16 TOC 1st Previous Next ↓Bottom Just 6th
                                                                [Download Table]

                    NTN COMMUNICATIONS, INC. AND SUBSIDIARIES                  
                      Consolidated Statements of Cash Flows                    
                   Three Months Ended March 31, 1997 and 1996                  
                                   (Unaudited)                                 

                                                    Three Months   Three Months
                                                      March 31,      March 31, 
                                                        1997           1996    
                                                    ------------   ------------
                                                                               
Cash flows from (used for) operating activities:                               
    Net loss                                        $(6,347,000)    (2,797,000)
    Adjustments:                                                               
      Depreciation and amortization                   1,253,000        359,000 
      Provision for doubtful accounts                   225,000         97,000 
      Accrual for issuance of warrants                1,883,000        597,000 
      Accrual for settlement warrants                    56,000             -- 
      (Gain) loss on sale and leaseback                                        
        transactions                                         --       (154,000)
      Amortization of deferred gain on sale and                                
        leaseback transactions                           62,000       (210,000)
      Changes in assets and liabilities:                                       
       Accounts receivable - trade                     (278,000)      (198,000)
       Inventory                                             --       (561,000)
       Prepaid expenses and other assets                591,000        (41,000)
       Accounts payable and accrued liabilities         265,000       (790,000)
       Deferred revenue                                (107,000)       (75,000)
       Customer deposits                               (118,000)       (48,000)
                                                    -----------    ----------- 

                Net cash used for operating                                    
                     activities                      (2,515,000)    (3,821,000)
                                                    -----------    ----------- 

Cash flows from (used for) investing activities:                               
    Capital expenditures                               (658,000)      (290,000)
    Notes receivable - related parties                       --      1,064,000 
    Software development costs                         (309,000)      (471,000)
    Proceeds from sale and leaseback transactions            --        875,000 
    Deposits related to sale and leaseback                                     
       transactions                                          --        375,000 
                                                    -----------    ----------- 

                Net cash provided by (used for)                                
                     investing activities              (967,000)     1,553,000 
                                                    -----------    ----------- 

6 

10-Q/A 7th Page of 16 TOC 1st Previous Next ↓Bottom Just 7th
                                                        [Enlarge/Download Table]

                    NTN COMMUNICATIONS, INC. AND SUBSIDIARIES                               
                Consolidated Statements of Cash Flows, Continued                            
                   Three Months Ended March 31, 1997 and 1996                               
                                   (Unaudited)                                              

                                                                Three Months   Three Months 
                                                                  March 31,      March 31,  
                                                                    1997           1996     
                                                                ------------   ------------ 
                                                                                            
Cash flows from (used for) financing activities:                                            
    Principal payments on debt                                   $        --         (6,000)
    Proceeds from issuance of debt                                   155,000      1,772,000 
    Purchase of equipment related to sale and                                               
       leaseback transactions                                             --       (507,000)
    Proceeds from issuance of common stock, less                                            
       issuance costs paid in cash                                   214,000        (15,000)
    Payments for purchase of treasury stock                               --     (2,330,000)
                                                                 -----------    ----------- 

                  Net cash provided by (used                                                
                     for) financing activities                       369,000     (1,086,000)
                                                                 -----------    ----------- 

Net decrease in cash and cash equivalents                         (3,113,000)    (3,354,000)

Cash and cash equivalents at beginning of period                   6,579,000      6,475,000 
                                                                 -----------    ----------- 

Cash and cash equivalents at end of period                       $ 3,466,000      3,121,000 
                                                                 ===========    =========== 

Supplemental disclosures of cash flow information:                                          
       Cash paid during the period for:                                                     
          Interest                                               $        --         20,000 
                                                                 ===========    =========== 

          Income taxes                                           $        --             -- 
                                                                 ===========    =========== 

See accompanying notes to unaudited consolidated financial statements.

7 

10-Q/A 8th Page of 16 TOC 1st Previous Next ↓Bottom Just 8th
NTN COMMUNICATIONS, INC. AND SUBSIDIARIES 
Notes to Financial Statements 
(Unaudited) 

1.     General.                                                   
-------                                             
     Management has elected to omit substantially all notes to the Company's
financial statements. Reference should be made to the Company's Form 10-K filed 
for the year ended December 31, 1996, which report incorporated the notes to the
Company's year-end financial statements.                                        

2.     Unaudited Information.                                     
---------------------                               
     The March 31, 1997 and 1996 information furnished herein was taken from
the books and records of the Company without audit. However, such information   
reflects all adjustments that are, in the opinion of management, necessary to   
reflect properly results of the interim periods presented. The results of       
operations for the period ended March 31, 1997 are not necessarily indicative of
the results to be expected for the fiscal year ending December 31, 1997.        

    Certain items in the prior year consolidated financial statements have
been reclassified to conform to the format used for the current periods         
presented.                                                                      

3.     Management Reorganization.                                 
-------------------------                           
 On March 5, 1997, the Company announced a reorganization of its
executive management personnel in which Patrick J. Downs resigned as Chief      
Executive Officer and Chairman of the Board, and Daniel C. Downs resigned as    
President. In connection with the reorganization ("Reorganization"), other      
personnel changes include the resignation of Mr. Ronald Hogan, as Senior Vice   
President, and the terminations of Mr. Gerald McLaughlin, formerly Executive    
Vice President, and Mr. Michael Downs, formerly President and CEO of LearnStar. 
The Company has entered into separate agreements ("Agreements") with each of the
former officers setting out the terms on which their existing employment        
contracts with NTN will be settled. In compliance with the Agreements, NTN will 
continue to pay the former executives their current annual salaries and other   
benefits for the remaining terms of their employment agreements with NTN, which 
expire on or before December 31, 1999. Charges for severance and other costs    
associated with the Reorganization recorded in 1996 were $5,092,000. Charges for
severance and other costs associated with the Reorganization recorded as an     
expense and liability in the first quarter of 1997 including accreted interest  
expense was $5,206,000. Contractual payments for employment contracts related to
the Agreements will be $1,711,000 in 1997, $1,350,000 in 1998 and $1,269,000 in 
1999. The Company expects that such amounts will be funded from its on-going    
operations. The Company has recorded the charges in 1996 and 1997 in accordance 
with Emerging Issues Task Force Issues No. 94 - 3.                              

4.     Certain Transactions.                                      
--------------------                                

8 

10-Q/A 9th Page of 16 TOC 1st Previous Next ↓Bottom Just 9th
       In December 1995, the Company entered into an agreement to sell a 45%
interest in LearnStar subsidiary to an unaffiliated company for a $2,500,000    
note receivable. No gain on the sale was recognized in 1995 as the Company had  
not received any payments on the note. In late 1996, the parties agreed to      
rescind the agreement. A gain was recorded in the first quarter of 1996 based on
payments received to date. The Company has revised amounts previously reported  
as gain in the March 31, 1996 financial statements.                             

       In December 1995, the Company entered into a sale, purchase agreement
and investment agreement ("Agreement") with Symphony LLC ("Symphony"), an       
unaffiliated company, whereby Symphony agreed to purchase a 10% interest in IWN,
Inc. for $350,000 and would make capital contributions totaling $2,650,000 to   
IWN L.P., a limited partnership of which IWN Inc. is the general partner.       

       The Agreement includes a provision whereby Symphony has the option to
put ("IWN Put Option") its partnership interest and its shares of IWN Inc. to   
NTN during the period from April 1, 1997 through December 1, 1997 for certain   
consideration. Accordingly, the Company has included the accounts and results of
operations of. IWN L.P. in the Company's consolidated financial statements.     

5.     Discontinued Operations - Sale of New World Computing.     
 -----------------------------------------------------
     On June 30, 1996 the Company sold all of the assets and business of its
New World Computing subsidiary to The 3DO Company. The disposal of the New World
has been accounted for as a discontinued operation. Accordingly, the            
consolidated financial statements for the quarter ended March 31, 1996 has been 
reclassified to report separately operating results of the discontinued         
business.                                                                       

6.     Earnings per Share.                                        
------------------                                  
Earnings per share amounts are computed by dividing net earnings  
increased by preferred dividends resulting from the assumed exercise of stock   
options and warrants and the assumed conversion of convertible preferred shares,
and the resulting assumed reduction of outstanding indebtedness, by the         

9 

10-Q/A 10th Page of 16 TOC 1st Previous Next ↓Bottom Just 10th
weighted average number of common and common equivalent shares outstanding      
during the period. Common stock equivalents represent the dilutive effect of the
assumed exercise of certain outstanding options and warrants and preferred      
stock.                                                                          

      Earnings per share amounts are based on 23,239,000 and 22,924,000 common
shares for the three months ended March 31, 1997 and 1996, respectively. The    
impact of the common stock equivalents would have had an antidilutive effect for
these periods and accordingly have not been included in the computation.        
Earnings per share for 1996 has been amended to reflect the amended results of  
operations for the period ended March 31,1996. Previously reported earnings per 
share was $0.01 compared to the revised amount of $(0.12).                      

10

10-Q/A 11th Page of 16 TOC 1st Previous Next ↓Bottom Just 11th
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS.                                                  

General                                                                         
-------                                                                         
         The Company uses existing technology to develop, produce and distribute
two-way multi-player interactive live events and also produces and distributes  
its own original interactive programs. The Company's principal sources of       
revenue from distribution activities are derived from (a) service distribution  
fees in the United States; (b) advertising fees, (c) sales of equipment to      
foreign licensees; (d) service distribution fees and royalties from foreign     
licensees; and (e) licensing fees from foreign and domestic licensees.          

  On October 25, 1996, the Company reported that it was advised on
September 9, 1996 by the United States Federal Communications Commission that   
its PlaymakerAE keypad had not received FCC approval. The Company immediately   
suspended shipment of the Playmakers(R) to new NTN Network Locations pending    
approval by the FCC. Upon notification, the Company commenced testing its       
equipment and submitted its application to the FCC. There was no interruption of
the Company's services to existing NTN Network customers, nor were any of the   
Company's Online/Internet Services ever affected. The Company received approval 
on January 15, 1997 and immediately began shipments to new Locations, including 
approximately 290 new customers which were previously awaiting installation. The
installation of the Locations was completed in January and February 1997. The   
Company will also implement a corrective action program to be approved by the   
FCC.                                                                            

     The Playmakers(R) are handheld radio frequency devices that contain
rechargeable batteries. Recently manufactured Playmakers(R) have experienced    
problems related to noise sensitivity and recharging performance. The Company   
has modified the circuit board to address the problems, and is in the process of
upgrading the approximately 14,000 affected Playmakers(R). The Company believes 
the modifications will be completed by August 1997. These problems have         
negatively affected the number of new Network Services customers sign up by the 
Company and have caused an increase in the number of "disconnects" - customers  
terminating service and an increase in accounts receivable from dissatisfied    
customers.                                                                      

 New locations signed up by the Company during the suspension of
Playmakers(R) shipments were granted up to one day of credit by the Company     
against future billings for each day the sites could not utilize the NTN system.
The Company estimated the temporary suspension of Playmaker(R) shipments and the
credits extended by the Company to backlogged locations will result in reduced  
cash flow of approximately $350,000 during the first half of 1997 from all      
affected locations.                                                             

    In addition, the Company has discovered that the "basestation" - a
device used in conjunction with Playmakers(R) - has not been performing         
satisfactorily. The Company recently decided to recall all poorly performing    
basestations and replace all such equipment with a recently upgraded and        
improved model in customer locations, which process will commence in the second 
quarter. The Company recorded a charge of $650,000 in the quarter ended March   
31, 1997 related to Playmaker(R) and basestation equipment.                     

       On March 5, 1997, the Company announced a reorganization of its executive
management personnel in which Patrick J. Downs resigned as Chief Executive      
Officer and Chairman of the Board, and Daniel C. Downs resigned as President. In
addition, three other officers resigned or were terminated in connection with   
the reorganization. The Company recorded substantial charges related to the     
management reorganization ("Reorganization") and other items more fully         
described below.                                                                

Material Changes in Results of Operations                                       
-----------------------------------------                                       
Three month periods ended March 31, 1997 and March 31, 1996                     

11

10-Q/A 12th Page of 16 TOC 1st Previous Next ↓Bottom Just 12th
 On March 5, 1997, the Company announced a reorganization of its
executive management personnel in which Patrick J. Downs resigned as Chief      
Executive Officer and Chairman of the Board, and Daniel C. Downs resigned as    
President. Other personnel changes include the resignation of Mr. Ronald Hogan, 
as Senior Vice President, and the terminations of Mr. Gerald McLaughlin,        
formerly Executive Vice President, and Mr. Michael Downs, formerly President and
CEO of LearnStar, in connection with the reorganization ("Reorganization"). The 
Company has entered into separate agreements ("Agreements") with each of the    
former officers setting out the terms on which their existing employment        
contracts with NTN will be settled. In compliance with the Agreements, NTN will 
continue to pay the former executives their current annual salaries and other   
benefits for the remaining terms of their employment agreements with NTN, which 
expire on or before December 31, 1999. Charges for severance and other costs    
associated with the Reorganization recorded in 1996 amounted to $5,092,000.     
Charges for severance and other costs associated with the Reorganization        
recorded as an expense and liability in the first quarter of 1997 including     
accreted interest expense was $5,206,000. Contractual payments for employment   
contracts related to the Agreements are $1,711,000 in 1997, $1,350,000 in 1998  
and $1,269,000 in 1999. The Company expects that such amounts will be funded    
from its on-going operations. The Company has recorded the charges in 1996 and  
1997 in accordance with Emerging Issues Task Force Issues No. 94 - 3.           

    The Company incurred a net loss of $6,347,000 for the three months
ended March 31, 1997 compared to a net loss of $2,797,000 for the three months  
ended March 31, 1996. 1996 results have been adjusted to reflect the sale of New
World in 1996 as a discontinued operation. The 1997 results include significant 
charges totaling $5,206,000 related to the Reorganization and a $650,000 charge 
related to defective equipment.                                                 

         For the current quarter, total revenues increased 8% from $6,076,000 to
$6,540,000, primarily as a result of increased Online/Internet Services revenues
and to a lesser extent an increase in Network Services revenues which were      
offset somewhat by a decline in equipment sales.                                

  Network Services increased 2% from $4,868,000 to $4,969,000. The
increase is primarily due to an expansion in the number of subscriber locations 
contracting for services. Online/Internet Services increased 262% from $234,000 
to $848,000 due to increasing number of on-line customers and increasing        
participation by the ultimate consumers. In addition, the Company has increased 
the number of programs                                                          

12

10-Q/A 13th Page of 16 TOC 1st Previous Next ↓Bottom Just 13th
available on various distribution platforms. Advertising revenues increased 3%  
from $237,000 to $245,000 due to increased number of commercial spots sold.     

      Equipment Sales, net of cost of sales decreased 62% from $488,000 to
$187,000. Equipment sales are predominantly due to sales to foreign licensees   
which are subject to outside influences and can occur at random times throughout
the year. Equipment sales have been highly volatile in the past and are expected
to remain so, as they are dependent on the timing of expansion plans of the     
Company's foreign licensees and its educational customers.                      

    Operating Expenses related to Network Services and Online/Internet
Services rose from $1,356,000 in the prior years quarter to $2,209,000 in the   
current years quarter, an increase of 63%. The increase is largely attributable 
to a charge of $650,000 for the replacement and repair of defective equipment   
and to a slight expansion in the number of subscribers and online services      
contracting for services. Selling, General and Administrative Expenses increased
50% from $4,531,000 to $6,792,000. Included in Selling, General and             
Administrative Expenses are charges for the Reorganization totaling $3,277,000. 
Also included are stock-based compensation charges made pursuant to SFAS 123    
which were $1,883,000 in 1997 compared to $597,000 in 1996. Stock-based         
compensation charges result from the issuance of warrants or options to non-    
employees and will vary from period to period. Charges in 1997 include          
$1,450,000 which resulted from extension of the exercise period of warrants     
owned by certain former officers pursuant to the Reorganization. Exclusive of   
these specific charges, Selling, General and Administrative Expenses decreased  
17% over the previous years quarter largely due to personnel cutbacks. Research 
and Development Expense decreased 54% from $863,000 to $400,000. Research and   
development in 1996 related largely to development of gaming applications at the
Company's IWN subsidiary.                                                       

         Deprecation Expense increased 476% from $152,000 to $876,000 due to the
buyout of equipment lease commitments late in 1996 resulting in the Company     
owning most of its Broadcast equipment.                                         

     Interest Income decreased 48% from $120,000 to $62,000 due to lower
balances in interest bearing accounts. Interest Expense increased 340% from     
$48,000 to $211,000 largely due to interest charges related to the IWN Put      
Option, and accretion of interest for the settlement warrant liability and the  
liability for the Reorganization that was discounted when recorded.             

Material Changes in Financial Condition                                         
---------------------------------------                                         

The following analysis compares information as of the most recent 
unaudited balance sheet date of March 31, 1997 to the prior year-end audited    
balance sheet dated December 31, 1996.                                          

      Total assets decreased 14% from $28,504,000 to $24,567,000 from December
31, 1996 to March 31, 1997. The decrease in assets is primarily due to the      
significant charges related to the Reorganization. Cash decreased from          
$6,579,000 to $3,466,000 at March 31, 1997 due primarily to $2,515,000 in cash  
needed to fund operations. The decrease was attributable, in part, to           
approximately $813,000 used for initial payments related to the Reorganization  
and $522,000 paid to former officers under an existing deferred compensation    
plan.                                                                           

     Accounts Receivable - Trade increased 12% from $2,031,000 to $2,283,000
at March 31, 1997, reflecting the growth of the Company's Network Services and  
the marketing program put into place in late 1996 related to the suspension of  
shipments for the FCC issue. Prepaid expenses and other current assets increased
from $1,846,000 to $3,894,000 due to reclassification of the retirement plan    
assets which will be liquidated during the second quarter as a result of the    
Reorganization.                                                                 

 Broadcast Equipment decreased from $10,103,000 to $9,643,000 as the
result of depreciation of assets, a charge to replace and repair certain        
equipment of $650,000, net of additions for new Network Services subscribers.   

13

10-Q/A 14th Page of 16 TOC 1st Previous Next ↓Bottom Just 14th
 Total liabilities increased 2% from $18,282,000 to $18,595,000 from
December 31, 1996 to March 31, 1997. The decrease in Accounts Payable and       
Accrued Liabilities from $6,182,000 to $5,238,000 reflects the use of cash to   
pay down liabilities following year end. Short term borrowings increased from   
$5,060,000 to $5,215,000 due to additional amounts payable pursuant to the IWN  
Put Option. Other long-term liabilities increased 38% from $3,216,000 to        
$4,425,000 due to the long-term liabilities related to the Reorganization.      

    Overall, the Company's working capital deficit increased $320,000 from
December 31, 1996 to March 31, 1997, primarily the result of the use of cash to 
fund operations and charges and activity related to the Reorganization.         

      Management has implemented an organizational and strategic restructuring
aimed at reducing overhead expenses by 20% and focusing on the Company's core   
business units. This involved a workforce reduction, including five senior      
officers, the buyout of many high-rate lease commitments, and restructuring its 
management personnel and responsibilities. Management believes that these       
factors will contribute toward achieving profitability and improving cash flow. 

      The Company has $3,466,000 of cash available at March 31, 1997. In 1996,
the Company completed a plan to repurchase equipment related to certain lease   
obligations. This transaction has resulted in improved cash flow due to the     
elimination of the lease payments. Further, following the Reorganization, the   
Company implemented an organization and strategic restructuring plan aimed at   
reducing overhead expenses, which included a workforce reduction and re-focusing
on immediate goals designed to generate immediate results.                      

     The Company has both short-term and long-term needs for cash outside of
its normal operating needs. In recent months, the Company has experienced       
technical problems related to its Playmaker/R/ device. Further, the Company has 
also experienced a high rate of customers discontinuing service. A task force   
has been assembled to review the issue and to make recommendations to improve   
Playmaker/R/ performance. Based on preliminary data, the Company believes that  
any required changes can be effected within the next year. The costs are        
estimated to be less than $1 million and are expected to be funded through      
current operational cash flow. The Company anticipates that the number of       
customers discontinuing service due to technical problems may decrease once the 
Playmaker/R/ performance has been improved, although no assurances can be given 
that a solution can be reached without undue delay or cost. If the technical    
problems persist for an extended period of time, it may negatively impact the   
Company's cash flow from operations.                                            

As noted earlier, the Company completed a reorganization of its   
management team that will require the payment to former officers over the next  
three years. These payments include contractual amounts under employment        
agreements and payment for unused vacation leave. Further, payments in 1997     
include amounts due for previously deferred compensation of approximately       
$500,000. The Company has specific assets identified that were liquidated to    
pay-off the deferred compensation obligation; therefore, no current cash assets 
were utilized for that portion of the obligation. All other obligations owing to
former officers are expected to be funded through operations through 1999.      

    The Company has several lawsuits pending. In 1996, the Company settled
one lawsuit by establishing a settlement fund consisting of $400,000 in cash    
and 565,000 warrants to purchase the common stock of the Company. This          
settlement minimizes the amount of cash used and provides for possible future   
inflow of cash if the warrants are exercised. The Company is currently          
attempting to settle other lawsuits and may settle these using a similar format 
of minimal cash and equity instruments.                                         

   As part of the Reorganization, the Company terminated the pension and
deferred compensation plan that benefited only former officers. The termination 
of these plans generated approximately $500,000 in cash, after payment of       
related loans against these assets.                                             

       In the past, the Company has been able to fund its operations and improve
its working capital position by sales of Common Stock, upon exercise of warrants
and options, by leasing transactions for equipment in use at subscriber         
locations, and by licensing its technology to foreign licensees. The Company is 
exploring alternative capital financing possibilities which may include (i)     
licensing and related royalties of the Company's technology and products; (ii)  
borrowing arrangements under fixed and revolving credit agreements; or (iii)    
sale of additional equity securities. The Company may negotiate for additional  
lease and debt financing and additional foreign licensing, however, the extent  
to which any of the foregoing may be accomplished, if at all, cannot be         
predicted at this time.                                                         

     The Company has certain lawsuits pending as previously described in
"Legal Proceedings". The Company believes, based in part on the advice of       
outside, independent counsel, that there is no basis to claimants allegations,  
but to avoid the expense and disruption of protracted litigation has settled    
certain cases and may continue to attempt to settle others. The Company provided
a charge against its current earnings for such possible actions, There can be no
assurances that the Company will be successful in settling or defending such    
actions or that any or all actions would be decided in favor of the Company or  
that the continued cost of defending and prosecuting these actions will not have
a material adverse effect on the Company's financial position or results of     
operations.                                                                     

14

10-Q/A 15th Page of 16 TOC 1st Previous Next ↓Bottom Just 15th
PART II  OTHER INFORMATION                                                      
-----------------                                             

Item 1.       LEGAL PROCEEDINGS.                                  

A description of certain legal proceedings is contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 under 
the caption "Legal Proceedings".                                                

    In May 1997, a shareholder's derivative complaint was filed in the
Superior Court of California, North County Branch.  The complaint, which seeks  
injunctive relief and an unspecified amount of damages, was brought by a current
shareholder against NTN and certain officers and directors and alleges that the 
Company was injured by a lack of independence and breach of business judgment by
virtue of certain agreements entered into in connection with a recent           
Reorganization.  The Company believes that the lawsuit is without merit and     
intends to vigorously defend against the action.  The Company has not formally  
responded due to the fact that the action was only recently filed.              

Item 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.                                                             

Item 6.       EXHIBITS AND REPORTS ON REPORT 8-K.                 

                   Form 8-K filed March 5,1997 reporting the resignation and
termination of officers.              

15  

10-Q/A Last Page of 16 TOC 1st Previous Next ↓Bottom Just 16th
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:  November 21, 1997               By:  /s/GERALD SOKOL, JR.                
                          ----------------------
                      Gerald Sokol, Jr.,
                                         President and Chief Executive Officer

16

10-Q/A	1st Page of 16	TOC	↑Top	Previous	Next	↓Bottom	Just 1st

10-Q/A	2nd Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 2nd

10-Q/A	3rd Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 3rd

10-Q/A	4th Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 4th

10-Q/A	5th Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 5th

10-Q/A	6th Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 6th

10-Q/A	7th Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 7th

10-Q/A	8th Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 8th

10-Q/A	9th Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 9th

10-Q/A	10th Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 10th

10-Q/A	11th Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 11th

10-Q/A	12th Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 12th

10-Q/A	13th Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 13th

10-Q/A	14th Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 14th

10-Q/A	15th Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 15th

10-Q/A	Last Page of 16	TOC	1st	Previous	Next	↓Bottom	Just 16th

Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-Q/A’ Filing	Date	First	Last	Other Filings

	12/31/99	8	12	10-K, 10-K/A
	12/31/97	8		10-K, 10-K/A, NT 10-K
	12/1/97	9
Filed on:	11/25/97
	11/21/97	1	16
	4/1/97	9
For Period End:	3/31/97	1	14	10-Q, 10-Q/A
	3/5/97	8	12	8-K
	1/15/97	11		S-3/A
	12/31/96	3	15	10-K, 10-K/A, NT 10-K
	10/25/96	11		8-K
	9/9/96	11
	6/30/96	9		10-Q, 10-Q/A, 8-K
	3/31/96	5	12	10-Q
				List all Filings

↑Top

Filing Submission 0000944209-97-001636 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

NTN Buzztime Inc – ‘10-Q/A’ for 3/31/97

As of: Tuesday, 11/25/97 · For: 3/31/97 · Accession #: 944209-97-1636 · File #: 1-11460

Previous ‘10-Q’: ‘10-Q’ on 11/14/97 for 9/30/97 · Next: ‘10-Q/A’ on 12/16/97 for 6/30/97 · Latest: ‘10-Q’ on 11/13/23 for 9/30/23

Amendment to Quarterly Report — Form 10-QFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Amendment to Quarterly Report — Form 10-Q
Filing Table of Contents