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As filed with the Securities and Exchange Commission on March 23, 2000
Registration No. 333-33078
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
NTN COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
31-1103425
(I.R.S. EMPLOYER 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
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
STANLEY B. KINSEY
CHIEF EXECUTIVE OFFICER
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)
WITH A COPY TO:
THOMAS J. LEARY, ESQ.
O'MELVENY & MYERS LLP
610 NEWPORT CENTER DRIVE
NEWPORT BEACH, CALIFORNIA 92660
(949) 760-9600
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
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 begin registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, 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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================= ==================== ======================= ====================== ==================
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Amount of
Securities to be Registered Registered Per Share Offering Price Registration Fee
- --------------------------------------------- -------------------- ----------------------- ---------------------- ------------------
<S> <C> <C> <C> <C>
Common Stock, $.005 par value (1)(2) (3) (1)(2)(3) $5,280 (4)
============================================= ==================== ======================= ====================== ==================
</TABLE>
(1) In no event will the aggregate maximum offering price of all securities
issued pursuant to this Registration Statement exceed $20,000,000.
(2) Subject to Footnote (1), there is being registered hereunder an
indeterminate number of shares of Common Stock as may be sold, from
time to time, by the Registrant.
(3) The proposed maximum offering price per share will be determined, from
time to time, by the Registrant in connection with the issuance by the
Registrant of the shares of Common Stock registered hereunder.
(4) Calculated pursuant to Rule 457(o) of the rules and regulations under
the Securities Act of 1933, as amended. Amount was previously paid by
the Registrant upon the initial filing of this Registration Statement.
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 of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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SUBJECT TO COMPLETION, DATED MARCH __, 2000
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS
$20,000,000
[NTN COMMUNICATIONS LOGO]
NTN COMMUNICATIONS, INC.
COMMON STOCK
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This Prospectus is part of a Registration Statement that we filed with
the SEC utilizing a "shelf" registration process. Under this shelf process, we
may offer from time to time shares of our Common Stock, $.005 par value per
share, as described in this Prospectus. The shares of our Common Stock will have
a maximum aggregate offering price of $20,000,000. We will offer the shares of
our Common Stock on terms to be determined at the time of the offering. The
specific number of shares and issuance price per share will be set forth in an
accompanying Prospectus Supplement.
Our Common Stock is listed on the American Stock Exchange under the
symbol "NTN."
We may sell shares of our Common Stock directly, through agents from
time to time or through underwriters or dealers. If any agent or any underwriter
is involved in the sale of the shares of Common Stock, their name and any
applicable commission or discount will be set forth in the accompanying
Prospectus Supplement. See "Plan of Distribution." Our net proceeds from such
sale will also be set forth in the applicable Prospectus Supplement.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS THAT ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 4 OF THIS PROSPECTUS. YOU SHOULD READ
THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT, TOGETHER WITH THE ADDITIONAL
INFORMATION DESCRIBED UNDER THE HEADING "WHERE YOU CAN FIND MORE INFORMATION,"
CAREFULLY BEFORE YOU INVEST.
-----------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus is truthful and complete. Any representation to the contrary is a
criminal offense.
-----------------------
This Prospectus may not be used to consummate sales of our Common Stock
unless accompanied by a Prospectus Supplement.
-----------------------
The date of this Prospectus is March ___, 2000
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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 our Annual Report
on Form 10-K for the year ended December 31, 1999, our Proxy Statement for our
Special Meeting of Stockholders held on January 7, 2000, and the description of
our Common Stock which is contained in our Registration Statement on Form 8-A
(File No. 0-19383), each of which we already have filed with the SEC. 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 we 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: Ms. Berger
You should rely only on the information contained in, or incorporated
by reference into, this Prospectus or any applicable Prospectus Supplement. We
have not authorized anyone to provide you with additional or different
information. You should not assume that the information in this Prospectus, any
Prospectus Supplement, 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.
FORWARD-LOOKING STATEMENTS
We make statements in this Prospectus and the documents incorporated by
reference that are considered forward-looking statements under the federal
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 dates. 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.
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ABOUT NTN COMMUNICATIONS
We are a developer and distributor of interactive game content, and we
own and operate the largest "out-of-home" interactive consumer marketing
television network in the United States. We operate our businesses through two
operating divisions, BUZZTIME.com, Inc.(TM) and the NTN Network(R).
BUZZTIME.com, our wholly-owned subsidiary formed in December 1999, owns
the exclusive rights to two separate sets of game content. First, BUZZTIME.com
owns the largest known digital trivia game show library, encompassing content
from widely diverse areas of knowledge. Second, BUZZTIME.com owns the rights to
eight unique "TV Play-along" sports games, played in conjunction with live
televised sports programming. This is accomplished through our interactive
broadcast studio that enables us to turn televised sports or other televised
events into a live interactive game.
We anticipate that BUZZTIME.com will function both as a game web site,
with the expected launch of "BUZZTIME.com" in Spring 2000, and as a developer
and distributor of game content. As a developer, BUZZTIME.com will continue to
augment our expansive interactive game libraries. As a distributor, BUZZTIME.com
intends to broadcast live play-along game shows to a broad array of interactive
networks and platforms, including the Internet and online services, interactive
television and hand-held devices.
The NTN Network is North America's largest "out-of-home" interactive
television network. The unique private network, distributed by Internet-enhanced
technology, broadcasts a variety of multi-player sports and trivia games 365
days a year to hospitality venues such as restaurants, sports bars, hotels,
clubs and military bases totaling approximately 3,300 locations in North America
("Locations") as of March 1, 2000. A unique feature of NTN Network's interactive
programming is that all players compete in real-time within each Location and
are ranked at the end of each game against players in all Locations throughout
North America. This enables each Location to create on-premises promotions to
increase patron loyalty as well as allowing NTN to capture national sponsors who
want to use the competitions as a promotional tool.
Our current strategy is to develop and take the BUZZTIME.com brand
beyond the Internet and online services to multiple consumer interactive
platforms and to gain player registrations and loyalty, regardless of the
consumer's point of access. The NTN Network will be a key element in promoting
the new brand. In the future, we expect to generate revenues through a
combination of advertising, game sponsorships, pay-to-play and subscription
models across all platforms. There can be no assurance, however, that we will be
successful in executing this strategy.
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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 in this Prospectus and the Prospectus Supplement 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.
RISKS ASSOCIATED WITH NTN COMMUNICATIONS AND THIS OFFERING
Our Limited Liquidity and Capital Resources May Constrain Our Ability
To Operate Our Business. At December 31, 1999, our current assets exceeded our
current liabilities by $921,000. As of the date of this Prospectus, we believe
that our cash on hand, anticipated cash flows from our operations and borrowings
under our line of credit will be sufficient to meet our immediate operating
needs.
We will require additional financing to implement our plan of
o converting our entire existing customer base to the Digital
Interactive Television Network ("DITV");
o expanding the DITV Network; and
o executing our strategy to promote our newly-branded game portal
called "BUZZTIME.com."
We intend to raise funds through public or private financings or other
arrangements. We cannot assure you that we will be able to raise capital on
terms to our satisfaction. If we are unable to raise capital when needed, or if
our cash flows are less than we anticipate, or if we incur unanticipated
expenses, our business, financial condition and results of operations will be
materially adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources"
in our Annual Report on Form 10-K for the fiscal year ended December 31, 1999
for additional information about our liquidity and capital resources.
Any additional equity financing may be dilutive to stockholders.
We Have Experienced Significant Losses and Our Future Profitability
Remains Uncertain. We had a net loss of $2,498,000 for the year ended December
31, 1999. We cannot assure you that we will achieve or sustain profitability,
and we may have significant or increasing operating and net losses in the
future.
Our Prospects for Growth Are Uncertain. Our new DITV Network, launched
in April 1999, is now being deployed to subscriber locations. We currently plan
to continue operating our original NTN network and the DITV Network concurrently
until approximately June 2000. Our immediate prospects for growth depend, in
part, on the successful introduction and implementation of the new DITV Network.
We cannot assure that the DITV Network will be favorably received by our current
subscribers or that it will enable us to attract a significant number of new
subscribers. We also cannot assure that we can implement and operate the DITV
Network profitably.
In December 1999, we established a subsidiary, BUZZTIME.com, Inc., a
Delaware corporation. We expect BUZZTIME.com to function both as a developer and
a distributor of game content. As a developer, BUZZTIME.com will continue to
augment our expansive interactive game library. As a distributor, BUZZTIME.com
intends to broadcast live play-along game shows to a broad array of interactive
networks and platforms, including the Internet and online services, interactive
television and hand-held devices. In Spring of 2000, we expect to launch
BUZZTIME.com as a new game web site. Our strategy is to develop and take the
BUZZTIME.com brand beyond the Internet and online services to multiple consumer
interactive platforms. Our prospects are subject to risks and uncertainties,
including those described in this Prospectus, and we cannot assure that we will
be successful in executing our strategy.
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We Are Involved in Pending Litigation Proceedings. On June 11, 1997, we
were named as a defendant in a class action lawsuit filed in the United States
District Court for the Southern District of California. The complaint alleged
violations of state and federal securities laws based upon purported omissions
from our periodic filings with the Securities and Exchange Commission. More
particularly, the complaint alleged that the defendant directors and former
officers devised an "exit strategy" to provide themselves with undue
compensation upon their resignation from NTN Communications. The plaintiffs
further alleged that the defendants made false statements about, and failed to
disclose, contingent liabilities and phantom assets in our consolidated
financial statements and our independent auditor's audit reports. According to
the plaintiffs, these alleged misrepresentations and omissions inflated the
trading price of our Common Stock.
In November 1999, we reached a tentative settlement agreement with the
plaintiffs in the federal lawsuit whereby we will pay $3,250,000, subject to
final approval by the U.S. District Court. A settlement hearing is scheduled to
take place in April 2000 for the purpose of seeking court approval of the
proposed settlement and plan of allocation of the settlement funds. Upon
approval of the proposed settlement, the court is expected to enter final
judgment and dismiss the litigation. However, there can be no assurance that the
U.S. District Court will approve the settlement agreement.
We Face Significant Competition. The entertainment business is highly
competitive. We compete with other companies for total entertainment dollars 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. With
the entrance of motion picture, cable and television companies, competition in
the interactive entertainment and multimedia industries will likely intensify in
the future. In January 1999, The Walt Disney Company introduced interactive
programming broadcast in conjunction with live sporting and other events which
may compete directly with our programming.
We also compete with other content and services available to consumers
through online services. Moreover, the expanded use of online networks and the
Internet provide computer users with an increasing number of alternatives to
video games and entertainment software. We seek to compete by providing high
quality products, thereby establishing a favorable reputation among frequent
users. There can be no assurance, however, that we can compete effectively. The
entertainment industry is continuing to undergo significant changes, primarily
due to technological developments. Due to this rapid growth of technology,
shifting consumer tastes and the popularity and availability of other forms of
entertainment, it is impossible to predict the overall effect these factors will
have on the potential revenue from and profitability of our products.
New Products and Rapid Technological Change May Affect Our Operations.
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.
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There can be no assurance that we will be successful in developing and marketing
new products and services that respond to technological and competitive
developments and changing customer needs, or that such products and services
will gain market acceptance. Any significant delay or failure in developing new
or enhanced technology, including new product and service offerings, would have
a material adverse effect on our business, financial condition and operating
results.
Our Inability To Protect Our Intellectual Property Could Seriously
Damage Our Business. We rely on a combination of trademarks, copyrights and
trade secret laws to protect our proprietary rights in certain 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.
If We Cannot Establish Brand Awareness, Our Business May Be Adversely
Affected. Enhancing the BUZZTIME.com brand is critical to our ability to expand
our user base and revenues. We believe that the importance of brand recognition
will increase as the number of entertainment web sites grows and have,
therefore, launched our "BUZZTIME Everywhere" campaign. In order to attract and
retain users and advertisers, we intend to increase expenditures for creating
and maintaining brand loyalty. There is no assurance that we will be successful
in building or maintaining this brand. Our success in promoting and enhancing
the BUZZTIME.com brand will also depend on our success in providing high quality
content, features and functions that are attractive and entertaining to users of
online game shows and multi-player games. If advertisers or visitors to our web
sites do not perceive our services to be of high quality, the value of the
BUZZTIME.com brand could be diminished, and this could adversely affect our
business, financial condition and results of operations.
We Have Experienced Recent Equipment Problems. The 49 megahertz
Playmaker(R), a hand-held, radio frequency device used to enter choices and
selections by players of QB-1(R) and our other games and programming broadcast
via our original NTN Network is still being used in approximately 40% of our
hospitality locations as of March 16, 2000. Our customers have experienced
certain recurring problems with 49 megahertz Playmakers related to noise
sensitivity and performance of the Playmaker's rechargeable batteries. We
believe these equipment problems have contributed to high rate of terminations
and bad debt experience. To address these problems, we introduced a 900
megahertz Playmaker in April 1999. The 900 megahertz Playmaker is manufactured
by the manufacturer of the 49 megahertz Playmaker. To date, there have been no
significant equipment problems with the 900 megahertz Playmaker. However, there
is no assurance that such problems or other problems will not occur in the
future.
We Depend on a Single Supplier of Playmakers. We currently purchase the
redesigned 900 megahertz Playmaker from a single, unaffiliated Taiwanese
manufacturer. 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 business will be
adversely affected.
Our Games and Game Shows Are Subject To Gaming Regulations. We operate
online games of skill and chance that are regulated in many jurisdictions and,
in some instances, we reward prizes to the participants. The selection of prize
winners is sometimes based on chance, although none of our games requires any
form of monetary payment. The laws and regulations that govern our 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.
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 growth has placed,
and 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.
We plan to continue adding to our technical and Internet sales and
marketing force and our advertising sales department. However, competition for
qualified personnel is intense, particularly for employees with technical and
Internet sales and marketing expertise. The success of our business depends on
hiring and retaining suitable personnel.
If Our Key Personnel Leave Us, Our Business May Be Adversely Affected.
Our success greatly depends on the efforts of our executive management,
including the Chief Executive Officer, Chief Financial Officer and President of
BUZZTIME.com. Our ability to operate successfully will depend significantly on
the services and contributions of each of these officers. Although we entered
into an employment agreement with our Chief Executive Officer on October 7,
1998, we cannot assure you that he will continue his employment for any
specified period of time. Our business and operations may be adversely affected
if one or more key executives were to leave.
Our Stock Price Has Been Highly Volatile. The trading price of our
Common Stock has been and may continue to be subject to wide fluctuations. The
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 Internet-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. Certain provisions of our Certificate of Incorporation
could make it more difficult for a third party to acquire control of our
company, 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 the Certificate of Incorporation and the Bylaws, 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 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.
In addition, our Certificate of Incorporation and Bylaws divide our
Board of Directors into three classes, each class to be nearly equal in number
as possible and to serve staggered three-year terms. Approximately one-third of
our directors are subject to re-election at each annual meeting of stockholders.
This classification of directors, together with other provisions in our
Certificate of Incorporation that limit the ability of stockholders to increase
the size of our Board of Directors without a supermajority vote or to remove
directors, may make it more difficult for stockholders to change the composition
of our Board of Directors, whether or not a change in our Board of Directors
would be beneficial to our company and our stockholders and whether or not a
majority of our stockholders believes such a change would be desirable.
Our Certificate of Incorporation also eliminates the ability of the
stockholders to call a special meeting of stockholders or to act by written
consent.
We Do Not Expect to Pay Dividends During the Foreseeable Future. We
have never declared or paid any cash dividends on our Common Stock and
anticipate that for the foreseeable future any earnings will be retained for use
in our business. Our outstanding revolving line of credit prohibits us from
paying cash dividends without obtaining prior approval from the lender.
If the Shares of Our Common Stock Eligible for Future Sales Are Sold,
the Market Price of Our Common Stock May Be Adversely Affected. Sales of
substantial amounts of our Common Stock in the public market after this offering
or the anticipation of such sales could have a material adverse effect on
then-prevailing market prices. As of March 1, 2000, there were approximately
7,011,104 shares of Common Stock reserved for issuance upon the exercise of
outstanding stock options at exercise prices ranging from $0.5625 to $6.37 per
share. As of March 1, 2000,
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there were also outstanding warrants to purchase an aggregate of approximately
3,008,238 shares of Common Stock at exercise prices ranging from $0.6875 to
$6.125 per share.
RISKS ASSOCIATED WITH THE INTERNET
One of our principal business objectives is to increase our direct
contact with consumers. To that end, we maintain a web site on the Internet (the
"NTN Web Site") and are currently constructing a web site for BUZZTIME on the
Internet (the "BUZZTIME Web Site", together with NTN Web Site, our "Web Sites").
We will face the risks described below in operating the Web Sites on the
Internet.
We Face Significant Internet Competition. The Internet market is new,
rapidly evolving and intensely competitive. We expect this competition to
intensify in the future due in part to the minimal barriers to entry and the
relatively low cost to launch a new web site. We will compete with a variety of
other entertainment and multimedia companies on the Internet. Some of these
competitors can devote substantial resources to Internet commerce in the near
future. Our Web Sites will also compete with traditional providers of
entertainment and multimedia content and services.
We believe that the principal competitive factors we will face in
providing entertainment and multimedia content and services through our Web
Sites are brand recognition, selection, availability, price, effectiveness of
advertising, customer service, technical expertise, convenience, accessibility,
quality of search tools and quality of editorial and other site content. Many of
our current and potential competitors have large customer bases, greater brand
recognition and significantly greater financial, marketing and other resources
than we have. In addition, some competitors may be able to obtain services from
vendors on more favorable terms, devote greater resources to marketing and
promotional campaigns, adopt more aggressive pricing policies and devote more
resources to web site and systems development than we can. We cannot assure you
that our Web Sites will be able to compete successfully against current or
future competitors.
We Face Rapid Technological Change. The technology used in the Internet
commerce industry changes rapidly. This rapid change results in the availability
of many new products and services, new industry standards, and frequent changes
in user and customer requirements and preferences. The success of our Web Sites
will depend, in part, on our ability to do the following:
o license leading technologies useful in the Internet services
business;
o enhance our Web Sites' existing services;
o develop new services and technologies that address the
increasingly sophisticated and varied needs of our customers; and
o respond to technological advances and emerging industry standards
and practices on a cost-effective and timely basis.
We cannot assure you that we will successfully use new technologies effectively
or adapt our Web Sites to customer requirements or emerging industry standards.
We Depend on Continued Growth of the Internet. Our future success
depends on the increased use of the Internet. We cannot assure you that the
market for Internet services will continue to grow or become sustainable. The
Internet may not continue as a viable commercial marketplace because of many
factors, including:
o inadequate development of the necessary infrastructure;
o lack of development of complementary products such as high speed
modems and high speed communication lines; and
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o delays in the development or adoption of new standards and
protocols required to handle increased levels of Internet
activity.
If the Internet and other online services continue to experience
significant growth in the number of users, the frequency of use or bandwidth
requirements, the infrastructure for the Internet could be affected by capacity
constraints. In addition, the Internet could lose its viability due to delays in
the development or adoption of new standards and protocols required to handle
increased levels of service activity. Changes in or insufficient availability of
telecommunications services to support the Internet also could result in slower
response times and could adversely affect usage of the Internet. Our business,
prospects, financial condition and results of operations could be materially
adversely affected if use of the Internet does not continue to grow or grows
more slowly than expected, if the infrastructure for the Internet does not
effectively support growth that may occur, or if the Internet does not become a
viable commercial marketplace.
We Will Only Be Able To Execute Our Business Plan If We Are Successful
In Achieving Our Advertising Revenue Goals. Consumer usage of the Internet is
relatively new, and the success of the Internet as an advertising medium will
depend on its widespread adoption. Our business would be materially adversely
affected if the Internet advertising market develops more slowly than we expect,
or if we are unsuccessful in achieving our advertising revenue goals. We expect
that revenues from Internet advertising will make up a significant amount of our
revenues in the future. The adoption of Internet advertising, particularly by
those entities that have historically relied on traditional media for
advertising, requires the acceptance of a new way of conducting business,
exchanging information and advertising products and services. Advertisers that
have traditionally relied on other advertising media may be reluctant to
advertise on the Internet. These businesses may find Internet advertising to be
less effective than traditional advertising media for promoting their products
and services. Many potential advertising and electronic commerce partners have
little or no experience using the Internet for advertising purposes.
Consequently, they may allocate only limited portions of their advertising
budgets to the Internet.
We May Be Liable for the Content We Make Available on the Internet. We
make content available on our Web Sites and on the web sites of our advertisers
and distribution partners. 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 are found liable for information that we make available.
Implementing measures to reduce our exposure to this liability may require us to
spend substantial resources and may limit the attractiveness of our services to
users.
We May Lose Visitors To Our Web Sites If Our Online Security Measures
Fail. Secure transmission of confidential information over public networks is a
significant barrier to Internet commerce. Advances in computer capabilities, new
discoveries in the field of cryptography or other developments could compromise
the security measures we employ to protect customer transaction data. In
addition, concerns over the security of transactions conducted on the Internet
and the privacy of users in general may inhibit the growth of Internet commerce.
To the extent that our activities or the activities of third-party contractors
involve the storage and transmission of proprietary information, security
breaches could damage our reputation and expose us to a risk of loss or
litigation and possible liability. We may be required to expend significant
capital and other resources to protect against such security breaches or to
alleviate security-related problems, and we cannot assure you that our security
measures will prevent security breaches. Any compromise of our security systems
could have a material adverse effect on our reputation, business, prospects,
financial condition and results of operations.
Our Business May Suffer If We Have Difficulty Retaining Users on Our
Web Sites. Our business and financial results depend on our ability to retain
users on our Web Sites. In any particular month, many of the visitors to our Web
Sites are not registered users, and many of our registered users do not visit
our Web Sites. We believe that intense competition has caused, and will continue
to cause, some of our registered users to seek online entertainment on other web
sites and spend less time on our Web Sites. It is relatively easy for Internet
users to go to competing sites, and we cannot be certain that any steps we take
will maintain or improve our retention of users. In addition, some new users may
decide to visit our Web Sites out of curiosity regarding the Internet and may
later discontinue using Internet entertainment services. If we are unable to
retain our user base, our business and financial results may suffer.
9
<PAGE> 11
Laws Restricting the Internet Could Adversely Affect Our Business.
Federal, state and foreign governmental organizations are currently considering
many legislative and regulatory proposals. If a government authority were to
adopt laws or regulations that cover Internet-related issues such as user
privacy, pricing and characteristics and quality of products and services
provided, the growth of the Internet could be adversely affected. This could
lead to a decrease in demand for services offered over the Internet, including
those that our Web Sites offer, and could increase the cost of doing business on
the Internet. In addition, we do not know how existing laws governing issues
such as property ownership, copyright, trade secret, libel and personal privacy
will be applied to the rapidly changing Internet. We could be materially
adversely affected by any new legislation or regulation or by the application or
interpretation of existing laws to the Internet.
RECENT DEVELOPMENT
EXPIRATION OF PUT RIGHT
In February 1998, pursuant to the settlement of a class action lawsuit
pending against us since 1993, we issued 565,000 warrants to purchase our Common
Stock (the "Settlement Warrants"). Each Settlement Warrant has a term of three
years beginning February 18, 1998 and entitles the holder thereof to purchase a
share of our Common Stock at a price of $0.96. During the period from February
18, 2000 to February 18, 2001, the holders of the Settlement Warrants were to
have the right, but not the obligation, to put the Settlement Warrants to us for
repurchase at a price of $3.25 per Settlement Warrant (the "Put Right").
However, the Put Right expired by its terms on February 17, 2000 when the
closing price per share of our Common Stock on the American Stock Exchange
reached $4.22 or above for the seventh trading day. We have no further
obligation to repurchase the Settlement Warrants. The right of holders to
exercise the Settlement Warrants to purchase shares of our Common Stock at $0.96
per share continues through February 18, 2001. As a result of the expiration of
the Put Right, an accrual for the Settlement Warrants in the approximate amount
of $1,793,000 as of December 31, 1999, will be reversed in the first quarter of
2000, thereby reducing expenses.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement which
accompanies this Prospectus, the net proceeds from the sale of the shares of our
Common Stock offered from time to time hereby will be used for working capital
and general corporate purposes, which may include sales and marketing
activities, capital expenditures and the purchase of additional equipment.
Pending these uses, the net proceeds of an offering of our shares of Common
Stock will be invested in short term, interest-bearing, investment grade
securities.
10
<PAGE> 12
PLAN OF DISTRIBUTION
We may sell shares of Common Stock through underwriters, dealers or
agents, or directly to one or more purchasers. For each sale of Common Stock,
the Prospectus Supplement will describe:
o the initial public offering price;
o the names of any underwriters, dealers or agents;
o the purchase price of the Common Stock;
o our proceeds from the sale of the Common Stock;
o any underwriting discounts, agency fees, or other compensation
payable to underwriters or agents; and
o any discounts or concessions allowed or reallowed or paid to
dealers.
If we use underwriters in the sale, they will buy shares of Common
Stock for their own account. The underwriters may then resell the shares of
Common Stock in one or more transactions at a fixed public offering price or at
varying prices determined at the time of sale or thereafter. The obligations of
the underwriters to purchase shares of Common Stock will be subject to certain
conditions. The underwriters will be obligated to purchase all of the shares of
Common Stock offered if they purchase any shares of Common Stock. Any initial
public offering price and any discounts or concessions allowed or re-allowed or
paid to dealers may be changed from time to time.
If we use dealers in the sale, we will sell shares of Common Stock to
such dealers as principals. The dealers may then resell the shares of Common
Stock to the public at varying prices to be determined by such dealers at the
time of resale. If we use agents in the sale, they will use their reasonable
best efforts to solicit purchases for the period of their appointment. If we
sell directly, no underwriters or agents would be involved. We are not making an
offer of Common Stock in any state that does not permit such an offer.
Underwriters, dealers and agents that participate in the distribution
of the Common Stock may be deemed to be underwriters as defined in the
Securities Act of 1933. Any discounts, commissions or profit they receive when
they resell shares of Common Stock may be treated as underwriting discounts and
commissions under that Act. We may have agreements with underwriters, dealers
and agents to indemnify them against certain civil liabilities, including
certain liabilities under the Securities Act of 1933, or to contribute with
respect to payments that they may be required to make.
We may authorize underwriters, dealers or agents to solicit offers from
certain institutions whereby the institution contractually agrees to purchase
shares of Common Stock from us on a future date at a specified price. This type
of contract may be made only with institutions that we specifically approve.
Such institutions could include banks, insurance companies, pension funds,
investment companies and educational and charitable institutions. The
underwriters, dealers or agents will not be responsible for the validity or
performance of these contracts.
Underwriters, dealers and agents may engage in transactions with us or
perform services for us in the ordinary course of business.
LEGAL MATTERS
The validity of the shares of Common Stock being offered will be passed
upon for NTN Communications by O'Melveny & Myers LLP. Underwriters, dealers or
agents, who we will identify in a Prospectus Supplement, may have their counsel
opine about certain legal matters relating to the offering and sale of the
shares of Common Stock.
11
<PAGE> 13
EXPERTS
The consolidated financial statements of NTN Communications, Inc., as
of December 31, 1999 and 1998, and for each of the years in the three-year
period ended December 31, 1999, have been incorporated herein by reference and
in the Registration Statement in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
12
<PAGE> 14
================================================================================
You should rely on the information incorporated by reference or
provided in the Prospectus or a Prospectus supplement. NTN Communications
has not authorized anyone else to provide you with different information.
Neither NTN Communications, nor any other person on behalf of NTN
Communications, is making an offer to sell or soliciting an offer to buy
any of the securities described in this Prospectus or in a
Prospectus Supplement in any state where the offer is not permitted by law.
You should not assume that the information in this Prospectus or any
Prospectus Supplement is accurate as of any date other than the date on the
front of the documents. There may have been changes in the affairs of NTN
Communications since the date of the Prospectus or a Prospectus supplement.
- ------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION> Page
<S> <C>
Where You Can Find More Information..........................................2
Forward-Looking Statements...................................................2
About NTN Communications.....................................................3
Risk Factors.................................................................4
Recent Development..........................................................10
Use of Proceeds.............................................................10
Plan of Distribution........................................................11
Legal Matters...............................................................11
Experts.....................................................................12
</TABLE>
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[NTN Logo]
NTN Communications, Inc.
$20,000,000
Common Stock
_______________
Prospectus
_______________
March ___, 2000
================================================================================
13
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC registration fee...................................................................$ 5,280
Printing expenses......................................................................$ 20,000
Accounting fees and expenses...........................................................$ 45,000
Legal fees and expenses................................................................$ 85,000
Fees and expenses for qualification under state securities laws........................$ 15,000
Miscellaneous expenses.................................................................$ 29,720
Total.............................................................................$ 200,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's 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
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
3.1* Amended and Restated Certificate of Incorporation of NTN
Communications, Inc., as amended (Incorporated by reference to
Exhibit 3.1 to the Registration Statement on Form S-3 (File
No. 333-69383) filed with the Securities and Exchange
Commission)
3.2* Bylaws of NTN Communications, Inc. (Incorporated by reference
to Exhibit 3.2 to the Registration Statement on Form S-8 (File
No. 333-75732) 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. 0-19383) filed with the Securities and Exchange
Commission)
5.1* Opinion of O'Melveny & Myers LLP, counsel to NTN
Communications, Inc., as to the legality of the Common Stock
offered hereby (including consent)
II-1
<PAGE> 16
23.1* Consent of KPMG LLP, Independent Auditors
23.2* Consent of O'Melveny & Myers LLP, counsel to the Company
(included with Exhibit 5.1)
24* Power of Attorney
- --------------------
* Previously filed.
II-2
<PAGE> 17
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a) 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 of 1933, unless the
information required to be included in such
post-effective amendment is contained in a periodic
report filed by Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934
and incorporated herein by reference;
(ii) To reflect in the Prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement,
unless the information required to be included in
such post-effective amendment is contained in a
periodic report filed by Registrant pursuant to
Section 13 or Section 15(d) of the Securities Act of
1934 and incorporated herein by reference;
(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;
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, 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;
(c) 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.
(d) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 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.
(e) That, insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the 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 of
1933 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 of whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
(f) That, for purposes of determining any liability under the
Securities Act of 1933, 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)
II-3
<PAGE> 18
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.
(g) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
II-4
<PAGE> 19
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 Amendment
No. 1 to Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Carlsbad, State of California, on
March 23, 2000.
NTN COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Stanley B. Kinsey
--------------------------------------
STANLEY B. KINSEY,
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Stanley B. Kinsey Chairman of the Board
- ---------------------------------------- and Chief Executive Officer March 23, 2000
Stanley B. Kinsey (Principal Executive Officer)
/s/ Kendra S. Berger Chief Financial Officer (Principal Financial
- ---------------------------------------- Accounting Officer) March 23, 2000
Kendra Berger
* Director March 23, 2000
- ----------------------------------------
Robert M. Bennett
* Director March 23, 2000
- ----------------------------------------
Barry Bergsman
* Director March 23, 2000
- ----------------------------------------
Donald C. Klosterman
* Director March 23, 2000
- ----------------------------------------
Esther L. Rodriguez
* Director March 23, 2000
- ----------------------------------------
Gary Arlen
* Director March 23, 2000
- ----------------------------------------
Vincent A. Carrino
*By /s/ Stanley B. Kinsey
- ----------------------------------------
Stanley B. Kinsey
Attorney-in-fact
</TABLE>
S-1
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ -------
<S> <C>
3.1* Amended and Restated Certificate of Incorporation of NTN Communications, Inc., as amended
(Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-3 (File No.
333-69383) filed with the Securities and Exchange Commission)
3.2* Bylaws of NTN Communications, Inc. (Incorporated by reference to Exhibit 3.2 to the
Registration Statement on Form S-8 (File No. 333-75732) 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. 0-19383) filed with the Securities and Exchange Commission)
5.1* Opinion of O'Melveny & Myers LLP, counsel to NTN Communications, Inc., as to the legality of
the Common Stock offered hereby (including consent)
23.1* Consent of KPMG LLP, Independent Auditors
23.2* Consent of O'Melveny & Myers LLP, counsel to the Company (included with Exhibit 5.1)
24* Power of Attorney
</TABLE>
- ----------------
* Previously filed
