Can NTN Buzztime Inc. (NYSEMKT:NTN) Survive Two-Step Restructuring??

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NTN Buzztime Inc. (NYSEMKT: NTN)’s shares that recently adjusted in a two-step restructuring format will begin trading today, Friday, June 17. The company first performed a reverse stock split and then immediately followed it up with a forward stock split.

The adjustments are expected to significantly reduce the number of NTN Buzztime Inc. (NYSEMKT: NTN)’s outstanding shares compared to where they were previously. The company said that it will have about 1.8 million shares outstanding compared to about 92.4 million shares before it performed the multilevel restructuring.

Impact on stock price

Although a reverse stock splitting usually result in elevated share price once completed, NTN Buzztime appeared to doubt that the price of its common stock would increase after the reverse/forward stock split. In particular, the management hinted that the trading price of the stock could be adversely affected by multiple factors, potentially limiting the room for the stock price to rise significantly above the levels there were before the restructuring.

1-for-100 reverse stock split

The first step in NTN Buzztime’s double-stock restructuring was to perform a 1-for-100 reverse split. In the case, every 100 shares were consolidated into just one share. Fractional shares that resulted from the reverse split were to be rounded up to the nearest whole share.

But the company said that shareholders whose stake was less than 100 shares could opt for cash payment for the shares they hold before the completion of the reverse split. Alternatively, those shareholders with fewer than 100 shares could acquire more shares to bring their shareholding to a level that is evenly divisible by 100.

2-for-1 forward split

After completing the 1-for-100 reverse split, NTN Buzztime Inc (NYSEMKT: NTN) immediately embarked on a 2-for-1 forward split. In that case, every single share from the 1-for-100 consolidated was double so that a shareholder received two shares for each share held.

1Q2016 financials NTN Buzztime Inc. (NYSEMKT: NTN)

NTN Buzztime Inc. (NYSEMKT: NTN) generated revenue of $5.5 million in 1Q2016, slightly down from $5.7 million in the corresponding quarter in 2015. Lower lease deals were blamed for the pullback in topline number. Despite the decline in revenue, NTN’s bottom-line improved as EPS loss of $0.01 was better than EPS loss of $0.02 in the year ago quarter.

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