What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2021-03-11 compared with 2020-03-19 · 502 added, 463 removed, 206 unchanged (82% of the section changed)

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

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

342 holders of record.

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.

15 unchanged sentences

at the beginning of this report.

All dollar amounts in

MD&A are rounded to the nearest thousand.

Our MD&A is organized as follows:

Our MD&A is organized

This section provides a general description of our business.

23 unchanged sentences

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

Over 1 million hours of trivia,

card, sports and arcade games are played on our network each month.

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

1 unchanged sentence

December 31, 2019.

generate revenue by charging subscription fees to our partners for access to our 24/7 trivia network, by charging equipment fees

to select partners for use of tablets and other equipment, 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.

Up until February 1, 2020, we also generated revenue

by hosting live trivia events.

(See Note 18 to the consolidated financial statements included in item 8 of this report.)

The table below summarizes the type of revenue we generated for the years ended December 31, 2019 and 2018:

ended December 31,

decrease in subscription revenue year-over-year was primarily due to lower average site count and lower average revenue per site

in 2019 compared to 2018.

In November 2019, our agreements with Buffalo Wild Wings corporate-owned restaurants and most of its

franchisees terminated in accordance with their terms.

As a result of the foregoing and if we do not add network subscribers or

other revenue sources to sufficiently offset the subscription revenue we received in recent years from Buffalo Wild Wings corporate-owned

restaurants and its franchisees, our subscription revenue will materially decrease beginning in the first quarter of 2020.

addition, our subscription revenue could be further adversely affected as a result of the effects of the recent COVID-19 pandemic.

See “ITEM 1A., Risk Factors—Risk Factors That May Affect Our Business—

Due 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 .”

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

of December 31,

decrease in hardware revenue year-over-year was primarily due to decreased sales-type lease arrangements in 2019 compared to 2018,

offset by increased sales of our tablets to a third-party using our tablets and operating system to deliver its services in jails.

We do not expect to continue recognizing hardware revenue under sales-type lease arrangements during 2020 or thereafter.

to continue recognizing hardware revenue throughout 2020 under our existing contract from our jail services partner.

We are uncertain

if we will enter into another equipment sale contract with our jail services partner or any other party.

decrease in other revenue year-over-year was primarily due to a decrease in revenue for professional services performed in 2019

compared to 2018, partially offset by increased advertising and licensing revenue in 2019 compared to 2018.

Our advertising revenue

could be adversely affected as a result of the effects as a result of the recent COVID-19 pandemic, including because of a decrease

in advertising sales arising from a slowdown in consumer traffic of the restaurant and bars that subscribe to our service.

“ITEM 1A., Risk Factors—Risk Factors That May Affect Our Business—

Due 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 .”

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:

the years ended

For the years ended

$ (14,006,000 )

$ (9,430,000 )

Margin Percentage

decrease in direct costs year-over-year was primarily due to decreased (i) equipment expense of approximately $823,000 related

to lower hardware revenue, (ii) service provider and freight expense of $384,000 and (iii) license fees of $137,000, partially

offset by increased (a) equipment expense of approximately $676,000 related to writing off certain older tablets and the related

cases during the fourth quarter ended December 31, 2019 for which we did not expect to generate future cash flows, (b) depreciation

expense of $69,000 and (c) other miscellaneous expense of $13,000.

the years ended

general and administrative

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 )

of capitalized software

Impairment of capitalized software

Impairment of goodwill

and amortization (non-direct)

Depreciation and amortization (non-direct)

General and Administrative Expenses

decrease in selling, general and administrative expenses year-over-year was primarily due to decreased (i) payroll and related

expense of $980,000, (ii) professional fees of $303,000 due to fewer consulting and legal expenses and (iii) occupancy expense

of $150,000 related to the lease for our new headquarters that we moved to in December 2018.

These decreases were partially offset

by increased (a) bad debt expense of $118,000, (b) marketing expense of $87,000 and (c) miscellaneous expenses of $61,000.

light of the recent measures we implemented to reduce operating expenses and to preserve capital, we expect our selling, general

and administrative expenses to decrease in 2020.

However, such actions, and any similar actions we may implement in the future,

could adversely affect our business and we may not realize the operation or financial benefits of such actions.

See “ITEM

1A., Risk Factors—Risk Factors That May Affect Our Business—The measures we recently implemented and may implement

in the future to reduce operating expenses and preserve capital could adversely affect our business and we may not realize the

operational or financial benefits from such actions,”

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

of capitalized software increased for the year ended December 31, 2019 as a result of abandoning 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

have 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.

If there are indications

of impairment, then we perform a quantitative impairment test.

We performed the quantitative impairment test of our goodwill in

each of the years ended December 31, 2019 and 2018, as we determined that because of declines in revenue of the Reporting Unit,

the decline in our stock price and other general market conditions, it was more likely than not that there were indications of

We used three methods of determining the fair value of the Reporting Unit:

the public company market method, the transaction

market method and the income method.

Each method was equally weighted to calculate the total estimated fair value of the Reporting

Unit, and then we compared this fair value to the carrying value of the Reporting Unit.

The impairment test performed during 2018

resulted in the carrying value exceeding the fair value.

Accordingly, we recognized a goodwill impairment loss of $261,000 during

the year ended December 31, 2018.

The impairment test performed during 2019 resulted in the fair value exceeding the carrying

Therefore, we did not record any goodwill impairment for the year ended December 31, 2019.

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

our Canadian business could be an event that requires us to assess at interim periods in 2020 whether the recorded goodwill related

to our Canadian business is impaired, and if impaired, we would be required to record a non-cash impairment charge.

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

increase in depreciation and amortization expense year-over-year was primarily due to our leasehold improvement asset we recognized

as a result of our move to our new headquarters in December 2018.

The leasehold improvement asset is being depreciated over the

term of the lease, which is 89 months

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

the years ended

other expense, net

decrease in other expense, net was primarily related to decreased interest expense resulting from lower debt balances and gains

from the sale of equipment, partially offset by increased foreign currency losses related to the operations of our Canadian subsidiary

for the year ended December 31, 2019 when compared to 2018.

the years ended

benefit for income taxes

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.

1 unchanged sentence

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

During the year ended December 31, 2018, an impairment

to goodwill resulted in a deferred tax benefit under generally accepted accounting principles (“GAAP”), which resulted

in a net tax benefit in Canada.

EBITDA—Consolidated

before interest, taxes, depreciation and amortization, or EBITDA, is not intended to represent a measure of performance in accordance

Nor should EBITDA be considered as an alternative to statements of cash flows as a measure of liquidity.

EBITDA because we believe it is a measure of operating performance that financial analysts, lenders, investors and other interested

parties find to be a useful tool for analyzing companies like us that carry significant levels of non-cash depreciation and amortization

charges compared to their net income or loss calculation in accordance with GAAP.

reconciliation of our consolidated net loss calculated in accordance with GAAP to EBITDA for the years ended December 31, 2019

and 2018 is shown in the table below.

EBITDA should not be considered as substitutes for, or superior to, net loss calculated

in accordance with GAAP.

the years ended

$ (2,047,000 )

Interest expense, net

Income tax provision

and amortization

and Capital Resources

1 unchanged sentence

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

In January 2020, we sold all our assets used to conduct the live hosted knowledge-based

trivia events known as Stump!

Trivia and OpinioNation for approximately $1.4 million in cash.

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

1 unchanged sentence

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

During the year ended December 31, 2019, we incurred a net loss of $2,047,000, and as a result of the debt reclassification

described below, the Company’s current liabilities exceeded its current assets at December 31, 2019 by $25,000.

December 31, 2019, we had $3,209,000 of unrestricted cash and total debt outstanding of $2,750,000, which was the outstanding

principal balance of our term loan with Avidbank.

Since January 1, 2020, Avidbank required us to pay $750,000 of the principal

balance of our term loan, thereby reducing it to $2,000,000 as of March 19, 2020.

Under the terms of the amendment to our loan

and security agreement that we entered into with Avidbank on March 12, 2020, during 2020 we will be required to make monthly payments

that, if made in accordance with their terms, will result in us paying off our term loan by December 31, 2020.

Based on this amendment,

$1,750,000 of debt outstanding has been reclassified as a current liability in the accompanying balance sheet at December 31,

As a result of the accelerated payments required on our term loan, and taking into account our current financial condition

and our existing sources of revenue, our management concluded there is substantial doubt about our ability to continue as a going

concern through March 19, 2021.

January 1, 2020, we reduced headcount by approximately $2.2 million in annualized salaries and implemented measures to preserve

We may implement additional measures designed to reduce operating expenses and/or preserve capital.

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

We continue to explore and evaluate

opportunities to raise capital, including through equity financings, alternative sources of debt, and strategic transactions,

which may include selling a portion or all of our assets.

However, none of these potential sources of capital are currently assured,

and the actions to reduce operating expenses we implemented may not sufficiently mitigate the conditions and events that raise

substantial doubt about our ability to continue as a going concern through March 19, 2021.

See “ITEM 1A, Risk Factors—Risk

Factors That May Affect Our Business—“

We 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 ,”

addition, any actions we implemented or may implement in the future designed to reduce operating expenses and to preserve capital

may not cover our capital needs and 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 the

Buzztime network, to retain customers, and to generate revenue.

See “ITEM 1A, Risk Factors—Risk Factors That May Affect

Our Business—“The 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,”

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.

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

As of December 31, 2019, $2,750,000 was outstanding under the term loan.

We recorded debt issuance costs of $23,000, which

includes a $20,000 facility fee.

The debt issuance costs are being amortized to interest expense using the effective interest

rate method over the life of the loan.

The unamortized balance of the debt issuance costs as of December 31, 2019 was $11,000

and is recorded as a reduction of long-term debt.

March 12, 2020, we entered into an amendment to the Original LSA.

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 includes the $83,333 monthly

principal payment plus accrued interest for March 2020 and a $350,000 principal prepayment, thereby reducing the outstanding principal

balance of our term loan to $2.0 million.

Under the terms of the amendment, our financial covenants were changed, the maturity

date of our term loan was changed from September 28, 2022 to December 31, 2020 (and as a result, we classified the total outstanding

principal balance as a current liability on our balance sheet as of December 31, 2019), and commencing on April 30, 2020, we must

make principal plus accrued interest payments on the last day of each month, such that our term loan will be repaid by December

The principal payment we must make each month will be $125,000 for each of April, May and June, $300,000 for each of

July, August, September, October and November, and $125,000 for December.

the terms of the Original LSA, our EBITDA was required to be at least $1,000,000 for the trailing six-month period as of the last

day of each fiscal quarter and the aggregate amount of unrestricted cash we had in deposit accounts or securities accounts maintained

with Avidbank must be not less than $2,000,000 at all times.

As of December 31, 2019, we were in compliance with both of those

the terms of the amendment, the minimum EBITDA covenant was replaced with a monthly minimum asset coverage ratio covenant, which

we refer to as the ACR covenant, and the minimum liquidity covenant was amended to provide that the aggregate amount of unrestricted

cash we have in deposit accounts or securities accounts maintained with Avidbank must be at all times not less than the principal

balance outstanding under our term loan.

Under the ACR covenant, the ratio of (i) our unrestricted cash at Avidbank as of the

last day of a calendar month plus 75% of our outstanding accounts receivable accounts that are within 90 days of invoice date

to (ii) the outstanding principal balance of our term loan on such day must be no less than 1.25 to 1.00.

the Avidbank LSA, subject to customary exceptions, we are prohibited from borrowing additional indebtedness.

We granted and pledged

to Avidbank a first-priority security interest in all our existing and future personal property.

Avidbank LSA includes customary representations, warranties and covenants (affirmative and negative), including restrictive covenants

that, subject to specified exceptions, limit our ability to:

dispose of our business or property;

merge or consolidate with or

into any other business organization;

incur or prepay additional indebtedness;

create or incur any liens on its property;

or pay any dividend or make a distribution on any class of our stock;

or enter specified material transactions with our affiliates.

The Avidbank LSA also includes customary events of default, including:

payment defaults;

breaches of covenants following any applicable

material breaches of representations or warranties;

the occurrence of a material adverse effect;

events relating

to bankruptcy or insolvency;

and the occurrence of an unsatisfied material judgment against us.

Upon the occurrence of an event

of default, Avidbank may declare all outstanding obligations immediately due and payable, do such acts as it considers necessary

or reasonable to protect its security interest in the collateral, and take such other actions as are set forth in the Avidbank

board of directors continues to explore and evaluate strategic alternatives focused on maximizing shareholder value, while also

exploring and evaluating financing alternatives to raise the capital we need to successfully execute our current operating and

strategic plan in the event the strategic process does not result in a transaction.

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, and no assurance

can be given as to the outcome of the process.

We do not intend to disclose additional details regarding the strategic process

unless and until further disclosure is appropriate or necessary.

What changed 10-K

Item 5. Market for Registrant’s Common Equity