What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2022-04-15 compared with 2021-03-11 · 12 added, 708 removed, 0 unchanged (100% of the section changed)

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

common stock is listed on the NYSE American under the symbol “NTN.”

March 9, 2021, the closing price for our common stock as reported on the NYSE American was $3.47 and there were approximately

283 stockholders of record.

The number of stockholders of record is based upon the actual number of holders registered

on our books at such date.

A substantially greater number of holders of our common stock are “street name”

or beneficial

holders, whose shares are held by banks, brokers and other financial institutions.

have 156,112 shares of Series A Preferred Stock issued and outstanding.

The Series A Preferred Stock provides for a cumulative

annual dividend of 10 cents per share, payable in semi-annual installments in June and December.

Dividends may be paid in cash

or in shares of our common stock.

In 2020, we paid approximately $16,000 in cash dividends to the holders of our Series A Preferred

We expect to pay the dividends on our Series A Preferred Stock in accordance with its terms, though we may elect to pay

the dividend in shares of our common stock in the future.

Selected Financial Data

SEC rules and regulations, as a smaller reporting company, we are not required to provide the information otherwise required by

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s

discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction

with the accompanying audited consolidated financial statements and notes, included in Item 8 of this report, to help provide

an understanding of our financial condition, the changes in our financial condition and our results of operations.

also see the section entitled “Forward-Looking Statements”

at the beginning of this report.

Our MD&A is organized

This section provides a general description of our business.

of Operations .

This section provides an analysis of our results of operations presented in the accompanying consolidated

statements of operations by comparing the results for our two most recent completed fiscal years.

and Capital Resources .

This section provides an analysis of our historical cash flows, as well as our future capital requirements.

Sheet Arrangements .

This section provides information related to any off-balance sheet arrangement we may have that would

affect our consolidated finance statements.

Accounting Policies and Estimates .

This section provides a listing of our significant accounting policies, including any

material changes in our critical accounting policies, estimates and judgments during the year ended December 31, 2020 from

those described in the MD&A section of our Annual Report on Form 10-K for the year ended December 31, 2019.

Accounting Pronouncements.

This section provides information related to new or updated accounting guidance that may impact

our consolidated financial statements.

deliver interactive entertainment and innovative technology to our partners in a wide range of verticals –

from bars and

restaurants to casinos and senior living centers.

By enhancing the overall guest experience, we believe we help our hospitality

partners acquire, engage, and retain patrons.

social fun and friendly competition, our platform creates bonds between our hospitality partners and their patrons, and between

patrons themselves.

We believe this unique experience increases dwell time, revenue, and repeat business for venues –

has also created a large and engaged audience which we connect with through our in-venue TV network.

Until the significant disruptions

to the restaurant and bar industry resulting from the COVID-19 pandemic, or the pandemic, that began in March 2020, over 1 million

hours of trivia, card, sports and arcade games were played on our network each month.

Since March 2020, approximately 100,000

hours per month of such games have been played on our network each month.

mentioned below, we will be holding our special meeting of stockholders to consider the Merger (as defined below), the Asset Sale

(as defined below) and related proposals on March 15, 2021 at 9:00 a.m., Pacific Time, unless postponed or adjourned to a later

date or time.

We are focused on managing our operating expenses and maintaining our operations through consummation of the Merger

and Asset Sale.

There can be no assurance that we will be successful in completing the Merger or the Asset Sale or managing our

operating expenses or maintaining our operations through consummation of the Merger and Asset Sale.

As a result of the impact

of the pandemic on our business and taking into account our current financial condition and our existing sources of projected

revenue and our projected subscription revenue, advertising revenue and cash flows from operations, we believe we will have sufficient

cash resources to pay forecasted cash outlays only through mid-March 2021, assuming we are able to continue to successfully manage

our working capital deficit by managing the timing of payments to our vendors and other third parties.

We expect that the earliest

the Asset Sale and the Merger could be completed is during the week of March 15, 2021.

If the completion of the Asset Sale and

the Merger is delayed beyond that week, we will need to raise additional capital to maintain operations through the completion

of the Asset Sale and the Merger, and we currently have no arrangements for such capital.

If we do not complete the Merger for

any reason, we would likely be required to dissolve and liquidate our assets, and we would be required to pay all our debts and

contractual obligations and set aside certain reserves for potential future claims.

In such event, our investors may lose their

entire investment.

While we could attempt to complete another strategic transaction like the Merger or to raise additional capital

through equity financings and/or alternative sources of debt to allow us to continue as a going concern, based on the strategic

process conducted to date, we do not believe that we would be able to identify and complete another reverse merger or consummate

a financing to obtain sufficient additional financial resources when needed, on acceptable terms, or at all.

Merger with Brooklyn

August 12, 2020, we entered into an agreement and plan of merger and reorganization (the “Merger Agreement”) with

Brooklyn Immunotherapeutics LLC (“Brooklyn”), a privately-held, biopharmaceutical company focused on exploring the

role that cytokine-based therapy can have in treating patients with cancer.

Pursuant to the Merger Agreement, subject to the satisfaction

or waiver of the conditions set forth in the agreement, BIT Merger Sub, Inc., our wholly-owned subsidiary formed solely for purposes

of carrying out the merger, will merge with and into Brooklyn, with Brooklyn surviving the merger as a wholly-owned subsidiary

of our company and Brooklyn’s members receiving newly issued shares of our common stock in exchange for their ownership

interests in Brooklyn (the “Merger”).

The Merger, if completed, will result in a change in control of NTN as described

If the Merger is completed, NTN expects to change its name to Brooklyn ImmunoTherapeutics, Inc.

and the combined company

will focus on Brooklyn’s business of exploring the role that cytokine-based therapy can have on the immune system in treating

patients with cancer.

Upon completion of the Merger, the board of directors of the combined company is expected to consist entirely

of individuals designated by Brooklyn and the officers of the combined company are expected to be members of Brooklyn’s

current management team.

the Merger is completed, at the effective time of the Merger, Brooklyn’s members will exchange their equity interests in

Brooklyn for shares of NTN common stock representing between approximately 94.08% and 96.74% of the outstanding common stock of

NTN immediately following the effective time of the Merger on a fully diluted basis (less a portion of such shares which will

be allocated to Brooklyn’s banker, Maxim, in respect of the success fee owed to it by Brooklyn), and NTN’s stockholders

as of immediately prior to the effective time, will own between approximately 5.92% and 3.26% of the outstanding common stock

of NTN immediately after the effective time of the Merger on a fully diluted basis.

The exact number of shares to be issued in

the Merger will be determined pursuant to a formula in the Merger Agreement that takes into account the amount of Brooklyn’s

cash and cash equivalents as of the closing of the Merger and the amount by which NTN’s net cash is less than zero at the

the section titled “Business”

in Item 1 of Part I this report for additional information about the Merger Agreement

Asset Sale to eGames.com

NTN announced the signing of the Merger Agreement, NTN also announced that it was continuing to explore the sale of substantially

all of the assets relating to its current business to provide additional capital and allow the combined company following the

closing of the Merger, if it closes, to be in a position to focus exclusively on Brooklyn’s business.

September 18, 2020, NTN and eGames.com Holdings LLC (“eGames.com”) entered into an asset purchase agreement (as amended

from time to time, the “APA”) pursuant to which, subject to the terms and conditions thereof, NTN will sell and assign

(the “Asset Sale”) all of its right, title and interest in and to the assets relating to its current business (the

“Purchased Assets”) to eGames.com.

The Purchased Assets comprise substantially all of NTN’s assets.

At the closing

of the Asset Sale, in addition to assuming specified liabilities of NTN, eGames.com will pay NTN $2.0 million in cash.

In connection

with entering into the APA, the sole owner of eGames.com absolutely, unconditionally and irrevocably guaranteed to NTN the full

and prompt payment when due of any and all amounts, from time to time, payable by eGames.com under the APA.

connection with entering into the APA, Fertilemind Management, LLC, an affiliate of eGames.com (“Fertilemind”), on

behalf of eGames.com, made a $1.0 million bridge loan to NTN.

On November 19, 2020, NTN, eGames.com and Fertilemind entered into

an omnibus amendment and agreement pursuant to which, among other things, eGames.com agreed to provide, or cause Fertilemind,

on behalf of eGames.com, to provide, an additional $0.5 million bridge loan to NTN on December 1, 2020, and the parties agreed

to increase the interest rate on the $1.0 million bridge loan Fertilemind made to NTN in September 2020 from 8% to 10% effective

December 1, 2020.

Fertilemind provided the $0.5 million bridge loan to NTN on December 1, 2020.

On January 12, 2021, NTN, eGames.com

and Fertilemind entered into a second omnibus amendment and agreement pursuant to which, among other things, eGames.com agreed

to provide, or cause Fertilemind, on behalf of eGames.com, to provide an additional $0.2 million bridge loan to NTN on January

Fertilemind provided the $0.2 million bridge loan to NTN on January 12, 2021.

The principal and accrued interest of

each of the loans provided by Fertilemind to NTN will be applied toward the $2.0 million purchase price at the closing of the

the section titled “Business”

in Item 1 of Part I this report for additional information about the APA and Asset Sale.

negative impact of the COVID-19 pandemic on the restaurant and bar industry was abrupt and substantial, and our business, cash

flows from operations and liquidity suffered, and continues to suffer, materially as a result.

In many jurisdictions, including

those in which we have many customers and prospective customers, restaurants and bars were ordered by the government to shut-down

or close all on-site dining operations in the latter half of March 2020.

Since then, governmental orders and restrictions impacting

restaurants and bars in certain jurisdictions were eased or lifted as the number of COVID-19 cases decreased or plateaued, but

as jurisdictions began experiencing a resurgence in COVID-19 cases, many jurisdictions reinstated such orders and restrictions,

including mandating the shut-down of bars and the closing of all on-site dining operations of restaurants.

We have experienced

material decreases in subscription revenue, advertising revenue and cash flows from operations, which we expect to continue for

at least as long as the restaurant and bar industry continues to be negatively impacted by the COVID-19 pandemic, and which may

continue thereafter if restaurants and bars seek to reduce their operating costs or are unable to re-open even if restrictions

within their jurisdictions are eased or lifted.

For example, at its peak, approximately 70% of our customers had their subscriptions

to our services temporarily suspended.

As of March 9, 2021, approximately 11% of our customers remain on subscription suspensions.

response to the impact of the pandemic on our business, we implemented measures to reduce our operating expenses and preserve

capital, and we may implement additional measures in the future.

reduced our headcount (as of March 9, 2021, we had 22 employees, compared to 74 at December 31, 2019).

chief executive officer agreed to defer payment of 45% of his base salary between May 1, 2020 and October 31, 2020 until the

earlier of October 31, 2020 or such time as our board of directors determines in good faith that we are in the financial position

to pay his accumulated deferred salary.

All such deferred base salary payments were made by November 6, 2020.

terminated the lease for our corporate headquarters, resulting in a reduction in our future cash obligations under the lease

by approximately $3.4 million (see Note 16 to our audited consolidated financial statements included herein).

substantially eliminated all capital projects and are aggressively managing our expenditures to limit further cash outlays

and manage our working capital.

April 2020, we received a loan of approximately $1,625,000 under the Paycheck Protection Program of the Coronavirus Aid, Relief,

and Economic Security Act administered by the U.S.

Small Business Administration.

The loan matures on April 18, 2022 and bears

interest at a rate of 1.0% per annum.

We began making monthly interest only payments in November 2020.

One final payment of all

unforgiven principal plus any accrued unpaid interest is due at maturity.

In November 2020, we were informed by our lender that

the U.S Small Business Administration approved the forgiveness of approximately $1,093,000 of the $1,625,000 loan, leaving a principal

balance of approximately $532,000.

For additional information, see the section entitled “Liquidity and Capital Resources—Paycheck

Protection Program Loan,”

amounts outstanding under our term loan we entered into with Avidbank in September 2018 were paid in full on December 31, 2020

and we have no further obligations to Avidbank.

January 2020, we sold all of our assets used to conduct the live hosted knowledge-based trivia events known as Stump!

OpinioNation for approximately $1.4 million in cash.

of Operations

generated a net loss of $4,415,000 for the year ended December 31, 2020, compared to a net loss of $2,047,000 for the year ended

December 31, 2019.

generate revenue by charging subscription fees to our partners for access to our 24/7 trivia network, by selling and leasing tablet

and hardware equipment for custom usage beyond trivia/entertainment, by selling digital-out-of-home (DOOH) advertising direct

to advertisers and on national ad exchanges, by licensing our entertainment and trivia content to other parties, and by providing

professional services such as custom game design or development of new platforms on our existing tablet form factor.

Until February

1, 2020, we also generated revenue from hosting live trivia events.

We sold all our assets used to host live trivia events in

January 2020.

(See Note 4 to the consolidated financial statements included in this report.) The table below summarizes the type

of revenue we generated for the years ended December 31, 2020 and 2019:

Years ended December 31,

Subscription revenue

Hardware revenue

Other revenue

(14,006,000 )

decrease in subscription revenue for the year ended December 31, 2020 was due to lower average site count, lower average revenue

per site and the impact of the COVD-19 pandemic on our business when compared to 2019.

We previously reported that our subscription

revenue would materially decrease beginning in the first quarter of 2020 if we did not add network subscribers or other revenue

sources sufficient to replace the revenue historically received from Buffalo Wild Wings corporate-owned restaurants and its franchisees,

after our existing relationships with BWW terminated in November 2019.

To date, we have not offset the lost subscription revenue

from Buffalo Wild Wings corporate-owned restaurants and its franchisees, and, in light of the substantial negative impact the

pandemic has had, continues to have and is expected to continue to have, on the restaurant and bar industry and on our business,

and taking into account the measures we implemented in response to the impact of the pandemic on our business to reduce operating

expenses and preserve capital, including reducing our headcount and sales and marketing team, we do not expect that will be able

to do so in the foreseeable future.

shelter-in-place orders and governmental orders and restrictions on the operations of restaurants and bars to shut have been lifted

or reduced for many of our customers, our subscription revenue suffered during 2020 and we expect that it will continue to suffer

as a result of the pandemic, including because we expect governmental orders and restrictions impacting restaurants and bars will

remain in effect or be reinstated in response to resurgences in COVID-19 cases.

See “Item 1A.

Risk Factors”

report for additional information regarding the impact of the pandemic on our business and outlook.

606 specifies certain criteria that an arrangement with a customer must have in order for a contract to exist for purposes

of revenue recognition, one of which is that it must be probable that we will collect the consideration to which we will be entitled

under the contract.

As a result of the impact that the pandemic has had, and continues to have, on our customers, we determined

that due to the uncertainty of collectability of the subscription fees for certain customers, our arrangement with those customers

no longer meets all the criteria needed for a contract to exist for revenue recognition purposes.

Therefore, we did not recognize

revenue for these customers and fully reserved for accounts receivable in the allowance for doubtful accounts.

We only recognize

revenue for the arrangements that continued to meet the contract criteria, including the criteria that collectability was probable.

The table below provides a geographic breakdown of our site count as of the date indicated:

Network Subscribers

as of December 31,

United States

decrease in hardware revenue for the year ended December 31, 2020 was due to decreased sales-type lease arrangements as well as

a reduction in hardware sales to our jail services partner when compared to 2019.

As previously reported, in September 2020, we

entered into an agreement with our jail service partner to terminate our existing contract and cancel the remaining tablets to

be delivered under our contract.

We do not expect to recognize material hardware revenue in the future.

decrease in other revenue for the year ended December 31, 2020 was primarily due to a decrease in revenue from our live-hosted

trivia events when compared to 2019 as a result of the sale in January 2020 of all our assets used to conduct such events.

do not expect to recognize revenue from live-hosted trivia events in the future.

also recognized less license revenue and advertising revenue during the year ended December 31, 2020 when compared to 2019.

expect our advertising revenue will continue to be materially adversely impacted because of a decrease in advertising sales arising

from a slowdown in consumer traffic in the restaurant and bars that subscribe to our service as a result of the COVID-19 pandemic.

Costs and Gross Margin

following table compares the direct costs and gross margin for the years ended December 31, 2020 and 2019:

For the years ended

$ (14,006,000 )

$ (9,430,000 )

Gross Margin Percentage

the year ended December 31, 2020, the decrease in direct costs was primarily due to decreased (1) direct wages of approximately

$1,133,000 as a result of no longer providing live-hosted trivia events after January 2020;

(2) equipment expense of approximately

$1,545,000 due primarily to a reduction in hardware revenue as well as a reduction in equipment write-offs of certain older site

(3) depreciation expense of $979,000;

(4) service provider and freight expense of approximately $581,000;

and (5) other

miscellaneous expenses of $338,000, in each case, when compared to 2019.

decrease in gross margin for the year ended December 31, 2020 was primarily due to the reduction in revenue when compared to the

same periods in 2019.

Additionally, certain fixed costs, such as direct depreciation and amortization expense, negatively impacted

gross margins for the year ended December 31, 2020 when compared to 2019.

For the years ended

Selling, general and administrative

$ (5,084,000 )

Impairment of capitalized software

Impairment of goodwill

Depreciation and amortization (non-direct)

General and Administrative Expenses

decrease in selling, general and administrative expenses for the year ended December 31, 2020 when compared to 2019 was primarily

due to decreased (1) payroll and related expense of $4,450,000 as a result of reduced headcount;

(2) marketing fees of $732,000

due to managing discretionary spending;

(3) lease expense of approximately $245,000 due to terminating our lease and vacating

our corporate headquarters in June 2020, and (4) miscellaneous expense of $396,000, in each case, when compared to 2019.

decreases were partially offset by increased transaction-related expenses of $739,000 for the year ended December 31, 2020, consisting

primarily of professional financial advisor, legal and accounting fees associated with evaluating strategic opportunities, negotiating

the Merger Agreement and the APA and other services related to the proposed Merger and Asset Sale.

of Capitalized Software

each of the years ended December 31, 2020 and 2019, we abandoned certain capitalized software development projects that we concluded

were no longer a current strategic fit or for which we determined that the marketability of the content had decreased due to obtaining

additional information regarding the specific purpose for which the content was intended.

March 31, 2020, we had goodwill resulting from the excess of costs over the fair value of assets we acquired in 2003 related to

our Canadian business (the “Reporting Unit”).

Goodwill and intangible assets acquired in a purchase combination that

are determined to have an indefinite useful life are not amortized, but instead are assessed annually, or at interim periods,

for impairment based on qualitative factors, such as macroeconomic conditions, industry and market considerations, cost factors,

overall financial performance and other relevant events, to determine whether the existence of events or circumstances leads to

a determination that it is more likely than not that the fair value of the Reporting Unit is less than its carrying amount.

there are indications of impairment, then we perform a quantitative impairment test.

out evaluation of impairment indicators as of March 31, 2020, we determined that the uncertainty relating to the impact of the

COVID-19 pandemic on the Reporting Unit’s future operating results represented an indicator of impairment.

we compared the estimated fair value of the Reporting Unit to its carrying value at March 31, 2020, determined that a full impairment

loss was warranted and recognized an impairment charge of $662,000 for the year ended December 31, 2020, all of which was recorded

during the three months ended March 31, 2020.

There was no goodwill impairment recorded for the year ended December 31, 2019.

and Amortization

decrease in depreciation and amortization expense for the year ended December 31, 2020 was primarily due to various equipment

becoming fully depreciated and not replacing with new assets, and as a result of writing off our leasehold improvement assets

when we terminated our lease and vacated our corporate headquarters in June 2020.

(Expense) Income, Net

For the years ended

Increase in other

Interest expense, net

Other income (expense), net

Total other income (expense), net

increase in other income, net for the year ended December 31, 2020 when compared to 2019 was primarily related to (1) a gain of

approximately $1,225,000 for the sale of all our assets used to conduct live-hosted trivia events;

(2) decreased interest expense

of approximately $111,000 due to lower debt balances;

and (3) a gain of approximately $1,093,000 related to the forgiveness of

the loan we received under the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic

Security Act administered by the U.S.

Small Business Administration (the “CARES Act”).

In October 2020, we submitted

our loan forgiveness application for our PPP loan, and in November 2020, the lender informed us that the U.S Small Business Administration

approved the forgiveness of approximately $1,093,000 of the $1,625,000 loan, leaving a principal balance of approximately $532,000.

These increases in other income, net were partially offset by increased losses during the year ended December 31, 2020 of approximately

$284,000 related to disposals of assets when we terminated the lease for our corporate headquarters in June 2020 when compared

For the years ended

Benefit (provision) for income taxes

expect to incur state income tax liability in 2020 related to our U.S.

We also expect to incur an income tax liability

in 2020 in Canada due to the profitability of our Canadian subsidiary.

and Capital Resources

of December 31, 2020, we had cash, cash equivalents and restricted cash of $777,000 compared to cash, cash equivalents and restricted

cash of $3,409,000 as of December 31, 2019.

During the year ended December 31, 2020, we incurred a net loss of $4,415,000 compared

to a net loss of $2,047,000 for the year ended December 31, 2019.

connection with preparing our financial statements as of and for the year ended December 31, 2020, our management evaluated whether

there are conditions or events, considered in the aggregate, that are known and reasonably knowable that would raise substantial

doubt about our ability to continue as a going concern through twelve months after the date that such financial statements are

discussed in more detail under “Bridge Loans,”

below, we have received an aggregate of $1.7 million in principal amount

of bridge loans from Fertilemind, an affiliate of eGames.com.

The principal amount of these loans and accrued interest thereon

will be applied toward the $2.0 million purchase price under the APA.

If the Asset Sale does not close, the principal amount of

these loans and accrued interest thereon is due and payable upon the earlier of (i) the termination of the APA, (ii) the closing

of a Business Combination (as defined in the promissory note evidencing the loan), and (iii) April 30, 2021.

primary source of capital is cash from operations.

We have experienced material decreases in subscription revenue, advertising

revenue and cash flows from operations as a result of the impact of the COVID-19 pandemic on the restaurant and bar industry.

We expect the negative impact on our business to continue for as long as restaurants and bars continue to be negatively impacted

by the pandemic, and which may continue thereafter if restaurants and bars seek to reduce their operating costs or choose not

to re-open even if governmental orders and restrictions are eased or lifted.

a result of the impact of the pandemic on our business and taking into account our current financial condition and our existing

sources of projected revenue and our projected subscription revenue, advertising revenue and cash flows from operations, we believe

we will have sufficient cash resources to pay forecasted cash outlays only through mid-March 2021, assuming we are able to continue

to successfully manage our working capital deficit by managing the timing of payments to our vendors and other third parties.

We expect that the earliest the Asset Sale and the Merger could be completed is during the week of March 15, 2021.

If the completion

of the Asset Sale and the Merger is delayed beyond that week, we will need to raise additional capital to maintain operations

through the completion of the Asset Sale and the Merger, and we currently have no arrangements for such capital.

we do not complete the Merger for any reason, we would likely be required to dissolve and liquidate our assets, and we would be

required to pay all our debts and contractual obligations and set aside certain reserves for potential future claims.

event, our investors may lose their entire investment.

While we could attempt to complete another strategic transaction like the

Merger or to raise additional capital through equity financings and/or alternative sources of debt to allow us to continue as

a going concern, based on the strategic process conducted to date, we do not believe that we would be able to identify and complete

another reverse merger or consummate a financing to obtain sufficient additional financial resources when needed, on acceptable

terms, or at all.

See “ITEM 1A, Risk Factors—Risk Factors That May Affect Our Business—”Our cash flows

from operations and liquidity have been materially adversely affected by the effects of the COVID-19 pandemic.

We need to raise

capital in the near term and/or complete a strategic transaction, and our inability to do so could result in us pursuing a restructuring,

which may include a reorganization or bankruptcy under Federal bankruptcy laws, assignment for the benefit of creditors, or a

dissolution, liquidation and/or winding up, ”

on the factors described above, management concluded that there is substantial doubt regarding our ability to continue as a going

concern through the twelve month period following the date that our financial statements as of and for the year ended December

31, 2020 are issued.

The accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates

the realization of assets and the satisfaction of liabilities in the normal course of business.

The accompanying consolidated

financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification

of assets or the amounts and classifications of liabilities that may result from uncertainty related to our ability to continue

as a going concern.

a loan and security agreement we entered into with Avidbank in September 2018, or the Original LSA, we borrowed $4,000,000 in

the form of a 48-month term loan, all of which we used to pay-off the $4,050,000 of principal borrowed from our then-existing

In February 2020, we made a pre-payment on the term loan of approximately $150,000 following the sale in January 2020

of all our assets used to conduct live-hosted trivia events.

In March 2020, we entered into an amendment to the Original LSA.

We refer to the Original LSA, as amended, as the Avidbank LSA.

In connection with entering into the amendment, we made a $433,000

payment on our term loan, which included the $83,333 monthly principal payment for March 2020 plus accrued interest and a $350,000

principal prepayment.

All amounts owing under the term loan were paid on December 31, 2020, when the term loan matured, and Avidbank

released its security interest in all of our existing personal property.

incurred approximately $26,000 of debt issuance costs related to the Original LSA and the amendment to the LSA.

The debt issuance

costs were amortized to interest expense using the effective interest rate method over the life of the loan.

The debt issuance

costs were fully amortized as of December 31, 2020.

Protection Program Loan

April 2020, we issued a note in the principal amount of approximately $1,625,000 evidencing the loan we received under the PPP

that bears interest at a rate of 1.0% per annum.

Under the terms of the PPP, certain amounts of the PPP loan may be forgiven if

they used for qualifying expenses as described in the CARES Act.

In October 2020, we submitted our loan forgiveness application

for the PPP loan, and in November 2020, our lender informed us that the U.S Small Business Administration approved the forgiveness

of approximately $1,093,000 of the $1,625,000 loan, leaving a principal balance of approximately $532,000.

The unforgiven principal

balance, plus accrued and unpaid interest, is due at the closing of the Asset Sale, if the Asset Sale occurs, or at the closing

of the Merger, if the Merger occurs.

If neither the Asset Sale nor the Merger occurs, the unforgiven principal balance, plus accrued

and unpaid interest, is due at maturity, April 18, 2022.

We began making monthly interest only payments on November 18, 2020.

We may prepay the PPP loan at any time with no prepayment penalties.

As of December 31, 2020, the outstanding principal balance

of the PPP loan was approximately $532,000.

connection with entering into the APA, we issued to Fertilemind an unsecured promissory note (the “First Note”) in

the principal amount of $1,000,000, evidencing a $1,000,000 loan received from Fertilemind on behalf of eGames.com.

below, until December 1, 2020, the principal amount of the First Note accrued interest at the rate of 8% per annum (increasing

to 15% per annum upon the occurrence of an event of default), compounded annually.

On November 19, 2020, eGames.com agreed to

loan, or cause Fertilemind, on behalf of eGames.com, to loan an additional $500,000 to us on December 1, 2020.

Upon receipt of

such $500,000 loan, on December 1, 2020, we issued a second unsecured promissory note (the “Second Note”) evidencing

In connection with borrowing the additional $500,000 loan, the interest rate of the First Note increased from 8% to

10% beginning on December 1, 2020.

On January 12, 2021, eGames.com agreed to loan, or cause Fertilemind, on behalf of eGames.com,

to loan an additional $200,000 to us on January 12, 2021.

Upon receipt of such $200,000 loan, on January 12, 2021, we issued a

third unsecured promissory note (the “Third Note,”

and together with the First Note and the Second Note, the “Bridge

Notes”) evidencing such loan.

The principal amount of the Second Note and the Third Note accrues interest at the rate of

10% per annum (increasing to 15% per annum upon the occurrence of an event of default), compounded annually.

The principal amount

of the Bridge Notes and accrued interest thereon is due and payable upon the earlier of (i) the termination of the APA, (ii) the

closing of a Business Combination (as defined in the Bridge Notes), and (iii) April 30, 2021.

Upon the closing of the Asset Sale,

the outstanding principal amount of the Bridge Notes and all accrued and unpaid interest thereon will be applied against the purchase

price under the APA, and the Bridge Notes will be extinguished.

We may use the proceeds under the Bridge Notes for, among other

things, the payment of obligations related to the transactions contemplated by the APA and the Merger and other general working

capital purposes.

Bridge Notes include customary events of default, including if any portion of either of the Bridge Notes is not paid when due;

if we default in the performance of any other material term, agreement, covenant or condition of either of the Bridge Notes, subject

to a cure period;

if any final judgment for the payment of money is rendered against us and we do not discharge the same or cause

it to be discharged or vacated within 90 days;

if we make an assignment for the benefit of creditors, if we generally does not

pay its debts as they become due;

if a receiver, liquidator or trustee is appointed for us, or if we are adjudicated bankrupt

or insolvent.

In the event of an event of default, the Bridge Notes will accelerate and become immediately due and payable at

the option of the holder.

of December 31, 2020, we had negative working capital (current liabilities in excess of current assets) of $636,000 compared to

negative working capital of $25,000 as of December 31, 2019.

The following table shows our change in working capital from December

31, 2019 to December 31, 2020.

Working capital deficit as of December 31, 2019

Changes in current assets:

Cash and cash equivalents

Accounts receivable, net of allowance

Site equipment to be installed

Prepaid expenses and other current assets

Net decrease in current assets

Changes in current liabilities:

Accounts payable

Accrued compensation

Accrued expenses

Sales taxes payable

Income taxes payable

Current portion of obligations under capital leases

Deferred revenue

Deferred rent

Other current liabilities

Net decrease in current liabilities

Net decrease in working capital

Working capital deficit as of December 31, 2020

flows from operating, investing and financing activities, as reflected in the accompanying consolidated statements of cash flows,

are summarized as follows:

For the years ended

Cash (used in) provided by:

Operating activities

$ (3,894,000 )

$ (6,638,000 )

Investing activities

Financing activities

Effect of exchange rates

Net (decrease) increase in cash, cash equivalents and restricted cash

$ (2,632,000 )

$ (3,255,000 )

cash (used in) provided by operations.

The increase in cash used in operating activities was primarily due to an increase

in net loss of $5,643,000 after giving effect to adjustments made for non-cash transactions as well as increased cash used for

operating assets and liabilities of $995,000 during 2020 compared to 2019.

largest use of cash is payroll and related costs.

Cash used for payroll and related costs decreased $4,862,000 from $9,296,000

for 2019 to $4,434,000 for 2020, primarily due to reduced headcount.

primary source of cash is cash we generate from customers.

Cash received from customers decreased $13,041,000 from $19,790,000

for 2019 to $6,749,000 for 2020, primarily related to decreased subscription revenue, hardware revenue and live hosted trivia

cash provided by (used in) investing activities.

The $2,025,000 increase in cash provided by investing activities was primarily

due to receiving $1,226,000 in net proceeds from the sale of all our assets used to conduct live-hosted trivia events in January

2020 as well as decreased capital expenditures.

cash provided by (used in) financing activities.

During the year ended December 31, 2020, we received $1,625,000 in proceeds

from the PPP loan and $1,500,000 in proceeds from bridge loans received from Fertilemind.

There were no similar transactions during

During 2020, we made $1,750,000 more in principal payments on long-term debt and $26,000 less in principal payments on our

finance leases when compared to 2019.

Sheet Arrangements

have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial

condition, changes in our financial condition, expenses, results of operations, liquidity, capital expenditures or capital resources.

Accounting Policies and Estimates

discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements,

which have been prepared in accordance with GAAP.

The preparation of these financial statements requires us to make estimates

and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent

assets and liabilities.

On an ongoing basis, we evaluate our estimates, including those related to deferred costs and revenues,

depreciation of fixed assets, allowance for doubtful accounts, site equipment to be installed, investments, intangible assets,

and contingencies.

We base our estimates on a combination of historical experience and various other assumptions that are believed

to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of

assets and liabilities that are not readily apparent from other sources.

Actual results may differ materially from these estimates.

Critical accounting policies and estimates are defined as those that are both most important to the portrayal of our financial

condition and results and require management’s most subjective judgments.

believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation

of our consolidated financial statements.

for Doubtful Accounts —We maintain allowances for doubtful accounts for estimated losses resulting from nonpayment by

our customers.

We reserve for all accounts that have been suspended or terminated from our Buzztime network services and for customers

with balances that are greater than a predetermined number of days past due.

We analyze historical collection trends, customer

concentrations and creditworthiness, economic trends and anticipated changes in customer payment patterns when evaluating the

adequacy of our allowance for doubtful accounts for specific and general risks.

Additional reserves may also be established if

specific customers’

balances are identified as potentially uncollectible.

If the financial condition of our customers were

to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Equipment to be Installed—

Site equipment to be installed consists of fixed assets related to our tablet platform that

have not yet been placed in service and are stated at cost.

Such equipment includes the Classic Playmaker, tablets, other associated

electronics and the computers located at customer’s sites.

These assets remain in site equipment to be installed until installed

at our customer sites, at which point, the cost of the deployed site equipment is reclassified to fixed assets and depreciated

over the estimated useful life.

We evaluate the recoverability of site equipment to be installed for impairment whenever events

or circumstances indicate that the carrying amounts of such assets may not be recoverable.

Recoverability is measured by comparing

the carrying amount of an asset or asset group to estimated undiscounted future net cash flows expected to be generated.

carrying amount of the asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized

to the extent that the carrying amount exceeds its fair value.

Fair value is determined through various valuation techniques including

discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary.

year ended December 31, 2020 and 2019, we recognized a loss of approximately $307,000 and $591,000, respectively, for the disposition

of site equipment to be installed for which we did not expect to generate future cash flows.

Assets —

Fixed assets are recorded at cost.

Equipment under finance leases is recorded at the present value of future

minimum lease payments.

We evaluate the recoverability of our fixed assets for impairment whenever events or circumstances indicate

that the carrying amounts of such assets may not be recoverable.

If the carrying amount of the asset or asset group is not recoverable

on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value.

During the year ended December 31, 2020, we recognized a loss of approximately $54,000 of fixed assets related to deployed site

equipment in the ordinary course of business.

As discussed further in Note 16 to the accompanying financial statements, we our

lease for our corporate headquarters and vacated the facility as of June 30, 2020.

As a result, during the year ended December

31, 2020, we wrote-off approximately $890,000 of unamortized tenant improvement allowance that is recorded as part of the gain

on termination of lease, as well as approximately $87,000 in leasehold improvement assets and $197,000 in furniture and fixtures

and our vehicle.

During the year ended December 31, 2019, total loss for the disposition of fixed assets was approximately $127,000.

of fixed assets is computed using the straight-line method over the estimated useful lives of the assets.

Depreciation of leasehold

improvements and fixed assets under finance leases is computed using the straight-line method over the shorter of the estimated

useful lives of the assets or the lease period.

incur a relatively significant level of depreciation expense in relation to our operating income.

The amount of depreciation expense

in any fiscal year is largely related to the equipment located at our customers’

Such equipment is depreciated over

one to three years based on the shorter of the contractual finance lease period or the estimated useful life, which considers

anticipated technology changes.

Machinery and equipment are depreciated over three to five years.

If our fixed assets turn out

to have longer lives, on average, than estimated, then our depreciation expense would be significantly reduced in those future

Conversely, if the fixed assets turn out to have shorter lives, on average, than estimated, then our depreciation expense

would be significantly increased in those future periods.

As of December 31, 2020, we determined there were no changes to the

estimated useful lives for any of our assets.

Goodwill —Goodwill

represents the excess of costs over fair value of assets of businesses acquired.

Goodwill acquired in a purchase combination determined

to have an indefinite useful life are not amortized, but instead are assessed annually, or at interim periods, for impairment

based on qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is

more likely than not that the fair value of the reporting unit is less than its carrying amount.

Such qualitative factors include

macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other relevant events.

If after assessing the totality of events or circumstances we determine it is more likely than not that the fair value of the

reporting unit is less than its carrying amount, then we must perform the step one quantitative impairment test outlined in Accounting

Standards Codification (“ASC”) No.

350, Intangibles –

Goodwill and Other.

goodwill balance of $696,000 as of December 31, 2019 relates to the excess of costs over the fair value of assets we acquired

in 2003 related to our Canadian business (the “Reporting Unit”).

In our evaluation of impairment indicators as of

March 31, 2020, we determined that the uncertainty relating to the impact of the COVID-19 pandemic on the Reporting Unit’s

future operating results represented an indicator of impairment.

Accordingly, we compared the estimated fair value of the Reporting

Unit to its carrying value at March 31, 2020, determined that a full impairment loss was warranted and recognized an impairment

charge of $662,000 for the three months ended March 31, 2020.

No further evaluations were necessary after March 31, 2020.

was no goodwill impairment recorded for the year ended December 31, 2019.

Recognition —In accordance with ASC No.

606, Revenue from Contracts with Customers, we recognize revenue when

we transfer promised goods or services to customers in an amount that reflects the consideration we expect to receive in exchange

for those goods or services.

generate revenue by charging subscription fees to partners for access to our 24/7 trivia network, by selling and leasing tablet

and hardware equipment for custom usage beyond trivia/entertainment, by selling DOOH advertising direct to advertisers and on

national ad exchanges, by licensing our entertainment and trivia content to other entities, and by providing professional services

such as custom game design or development of new platforms on our existing tablet form factor.

Until February 1, 2020, we also

generated revenue from hosting live trivia events.

We sold all of our assets used to host live trivia events in January 2020.

general, when multiple performance obligations are present in a customer contract, we allocated the transaction price to the individual

performance obligation based on the relative stand-alone selling prices, and recognize the revenue when or as each performance

obligation has been satisfied.

We treat discounts as a reduction to the overall transaction price and allocate the discount to

the performance obligations based on the relative stand-alone selling prices.

We recognize revenue net of sales tax we collect

from the customer.

606 specifies certain criteria that an arrangement with a customer must have in order for a contract to exist for purposes

of revenue recognition, one of which is that it must be probable that we will collect the consideration to which we will be entitled

under the contract.

As a result of the impact that the COVID-19 pandemic has had, and continues to have, on our customers, we

determined that due to the uncertainty of collectability of the subscription fees for certain customers, our arrangement with

those customers no longer meets all the criteria needed for a contract to exist for revenue recognition purposes.

Therefore, we

did not recognize revenue for these customers and fully reserved for accounts receivable in the allowance for doubtful accounts.

We only recognized revenue for the arrangements that continued to meet the contract criteria, including the criteria that collectability

was probable.

Development Costs —We capitalize costs related to the development of certain software products in accordance with ASC

We recognize amortization of costs related to interactive programs on a straight-line basis over the programs’

estimated useful lives, generally two to three years.

Amortization expense relating to capitalized software development costs

totaled $551,000 and $519,000 for the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020 and 2019,

approximately $123,000 and $177,000, respectively, of capitalized software costs were not subject to amortization as the development

of various software projects was not complete.

performed our annual review of software development projects for the years ended December 31, 2020 and 2019, and determined to

abandon various software development projects that we concluded were no longer a current strategic fit or for which we determined

that the marketability of the content had decreased due to obtaining additional information regarding the specific industry for

which the content was intended.

As a result, for the year ended December 31, 2020 and 2019, we recognized an impairment charge

of $248,000 and $550,000, respectively.

Impairment of capitalized software is shown separately on our consolidated statement of

Taxes —Income taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are recognized

for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets

and liabilities and their respective tax bases, and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities

are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are

expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized

in income in the period that includes the enactment date.

Deferred tax assets are reduced by a valuation allowance when, in the

opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

740, Income Taxes, defines the threshold for recognizing the benefits of tax return positions in the financial statements

as “more-likely-than-not”

to be sustained by the taxing authority.

A tax position that meets the “more-likely-than-not”

criterion is measured at the largest amount of benefit that is more than 50% likely of being realized upon ultimate settlement.

We have reviewed our tax positions and determined that an adjustment to the tax provision is not considered necessary nor is a

reserve for income taxes required.

Accounting Pronouncements

December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU No.

2019-12, Income Taxes (Topic

Simplifying the Accounting for Income Taxes.

This ASU enhances and simplifies various aspects of the income tax

accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business

combination, ownership changes in investments, methodology for calculating income taxes in an interim period when a year-to-date

loss exceeds the anticipated loss for the year and interim-period accounting for enacted changes in tax law.

The amendment will

be effective for public companies with fiscal years beginning after December 15, 2020 (which was January 1, 2021 for us);

adoption is permitted.

We do not expect that the adoption of this accounting standard update to have a material impact on our

consolidated financial statements.

June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments , which supersedes current

guidance requiring recognition of credit losses when it is probable that a loss has been incurred.

The ASU requires an entity

to establish an allowance for estimated credit losses on financial assets, including trade and other receivables, at each reporting

This ASU will result in earlier recognition of allowances for losses on trade and other receivables and other contractual

rights to receive cash.

For smaller reporting companies, the effective date for this standard has been delayed and will be effective

for fiscal years beginning after December 15, 2022 (which will be January 1, 2023 for us).

We are evaluating the impact that the

adoption of this standard will have on our consolidated financial statements.

Quantitative and Qualitative Disclosures about Market Risk

SEC rules and regulations, as a smaller reporting company we are not required to provide the information otherwise required by

Financial Statements and Supplementary Data

“Index to Consolidated Financial Statements”

on page F-1 for a listing of the Consolidated Financial Statements filed

with this report.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed on The Nasdaq Global Market under the symbol “BTX.”

As of April 12 , 2022, there were approximately 421 stockholders of record based on the actual number of holders registered on our books at such date.

We have 156,112 shares of Series A Preferred Stock issued and outstanding.

The Series A Preferred Stock provides for a cumulative annual dividend of 10 cents per share, payable in semi-annual

installments in June and December.

Dividends may be paid in cash or in shares of our common stock.

In 2021, we paid approximately $8,000 in cash dividends and issued 202 shares of common stock in stock dividends to the holders of our Series A

Preferred Stock.

We expect to pay the dividends on our Series A Preferred Stock in accordance with its terms, though we may elect to pay the dividend in shares of our common stock in the future.

We have not declared or paid any cash dividends on our common stock.

No cash dividends have been previously paid on our common stock and none are anticipated in 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity