NTN Buzztime, Inc. Announces Second Quarter 2007 Results

NTN Buzztime, Inc. Announces Second Quarter 2007 Results

Second Quarter 2007 Financial Highlights:

- Gross margin improved to 71% from 68%

- Annualized customer churn declined to 28% from 34% in the first quarter

- Net loss from Entertainment Division narrowed to $0.4 million from $1.8 million compared to second quarter 2006

- Cash and equivalents increased $0.3 million to $11.4 million during the second quarter

CARLSBAD, Calif., Aug. 8 /PRNewswire-FirstCall/ -- NTN Buzztime, Inc. (AMEX:NTN) , a leader in interactive communications and entertainment products for the hospitality industry and for the home, today announced results for the second quarter ended June 30, 2007.

Entertainment Division

Revenue for the Entertainment Division decreased $0.3 million or 4% to $7.6 million for the second quarter of 2007, compared to revenues of $7.9 million for the second quarter of 2006. This decrease was primarily due to a decrease of $367,000 in subscription fees related to a reduction in site count and a decrease of $136,000 in interactive events revenue in Canada due to the sale of this business during the first quarter of 2007. These decreases were partially offset by an increase of $173,000 in Buzztime Distribution revenue related to cable development services.

Gross margin remained relatively unchanged while gross margin as a percentage of revenue for the Entertainment Division increased to 71% in the second quarter of 2007 from 68% in the second quarter of 2006 due to operational cost savings related to playmaker repairs, service fees, communication costs, depreciation and shipping costs.

Selling, general and administrative expenses for the Entertainment Division decreased $0.6 million or 10%, to $5.6 million for the second quarter 2007 from $6.2 million for the second quarter of 2006. This decrease is related to several factors including a one-time severance charge in the second quarter of 2006 of $435,000 associated with the departure of the Company's former CEO, a decrease in stock based compensation of $119,000 and a decrease of $150,000 related to the restructuring of our Canadian operations that involved moving to smaller less expensive space and decreasing the workforce by ten. These reductions were partially offset by increases in salaries and benefits as we increased our work force in the sales, marketing and administrative areas. Additionally, selling, general and administrative expenses for Buzztime Distribution decreased $195,000 due to a reduction in salaries and marketing expenses.

The Entertainment Division's net loss for the second quarter of 2007 was $0.4 million, an improvement compared to a net loss of $1.8 million for the second quarter of 2006. The narrowed loss was the result of the absence of a $652,000 impairment charge and a $435,000 one-time severance charge in the June 30, 2006 period, a reduction in stock based compensation expense and certain reductions in selling, general and administrative expenses in the second quarter of 2007.

"I am pleased with our gross margin and bottom line results for the second quarter," commented Dario Santana, Chief Executive Officer of NTN Buzztime, Inc. "While top line growth remains our number one objective, these results attest to the fact that this management team continues to focus on operating efficiencies and cost reductions where ever and whenever possible."

Hospitality Division (Discontinued Operations*)

The Hospitality Division consists of two segments, Wireless (divested March 30, 2007) and Software Solutions (held for sale). The Hospitality Division revenues for the second quarter of 2007 were $0.9 million, compared to revenues of $2.9 million for the second quarter of 2006. The 2006 results included $1.6 million in revenue generated from the Wireless segment which was sold March 30, 2007. The remaining decrease in revenue is due to fewer software installations and lower revenue generated from help desk services due to customer attrition. The Hospitality Division net loss for the second quarter of 2007 was $177,000 compared to a $72,000 loss for the second quarter of 2006. Included in the net loss for the second quarter of 2006 was $220,000 of net income from the Wireless business. Due to the divestiture on March 30, 2007, no such income was generated in the second quarter of 2007.

"While Software Solutions is being held for sale, we continue to look for cost reduction opportunities and improved management practices for this business," concluded Mr. Santana.

   Second Quarter 2007 Operating Highlights:    -- Realized an improvement in churn from an annualized rate of 34% in the      first quarter of 2007 to 28% this quarter.   -- As retention improves, we have steadily increased our investment in      lead generation by targeting new verticals such as hotels, golf clubs,      bowling alleys, military bases and more.   -- Achieved record sales in the UK during the second quarter.   -- Launched Texas Hold'Em and Spotlight trivia enhancements, which led to      significant increases in game play.   -- Announced QB1 Tournament of Champions designed to increase game play      during the 2007/2008 NFL Season.   -- Launched a B2B website, my.buzztime.com, aimed at improving Buzztime's      value to subscribing customers.   -- Hired an experienced sales professional from the beverage industry to      lead our national accounts initiative.    

"We are receiving increasingly positive feedback from our customers in response to many of the initiatives we have implemented in the first half of the year," said Dario Santana. "Improvements in customer retention are very encouraging, and demonstrate that our efforts to strengthen the Buzztime brand and customer value proposition are paying off. While our focus on our core business remains a critical component to our future success and growth, we are stepping up efforts to increase the scope of our business and to extend Buzztime branded offerings to broader audiences and new distribution platforms such as the Internet and mobile. Our balance sheet remains strong, and we intend to invest strategically and with prudence in initiatives that we believe will accelerate our return to revenue growth and profitability," concluded Mr. Santana.

Conference Call

Management will announce its second quarter 2007 financial results after market close on Wednesday, August 8, 2007. Management will then host a conference call at 4:30 p.m. Eastern Time to discuss the results with the investment community.

Anyone interested in participating should call 866-225-8754 if calling within the United States or 1-480-629-9562 if calling internationally. A replay will be available until August 15, 2007, which can be accessed by dialing 1-800-406-7325 if calling within the United States or 1-303-590-3030 if calling internationally. Please use passcode 3763005 to access the replay.

The call will also be accompanied live by webcast over the Internet and accessible at NTN Buzztime's web site at http://www.buzztime.com/.

About NTN Buzztime, Inc.

Based in Carlsbad, CA, NTN Buzztime, Inc. has been a leader in interactive television entertainment for more than 20 years and distributes its Play Along TV games and technology through numerous platforms including its own Buzztime(R) iTV Network, which is available on TVs in approximately 4,000 restaurants, sports bars and pubs throughout North America and the United Kingdom. Its innovative games are also distributed through cable TV, satellite TV, mobile phones, electronic games and books. For more information, please visit http://www.buzztime.com/.

*The Company continues to classify its non-core business, Software Solutions, as "Discontinued Operations" while the Entertainment Division, consisting of the Buzztime iTV Network and Buzztime Distribution comprises "Continuing Operations". The Company anticipates completing the divestiture of Software Solutions by the end of 2007.

Forward-looking Statements;

This release contains forward-looking statements which reflect management's current views of future events and operations including but not limited to projected future financial results and business trends. These statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include the risk of changing economic conditions, failure of product demand or market acceptance of both existing and new products and services and the impact of competitive products and pricing. Please see NTN Buzztime, Inc.'s recent Form 10-K and other filings with the Securities and Exchange Commission for information about these and other risks that may affect the Company. All forward-looking statements included in this release are based on information available to us on the date hereof. These statements speak only as of the date hereof, and NTN Buzztime, Inc. does not undertake to publicly update or revise any of its forward-looking statements, even if experience or future changes show that the indicated results or events will not be realized.

   CONTACT:   Kendra Berger   Chief Financial Officer   NTN Buzztime, Inc.   (760) 438-7400   Kendra.berger@ntnbuzztime.com    Or    Peter Seltzberg   Hayden Communications   (646) 415-8972   peter@haydenir.com                               Consolidated Results                       For the Quarter Ended June 30,                               (in thousands)    Revenues by Segment:                         2007                   2006   Continuing Operations:   Buzztime iTV network                     $  7,360               $  7,822   Buzztime Distribution                         280                    107     Total Entertainment Division              7,640                  7,929    Discontinued Operations:   Wireless                                 $     --               $  1,645   Software Solutions                            921                  1,282     Total Hospitality Division                  921                  2,927     Consolidated Revenues                  $  8,561               $ 10,856                              Consolidated Results                       For the Quarter Ended June 30,                               (in thousands)    Income (Loss) by Segment:                    2007                   2006   Continuing Operations:   Buzztime iTV network                     $   (269)              $ (1,382)   Buzztime Distribution                        (108)                  (402)     Total Entertainment Division               (377)                (1,784)    Discontinued Operations:   Wireless                                 $    (12)              $    220   Software Solutions                           (165)                  (292)     Total Hospitality Division                 (177)                   (72)     Consolidated Income (Loss)             $   (554)              $ (1,856)                       NTN BUZZTIME, INC. AND SUBSIDIARIES                   CONDENSED CONSOLIDATED BALANCE SHEETS                               (in thousands)    ASSETS                                      June 30,          December 31,                                                 2007                2006    Current Assets:      Cash and cash equivalents             $  11,395              $  8,774      Restricted cash                              48                    58      Accounts receivable, net                    924                 1,874      Investments available-for-sale              361                   337      Deposits on broadcast equipment              --                   381      Deferred costs                              964                 1,067      Prepaid expenses and other current       assets                                     553                   908      Assets held for sale                      1,136                 2,659           Total current assets                15,381                16,058       Broadcast equipment and fixed       assets, net                              4,929                 5,919      Software development costs, net             765                   806      Deferred costs                              813                   963      Goodwill                                    974                   974      Intangible assets, net                    1,327                 1,561      Other assets                                142                   244          Total assets                      $  24,331              $ 26,525      LIABILITIES AND SHAREHOLDERS' EQUITY      Current Liabilities:      Accounts payable                      $     337              $  1,139      Accrued expenses                          2,836                 2,921      Income taxes payable                          5                    53      Obligations under capital leases       - current portion                          144                   349      Deferred revenue                          1,097                 1,826      Liabilities of discontinued       operations                               1,227                 1,441         Total current liabilities              5,646                 7,729      Obligations under capital                     7                    20       leases, excluding current       portion      Deferred revenue, excluding       current portion                            163                   246         Total liabilities                  $   5,816              $  7,995      Shareholders' equity:      Series A 10% cumulative       convertible preferred stock                  1                     1      Common Stock                                277                   272      Additional paid-in capital              112,545               111,617      Accumulated deficit                     (94,882)              (93,561)      Accumulated other       comprehensive income                       574                   201         Total shareholders' equity            18,515                18,530          Total liabilities and          shareholders' equity              $  24,331              $ 26,525                       NTN BUZZTIME, INC. AND SUBSIDIARIES              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                (Unaudited)                   (In thousands, except per share data)                                 Three Months Ended         Six Months Ended                                     June 30,                  June 30,                                  2007         2006       2007          2006   Revenues                   $  7,640     $  7,929   $ 15,373      $ 16,198    Operating expenses:     Direct operating costs      of services (includes      depreciation)              2,213        2,563      4,426         5,039     Selling, general and      administrative             5,600        6,235     11,291        11,576     Depreciation and      amortization (excluding      depreciation included      in direct costs)             139          169        292           340     Research and development       43           56         79           122     Restructuring costs            26           --        478            --         Total operating          expenses               8,021        9,023     16,566        17,077    Operating loss                 (381)      (1,094)    (1,193)         (879)    Other income (expense):     Interest Income               105           18        146            49     Interest expense               (8)         (39)       (22)          (85)     Impairment of investments      available-for-sale            --         (652)        --          (652)     Other income                   --           --         82            --         Total other income          (expense)                 97         (673)       206          (688)    Loss from continuing    operations before income    taxes                         (284)      (1,767)      (987)       (1,567)    Provision for income taxes       93           17        153            44    Net loss from continuing    operations                    (377)      (1,784)    (1,140)       (1,611)   Net loss from discontinued    operations, net of tax    (including gain on sale of    NTN Wireless of $396,000    for the three and six    months ended June 30, 2007    (177)         (72)      (181)         (169)   Net loss                   $   (554)    $ (1,856)  $ (1,321)     $ (1,780)    Net loss per common share -    basic and diluted:     Net loss from continuing      operations                 (0.01)       (0.03)     (0.02)        (0.03)     Net loss from      discontinued operations    (0.00)       (0.00)     (0.00)        (0.00)     Net loss per common share      - basic and diluted     $  (0.01)    $  (0.03)  $  (0.02)     $  (0.03)    Weighted average shares    outstanding - basic &    diluted                     54,691       54,157     54,722        54,044                       NTN BUZZTIME, INC. AND SUBSIDIARIES              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                (Unaudited)                               (in thousands)                                                         Six Months Ended                                                             June 30,                                                     2007              2006   Cash flows from operating activities:       Net loss                                  $  (1,321)        $  (1,780)       Adjustments to reconcile net        loss to net cash provided by        operating activities         Net loss from discontinued          operations, net of tax                       181               169         Depreciation and amortization               1,990             2,159         Provision for doubtful accounts               204              (205)         Share-based compensation                      339               668         Unrealized loss on investment          available for sale                            --               652         Loss from disposition of          equipment and other assets                   156               102        Changes in assets and liabilities:         Restricted cash                                10                --         Account receivable                            746               953         Deferred costs                                251                75         Prepaid expenses and other          assets                                       475               (26)         Accounts payable and          accrued expenses                            (930)              272         Income taxes payable                          (48)             (131)         Deferred revenue                             (812)               20           Net cash provided by            operating activities                     2,928             1,241    Cash flows from investing activities:       Capital expenditures                           (105)             (668)       Software development expenditures              (251)             (263)       Deposits on broadcast equipment                (161)             (365)       Proceeds from sale of discontinued        operations                                   2,400                --       Net change in loans to discontinued        operations                                  (1,272)             (253)           Net cash used in investing            activities                                 611            (1,549)    Cash flows from financing activities:       Principal payments on capital leases           (219)             (224)       Principal payments on revolving line        of credit                                       --              (700)       Proceeds from exercise of stock        options and warrants                           639               278           Net cash provided by (used in)            financing activities                       420              (646)    Net increase in cash and cash equivalents         2,272               733   Effect of exchange rate on cash                     349                31   Cash and cash equivalents at beginning of    period                                           8,774             5,982   Cash and cash equivalents at end of period    $  11,395         $   6,746  

First Call Analyst:
FCMN Contact: Teresa.Kosmas@ntn.com

Source: NTN Buzztime, Inc.

CONTACT: Kendra Berger, Chief Financial Officer of NTN Buzztime, Inc.,
+1-760-438-7400, Kendra.berger@ntnbuzztime.com; or Peter Seltzberg of Hayden
Communications, +1-646-415-8972, peter@haydenir.com, for NTN Buzztime, Inc.

Web site: http://www.ntn.com/

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Profile: International Entertainment