As filed with the Securities and Exchange Commission on December 24, 2003
Registration No. 333-____
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NTN COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 31-1103425
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
THE CAMPUS - 5966 LA PLACE COURT
CARLSBAD, CALIFORNIA 92008
(760) 438-7400
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
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STANLEY B. KINSEY
NTN COMMUNICATIONS, INC.
THE CAMPUS - 5966 LA PLACE COURT
CARLSBAD, CALIFORNIA 92008
(760) 438-7400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES OF COMMUNICATIONS TO:
C. JAMES LEVIN, ESQ.
MARK T. UYEDA, ESQ.
O'MELVENY & MYERS LLP
400 SOUTH HOPE STREET
LOS ANGELES, CALIFORNIA 90071
(213) 430-6000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
At such time or times on and after the date on which this Registration Statement
becomes effective as the selling securityholders may determine.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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Calculation of Registration Fee
Amount Proposed maximum Proposed maximum
Title of each class of to be offering price per aggregate offering Amount of
securities to be registered registered(1) unit(2)(3) price(2)(3) registration fee
common stock, $0.005 par value per 1,610,914 $3.67 $5,912,054 $485
share
(1) This Registration Statement covers shares of common stock previously
issued to the selling securityholders and shares of common stock issuable
upon the exercise of warrants held by the selling securityholders. This
Registration Statement will cover an indeterminate number of additional
shares that may become exercisable under the warrants to the extent
permitted by Rule 416 under the Securities Act.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Pursuant to Rule 457(c), the price of the common stock is based upon
the average of the high and low prices of the common stock on the American
Stock Exchange on December 22, 2003.
--------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
PROSPECTUS
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject to Completion. Dated December 24, 2003.
NTN COMMUNICATIONS, INC.
1,610,914 Shares of
Common Stock
--------------------
The selling securityholders who are identified in this Prospectus (which term
includes their pledges, donees, transferees or other successors-in-interest) may
offer and sell from time to time up to 1,610,914 shares of common stock of NTN
Communications, Inc. by using this Prospectus. Of these shares, 1,530,914 are
outstanding common stock and 80,000 shares of common stock are issuable upon the
exercise of outstanding warrants.
The selling securityholders may offer the shares from time to time through
public or private transactions at prevailing market prices, at prices related to
prevailing market prices, at privately negotiated prices or such other prices as
the selling securityholders may determine from time to time. We will not receive
any proceeds from the sale of these shares by the selling securityholders except
for proceeds upon exercise of the warrants. For more information, please refer
to "Selling Securityholders" on page 13 of this Prospectus.
Our common stock is traded on the American Stock Exchange (AMEX) under the
ticker symbol "NTN." On December 22, 2003 the closing price of our common stock,
as reported by the AMEX, was $3.72 per share.
-----------------------
Investing in our common stock involves risks that are described in the "Risk
Factors" section beginning on page 3 of this Prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is December __,2003.
TABLE OF CONTENTS
Page
Summary........................................................................1
The Offering..................................................................2
Risk Factors..................................................................3
Recent Company Developments..................................................12
Forward-Looking Statements...................................................12
Use of Proceeds..............................................................12
Selling Securityholders......................................................13
Plan of Distribution.........................................................15
Legal Matters................................................................16
Experts.......................................................................16
Where You Can Find More Information...........................................17
SUMMARY
You should read the following summary together with the more detailed
information about our company and the common stock being sold in this offering,
including "Risk Factors" and our consolidated financial statements and related
notes, contained elsewhere in this Prospectus or incorporated by reference.
NTN Communications, Inc. develops and distributes interactive communications and
entertainment products for the home and for the hospitality industry. We own and
operate the largest "out-of-home" interactive consumer marketing television
network in North America.
We operate our businesses principally through four operating segments: the NTN
iTV Network, NTN Wireless Communications, Inc. ("NTN Wireless") and NTN Software
Solutions, Inc. ("Software Solutions"), which combine to form the NTN
Hospitality Technologies division, and Buzztime Entertainment, Inc. as follows:
o The NTN iTV Network entertainment services represent a wide variety of
popular interactive games, advertisements and informational programming
delivered daily to consumers in approximately 3,400 restaurants, sports
bars and taverns throughout the United States and Canada, as well as
hotels, cruise ships and active adult communities.
o NTN Wireless on-site communications products--primarily guest and server
paging products--are distributed to another 2,800 locations in the United
States.
o Software Solutions products primarily consist of point of sale products
sold or licensed to the quick serve/delivery segment of the hospitality
market and reservation and table management products that are sold or
licensed to the fine dining and casual dining sectors of the industry.
o Buzztime operates our live broadcast studio, produces our trivia and live
sports "play-along" content for both the NTN iTV Network and new consumer
interactive platforms, and is developing the Buzztime(R) interactive
television channel.
Unless otherwise indicated, references herein to "NTN," "we," "us" and "our"
include NTN Communications, Inc. and its consolidated subsidiaries. Our
headquarters are located at 5966 La Place Court, Carlsbad, California, telephone
(760) 438-7400.
Our current strategy is to leverage our unique interactive entertainment as a
means of growing our business units. First, we intend to be a leading provider
of interactive communications and entertainment offerings to the hospitality
industry through the NTN Hospitality Technologies division. Second, we plan to
be a leading developer and distributor of interactive entertainment for the
in-home market through interactive television and wireless devices via Buzztime.
To accomplish our objectives, we are pursuing strategies to:
o Increase the number of hospitality locations serviced by the NTN iTV
Network, NTN Wireless and Software Solutions, Inc. ("Software Solutions").
We intend to accomplish this increase by expanding our product offerings to
include more value-added services, adding personnel to our sales force and
providing new and updated content on a regular basis.
o Develop and distribute the Buzztime trivia channel to cable and satellite
operators with the intent to become the first content provider to deploy a
digital interactive television entertainment channel. We have adapted, or
are planning to adapt, our interactive trivia game show content and
technology to the leading interactive television platforms, to gain market
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share by partnering with major industry manufacturers and distributors, and
to utilize our broadcast interactive television studio as a development and
production facility to develop and deepen relationships with media-related
companies. We also plan to continue to support our efforts in early-stage
wireless entertainment through partnerships with leading wireless
distributors and carriers.
o Increase revenues through current and new revenue sources. The NTN iTV
Network receives service revenue from subscribing out-of-home hospitality
locations as well as third-party advertising revenue and production
services. We expect to continue generating revenue through these sources
and, by growing our customer base, we also expect to see revenue growth in
service and advertising revenue. Similarly, as Buzztime gains distribution
with cable television operators, we expect to increase revenue through
three sources: license fees paid by local cable television operators; fees
paid by interactive television home subscribers for premium services or
pay-per-play transactions; and advertising revenue.
o Both business units may also explore market opportunities to acquire
complementary businesses to increase revenues and earnings. One example of
a recent acquisition is NTN Wireless, which generated approximately $2.4
million in revenues through sales of restaurant pagers during the period
from the date of the acquisition in April 2002 through December 31, 2002.
Another example is Software Solutions, which we formed in July 2003 when we
acquired the assets and certain liabilities of Breakaway International,
Inc. Finally, on December 15, 2003, we acquired the assets of NTN
Interactive Network, Inc., our Canadian licensee since 1985. This
acquisition served to open the Canadian territory for the marketing and
sale of our products and services and immediately providing us with an
installed NTN iTV Network subscriber base of approximately 400 sites.
We have incurred consolidated net losses for most of our operating history and
expect to incur consolidated losses through at least the end of 2004. Recent
losses have resulted primarily from significant expenditures related to Buzztime
for which no significant revenues have yet been generated.
THE OFFERING
The offering price for the common stock may be the market price for our common
stock prevailing at the time of sale, a price related to the prevailing market
price, at negotiated prices or such other price as the selling securityholders
determine from time to time. The shares offered for resale by this Prospectus
represent approximately 3% of our shares outstanding, assuming the exercise of
all warrants held, and being offered for sale pursuant to this Prospectus by the
selling securityholders, but excluding shares issuable under any other options,
warrants or other derivative securities.
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RISK FACTORS
The shares of common stock being offered involve a high degree of risk. You
should carefully consider the following risk factors and all other information
contained, or incorporated by reference, in this Prospectus before you buy
shares of our common stock. The trading price of our common stock could decline
due to any of these risks, and you could lose all or part of your investment.
Risk Factors That May Affect Future Results
Our business, results of operation and financial condition could be adversely
affected by a number of factors, including the following:
We have experienced significant losses and we expect to incur significant net
losses in the future.
We have a history of significant losses, including net losses of $2,189,000 in
2002, $3,656,000 in 2001, and $9,589,000 in 2000, a net loss of $1,819,000 for
the nine months ended September 30, 2003 and an accumulated deficit of
$80,898,000 as of September 30, 2003. We expect to incur significant operating
and net losses for the next four quarters due primarily to our continued
development of Buzztime. Furthermore, we may never achieve profitability, and
even if we do, we may not sustain or increase profitability on a quarterly or
annual basis in the future.
Our limited liquidity and capital resources may constrain our ability to operate
and grow our business.
At September 30, 2003, our current assets exceeded our current liabilities by
approximately $208,000. Our liquidity and capital resources remain limited and
this may constrain our ability to operate and grow our business.
We have a revolving line of credit agreement originally with Pacific Mercantile
Bank, which provides for borrowings of up to $1,000,000 and which expires in
July 2004. As of October 31, 2003, $1,000,000 was outstanding under the line of
credit. The line of credit is secured by substantially all of our assets. Any
reduction in availability under our line of credit may further constrain our
liquidity.
We will require additional financing to implement our plan to significantly
expand the digital interactive television network, including our current two-way
satellite rollout, and to develop Buzztime into a leading content provider for
interactive television platforms. Our requirements for additional financing in
2004 will depend upon the growth of our four business segments. If we desire to
grow more rapidly in any of our business segments, then we will require
additional financing in 2004. If we are unsuccessful in obtaining financing,
some initiatives relating to those higher growth opportunities may have to be
curtailed or deferred, including such projects as VSAT deployment and investment
in Buzztime. We may not be able to obtain additional financing on terms
favorable to us, or at all. If we receive additional equity financing, it could
be dilutive to our stockholders. Any debt financing, if available, may involve
covenants limiting or restricting our operations or future opportunities.
New products and rapid technological change may render our operations obsolete
or noncompetitive.
If we do not compete successfully in the development of new products and keep
pace with rapid technological change, we will be unable to achieve profitability
or sustain a meaningful market position. The interactive entertainment and game
industry, as well as the wireless paging and software applications industries,
are becoming highly competitive and subject to rapid technological changes when
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compared to other industries. We are aware of other companies that are
introducing interactive game products on various platforms that allow players to
compete across the nation. We are also aware of other companies that are
developing and introducing wireless technology and software applications that
may be suitable for use in the hospitality industry. The wireless paging
industry is highly competitive; we may experience pricing pressure in the
wireless markets that could impact our margins with respect to our wireless
product line. Some of these companies have substantially greater financial
resources and organizational capital than we do, which could allow them to
identify emerging trends. In addition, changes in customer tastes may render our
network and its content, our technology and our wireless and software products
obsolete or noncompetitive.
The emergence of new entertainment products and technologies, changes in
consumer preferences and other factors may limit the life cycle of our
technologies and any future products and services we develop. Accordingly, our
future performance will depend on our ability to:
o identify emerging technological trends in our market;
o identify changing consumer needs, desires or tastes;
o develop and maintain competitive technology, including new product and
service offerings;
o improve the performance, features and reliability of our products and
services, particularly in response to technological changes and competitive
offerings; and
o bring technology to the market quickly at cost-effective prices.
We may not be successful in developing and marketing new products and services
that respond to technological and competitive developments and changing customer
needs. Such products and services may not gain market acceptance. Any
significant delay or failure in developing new or enhanced technology, including
new product and service offerings, could result in a loss of actual or potential
market share and a decrease in revenues.
We must effectively compete within the highly competitive software industry.
The software industry is intensely competitive. Several large vendors develop
and market database management programs, business and management applications,
collaboration products and business intelligence products that compete with our
Software Solutions offerings. Some of these competitors have significantly
greater financial and technical resources than we do. We expect to continue to
face intense competition in the software market in which we compete. We could
lose market share if our competitors introduce new competitive products into one
or more of our markets, add new functionality into an existing competitive
product, acquire a competitive product, reduce prices, or form strategic
alliances with other companies. In addition, because new distribution methods
and opportunities offered by the internet and electronic commerce have removed
many of the barriers to entry historically faced by small and start-up companies
in the software industry, we expect to face additional future competition from
these companies.
If we fail to manage our growth effectively, we may lose business and experience
reduced profitability.
Continued implementation of our business plan requires an effective planning and
management process. Our anticipated future growth will continue to place a
significant strain on our management systems and resources. If we are to grow
successfully, we must:
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o improve our operational, administrative and financial systems;
o expand, train and manage our workforce; and
o attract and retain qualified management and technical personnel.
The interactive gaming and entertainment industry is highly competitive.
The entertainment business is highly competitive. We compete with other
companies for total entertainment related revenues in the marketplace. Our
network programming competes generally with broadcast television, direct
satellite programming, pay-per-view, other content offered on cable television,
and other forms of entertainment. Furthermore, certain of our competitors have
greater financial and other resources available to them. The entrance of motion
picture, cable and television companies in the interactive entertainment and
multimedia industries will likely intensify competition in the future. In
January 1999, The Walt Disney Company introduced interactive programming
broadcast in conjunction with live sporting and other events which competes
directly with our programming. We do not know of any direct impact on our
operations to date.
We also compete with other content and services available to consumers through
online services. The expanded use of online networks and the Internet provide
computer users with an increasing number of alternatives to video games and
entertainment software. With this increasing competition and rapidly changing
factors, we must be able to compete in terms of technology, content and
management strategy. If we fail to provide quality services and products, we
will lose revenues to other competitors in the entertainment industry. Increased
competition may also result in price reductions, fewer customer orders, reduced
gross margins, longer sales cycles, reduced revenues and loss of market share.
If intellectual property law and practice do not adequately protect our
proprietary rights and intellectual property, our business could be seriously
damaged.
We rely on a combination of trademarks, copyrights and trade secret laws to
protect our proprietary rights in some of our products. Furthermore, it is our
policy that all employees and consultants involved in research and development
activities sign nondisclosure agreements. Our competitors may, however,
misappropriate our technology or independently develop technologies that are as
good as or better than ours. Our competitors may also challenge or circumvent
our proprietary rights. If we have to initiate or defend against an infringement
claim in the future to protect our proprietary rights, the litigation over such
claims could be time-consuming and costly to us, adversely affecting our
financial condition.
From time to time, we hire or retain employees or external consultants who may
work for other companies developing products similar to those offered by us.
These former employers may claim that our products are based on their products
and that we have misappropriated their intellectual property. Any such
litigation could prevent us from exploiting our proprietary portfolio and cause
us to incur substantial costs, which in turn could materially adversely affect
our business.
We may be liable for the content we make available on the NTN iTV Network, the
Buzztime Channel and the Internet.
We make content available on the NTN iTV Network, the Buzztime Channel and the
Internet. The availability of this content could result in claims against us
based on a variety of theories, including defamation, obscenity, negligence or
copyright or trademark infringement. We could also be exposed to liability for
third party content accessed through the links from our web sites to other web
sites. We may incur costs to defend ourselves against even baseless claims, and
our financial condition could be materially adversely affected if we
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are found liable for information that we make available. Implementing measures
to reduce our exposure may require us to spend substantial resources and may
limit the attractiveness of our services to users.
We may face exposure on sales and/or use taxes in various states.
From time to time, state tax authorities will make inquiries as to whether or
not a portion of our services might require the collection of sales and use
taxes from customers in those states. In the current difficult economic climate,
many states are expanding their interpretation of their sales and use tax
statutes to derive additional revenue. While in the past our sales and use tax
expenses have not been material, it is likely that such expenses will grow in
the future.
Our games and game shows are subject to gaming regulations.
We operate games of skill and chance that, in some instances, reward prizes.
These games are regulated in many jurisdictions. The selection of prizewinners
is sometimes based on chance, although none of our games require any form of
monetary payment. The laws and regulations that govern these games, however, are
subject to differing interpretations in each jurisdiction and are subject to
legislative and regulatory change in any of the jurisdictions in which we offer
our games. If such changes were to happen, we may find it necessary to
eliminate, modify or cancel certain components of our products that could result
in additional development costs and/or the possible loss of revenue.
We are currently involved in litigation matters that could materially impact our
profitability.
We are involved in litigation in Canada, both involving Interactive
Network, Inc. Both NTN and Interactive Network, Inc. have asserted claims
involving patent infringement and validity and certain other proprietary rights.
These actions relate only to the broadcast of the NTN iTV Network to subscribers
in Canada and do not extend to our network operations in the United States or
elsewhere. To date, Interactive Network, Inc. has deposited a total of $140,000
in Canadian dollars with the Canadian court in compliance with the court's order
as security for costs to be incurred by us in defense of the action. A trial
date has been established for April 2004. We intend to continue to defend the
action vigorously.
On March 21, 2003, Long Range Systems, Inc. (LRS) filed in the United States
District Court, Northern District of Texas, a patent infringement complaint
against NTN Wireless. This complaint alleged trade dress and
patent infringement and unfair competition. This complaint relates to our repair
and replacement activities of LRS pagers, which is not a significant percentage
of our NTN Wireless business. On May 9, 2003, we filed with the court a motion
to dismiss the LRS complaint. The court denied our motion to dismiss and
provided LRS an opportunity to amend its complaint. LRS served the amended
complaint on July 24, 2003 and, in turn, we filed a motion to dismiss the
amended complaint. The court recently denied our motion to dismiss and appointed
a special master to the case. The parties will commence discovery.
On or about April 23, 2003, we filed a complaint in the Superior Court of the
State of California, County of San Diego, against LRS alleging defamation and
trade libel, intentional interference with prospective economic advantage,
Lanham Act (trademark violations) and California unfair competition. The case
was subsequently transferred to the United States District Court, Southern
District of California. Our complaint alleges that LRS made false statements in
its complaint and press release regarding our products infringing LRS patents,
that LRS intentionally made false statements to disrupt our business
relationships with our clients, and that LRS registered the domain name
www.ntnwireless.com in violation of our trademark rights. LRS has recently
6
agreed to transfer ownership of the www.ntnwireless.com domain name to us. LRS
filed a motion for change of venue seeking to have the matter transferred to
Texas and a motion to strike under California's Anti-SLAPP statute. Both motions
remain pending the court's ruling.
The foregoing claims may not be decided in our favor and we are not insured
against claims made. During the pendency of these claims, we will continue to
incur the costs of our legal defense.
If our chief executive officer leaves us, our business may be adversely
affected.
Our success greatly depends on the efforts of our chief executive officer,
Stanley B. Kinsey. Our ability to operate successfully will depend significantly
on his services and contributions. Mr. Kinsey's employment agreement with NTN
was amended on May 21, 2003 to provide for an extended term ending January 31,
2004 as well as an increase in annual salary and a grant of options to purchase
up to 400,000 shares of common stock. Our business and operations may be
adversely affected if he were to leave.
We may have difficulty recruiting professionals for our business.
Our business requires experienced programmers, creative designers and
application developers. Our success will depend on identifying, hiring, training
and retaining such experienced, knowledgeable professionals. We must recruit
talented professionals in order for our business to grow. There is significant
competition for employees with the skills required to develop the products and
perform the services we offer. There can be no assurance that we will be able to
attract a sufficient number of qualified employees in the future to sustain and
grow our business, or that we will be successful in motivating and retaining the
employees we are able to attract. If we cannot attract, motivate and retain
qualified professionals, our business, financial condition and results of
operations will suffer.
Risk Factors Associated With the NTN iTV Network
We depend on a single supplier of Playmakers(R). We currently purchase our
900-megahertz Playmakers from Climax Technology Co. Ltd., an unaffiliated
Taiwanese manufacturer. We are currently soliciting bids for the manufacture of
our Playmakers. Unless and until we succeed in establishing additional
manufacturing relationships, we will continue to depend on our current sole
source supplier of Playmakers. If we lose our supplier, our growth may be slowed
until an alternative supplier is identified.
Communication failures with our subscriber locations could result in the
cancellation of subscribers and a decrease in our revenues.
We rely on both satellite and telephone systems to communicate with our
subscriber locations. We currently transmit the majority of our data to our
hospitality customer sites via PanAmSat's Galaxy IIIR satellite and will rely
upon Galaxy IIIC for data transmission in connection with our new VSAT two-way
communication technology. We have currently converted 20% of our sites to the
VSAT technology. Interruption in communications with our subscriber locations
under either system could decrease customer loyalty and satisfaction and result
in a cancellation of our services. We are continually reviewing alternative
telephone service providers and establishing contingency plans; however, such
alternative providers and contingency plans have not been finalized.
In the event that we were forced to switch to another satellite, we would incur
significant costs associated with re-pointing our satellite receivers. In
addition, we could experience higher operating costs to transmit data to our
customers via telephone lines and the Internet during the transition period.
Another potential risk is the possibility that our government could pre-empt our
satellite for national security reasons, as the United States satellite
operators are federally licensed. This would appear to be unlikely as our
government has a strong communications infrastructure in place domestically.
Risk Factors Associated With Buzztime
We may sell equity interests in Buzztime to third parties, which could result in
the loss of control of Buzztime or devaluation of our equity interest in
Buzztime.
In June 2001, we sold a 6% interest in Buzztime to an affiliate of
Scientific-Atlanta, a leading cable television set-top box manufacturer. While
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Scientific-Atlanta's investment position was converted to our common stock in
January 2003, we believe there may be divergent investment preferences between
the strategies pursued by the NTN iTV Network and Buzztime and may decide in the
future to continue to raise additional financing by issuing and selling equity
interests in Buzztime to third parties. To enhance the ability of Buzztime to
raise such financing, we have previously contributed and may contribute in the
future some of our assets to Buzztime in order to allow the development of a
distinct identity that we believe is necessary for it to effectively grow as a
separate concern. These assets include our extensive trivia game show library
and our interactive play-along sports games and related intangible assets.
From an operational standpoint, we could lose control of Buzztime. If we lose
control, Buzztime may no longer provide adequate support and resources for
content and programming for the NTN iTV Network, affecting the ability of the
NTN iTV Network to continue its operations. From a financial viewpoint, we could
undervalue the stock of Buzztime when selling it to third parties or undervalue
assets transferred to Buzztime and this could devalue your holdings in NTN
because we would not receive the fair value for our interest in Buzztime.
If our new Buzztime programming is not accepted by consumers, we are not likely
to generate significant revenues or become profitable.
The new Buzztime channel faces risks as to whether consumers will accept
interactive television products and the trivia programming produced by Buzztime.
If interactive television does not become a successful, scaleable medium or if
consumers do not accept trivia and play-along sports games, then we will be
unable to draw revenues from advertising, direct-marketing of third-party
products, subscription fees and pay-per-play fees. Until a sufficient market
develops for the digital set-top boxes enabled to run our interactive television
game applications, our profit potential is uncertain and we may also face
competition from companies developing and marketing stand-alone game products
and services. We will also be unable to attract local cable operators to add
Buzztime programming as a channel to their service.
The market for interactive television games and services is new and may not
develop as anticipated.
The interactive television market currently is small and emerging. The success
of Buzztime will depend on the growth and development of this market in the
United States and it will depend upon the commercialization and broad acceptance
by consumers and businesses of a wide variety of interactive television
products. Demand and market acceptance of recently introduced products and
services are subject to a high level of uncertainty and, as a result, our profit
potential is unproven. In addition, the potential size of this new market
opportunity and the timing of its development and deployment are currently
uncertain. Development schedules of interactive television offered by our
competitors have been delayed or refocused as the industry evolves. If the
market for interactive television does not develop or develops more slowly than
anticipated, our revenues will not grow as fast as anticipated, if at all.
The adoption of incompatible standards could render our products obsolete or
non-competitive.
If a new digital set-top box standard is defined, we do not know whether
Buzztime's products will be compatible with such a standard once it is defined.
The establishment of multiple standards could hurt our business and
significantly increase our expenses, particularly if our products require
significant redevelopment in order to conform to the newly established
standards. Any delay or failure on our part to respond quickly, cost-effectively
and sufficiently to these developments could render our existing products and
services obsolete and cause us not to be competitive, resulting in a decrease in
our revenues without a corresponding decrease in our expenses. We may have to
incur substantial expenditures to modify or adapt our products or services to
respond to these developments. We must be able to incorporate new technologies
into the products we design and develop in order to address the increasingly
complex and varied needs of our customer base.
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Increasing government regulation could cause demand for our products and
services to decline significantly.
We are subject not only to regulations applicable to businesses generally, but
also laws and regulations that apply directly to the industry of interactive
television products. Although there are currently few such laws and regulations,
state and federal governments may adopt a number of these laws and regulations
governing any of the following issues:
o user privacy;
o copyrights;
o consumer protection;
o the media distribution of specific material or content; and
o the characteristics and quality of interactive television products and
services.
One or more states or the federal government could enact regulations aimed at
companies, like us, which provide interactive television products. The
likelihood of such regulation being enacted will increase as interactive
television becomes more pervasive and affects the daily lives of more people.
Any such legislation or regulation could dampen the growth of the industry of
interactive television. If such a reduction in growth occurs, demand for our
products and services may decline significantly.
On January 18, 2001, the Federal Communications Commission issued a notice of
inquiry concerning interactive television. The notice raised a series of
questions that suggest that cable systems might be regarded as essential, open
platforms of spectrum for non-discriminatory third-party access, rather than
facilities-based providers competing in a wider market. The notice sought
comments on the nature of interactive television and whether cable systems will
be a "superior platform" for providing interactive television. The outcome of
the inquiry will determine whether or not a subsequent rulemaking will be held
in order to create regulations for the interactive television industry. Any
regulation of this industry could impact on Buzztime and its operations.
9
Risks Associated with this Offering
Our common stock could be delisted or suspended from trading on the American
Stock Exchange.
On May 1, 2003, we received a letter from the American Stock Exchange (AMEX)
stating that we are now in compliance with AMEX listing standards. New AMEX
rules effective January 2003 permit a company, such as NTN, to remain listed on
AMEX if it has a total market capitalization of at least $50 million, has at
least 1.1 million shares publicly held, has a market value of publicly held
shares of at least $15 million and has a minimum of 400 round lot shareholders.
Should, at some future date, we fall out of compliance with the new rules (from
subsequent changes in market capitalization or otherwise), we could remain
compliant by maintaining a level of shareholder's equity of $6 million. If we
otherwise fail to maintain compliance with the AMEX listing standards, our
common stock may not remain listed on AMEX or any other exchange or quotation
system in the future. If our common stock is delisted from AMEX, spreads can
often be higher for securities traded on the over-the-counter market and the
execution time for orders may be longer. Thus, removing our stock from AMEX may
result in decreased liquidity by making the trading of our stock less efficient.
Our stock price has been highly volatile and your investment could suffer a
decrease in value.
The trading price of our common stock has been and may continue to be subject to
wide fluctuations. Our stock price may fluctuate in response to a number of
events and factors, such as quarterly variations in operating results,
announcements of technological innovations or new products and media properties
by us or our competitors, changes in financial estimates and recommendations by
securities analysts, the operating and stock price performance of other
companies that investors may deem comparable, and news reports relating to
trends in our markets. In addition, the stock market in general, and the market
prices for technology-related companies in particular, have experienced extreme
volatility that often has been unrelated to the operating performance of such
companies. These broad market and industry fluctuations may adversely affect the
price of our stock, regardless of our operating performance.
Our charter contains provisions that may hinder or prevent a change in control
of our company, which could result in our inability to approve a change in
control and potentially receive a premium over the current market value of your
stock.
Certain provisions of our certificate of incorporation could make it more
difficult for a third party to acquire control of us, even if such a change in
control would benefit our stockholders. For example, our certificate of
incorporation requires a supermajority vote of at least 80% of the total voting
power, voting together as a single class, to amend certain provisions of such
document, including those provisions relating to:
o the number, election and term of directors;
o the removal of directors and the filling of vacancies; and
o the supermajority voting requirements of our restated certificate of
incorporation.
These provisions could discourage third parties from taking over control of our
company. Such provisions may also impede a transaction in which you could
receive a premium over then current market prices and your ability to approve a
transaction that you consider in your best interests.
10
If the shares of our common stock eligible for future sale are sold, the market
price of our common stock may be adversely affected.
Future sales of substantial amounts of our common stock in the public market or
the anticipation of such sales could have a material adverse effect on
then-prevailing market prices. As of November 30, 2003, there were approximately
9,293,669 shares of common stock reserved for issuance upon the exercise of
outstanding stock options at exercise prices ranging from $0.45 to $4.9375 per
share. As of November 30, 2003, there were also outstanding warrants to purchase
an aggregate of approximately 1,796,508 shares of common stock at exercise
prices ranging from $0.50 to $3.75 per share. Additionally, we have
approximately $14 million of common stock remaining under our existing shelf
registration statement for possible future sale.
The foregoing options and warrants could adversely affect our ability to obtain
future financing or engage in certain mergers or other transactions, since the
holders of these options and warrants can be expected to exercise them at a time
when we would be able to obtain additional capital through a new offering of
securities on terms more favorable than those provided by such options and
warrants. For the life of such options and warrants, the holders are given the
opportunity to profit from a rise in the market price of our common stock
without assuming the risk of ownership. To the extent the trading price of our
common stock at the time of exercise of any such options or warrants exceeds the
exercise price, such exercise will have a dilutive effect on our stockholders.
11
RECENT COMPANY DEVELOPMENTS
Acquisition of Assets of Canadian Licensee
On December 15, 2003, we, along with NTN Canada, Inc, our Canadian
subsidiary, entered into an Asset Purchase Agreement to acquire the assets and
assume certain of the liabilities of our Canadian licensee, NTN Interactive
Network Inc., a wholly owned subsidiary of Chell Group Corporation. We acquired
NTN Interactive Network's assets for approximately US$1.5 million. The
consideration was composed of US$250,000 in cash, 238,300 shares of unregistered
NTN common stock valued at US$650,000 and the remainder was based upon the
application of unpaid licensing receivables owed to us at the closing of the
transaction. We also assumed certain liabilities in the transaction. The total
purchase price is subject to a post-closing adjustment based on the closing date
balance sheet. NTN Interactive Network's unaudited estimated revenues for its
fiscal year ended August 31, 2003 were CDN$5.8 million.
Warrant Exercise
On November 13, 2003, NorthBay Opportunities, L.P. (formerly known as
BayStar Capital, L.P.) and NorthBay International Opportunities, Ltd. (formerly
known as BayStar International, Ltd.) exercised warrants to purchase shares of
our common stock in the amounts of 493,827 and 123,456 shares, respectively. The
warrant exercise price for both firms was $1.62 per share. Those firms paid us
approximately $1 million on November 13, 2003 in order to exercise those
warrants. These warrants were existing instruments that were issued as part of a
previous financing by those firms. The warrants were scheduled to expire on
November 14, 2003.
FORWARD-LOOKING STATEMENTS
We make statements in this Prospectus and the documents incorporated by
reference that are considered forward-looking statements under the securities
laws. Such forward-looking statements are based on the beliefs of our
management, as well as assumptions made by and information currently available
to them. The words "anticipate," "believe," "may," "estimate," "expect," and
similar expressions, and variations of such terms or the negative of such terms,
are intended to identify such forward-looking statements.
All forward-looking statements are subject to certain risks, uncertainties
and assumptions. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, our actual results,
performance or achievements could differ materially from those expressed in, or
implied by, any such forward-looking statements. Important factors that could
cause or contribute to such difference include those discussed under "Risk
Factors" in this Prospectus and in our Annual Report on Form 10-K. You should
not place undue reliance on such forward-looking statements, which speak only as
of their date stated. We do not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. You should carefully consider the information set forth
under "Risk Factors" in this Prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common
stock offered by the selling securityholders pursuant to this prospectus. We
will receive up to an aggregate amount of $61,600 in proceeds from the exercise
of the warrants and such proceeds will be used for general corporate purposes.
12
SELLING SECURITYHOLDERS
The shares of common stock offered by this Prospectus have been or will be
issued to the selling securityholders (or their assignees) directly by us. The
following table sets forth certain information with respect to the beneficial
ownership of shares of our common stock by the selling securityholders as of
December 22, 2003 and the number of shares which may be offered pursuant to this
Prospectus for the account of the selling securityholders or their transferees
from time to time. Except as described in the footnotes to the table, to the
best of our knowledge, none of the selling securityholders has had any position,
office or other material relationship with our company within the past three
years (other than as a security holder).
Number of Maximum Number Number of Percent of
Shares Owned Percent of Class of Shares Which Shares Owned Class Owned
Prior to Owned Before the May Be Sold in After the After the
Selling Securityholder Offering(1) Offering(1)(2) This Offering(1) Offering(1) Offering(1)(2)
---------------------- ----------- -------------- ---------------- ----------- --------------
Gary W. Peek II 443,674(3) * 443,674 0 *
Thomas E. Patty, Jr. 363,006(3) * 363,006 0 *
Michael L. Davis 252,087(3) * 252,087 0 *
Michael D. Yaw 201,670(3) * 201,670 0 *
Gary W. Stevens 32,177(3) * 32,177 0 *
Paul Summers 20,000(4) * 20,000 0 *
Edmund Brooks 20,000(5) * 20,000 0 *
Daniel F. Purner 42,700(6) * 20,000 22,700 *
Stuart H. Mann 24,300(7) * 20,000 4,300 *
Chell Group Corporation, 238,300(8) * 238,300 0 *
Inc.
*Less than one percent.
(1) Assumes exercise of all options and warrants beneficially owned by the
selling securityholders for the maximum number of shares permitted as of
December 22, 2003 and assumes that each selling securityholder will sell all
shares of our common stock offered under this Prospectus.
(2) For purposes of calculating the percentage of class, we have excluded
1,797,000 shares of common stock issuable upon the exercise of warrants held by
other stockholders and 9,294,000 shares of common stock reserved for issuance
upon the exercise of options.
(3) Represents shares of common stock issued to Selling Securityholder in its
capacity as a shareholder of Breakaway International, Inc. pursuant to the asset
purchase agreement entered into on July 31, 2003 with Breakaway and all of
Breakaway's existing shareholders. Messrs. Peek, Patty, Davis and Stevens became
employees of Software Solutions upon consummation of the asset purchase
transaction and remain so employed.
(4) Represents 20,000 shares of our common stock issuable upon the exercise of
warrants. The warrants were issued in November 2001 at an exercise price of
$0.69 per share as compensation for service on the NTN Network Advisory Board.
(5) Represents 20,000 shares of our common stock issuable upon the exercise of
warrants. The warrants were issued in February 2002 at an exercise price of
$0.85 per share as compensation for service on the NTN Network Advisory Board.
13
(6) Represents 20,000 shares of our common stock issuable upon the exercise of
warrants. The warrants were issued in March 2002 at an exercise price of $0.77
per share as compensation for service on the NTN Network Advisory Board.
(7) Represents 20,000 shares of our common stock issuable upon the exercise of
warrants. The warrants were issued in March 2002 at an exercise price of $0.77
per share as compensation for service on the NTN Network Advisory Board.
(8) Represents shares of common stock issued pursuant to the Asset Purchase
Agreement dated December 15, 2003, by and among NTN Canada, Inc., NTN
Communications, Inc., NTN Interactive Network, Inc. and Chell Group Corporation,
Inc.
14
PLAN OF DISTRIBUTION
The shares of common stock offered hereby may be sold by the selling
securityholders or by their respective pledgees, donees, transferees or other
successors in interest. Such sales may be made at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, or at negotiated prices. The shares may be sold
by one or more of the following (as well as other methods of sale):
o one or more block trades in which a broker or dealer so engaged will
attempt to sell all or a portion of the shares held by the selling
securityholders as agent, but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchase by a broker or dealer as principal and resale by such broker or
dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o in an exchange distribution in accordance with the rules of the
applicable exchange;
o in the over-the-counter market;
o in private transactions other than in the over-the-counter market or on
an exchange;
o in connection with short sales of shares, to the extent permitted by law;
o by pledge to secure debts and other obligations;
o in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions in
standardized or over-the-counter options; or
o in a combination of any of the above transactions.
The selling securityholders may effect such transactions by selling shares
to or through broker dealers, and such broker-dealers may receive compensation
in negotiated amounts in the form of discounts, concessions, commissions or fees
from the selling securityholders and/or the purchasers of the shares for whom
such broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions). Such brokers or dealers or other participating brokers
or dealers and the selling securityholders may be deemed to be "underwriters"
within the meaning of the Securities Act, in connection with such sales.
When a particular offering of common stock is made, if required, we will
distribute a prospectus supplement. That supplement will set forth the names of
the selling securityholders, the aggregate amount and type of shares being
offered, the number of such securities owned prior to and after the completion
of any such offering, and, to the extent required, the terms of the offering,
including the name or names of any underwriters, broker-dealers or agents, any
discounts, commissions and other terms constituting compensation from the
selling securityholders and any discounts, commissions or concessions allowed or
reallowed or paid to broker-dealers.
To the extent provided by law, the selling securityholders may also enter
into hedging transactions with broker-dealers or other financial institutions.
15
In connection with these transactions, broker-dealers or other financial
institutions may engage in short sales of securities in the course of hedging
the positions they assume with selling securityholders. The selling
securityholders may also enter into options or other transactions with
broker-dealers or other financial institutions which require the delivery, to
that broker-dealer or other financial institution, of the securities offered
under this Prospectus. The securities that broker-dealers or other financial
institutions receive in those types of transactions may be resold under this
Prospectus.
Selling securityholders also may resell all or a portion of the shares in
reliance upon Rule 144 under the Securities Act, provided they meet the criteria
and conform to the requirements of that Rule.
We have agreed to bear all costs, expenses and fees in connection with the
registration of the shares of our common stock offered by this Prospectus. We
have also agreed to indemnify the selling securityholders against certain
liabilities, including liabilities arising under the Securities Act.
LEGAL MATTERS
The validity of the shares of common stock intended to be sold pursuant to
this Prospectus will be passed upon for NTN by O'Melveny & Myers LLP.
EXPERTS
The consolidated financial statements of NTN Communications, Inc. and its
subsidiaries as of December 31, 2002 and 2001, and for each of the years in the
three-year period ended December 31, 2002, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
LLP, independent accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
16
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
financial and business information with the SEC. Our SEC filings are available
on the SEC's web site at http://www.sec.gov. You also may read and copy any
document we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information about their public reference rooms, including copy charges.
You also can obtain information about us from the American Stock Exchange at 86
Trinity Place, New York, New York 10006-1881.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this Prospectus, and information that we file later with the
SEC will automatically update and supersede information in this Prospectus and
in our other filings with the SEC. We incorporate by reference the following
which we have previously filed with the SEC under the Securities Exchange Act of
1934 (File No. 1-11460), other than any information furnished pursuant to Item 9
or Item 12 of Form 8-K or as otherwise permitted by SEC rules and regulations:
o our Annual Report on Form 10-K for the year ended December 31, 2002;
o our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2003,
June 30, 2003 and September 30, 2003;
o our Current Reports on Form 8-K filed on October 14, 2003, August 14,
2003, August 8, 2003, April 30, 2003, February 3, 2003, January 22,
2003 and January 15, 2003; and
o the description of our common stock which is contained in our
Registration Statement on Form 8-A.
We also incorporate by reference any future filings we make with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until the selling securityholders sell all of the shares of common stock covered
by this Prospectus.
You may request a copy of these filings at no cost, by writing or calling
us at the following address:
NTN Communications, Inc.
The Campus - 5966 La Place Court
Carlsbad, California 92008
Telephone: (760) 438-7400
Attention: Kathy Miles
You should rely only on the information contained in, or incorporated by
reference into, this Prospectus. We have not authorized anyone to provide you
with additional or different information. You should not assume that the
information in this Prospectus or any document incorporated by reference is
accurate as of any date other than the date of those documents.
You may also obtain from the SEC a copy of the Registration Statement and
exhibits that we filed with the SEC when we registered the shares of common
stock. The Registration Statement may contain additional information that may be
important to you.
17
======================================= =======================================
You should rely only on the information
incorporated by reference, provided in
this Prospectus or any supplement or
that we have referred you to. We have
not authorized anyone else to provide
you with different information. You NTN COMMUNICATIONS, INC.
should not assume that the information
in this Prospectus or any supplement
is accurate as of any date other than
the date on the front of those
documents. However, you should 1,610,914 Shares of
realize that our affairs may have Common Stock
changed since the date of this
Prospectus. This Prospectus will not
reflect such changes. You should not
consider this Prospectus to be an
offer or solicitation relating to
the securities in any jurisdiction in
which such an offer or solicitation
relating to the securities is not
authorized, if the person making
the offer or solicitation is not
qualified to do so, or if it is
unlawful for you to receive such an
offer or solicitation. ----------------------
PROSPECTUS
----------------------
December __, 2003
======================================= =======================================
PART II
Item 14. Other Expenses of Issuance and Distribution
The expenses in connection with the registration of shares of the selling
securityholders will be borne by the Company and are estimated as follows:
Commission registration fee................................................$481
Printing and engraving.......................................................$0
Accounting fees and expenses.............................................$8,000
Legal fees and expenses.................................................$12,000
Miscellaneous expenses......................................................$200
Total....................................................................$20,681
Item 15. Indemnification of Directors and Officers
The Company's restated certificate of incorporation permits the Company to
indemnify officers and directors of the Company to the fullest extent permitted
by Section 145 of the Delaware General Corporation Law. Section 145 contains
provisions permitting corporations organized thereunder to indemnify directors,
officers, employees or agents against expenses, judgments and fines and amounts
paid in settlement actually and reasonably incurred and against certain other
liabilities in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person was or is a director, officer, employee or
agent of the corporation.
The Company has entered into indemnification agreements with certain of its
outside directors pursuant to which the Company has agreed to indemnify such
directors from claims, liabilities, damages, expenses, losses, costs, penalties
or amounts paid in settlement incurred by any such directors in or arising out
of such person's capacity as a director of the Company or any other corporation
of which such person is are a director or officer at the request of the Company
to the maximum extent provided by applicable law. In addition, such directors
are entitled to an advance of expenses to the maximum extent authorized or
permitted by law.
Item 16. Exhibits
See the attached Exhibit Index that follows the signature page.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
II-1
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) above do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") that
are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(5) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(6) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(7) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
II-2
registrant pursuant to the provisions described in Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Carlsbad, State of California, on December 23, 2003.
NTN COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Stanley B. Kinsey
---------------------------------------------
STANLEY B. KINSEY,
Chairman and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of NTN Communications, Inc.,
hereby severally constitute and appoint Stanley B. Kinsey, James B. Frakes and
Kathy Miles, and each of them singly, our true and lawful attorneys-in-fact,
with full power to them in any and all capacities, to sign any amendments to
this registration statement on Form S-3 (including any post-effective amendments
thereto), and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact may do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
Chairman of the Board
and Chief Executive Officer December 23, 2003
/s/ Stanley B. Kinsey (Principal Executive Officer)
----------------------
Stanley B. Kinsey
Chief Financial Officer
(Principal Financial Officer and December 23, 2003
/s/ James B. Frakes Principal Accounting Officer)
----------------------
James B. Frakes
/s/ Gary Arlen Director December 23, 2003
----------------------
Gary Arlen
/s/ Robert M. Bennett Director December 23, 2003
----------------------
Robert M. Bennett
/s/ Barry Bergsman Director December 23, 2003
----------------------
Barry Bergsman
/s/ Vincent A. Carrino Director December 23, 2003
----------------------
Vincent A. Carrino
S-1
/s/ Robert B. Clasen Director December 23, 2003
----------------------
Robert B. Clasen
/s/ Michael Fleming Director December 23, 2003
----------------------
Michael Fleming
/s/ Neal F. Fondren Director December 23, 2003
----------------------
Neil F. Fondren
/s/ Esther Rodriguez Director December 23, 2003
----------------------
Esther Rodriguez
S-2
Exhibit
Number Description of Exhibit
2.1 Asset Purchase Agreement by and among NTN Software Solutions,
Inc., NTN Communications, Inc., Breakaway International, Inc., and the
Seller Shareholders dated as of July 31, 2003 (incorporated by
reference to Exhibit 2.1 to the Current Report on Form 8-K (File No.
1-11460) filed on August 14, 2003 with the Securities and Exchange
Commission).
2.2 Asset Purchase Agreement by and among NTN Canada, Inc., NTN
Communications, Inc., NTN Interactive Network, Inc. and Chell Group
Corporation, Inc. dated December 15, 2003. (1) 3.1 Restated
Certificate of Incorporation of NTN Communications, Inc., as amended
(incorporated by reference to the Form 10-K for the year ended
December 31, 1990 filed with the Securities and Exchange Commission)
3.2 Certificate of Designations, Rights and Preferences of Series B
Convertible Preferred Stock (incorporated by reference to Exhibit 4.1
to the Form 8-K (File No. 1-11460) filed with the Securities and
Exchange Commission)
3.3 Certificate of Amendment to Restated Certificate of Incorporation
of NTN Communications, Inc., dated March 22, 2000 (incorporated by
reference to Exhibit 3.3 to the Form 10-K/A (File No. 1-11460) filed
on April 5, 2000 with the Securities and Exchange Commission)
3.4 Certificate of Amendment to Restated Certificate of Incorporation
of NTN Communications, Inc., dated March 24, 2000 (incorporated by
reference to Exhibit 3.4 to the Form 10-K/A (File No. 1-11460) filed
on April 5, 2000 with the Securities and Exchange Commission)
3.5 Bylaws of NTN Communications, Inc. (incorporated by reference to
Exhibit 3.2 to the Registration Statement on Form S-8 (File No.
33-75732) filed with the Securities and Exchange Commission)
4.1 Specimen common stock certificate (incorporated by reference to
Exhibit 4.1 to the Registration Statement on Form 8-A (File No.
1-11460) filed with the Securities and Exchange Commission)
5.1 Opinion of O'Melveny & Myers LLP as to the legality of the common
stock offered hereby (including consent) (1)
23.1 Consent of KPMG LLP, Independent Auditors (1)
23.2 Consent of O'Melveny & Myers LLP (included with Exhibit 5.1)
24.1 Powers of Attorney (included on page S-1)
------------------
(1) Filed herewith
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
NTN Communications, Inc.:
We consent to the use of our report incorporated by reference herein
and to the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
San Diego, California
December 22, 2003