What changed in this filing

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Item 1A. Risk Factors

2021-03-11 compared with 2020-03-19 · 607 added, 348 removed, 237 unchanged (80% of the section changed)

7 unchanged sentences

described below in evaluating our stock and the information in this report.

Related to the Merger

formula for determining the number of shares to be issued in the Merger to Brooklyn members is not adjustable based on the market

price of NTN’s common stock, so the number of shares of NTN common stock that may be issued in the Merger may have a greater

or lesser value than at the time the Merger Agreement was signed.

Merger Agreement has set the formula for determining the number of shares to be issued to Brooklyn’s members in the Merger,

and the number of shares to be so issued is only adjustable upward or downward under certain circumstances 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 closing.

Any changes in the market price of NTN

common stock before the completion of the Merger will not affect the number of shares of NTN common stock that Brooklyn members

will be entitled to receive pursuant to the Merger Agreement.

Therefore, if before the completion of the Merger the market price

of NTN common stock declines from the market price on the date of the Merger Agreement, then Brooklyn members could receive merger

consideration with substantially lower value for their equity interests in Brooklyn than the value of NTN common stock based on

the market price on the date of the Merger Agreement.

Similarly, if before the completion of the Merger the market price of NTN

common stock increases from the market price on the date of the Merger Agreement, then Brooklyn members could receive merger consideration

with substantially more value for their equity interests in Brooklyn than the value of NTN common stock based on the market price

on the date of the Merger Agreement.

Because the formula does not adjust as a result of changes in the value of NTN common stock,

for each one percentage point that the market value of NTN common stock rises or declines, there is a corresponding one percentage

point rise or decline, respectively, in the value of the total merger consideration issued to Brooklyn members compared to the

market price of the NTN common stock on the date of the Merger Agreement.

number of shares to be issued in the Merger to Brooklyn members will increase to the extent that Brooklyn has more than $10.0

million in cash and cash equivalents at the closing of the Merger, and will further increase to the extent that NTN’s net

cash at the closing of the Merger is less than zero dollars.

The increase based on the amount of Brooklyn’s cash and cash

equivalents at the closing of the Merger is subject to a $15.0 million cap, except that to the extent that NTN’s net cash

is less than zero, the number of shares to be issued in the Merger to Brooklyn members will increase to the extent that Brooklyn

has more than $15.0 million in cash and cash equivalents at the closing, up to the absolute amount of NTN’s net cash.

NTN’s stockholders could own less, and Brooklyn members could own more, of the combined company depending on the amount

of cash and cash equivalents Brooklyn has at the closing and on the extent to which NTN’s net cash at the closing is negative.

the conditions to closing the Merger are not satisfied, the Merger may not occur.

if NTN’s stockholders approve the issuance of NTN common stock pursuant to the Merger Agreement and the change of control

resulting therefrom (the “Merger Share Issuance Proposal”) and even if the beneficial holders of the Class A membership

interests of Brooklyn approve the Merger and the Merger Agreement, other specified conditions must be satisfied or waived to complete

the Merger, including the shares of NTN common stock shall continue to be traded on the NYSE American through the effective time

of the Merger, the shares of NTN common stock to be issued pursuant to the Merger Agreement shall have been approved for listing

on NYSE American (subject to official notice of issuance), and the NYSE American listing application shall have been approved

such that the NTN common stock will continue to trade on the NYSE American after the effective time of the Merger.

No assurances

can be given that all of the conditions will be satisfied or waived.

If the conditions are not satisfied or waived, the Merger

may not occur or will be delayed, and NTN and Brooklyn each may lose some or all of the intended benefits of the Merger.

example, one of the conditions to closing the Merger is that the deficit in NTN’s net cash not exceed $3.0 million.

Asset Sale is approved by NTN’s stockholders and the Asset Sale closes, NTN expects that it will satisfy this closing condition.

However, NTN has limited cash on hand and its cash flow from operations has suffered as result of the COVID-19 pandemic and any

delay in the closing of the Asset Sale and/or the Merger, will increase the risk that NTN will not satisfy this closing condition.

See “—Risks Related to NTN Prior to the Merger,”

Further, if the Asset Sale is not approved by NTN’s

stockholders or if the Asset Sale does not close for any other reason, NTN will likely not satisfy this condition.

another of the conditions to closing the Merger is that Brooklyn have not more than $750,000 in indebtedness for borrowed money

at the closing.

Although no assurances can be given in this regard, Brooklyn expects that it will satisfy this closing condition.

another example, one of the conditions to closing the Merger is that, at the closing, Brooklyn have not less than $10 million

in cash and cash equivalents on its balance sheet and have not more than $750,000 of indebtedness for borrowed money.

As of January

29, 2021, Brooklyn’s indebtedness for borrowed money consisted of (i) assumed notes payable in the amount of $410,000 related

to notes assumed in connection with the acquisition of IRX Therapeutics, and (ii) a loan in the amount of $309,905 under the Paycheck

Protection Program.

With respect to the cash balance sheet requirement, in order to help ensure that Brooklyn meets this condition,

Brooklyn has previously engaged in a rights offering to the beneficial holders of its Class A membership interests pursuant to

which such beneficial holders who exercised their rights have agreed to make additional contributions to Brooklyn.

will exchange the additional membership interests they receive for their contribution for a portion of the shares of NTN common

stock issuable to members of Brooklyn in the Merger.

Although Brooklyn expects to receive at least $10 million in proceeds from

the rights offering, there can be no assurance that these members will contribute what they have contractually agreed to contribute.

If these members do not make their committed contributions, Brooklyn may not be able to satisfy the closing condition that it

have not less than $10 million in cash and cash equivalents on its balance sheet at the closing of the Merger.

If this closing

condition is not satisfied, and if NTN does not waive the condition, the Merger will not occur.

to complete the Merger may result in NTN or Brooklyn paying a termination fee to the other party and could significantly harm

the market price of NTN’s common stock and negatively affect the future business and operations of both companies.

the Merger is not completed and the Merger Agreement is terminated under certain circumstances, NTN or Brooklyn may be required

to pay the other party a termination fee of $750,000, or reimburse the transaction expenses of the other party, up to a maximum

Even if a termination fee is not payable or transaction expenses are not reimbursable in connection with a termination

of the Merger Agreement, each of NTN and Brooklyn will have incurred significant legal, financial, advisory, accounting, audit

and other general operating expenses, which must be paid whether or not the Merger is completed.

Further, if the Merger is not

completed, it could significantly harm the market price of NTN common stock and further increase the doubt as to its ability to

continue as a going concern.

In addition, if the Merger Agreement is terminated and the board of directors of NTN or the board

of managers of Brooklyn determines to seek another business combination, there can be no assurance that either NTN or Brooklyn

will be able to find a partner and close an alternative transaction on terms that are as or more favorable than the terms set

forth in the Merger Agreement.

of the officers and directors of NTN and certain of the officers and managers of Brooklyn have interests in the Merger that are

different from the stockholders of NTN and members of Brooklyn, respectively, and that may influence them to support or approve

the Merger without regard to the interests of the stockholders of NTN or the members of Brooklyn.

officers and directors of NTN and certain officers and managers of Brooklyn participate in arrangements that provide them with

interests in the Merger that are different from the interests of the stockholders of NTN and members of Brooklyn including, among

others, the continued service as an officer or director of the combined company, severance benefits, the acceleration of vesting

of equity awards, continued indemnification and the potential ability to sell an increased number of shares of common stock of

the combined company in accordance with Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”).

These interests, among others, may influence the officers and directors of NTN and the officers and managers of Brooklyn to support

or approve the Merger.

market price of NTN common stock following the Merger may decline as a result of the Merger.

market price of NTN common stock may decline as a result of the Merger for a number of reasons including if:

react negatively to the prospects of the combined company’s product candidates, business and financial condition following

effect of the Merger on the combined company’s business and prospects is not consistent with the expectations of financial

or industry analysts;

combined company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial

or industry analysts.

stockholders and Brooklyn members will have a reduced ownership and voting interest in, and will exercise less influence over

the management of, the combined company following the closing of the Merger as compared to their current ownership and voting

interest in the respective companies.

the completion of the Merger, the current stockholders of NTN and the current members of Brooklyn will own a smaller percentage

of the combined company than their ownership in the respective companies prior to the Merger.

At the effective time of 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 after the effective time of the Merger on a

fully diluted basis (less a portion of such shares which will be allocated to 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 on a fully diluted basis.

Consequently, NTN

stockholders and Brooklyn members will be able to exercise less influence over the management and policies of the combined company

following the closing of the Merger than they currently exercise over the management and policies of their respective companies.

stockholders and Brooklyn members may not realize a benefit from the Merger commensurate with the ownership dilution they will

experience in connection with the Merger.

the combined company is not able to realize the strategic and financial benefits currently anticipated from the Merger, NTN stockholders

and Brooklyn members will have experienced substantial dilution of their ownership interests in their respective companies without

receiving the expected commensurate benefit, or only receiving part of the commensurate benefit to the extent that the combined

company is able to realize only part of the expected strategic and financial benefits currently anticipated from the Merger.

combined company may need to raise additional capital by issuing securities or debt or through licensing or other arrangements,

which may cause dilution to the combined company’s stockholders or restrict the combined company’s operations or impact

its proprietary rights.

Future issuances of the combined company’s common stock pursuant to options outstanding following

the Merger and under its equity incentive plan could result in additional dilution.

combined company may be required to raise additional funds sooner than currently planned.

If either NTN or Brooklyn hold less

cash at the time of the closing of the Merger than the parties currently expect, the combined company may need to raise additional

capital sooner than expected.

Additional financing may not be available to the combined company when needed or it may not be available

on favorable terms.

To the extent that the combined company raises additional capital by issuing equity securities, such an issuance

may cause significant dilution and the terms of any new equity securities may have preferences over the combined company’s

common stock.

Any debt financing the combined company enters into may include covenants that restrict its operations.

These restrictive

covenants may include limitations on additional borrowing and specific restrictions on the use of the combined company’s

assets, as well as prohibitions on its ability to create liens, pay dividends, redeem its stock or make investments.

if the combined company raises additional funds through licensing, partnering or other strategic arrangements, it may be necessary

to relinquish rights to some of the combined company’s technologies or product candidates and proprietary rights, or grant

licenses on terms that are not favorable to the combined company.

addition, the exercise or conversion of some or all of the combined company’s outstanding options (or, after the Merger,

the issuance of equity awards under the combined company’s equity incentive plan) could result in additional dilution in

the percentage ownership interest of current NTN stockholders and Brooklyn members in the combined company.

the pendency of the Merger, NTN and Brooklyn may not be able to enter into a business combination with another party at a favorable

price because of restrictions in the Merger Agreement, which could adversely affect their respective businesses.

in the Merger Agreement impede the ability of NTN and Brooklyn to make acquisitions, subject to certain exceptions relating to

fiduciary duties, or to complete other transactions that are not in the ordinary course of business pending completion of the

As a result, if the Merger is not completed, the parties may be at a disadvantage to their competitors during such period.

In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, initiating, encouraging

or entering into certain extraordinary transactions, such as a merger, sale of assets, or other business combination outside the

ordinary course of business with any third party, subject to certain exceptions relating to fiduciary duties and, with respect

to NTN, other than the asset sale.

Any such transactions could be favorable to such party’s securityholders.

provisions of the Merger Agreement may discourage third parties from submitting alternative acquisition proposals, including proposals

that may be superior to the arrangements contemplated by the Merger Agreement.

terms of the Merger Agreement prohibit NTN and Brooklyn from soliciting alternative acquisition proposals or cooperating with

persons making unsolicited acquisition proposals, except in limited circumstances where the board of directors of NTN and the

board of managers of Brooklyn, as applicable, determines in good faith that an unsolicited alternative acquisition proposal is

or is reasonably likely to lead to a superior offer and that failure to cooperate with the proponent of that proposal would reasonably

be likely to be inconsistent with the board’s fiduciary duties.

the lack of a public market for Brooklyn’s securities makes it difficult to evaluate the value of such securities, the members

of Brooklyn may receive shares of NTN common stock in the Merger that have a value that is less than, or greater than, the fair

market value of Brooklyn’s securities and/or NTN may pay more than the fair market value of Brooklyn’s securities.

outstanding securities of Brooklyn are privately held and not traded in any public market.

The lack of a public market makes it

difficult to determine the fair market value of Brooklyn.

Because the percentage of NTN common stock to be issued to Brooklyn

members was determined based on negotiations between NTN and Brooklyn, it is possible that the value of NTN common stock to be

received by Brooklyn members in the Merger will be less than the fair market value of Brooklyn, or NTN may pay more than the aggregate

fair market value for Brooklyn.

relating to the Merger could require NTN, Brooklyn or the combined company to incur significant costs and suffer management distraction

and could delay or enjoin the Merger.

and Brooklyn are subject to litigation relating to the Merger.

Such litigation may create uncertainty relating to the Merger,

or delay or enjoin the Merger.

Litigation is expensive and diverts management’s attention and resources, which could adversely

affect NTN’s, Brooklyn’s or the combined company’s business.

Insurance may not be sufficient to cover all costs

or damages related to this type of litigation.

ownership of the combined company common stock is expected to be concentrated, which may prevent you and other stockholders from

influencing significant corporate decisions and may result in conflicts of interest that could cause the combined company stock

price to decline.

officers and directors of the combined company and their affiliates are expected to beneficially own or control approximately

39.7% of the outstanding shares of the combined company common stock immediately following the effective time of the Merger on

a fully diluted basis (assuming Brooklyn’s members immediately prior to the effective time of the Merger and Maxim own 94.08%

of the outstanding common stock of NTN immediately following the effective time of the Merger on a fully diluted basis).

these executive officers, directors and their affiliates, acting as a group, will have substantial influence over the outcome

of corporate actions requiring stockholder approval, including the election of directors, any merger, consolidation or sale of

all or substantially all of the combined company assets or any other significant corporate transactions.

These stockholders may

also delay or prevent a change of control of the combined company, even if such a change of control would benefit the other stockholders

of the combined company.

The significant concentration of stock ownership may adversely affect the trading price of the combined

company’s common stock due to investors’

perception that conflicts of interest may exist or arise.

Related to the Asset Sale

the Asset Sale is pending, it creates unknown impacts on NTN’s future which could materially and adversely affect its business,

financial condition and results of operations.

the Asset Sale is pending, it creates unknown impacts on NTN’s future.

Therefore, NTN’s current or potential business

partners may decide to delay, defer or cancel entering into new business arrangements with NTN pending consummation of the Asset

The occurrence of these events individually or in combination could materially and adversely affect NTN’s business,

financial condition and results of operations.

failure to consummate the Asset Sale may materially and adversely affect NTN’s business, financial condition and results

of operations.

Asset Sale is subject to various closing conditions including stockholder approval of the Asset Sale Proposal as required under

applicable law.

NTN cannot control these conditions and cannot assure you that they will be satisfied.

If the Asset Sale is not

consummated, NTN may be subject to a number of risks, including the following:

may not satisfy the closing condition in the Merger Agreement that the deficit in NTN’s net cash not exceed $3.0 million;

may not be able to identify an alternate transaction, or if an alternate transaction is identified, such alternate transaction

may not result in terms as favorable to NTN as compared to the terms of the Asset Sale;

trading price of NTN common stock may decline to the extent that the current market price reflects a market assumption that

the Asset Sale will be consummated;

expenses related to the Asset Sale, such as legal, accounting and financial advisor fees, must be paid even if the Asset Sale

is not completed;

relationships with its customers, suppliers and employers may be negatively impacted which may harm its business.

occurrence of any of these events individually or in combination could materially and adversely affect NTN’s business, financial

condition and results of operations, which could cause the market value of NTN common stock to decline.

addition, if the Asset Sale does not close and the Merger does close, the aggregate ownership percentage of the combined company

by NTN stockholders will likely decrease due to an increase in the deficit of NTN’s net cash as a result of not receiving

the $2.0 million in the Asset Sale.

to complete the Asset Sale may result in NTN paying a termination fee to eGames.com.

the Asset Sale is not completed and the APA is terminated under certain circumstances, NTN may be required to pay eGames.com a

termination fee of $250,000.

Even if a termination fee is not payable in connection with a termination of the APA, NTN will have

incurred significant legal, financial, advisory, accounting, audit and other general operating expenses, which must be paid whether

or not the Asset Sale is completed.

of the officers and directors of NTN have interests in the Asset Sale that are different from the stockholders of NTN and that

may influence them to support or approve the Asset Sale without regard to the interests of the stockholders of NTN.

officers and directors of NTN participate in arrangements that provide them with interests in the Asset Sale that are different

from the interests of the stockholders of NTN including, among others, change-in-control benefits and the acceleration of vesting

of equity awards.

These interests, among others, may influence the officers and directors of NTN to support or approve the Asset

Factors that May Affect Our Business

need to raise capital to meet our debt service obligations to Avidbank and to fund our working capital needs.

Our inability to

raise sufficient capital would have a material adverse effect on our financial condition and business.

of December 31, 2019, we had cash, cash equivalents and restricted cash of $3,409,000.

As of December 31, 2019, $2,750,000 was

outstanding under our term loan with Avidbank, which is gross of any unamortized debt issuance costs that are recorded as a reduction

of long-term debt.

Since January 1, 2020, we paid $750,000 of the principal amount of our term loan, thereby reducing the principal

amount outstanding as of March 19, 2020 to $2,000,000.

The maturity date of our term loan is December 31, 2020 and we are required

to make monthly principal payments ranging from $125,000 to $300,000 plus accrued interest beginning in April 2020.

limited exceptions, our loan and security agreement with Avidbank prohibits us from borrowing additional amounts from other lenders.

need to raise capital to meet our debt service obligations to Avidbank and fund our working capital needs.

We currently have no

arrangements for such capital and no assurances can be given that we will be able to raise such capital when needed, on acceptable

terms, or at all.

The effects of the recent COVID-19 pandemic on macroeconomic conditions and the capital markets will likely

make it more challenging to raise capital.

If we are unable to raise sufficient capital, we will need to implement additional

measures to reduce operating expenses and to preserve capital, any of which may further adversely affect our operations.

going concern explanatory paragraph included in the report of our independent registered public accounting firm on our consolidated

financial statements as of and for the year ended December 31, 2019 could also impair our ability to raise capital.

The measures we recently implemented and may implement in the future to reduce operating expenses and to preserve capital

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

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.

negative impact of the 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.

Jurisdictions that have not imposed governmental

orders and restrictions on restaurants and bars or reinstated them could do so at any time.

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, but that percentage could increase, perhaps materially, at any time due to the effects of

the pandemic on our customers, including as jurisdictions reinstate governmental orders and restrictions impacting our customers.

Even in jurisdictions in which governmental orders and restrictions were eased or lifted, certain of our customers have requested,

and others could request, to continue their subscription suspensions because, for example, such customers choose not to re-open

despite being permitted to do so.

As a result, 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 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.

full extent to which the pandemic will, directly or indirectly, impact our business, results of operations and financial condition

is currently highly uncertain, including due to factors that currently are also highly uncertain, including when, and the extent

to which, the negative impact of the pandemic will improve, including when a substantial majority of restaurants across the U.S.

and Canada will be permitted to offer on-site dining and operate at or close to pre-pandemic levels or when a substantial majority

of bars across the U.S.

and Canada will be permitted to re-open and operate at or close to pre-pandemic levels, when our customers

will re-open, or if they will subscribe to our service if and when they do, the ultimate impact of the pandemic and how long it

endures, the impact of the current or future resurgences in COVID-19 cases, and the actions required or recommended to contain

or treat COVID-19.

However, unless in the very near term our subscription revenue, advertising revenue and cash flows from operations

return to pre-pandemic levels and/or we raise substantial capital, the amount of time and the amount of cash we have to maintain

operations and sustain the negative effects of the pandemic is very limited.

of December 31, 2020, we had cash and cash equivalents of approximately $777,000.

As of December 31, 2020, $0.5 million of principal

was outstanding under the loan we received under the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic

Security Act.

In connection with entering into the APA, we received a $1.0 million bridge loan from an affiliate of eGames.com,

and on December 1, 2020 and January 12, 2021, we received an additional $0.5 million bridge loan and an additional $0.2 million

bridge loan, respectively, from that affiliate, all of which, together with accrued interest, will be applied against the $2.0

million purchase price payable to us at the closing of the Asset Sale;

however, if the Asset Sale does not close, we will owe

the $1.7 million of principal of those bridge loans plus accrued interest to the affiliate of eGames.com.

For additional information

regarding these bridge loans, see the section entitled “Liquidity and Capital Resources—Bridge Loans”

in “ITEM

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

of Part II of this report.

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.

expect that the earliest the Asset Sale and the Merger will be completed is 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.

We currently have no arrangements for such capital and no assurances can be given

that we will be able to raise such capital when needed, on acceptable terms, or at all.

The effects of the pandemic on macroeconomic

conditions and the capital markets make it more challenging to raise capital.

The going concern explanatory paragraph included

in the report of our independent registered public accounting firm on our consolidated financial statements as of and for the

year ended December 31, 2020 could also impair our ability to raise capital.

If we are unable to complete the Merger or the Asset

Sale or raise sufficient additional capital in the very near term, we will likely be required to curtail or terminate some or

all of our business operations and we may have no choice but to pursue 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

In such event, our investors may lose their entire investment.

also, “

The measures we implemented and may implement in the future to reduce operating expenses and to preserve capital

could adversely affect our business and we may not realize the operational or financial benefits from such actions ,”

If we fail to comply with our debt service obligations or with our financial covenants to Avidbank, it may declare a

default, which could lead to all payment obligations becoming immediately due and payable and have a material adverse effect on

our financial condition and business ,”

Raising additional capital may cause dilution to our existing stockholders

and may restrict our operations ,”

to the termination of our relationships with Buffalo Wild Wings corporate-owned restaurants and most of its franchisees in November

2019, we expect our future revenue to materially decrease and, for at least the foreseeable future, our operating results and

cash flows to be adversely effected.

In addition, the recent COVID-19 pandemic could further decrease our revenues and our operating

results and cash flows could be further adversely effected.

the year ended December 31, 2019, Buffalo Wild Wings corporate-owned restaurants and its franchisees accounted for approximately

34%, or $6,820,000, of our total revenue.

We continue to seek to add network subscribers and other sources of revenue to offset

the revenue we lost as a result of the termination of our relationships with Buffalo Wild Wings corporate-owned restaurants and

most of its franchisees in November 2019, however, we have not yet been successful in doing so and there is no assurance that

addition, the effect of the recent COVID-19 pandemic on the restaurant and bar industry has been rapid and its scope and magnitude

is uncertain at this time.

Various levels of governmental authorities have recommended or mandated restrictions on the business

operations of restaurants and bars across the United States.

The extent to which the effects of the COVID-19 pandemic adversely

affects our business and operating results is uncertain at this time and will depend on many factors and future developments,

including the scope and nature of future governmental guidelines, recommendations, restrictions or orders.

The businesses of restaurants

and bars that subscribe to our service or of those considering subscribing to our service will likely be adversely affected by

the effects of the COVID-19 pandemic, which could result in such restaurants and bars deciding to terminate or suspend our service

or to not subscribe to it, any of which would, at a minimum, adversely affect our near-term revenues and could result in a material

adverse effect on our business or results of operations.

we fail to comply with our debt service obligations or with our financial covenants to Avidbank, it may declare a default, which

could lead to all payment obligations becoming immediately due and payable and have a material adverse effect on our financial

condition and business.

of March 19, 2020, the outstanding principal balance of our term loan with Avidbank is $2,000,000.

Under our loan and security

agreement with Avidbank, as amended, the maturity date of our term loan is December 31, 2020, we are required to make monthly

principal payments ranging from $125,000 to $300,000 plus accrued interest beginning in April 2020, our asset coverage ratio must

be no less than 1.25 to 1.00 as of the last day of each calendar month and at all times our minimum liquidity must be not less

than the outstanding principal of our term loan.

See “PART II—ITEM 7.

Management’s Discussion and Analysis of

Financial Condition and Results of Operations—Liquidity and Capital Resources—Avidbank Term Loan,”

can be no assurance we will be able to meet our term loan debt service obligations and fund our working capital needs or that

we will be in compliance with our financial covenants in the future or that Avidbank will waive any non-compliance in the future.

Among other factors, fluctuations in our operating results, could result in violation of these covenant.

the termination of our relationships with Buffalo Wild Wings corporate-owned restaurants and most of its franchisees in November

2019, we expect our future revenue to materially decrease and, for at least the foreseeable future, our operating results and

cash flows to be adversely effected.

In addition, the recent COVID-19 pandemic could further decrease our revenues and our operating

results and cash flows could be further adversely effected,”

we default on our monthly payment obligations to Avidbank or if we fail to comply with our financial covenants, Avidbank may declare

a default, which could lead to all payment obligations becoming immediately due and payable, which would have a material adverse

effect on our financial condition and business.

Avidbank has a first-priority security interest in all our personal property and

may foreclose on our personal property to satisfy our payment obligations.

measures we recently implemented and may implement in the future to reduce operating expenses and to preserve capital could adversely

affect our business and we may not realize the operational or financial benefits from such actions.

recently implemented measures to reduce operating expenses and to preserve capital.

For example, since January 1, 2020, we reduced

our headcount from 74 to 39 employees, and we eliminated certain capital expenditures and investments in our business that

we planned to make during 2020.

We may implement additional measures and further eliminate planned capital expenditures and investments

in our business in the future.

In addition to distracting management from the core operations of our business, any of these actions

may negatively impact our ability to effectively manage, operate and grow our business, to introduce new offerings to our customers,

to increase market awareness and encourage the adoption of the Buzztime brand and our Buzztime network, to retain customers, and

to generate revenue.

For example, the reduction in headcount resulted in the loss of a number of long-term employees, the loss

of institutional knowledge and expertise and the reallocation and combination of certain roles and responsibilities across the

organization, all of which could adversely affect our operations.

In addition, we may not be able to effectively realize all the

cost savings anticipated by the reductions in operational costs and we may incur unanticipated charges or make cash payments as

a result that were not previously contemplated which could result in an adverse effect on our business or results of operations.

The effects of the COVID-19 pandemic on the operating results of

our Canadian business could result in a goodwill impairment charge in 2020, which could adversely affect our future operating results.

We have goodwill resulting from the excess of costs over the fair

value of assets we acquired in 2003 related to our Canadian business.

As of December 31, 2019, that goodwill was $696,000.

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.

If there are indications of impairment, then we perform a quantitative impairment

If the impact of the COVID-19 pandemic is significant to the operating

results of our Canadian business, the recorded goodwill relating to our Canadian business may be impaired, which would result in

a non-cash impairment charge in future periods.

We cannot accurately predict the amount and

timing of any impairment charge at this time, however, any such impairment charge could have an adverse effect on our financial

Raising additional capital may cause dilution to our existing stockholders and may restrict our operations ,”

measures we implemented and may implement in the future to reduce operating expenses and to preserve capital could adversely affect

our business and we may not realize the operational or financial benefits from such actions.

implemented measures to reduce operating expenses and to preserve capital.

Since January 1, 2020, we implemented the following

reduced our headcount (as of March 9, 2021, we had 22 employees, as 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 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;

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

and manage our working capital.

may implement additional measures in the future.

In addition to distracting management from the core operations of our business,

any of these actions may negatively impact our ability to effectively manage, operate and grow our business, to introduce new

offerings to our customers, to increase market awareness and encourage the adoption of the Buzztime brand and our Buzztime network,

to retain customers, and to generate revenue.

For example, the reduction in headcount resulted in the loss of a number of long-term

employees, the loss of institutional knowledge and expertise and the reallocation and combination of certain roles and responsibilities

across the organization, all of which could adversely affect our operations.

In addition, we may not be able to effectively realize

all the cost savings anticipated by the reductions in operational costs and we may incur unanticipated charges or make cash payments

as a result that were not previously contemplated which could result in an adverse effect on our business or results of operations.

success depends on our ability to recruit and retain skilled professionals.

5 unchanged sentences

other businesses for individuals with the experience and skills required to successfully operate our business and the recent reductions

in headcount and other measures we recently implemented to reduce operating expenses may decrease the morale of our remaining

employees and make retaining them more challenging.

Moreover, in light of the small number of employees on our staff to manage

our key functions, we may not be able to adequately support current and future business initiatives or attract or retain customers,

which risk could be increased if we are unable to retain existing personnel.

cannot assure you that our exploration of strategic alternatives will result in us pursuing a transaction or that any such transaction

would be successfully completed, and there may be negative impacts on our business and stock price as a result of the process

of exploring strategic alternatives.

December 2018, we announced that our board of directors was exploring and evaluating strategic alternatives focused on maximizing

shareholder value, and that we engaged a financial advisor to assist in the process.

Although our engagement with the financial

advisor has ended, the strategic process is ongoing.

Our board of directors has not set a timetable for the strategic process

nor has it made any decisions relating to any strategic alternatives at this time.

No assurance can be given as to the outcome

of the process, including whether the process will result in a transaction or that any transaction that is agreed to will be completed.

Whether the process will result in a transaction, and our ability to complete a transaction, if our board of directors decides

to pursue one, will depend on numerous factors, some of which are beyond our control, including the interest of potential acquirers

or strategic partners in a potential transaction with our company, the value potential acquirers or strategic partners attribute

to our business and its prospects, market conditions, and industry trends.

Our stock price may be adversely affected if the process

does not result in a transaction or if a transaction is not completed.

Even if a transaction is completed, there can be no assurance

that it will be successful or have a positive effect on shareholder value.

Our board of directors may also determine that no transaction

is in the best interest of our stockholders.

addition, our financial results and operations have been and may continue to be adversely affected by the strategic process and

by the uncertainty regarding its outcome.

The attention of management and of our board of directors has been diverted from our

core business operations to the process and we have diverted capital and other resources to the process that otherwise could have

been used in our business operations, and we will continue to do so until the process is completed.

We could incur substantial

expenses associated with identifying and evaluating potential strategic alternatives, including those related to employee retention

payments, equity compensation, severance pay and legal, accounting and financial advisor fees.

In addition, the process could

lead us to lose or fail to attract, retain and motivate key employees, and to lose or fail to attract customers or business partners,

and could expose us to litigation.

The public announcement of a strategic alternative may also yield a negative impact on operating

results if prospective or existing service providers are reluctant to commit to new or renewal contracts or if existing customers

decide to move their business to a competitor.

do not intend to disclose developments or provide updates on the progress or status of the strategic process until our board of

directors deems further disclosure is appropriate or required.

Accordingly, speculation regarding any developments related to

the review of strategic alternatives and perceived uncertainties related to the future of our company could cause our stock price

to fluctuate significantly.

in headcount and other measures we implemented to reduce operating expenses may decrease the morale of our remaining employees

and make retaining them more challenging.

Moreover, in light of the small number of employees on our staff to manage our key functions,

we may not be able to adequately support current and future business initiatives or attract or retain customers, which risk could

be increased if we are unable to retain existing personnel.

have experienced significant losses and expect to incur significant losses in the future.

have a history of significant losses, including net losses of $2,047,000 and $259,000 for the years ended December 31, 2019 and

2018, respectively, and have an accumulated deficit of $131,457,000 as of December 31, 2019.

have a history of significant losses, including net losses of $4,415,000 and $2,047,000 for the years ended December 31, 2020

and 2019, respectively, and have an accumulated deficit of $135,888,000 as of December 31, 2020.

We expect to incur future operating

and net losses, due in part to expenditures required to continue to implement our business strategies, including the continued

development and implementation of our technology platform and product line.

Despite significant expenditures, we may not achieve

or maintain profitability.

Even if we achieve profitability, the level of profitability cannot be predicted and may vary significantly

from quarter to quarter and year to year.

See also “

Our business could

be adversely impacted if the sole manufacturer of our customized tablet and tablet equipment is not able to meet our manufacturing

quality standards .”

our sole manufacturer and/or suppliers were to go out of business or otherwise become unable to meet our needs for reliable equipment,

locating and qualifying alternate sources could take months, during which time our production could be delayed, and may, in some

cases, require us to redesign our products and systems.

Such delays and potentially costly re-sourcing and redesign could have

a material adverse effect on our business, operating results, and financial condition.

addition, the revenue we receive from the sale of advertisements that are shown on the screens throughout our network depends

on the advertisements being properly aired in our network.

We rely on the technology of an unaffiliated third party to air the

advertisements on the screens in our network.

If that third party technology has interruptions in service or if the advertisements

are otherwise not properly airing on our network, the revenue we receive from the sale of advertisements will decrease.

business could be adversely impacted if the sole manufacturer of our customized tablet and tablet equipment cannot meet our manufacturing

quality standards.

discussed above, one unaffiliated third-party manufactures our customized tablet and tablet equipment.

Continued improvement in

supply-chain management and in manufacturing of our customized tablet and tablet equipment and manufacturing quality and product

testing are important to our business.

Flaws in the design and manufacturing of our customized tablet or tablet equipment or both

(by us or our supplier) could result in substantial delays in shipment and in substantial repair, replacement or service costs,

could damage our reputation and customer loyalty, could cause subscription cancellations, and could increase our expense and reduce

Costs associated with tablet or tablet equipment defects due to, for example, problems in our design and manufacturing

processes, could include:

(a) writing off the value of inventory;

(b) disposing of items that cannot be fixed;

that have been shipped;

and (d) providing replacements or modifications.

These costs could be significant and may increase expenses

and lower gross margin.

There can be no assurance that our efforts to monitor, develop, modify and implement appropriate test

and manufacturing processes for our tablet and related equipment will be sufficient to permit us to avoid quality issues.

quality issues could have a material adverse effect on our business, results of operations or financial condition.

addition, the third-party manufacturer of our customized tablet and tablet equipment manufactures in China using a significant

number of Chinese-sourced parts.

While our inventory is currently robust, we are experiencing delays from suppliers who have

been affected by the COVID-19 pandemic.

A disruption in the supply chain for our tablet and tablet equipment for whatever

reason, including resulting from the effects of the COVID-19 pandemic, could adversely impact our ability to deliver our products

and services.

It may not be possible to find replacement products or supplies and significant delays could adversely affect our

We are experiencing delays from suppliers who have been affected more directly by the outbreak.

we do not adequately protect our proprietary rights and intellectual property or we are subjected to intellectual property claims

52 unchanged sentences

to jurisdiction.

See “ITEM 1.

BUSINESS—Government Regulations.”

We may find it necessary to eliminate, modify,

suspend, or cancel certain features of our offerings (including the games we offer) in certain jurisdictions based on the adoptions

of new laws and regulations or changes in law or regulations or the enforcement thereof, which could result in additional development

costs and/or the loss of customers and revenue.

See “Government Regulations”

We may find it necessary to eliminate, modify, suspend, or cancel

certain features of our offerings (including the games we offer) in certain jurisdictions based on the adoptions of new laws and

regulations or changes in law or regulations or the enforcement thereof, which could result in additional development costs and/or

the loss of customers and revenue.

Communication

24 unchanged sentences

December 31, 2020, we had net operating loss (“NOL”) carryforwards of approximately $5,310,000 available for federal

income tax purposes, which will continue expiring in 2020, and of approximately $29,195,000 available for state income tax purposes,

which will continue expiring in 2020.

We believe that our ability to utilize our NOL carryforwards may be substantially restricted

by the passage of time and the limitations of Section 382 of the Internal Revenue Code, which apply when there are certain changes

in ownership of a corporation.

To the extent we begin to realize significant taxable income, these Section 382 limitations may

result in our incurring federal income tax liability notwithstanding the existence of otherwise available NOL carryforwards.

performed a Section 382 analysis through December 31, 2018 to determine the impact of any changes in ownership.

This analysis

indicated that no ownership change occurred that would limit the use of the NOLs.

We do not believe there has been a material

change in our ownership between the Section 382 analysis completed through December 31, 2018 and the year ended December 31, 2019

that would indicate a limit on the use of the NOLs.

We established a full valuation allowance for substantially all of our deferred

tax assets, including the NOL carryforwards, since we do not believe we are likely to generate future taxable income to realize

these assets.

Relating to the Market for Our Common Stock

common stock could be delisted or suspended from trading on the NYSE American if we are determined not to be in compliance with

any of the NYSE American continued listing standards.

the filing of this report, the NYSE Regulation may notify us that we are not in compliance with Section 1003(a)(iii) of the NYSE

American Company Guide because our stockholders’

equity was less than $6 million as of December 31, 2019 (it was $5,091,000)

and because we had net losses in five of our most recent fiscal years ended December 31, 2019.

If we are determined not to be

in compliance with Section 1003(a)(iii) of the NYSE American Company Guide or any other NYSE American continued listing standard,

we will become subject to the procedures and requirements of Section 1009 of the Company Guide or the NYSE Regulation may immediately

initiate delisting proceedings.

we receive a notice of non-compliance from NYSE Regulation, we can give no assurances that we will be able to address it successfully,

or even if we do, that we will be able to maintain the listing of our common stock on the NYSE American.

In addition, we may determine

to pursue business opportunities or grow our business at levels or on timelines that further reduces our stockholders’

below the level required to maintain compliance with NYSE American continued listing standards.

The delisting of our common stock

for whatever reason could, among other things:

income tax purposes, and of approximately $16,051,000 available for state income tax purposes.

There can be no assurance that

we will ever be able to realize the benefit of some or all of the federal and state loss carryforwards due to continued operating

We performed an analysis as of December 31, 2020 to determine the limitations on our ability to utilize our NOL carryforwards

under Section 382 of the Internal Revenue Code of 1986, as amended (“IRC”) resulting from any changes in ownership.

This analysis indicates that an ownership change occurred on June 9, 2020 that would limit the use of approximately $61,965,000

Under IRC Section 382 and similar state provisions, ownership changes will limit the annual utilization of net operating

loss carryforwards existing prior to a change in control that are available to offset future taxable income.

Such limitations

have reduced our gross deferred tax assets related to the NOL carryforwards by approximately $11,021,000.

We have established

a full valuation allowance for substantially all deferred tax assets, including the NOL carryforwards, since we could not conclude

that it was more likely than not that we would be able to generate future taxable income to realize these assets.

Merger will likely result in an ownership change for purposes of Section 382, but no formal analysis has been or is expected to

be undertaken in this regard.

Relating to the Market for NTN Common Stock

common stock could be delisted or suspended from trading on the NYSE American if we do not regain compliance with continued listing

criteria with which we are currently not compliant or if we fail to meet any other continued listing criteria.

March 2020, we received a letter from NYSE Regulation Inc.

stating that we are not in compliance with Section 1003(a)(iii) of

the NYSE American Company Guide because we reported stockholders’

equity of less than $6 million as of December 31, 2019

and had net losses in five of our most recent fiscal years ended December 31, 2019.

Our stockholders’

equity was $5.1 million

as of December 31, 2019.

On June 11, 2020, NYSE Regulation notified us that we are not in compliance with Section 1003(a)(ii)

of the NYSE American Company Guide because we reported stockholders’

equity of less than $4.0 million as of March 31, 2020

and had net losses in five of our most recent fiscal years ended December 31, 2019.

June 11, 2020, NYSE Regulation notified us that it has accepted our plan to regain compliance with Section 1003(a)(iii) of the

NYSE American Company Guide and granted us a plan period through September 27, 2021 to regain compliance.

August 12, 2020, NYSE Regulation notified us that we are not in compliance with Section 1003(a)(i) of the NYSE American Company

Guide because we reported stockholders’

equity of less than $2.0 million as of June 30, 2020 and had net losses in five

of our most recent fiscal years ended December 31, 2019.

We continue to be subject to the procedures and requirements of Section

1009 of the NYSE American Company Guide.

listing of our common stock on the NYSE American is being continued during the plan period pursuant to an extension.

Regulation staff will review us periodically for compliance with initiatives outlined in our plan.

If we are not in compliance

with Sections 1003(a)(i), (ii) and (iii) by September 27, 2021 or if we do not make progress consistent with our plan during the

plan period, NYSE Regulation staff will initiate delisting proceedings as appropriate.

can give no assurances that we will be able to address our non-compliance with the NYSE American continued listing standards or,

even if we do, that we will be able to maintain the listing of our common stock on the NYSE American.

Our common stock could be

delisted because we do not make progress consistent with our plan during the plan period, because we do not regain compliance

by September 27, 2021, or because we become out of compliance with other NYSE American listing standards.

In addition, we may

determine to pursue business opportunities that reduces our stockholders’

equity below the level required to maintain compliance

with NYSE American continued listing standards.

The delisting of our common stock for whatever reason could, among other things,

substantially impair our ability to raise additional capital;

result in a loss

of institutional investor interest and fewer financing opportunities for us;

result in claims for breaches of representations

or covenants in agreements relating to our compliance with applicable listing requirements;

materially impair our stockholders’

ability to buy and sell shares of our common stock;

and have an adverse effect on the market price of, and the efficiency of the

trading market for, our common stock.

result in a loss of institutional investor interest and fewer financing

opportunities for us;

and/or result in potential breaches of representations or covenants in agreements pursuant to which we made

representations or covenants relating to our compliance with applicable listing requirements.

Claims related to any such breaches,

with or without merit, could result in costly litigation, significant liabilities and diversion of our management’s time

and attention and could have a material adverse effect on our financial condition, business and results of operations.

the delisting of our common stock for whatever reason may materially impair our stockholders’

ability to buy and sell shares

of our common stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our

common stock.

See also “

If our common stock were delisted and determined to be a ‘penny stock,’

a broker-dealer

may find it more difficult to trade our common stock and an investor may find it more difficult to acquire or dispose of our common

stock in the secondary market ,”

initial listing application to be filed with the NYSE American in connection with the Merger in order to continue the listing

of the shares of common stock of the combined company on the NYSE American may not be approved if the combined company does not

meet the initial listing standards.

order to continue the listing of the shares of common stock of the combined company on the NYSE American following the closing

of the Merger, the combined company must meet the NYSE American’s initial listing standards and the NYSE American must approve

an initial listing application that NTN filed with the NYSE American in early March 2021.

Although no assurances can be given that the combined company will meet such initial listing standards

or that the NYSE American will approve such application, assuming that the reverse stock split proposal being submitted to NTN’s

stockholders at the special meeting is approved, NTN and Brooklyn expect that the combined company will meet the initial listing

standard of the NYSE American that requires that:

(1) the stockholders’

equity of the combined company be at least $4.0

(2) the combined company have a minimum of 800 public shareholders and a minimum of 500,000 shares in the public distribution,

or a minimum of 400 public shareholders and a minimum of 1,000,000 shares in the public distribution;

(3) the minimum price of

the common stock of the combined company be at least $3.00 per share;

and (4) the minimum market value of publicly held shares

be at least $15.0 million.

For purposes of the foregoing, “public shareholders”

means the stockholders of the combined

company other than its officers, directors, controlling stockholders and other concentrated (i.e.

10% or greater) stockholders

and their respective affiliates, and “public distribution”

and “publicly held shares”

means the outstanding

shares of common stock of the combined company held by public shareholders.

If the reverse stock split proposal is not approved

by NTN stockholders, the combined company may not meet the requirement that the minimum price of the common stock of the combined

company be at least $3.00 per share.

If that requirement or any other initial listing standard requirement is not met, the NYSE

American will not approve the initial listing application and the shares of common stock of the combined company will not be listed

on the NYSE American following the closing of the Merger.

If Brooklyn waives the conditions to closing the Merger relating to

the continued listing of the common stock on the NYSE American and the Merger closes, the shares of the combined company would

not be listed on a national securities exchange immediately following the closing of the Merger, which could have a material adverse

effect on the combined company and its stockholders.

If the NYSE American does not approve the initial listing application

to be filed with it in connection with the Merger, the Merger may not close, but if Brooklyn waives this closing condition and

the Merger does close, the failure of the common stock of the combined company to be listed on a national securities exchange

could have a material adverse effect on the combined company and its stockholders ,”

If our common stock

were delisted and determined to be a ‘penny stock,’

a broker-dealer may find it more difficult to trade our common

stock and an investor may find it more difficult to acquire or dispose of our common stock in the secondary market ,”

the NYSE American does not approve the initial listing application to be filed with it in connection with the Merger, the Merger

may not close, but if Brooklyn waives this closing condition and the Merger does close, the failure of the common stock of the

combined company to be listed on a national securities exchange could have a material adverse effect on the combined company and

its stockholders.

to closing the Merger include that NTN’s common stock continue to be traded on the NYSE American until the effective time

of the Merger, the NTN common stock to be issued in the Merger be approved for listing (subject to official notice of issuance)

on the NYSE American as of the effective time of the Merger, and the NTN common stock will continue to trade on the NYSE American

after the effective time of the Merger.

Brooklyn could waive the satisfaction of any of the foregoing closing conditions, but

there can be no assurance that Brooklyn will do so.

If Brooklyn waives any of those closing conditions that are not satisfied

at the closing and the Merger closes, the common stock of the combined company would be expected to trade on an over-the-counter

market, which could, among other things, substantially impair the ability of the combined company to raise additional capital,

result in a loss of institutional investor interest and fewer financing opportunities for the combined company, materially impair

the ability of stockholders to buy and sell shares of the common stock of the combined company, and could have an adverse effect

on the market price of, and the efficiency of the trading market for, the common stock of the combined company.

See also “

our common stock were delisted and determined to be a ‘penny stock,’

a broker-dealer may find it more difficult to

trade our common stock and an investor may find it more difficult to acquire or dispose of our common stock in the secondary market ,”

our common stock were delisted and determined to be a “penny stock,”

36 unchanged sentences

of us or our stock price by the financial press and in online investor communities;

of non-compliance with any of the NYSE American continued listing standards;

to obtain compliance with any of the NYSE American continued listing standards;

of delisting proceedings by NYSE Regulation;

3 unchanged sentences

adverse effect on then-prevailing market prices.

of December 31, 2019, there were approximately (1) 142,000 shares of common stock reserved for issuance upon the exercise of outstanding

of March 9, 2021, there were approximately (1) 26,000 shares of common stock reserved for issuance upon the exercise of outstanding

stock options at exercise prices ranging from $2.43 to $27.50 per share, (2) 75,000 shares of common stock reserved for issuance

upon the settlement of outstanding restricted stock units, and (3) 156,000 shares of our Series A Preferred Stock outstanding

which, based on their current conversion price, would convert into approximately 11,000 shares of common stock.

Registration statements

registering the shares of common stock underlying the outstanding options and restricted stock units are currently effective.

Generally, the shares of common stock issuable upon conversion of the Series A Preferred Stock, which the holders may do at any

time, may be sold under Rule 144 of the Securities Act of 1933.

Accordingly, a significant number of shares of our common stock

could be sold at any time.

Depending upon market liquidity at the time our common stock is resold by the holders thereof, such

resales could cause the trading price of our common stock to decline.

In addition, the sale of a substantial number of shares

of our common stock, or anticipation of such sales, could make it more difficult for us to obtain future financing.

To the extent

the trading price of our common stock at the time any of our outstanding options are exercised exceeds their exercise price or

at the time any of our outstanding shares of Series A Preferred stock are converted exceeds their conversion price, such exercise

or conversion will have a dilutive effect on our stockholders.

upon the settlement of outstanding restricted stock units, and (3) 156,112 shares of our Series A Convertible Preferred Stock

outstanding which, based on their conversion price as of March 9, 2021, would convert into approximately 84,000 shares of common

Registration statements registering the shares of common stock underlying the outstanding options and restricted stock

units are currently effective.

Generally, the shares of common stock issuable upon conversion of the Series A Convertible Preferred

Stock, which the holders may do at any time, may be sold under Rule 144 of the Securities Act of 1933.

Accordingly, a significant

number of shares of our common stock could be sold at any time.

Depending upon market liquidity at the time our common stock is

resold by the holders thereof, such resales could cause the trading price of our common stock to decline.

In addition, the sale

of a substantial number of shares of our common stock, or anticipation of such sales, could make it more difficult for us to obtain

future financing.

To the extent the trading price of our common stock at the time any of our outstanding options are exercised

exceeds their exercise price or at the time any of our outstanding shares of Series A Convertible Preferred Stock are converted

exceeds their conversion price, such exercise or conversion will have a dilutive effect on our stockholders.

additional capital may cause dilution to our existing stockholders and may restrict our operations.

1 unchanged sentence

sales of equity or debt securities directly to investors or through underwriters or placement agents.

See also “

What changed 10-K

Item 1A. Risk Factors