About Buzztime

NTN BUZZTIME, INC. ANNOUNCES SECOND-QUARTER RESULTS

Thursday, 07 August 2008 12:48

CARLSBAD, Calif. , August 7/PRNewswire-FirstCall/ — NTN Buzztime, Inc. (Amex: NTN), an out-of-home interactive entertainment company, today announced results for the fiscal 2008 second quarter ended June 30, 2008.

“In my new role as interim CEO, I am pleased to report ongoing growth initiatives in site sales, advertising and marketing areas are showing early evidence of success,” commented NTN Buzztime's Chairman and interim CEO, Michael Fleming. “Further, our ‘rookie’ program, designed to increase retention of newly launched sites, contributed in the second quarter of 2008 to the highest levels of site retention in more than two years. In other good news, surveys we commissioned from marquee research firms and received in the second quarter have confirmed numerous key selling points for our entertainment products. One is that Buzztime players love our games, prefer subscriber sites as leisure-time destinations, visit Buzztime sites more often, stay longer and spend more time at these sites compared to non-players. Another key finding is that a Buzztime subscription delivers strong return on investment for the venue operator, typically paying for itself and becoming a profit center within an average of three months.”

Mr. Fleming continued, “As part of our continuing efforts to focus on growing our core Entertainment division which now includes our promising new digital signage product, we have determined to discontinue our United Kingdom operations as currently constituted, and began winding down our U.K. operations in July. However with proper market conditions and appropriate timing, the potential for expansion into territories outside North America remains in place.”

For the three and six months ended June 30, 2008, U.K. operations accounted for approximately 1% of total Company revenues. U.K. assets as of June 30, 2008 represented less than 3% of total Company assets. Net of severance and other costs related to this action, management expects the discontinuation of U.K. operations to contribute approximately $300,000 toward profitability for the remainder of 2008 and to aid management in focusing on growing continuing operations.

Results for the Second Quarter Ended June 30, 2008

Revenue from continuing operations decreased $0.6 million or 8% to $7.0 million for the second quarter of 2008, compared to revenues of $7.6 million for the second quarter of 2007. Net loss from continuing operations for the second quarter of 2008 was $2.1 million compared to a net loss from continuing operations of $377,000 for the second quarter of 2007. Although site count declined by only 3.6% compared to the same prior year date, revenue decreased by a higher percentage due to the longer-term effect on recurring revenues of a net decline in sites over recent quarters.

Gross margin as a percentage of revenue remained consistent at 71% for both the second quarter of 2008 and the second quarter of 2007.

Selling, general and administrative expenses increased $1.3 million or 23%, to approximately $6.9 million for the second quarter of 2008 from $5.6 million for the second quarter of 2007. This increase is primarily related to increased employee costs in key areas including sales, marketing, content and business development as well as increased severance costs stemming from a workforce reduction implemented in the second quarter of 2008 and the departure of the former CEO. Other elements of increased SG&A expenses included increases in marketing expenses related to research and audience measurement studies as well as increases in professional fees, including increased legal fees related to corporate governance matters and a trademark infringement case.

For the quarter ended June 30, 2008, results from continuing operations reflected solely the results from the Entertainment division, following the discontinuation of the Hospitality division.

Results for the Six Months Ended June 30, 2008

Revenue from continuing operations decreased $1.2 million or 8% to $14.2 million for the six months ended June 30, 2008 from $15.4 million in the corresponding period of 2007. Net loss from continuing operations for the first half of 2008 was $4.4 million, compared to a net loss from continuing operations of $1.1 million in the corresponding period of 2007.

Gross margin as a percentage of revenue remained consistent at 71% comparing the six-month periods of 2008 and 2007.

Selling, general and administrative expenses increased $2.8 million, or 25%, to $14.2 million in the first six months of 2008 from $11.4 million in the corresponding period of 2007. This increase is primarily related to increased employee costs, including increased severance payments, as well as marketing and legal expenses as noted above in connection with second-quarter results.

Additionally, the Entertainment division incurred $478,000 of restructuring costs during the first six months of 2007, compared to none in 2008, related to the restructuring of Canada operations completed in January 2007. This restructuring resulted in annual cost savings of approximately $360,000.

For the six months ended June 30, 2008, results from continuing operations reflected solely the results from the Entertainment division, following the discontinuation of the Hospitality division.

Discontinued Operations

Discontinued operations of the Company’s Hospitality division consisted of two segments, Wireless and Software Solutions. On March 30, 2007, the Company reported the sale of substantially all assets of the NTN Wireless segment for $2.4 million, which resulted in a gain of approximately $396,000 in the first quarter of 2007. On October 31, 2007, the Company announced that it had completed the sale and transfer of the Software Solutions intellectual property assets and began winding down the operation.

Discontinued operations generated losses of $216,000 and $507,000 for the three and six months ended June 30, 2008, respectively, compared to losses of $177,000 and $181,000, respectively, for the corresponding periods of 2007.

The Company completed the wind-down of the discontinued operations in July 2008.

Conference Call

Management will review these results today at 4:30 p.m. ET. The call is open to the public. Interested parties may access the teleconference call by dialing (866) 360-7027 approximately 15 minutes prior to the starting time and asking to be connected to the NTN Buzztime Earnings Conference Call. International callers please dial (706) 643-3291. This call is being simultaneously webcast and can be accessed at NTN's web site at http://www.ntnbuzztime.com.

A replay of the conference call will be available beginning on August 7, 2008, following the conclusion of the call, through August 13 at 11:59 p.m. ET. Please dial (800) 642-1687. International callers please dial (706) 645-9291. Please use passcode 57562093 to access the replay.

An archive of the webcast will also be available on the Company's web site at http://www.ntnbuzztime.com.

About NTN Buzztime, Inc.

NTN Buzztime, Inc., a leader in multi-point social interactive entertainment for more than 20 years, is based in Carlsbad, CA. Buzztime is distributed in-home and out-of-home across broadband platforms including online, cable TV, satellite TV, and in approximately 3,750 restaurants, sports bars and pubs throughout North America and the United Kingdom. Buzztime entertainment is also available on electronic games and in books. For more information, please visit http://www.buzztime.com.

Buzztime is a proud member of the OVAB |Out-of-home Video Advertising Bureau.

Buzztime is a registered trademark of Buzztime Entertainment, Inc. and Playmaker is a registered trademark of NTN Buzztime, Inc.

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 estimates of financial performance and cash flows, trends in subscriber preference and engagement and results of marketing strategies. 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 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.

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