Eterna Therapeutics Inc. (ERNA)·Q3 2020 Earnings Summary

Executive Summary

• Q3 2020 revenue was $1.477M, up ~96% sequentially vs Q2 on reopening tailwinds but down sharply from $4.6M in Q3 2019; operating expense fell to $2.9M (from $4.9M YoY), and net loss was $(1.5)M or $(0.50) per share .
• Management prioritized two “transformative transactions”: (i) asset sale of the Buzztime game network to eGames.com and (ii) merger with Brooklyn Immunotherapeutics, targeting simultaneous closing in early 2021, contingent on approvals .
• Liquidity: $1.7M cash at 9/30; PPP loan of $1.6M (with $1.1M forgiven in Nov., leaving ~$0.5M), Avidbank term loan principal $0.725M at Q3-end, and a $1.0M bridge loan from an eGames affiliate; a further $0.5M bridge loan was arranged for Dec. 1 and bridge terms amended (rate to 10% and maturity to Mar. 1, 2021) .
• No earnings call transcript was identified for Q3; the company had previously stated it would not host an earnings call for Q2 to conserve resources while pursuing strategic alternatives .

What Went Well and What Went Wrong

• What Went Well

  • Sequential revenue recovery as customer venues partially reopened: revenue grew ~96% QoQ to $1.5M in Q3; operating expenses fell to $2.9M on restructuring and cost cuts .
  • Secured liquidity support and de-leveraging path: SBA approved forgiveness of $1.1M of PPP loan in November (note balance ~$0.5M), and the eGames affiliate provided a $1.0M bridge loan tied to the asset sale closing .
  • Strategic clarity: “Buzztime is working diligently toward closing two transformative transactions… [asset sale to eGames.com]… [and] proposed merger with Brooklyn Immunotherapeutics,” positioning the equity for a new life sciences profile post-close .

• What Went Wrong

  • Structural revenue pressure: Q3 revenue of $1.5M was far below Q3 2019 due to the Nov. 2019 Buffalo Wild Wings termination and COVID-driven subscription suspensions across bars/restaurants .
  • Losses widened YoY: net loss attributable to common shareholders of $(1.5)M vs $(0.351)M in Q3 2019; EPS $(0.50) vs $(0.12) .
  • Working capital and going-concern risk without deal completion: negative working capital of $0.137M at Q3-end and explicit risk that failure to consummate the merger/asset sale in a timely manner could impact going concern .

Financial Results

Segment/category revenue mix (select quarters):

Liquidity/KPIs:

Notes: Sequential revenue increased ~96% vs Q2 (management disclosure) . The asset sale bridge loan ($1,000) and subsequent $500 second bridge (Dec.) were arranged in connection with the eGames transaction .

Guidance Changes

No formal financial guidance (revenue, margins, OpEx, tax) was provided in the Q3 press release; management focused guidance on transaction timing .

Earnings Call Themes & Trends

Management Commentary

• “Buzztime is working diligently toward closing two transformative transactions… sell all our assets related to our game network to eGames.com… [and] the proposed merger with Brooklyn Immunotherapeutics… We expect both transactions to close simultaneously in early 2021” — Allen Wolff, CEO .
• “We took action to significantly reduce our operating costs… focused on cash management and exploring and evaluating strategic alternatives.” — Allen Wolff (Q2 release) .
• “Shifting the Buzztime network to a mobile-based, capital-light solution complemented with an expanded programmatic advertising platform increased the scalability of our business… we took immediate and decisive action to further reduce expenses.” — Allen Wolff (Q1 release) .

Q&A Highlights

• The company did not host an earnings call for Q2 to conserve resources while managing operations and liquidity and exploring strategic alternatives; no Q3 call transcript was identified in available filings .
• Q1 featured a scheduled call (May 19, 4:30 p.m. ET), but subsequent quarters emphasized written updates and transaction-related disclosures .

Estimates Context

• Wall Street (S&P Global) consensus estimates for Q3 2020 revenue and EPS were not available for ERNA, so we cannot benchmark results versus Street; comparisons are shown versus prior quarter and prior year .

Key Takeaways for Investors

• Q3 showed a sequential rebound in revenue off a Q2 trough, but the business remains structurally smaller due to BWW termination and ongoing COVID impacts; cost controls materially reduced operating expense YoY .
• The equity’s near-term catalyst is binary: simultaneous closing of the eGames asset sale and the Brooklyn merger (target early 2021), which would transition the listed entity to a clinical-stage biotech profile .
• Liquidity remained tight at Q3-end with negative working capital, but PPP forgiveness ($1.1M) and bridge loans ($1.0M in Sept.; $0.5M in Dec. pursuant to amendment) provided interim runway pending transaction close .
• Operating losses narrowed sequentially as revenue recovered and costs stayed contained; sustaining this trajectory depends on venue reopenings and timing of the asset sale .
• Risk disclosures highlight dependency on approvals and closing conditions; delays or failure to consummate deals could pressure going concern .
• Trading lens: stock sensitivity likely tied to deal milestones (proxy/approvals/closing) and any incremental liquidity updates, rather than core operating KPIs given the pending strategic pivot .

Appendix: Additional Q3 Liquidity Details

• Cash $1.7M at 9/30/20; Avidbank term loan principal $725k; negative working capital $(137)k .
• PPP: $1.6M received in April 2020; $1.1M forgiven in November 2020, leaving ~$0.5M outstanding .
• Bridge financing: $1.0M 8% unsecured note in Sept. (to be netted against purchase price at closing) ; amended in Nov. to add $0.5M second bridge (10%), raise initial note rate to 10% from Dec. 1, and extend maturity to Mar. 1, 2021 .