What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-03-11 compared with 2020-03-19 · 1665 added, 944 removed, 696 unchanged (79% of the section changed)

14 unchanged sentences

our disclosure controls and procedures.

on our evaluation and subject to the foregoing, our Chief Executive Officer and Senior Vice President of Finance concluded that

our disclosure controls and procedures were effective as of the end of the period covered by this report in providing reasonable

assurance of achieving the desired control objectives.

on that evaluation, our Chief Executive Officer and Senior Vice President of Finance concluded that our disclosure controls and

procedures were not effective as of the end of the period covered by this report in providing reasonable assurance of achieving

the desired control objectives due primarily to a material weakness discussed below.

Management’s

5 unchanged sentences

the supervision and with the participation of our management, including our Chief Executive Officer and our Senior Vice President

of Finance, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31,

According to the guidelines established by the 2013 Internal Control—Integrated Framework issued by the Committee

of Sponsoring Organizations of the Treadway Commission, one or more material weaknesses renders a company’s internal control

over financial reporting ineffective.

Based on this evaluation, we have concluded that our internal control over financial reporting

was effective as of December 31, 2019.

of Finance, we conduct an annual evaluation of the effectiveness of our internal control over financial reporting based on the

guidelines established by the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations

of the Treadway Commission.

If management identifies any material weakness in the course of that evaluation, management cannot

conclude that our internal controls over financial reporting are effective.

A material weakness is a deficiency, or a combination

of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement

of our annual or interim financial statements will not be prevented or detected on a timely basis.

Based on the evaluation of

the effectiveness of our internal over financial reporting as of December 31, 2020, we concluded that, due to the material weakness

described below, our internal control over financial reporting was not effective as of December 31, 2020.

In response to the impact

of the pandemic on our business, we implemented measures to reduce our operating expenses and preserve capital, including by reducing

our headcount.

We reduced our headcount from 74 as of December 31, 2019 to 22 as of March 9, 2021.

Due to a limited number of

personnel, particularly in our accounting department, we do not have an internal audit department and we did not have the

resources necessary to adequately perform an internal assessment or engage a third party to perform the assessment of our

internal controls over financial reporting, which our management identified as a material weakness.

Management’s

Plan for Material Weakness in Internal Control over Financial Reporting

management and board of directors are committed to improving our overall system of internal controls over financial reporting.

To address the material weakness identified in our control environment, we plan to engage external resources with specialized

knowledge and expertise, where appropriate, to assist management in performing the internal assessment of our internal controls

over financial reporting.

in Internal Control over Financial Reporting

3 unchanged sentences

Directors, Executive Officers and Corporate Governance

required by this item will be set forth under the headings “PROPOSAL 1:

ELECTION OF DIRECTORS,”

“BOARD OF DIRECTORS

AND CORPORATE GOVERNANCE,”

“EXECUTIVE OFFICERS,”

and “DELINQUENT SECTION 16(a) REPORTS”

in our definitive

proxy statement relating to our 2020 annual meeting of stockholders (the “Proxy Statement”), which we expect to filed

no later than 120 days after the end of our fiscal year ended December 31, 2019, and is incorporated in this report by reference.

forth below are the names, ages, board committee assignments, tenure and certain biographical information of each of the members

of our Board of Directors as of March 9, 2021.

* Committee chairperson

**Nominating and Corporate Governance/Compensation Committee

Wolff was appointed as our chief executive officer and as a member of our board in January 2020.

He was appointed as chairman

of our board in April 2020.

Wolff served as our interim chief executive officer from September 2019 until he was appointed

as our chief executive officer.

From January 2016 through September 2019, Mr.

Wolff served as our chief financial officer and

executive vice president and served as chief financial officer from December 2014 through January 2016.

From July 2013 until December

Wolff served as the chief financial strategist of PlumDiggity, a privately-held financial and marketing strategy firm

that he co-founded.

From October 2012 to July 2013, Mr.

Wolff served as the chief financial officer of 365 Retail Markets, a privately-held

company in the self-checkout point of sale technology industry, where he also served on its board of directors during such period.

From July 2011 to April 2013, simultaneous with his role at 365 Retail Markets, Mr.

Wolff held the leadership role of “Game

Changer”

at Crowdrise, an online fundraising platform company.

Wolff joined Crowdrise after serving as the chief operating

officer and chief financial officer from January 2011 to July 2011 of RetailCapital, LLC, a small business specialty finance company.

Wolff co-founded PaySimple in January 2006 and held various roles including president, chief financial officer, executive

vice president and director, from 2006 until he left the company in January 2011.

From September 1998 until August 2012, Mr.

was a principal for a casual dining restaurant.

Wolff holds a B.A.

from the University of Michigan and an MBA, from the University

of Maryland, R.H.

Smith School of Business.

Wolff was chosen to serve on our board of directors because of our boards’

belief that our chief executive officer should serve on our board of directors, as well as his leadership of early stage, technology

companies and ability to raise capital.

Simtob has served on our board of directors since July 2017.

Since January 2001, Mr.

Simtob has been serving as president

of Simtob Consulting Group Corporation.

Simtob is a minority-owner of Zoup!

Holding, LLC, a company that operates and franchises

fast-casual soup restaurants and has been serving as vice president since January 2018.

Since April 2010, he has served as one

of its directors, and served as its president from April 2010 to December 2017.

From January 2004 through July 2009, Mr.

was also a partner at Wireless Toyz Franchise, LLC, a cellular service provider, where he also served in various roles such as

vice president of development, chief financial officer and chief operating officer.

Simtob owns a Michigan-based driving school

and eight swim school locations.

Simtob studied at the University of Western Ontario.

Simtob was chosen to serve on our

board of directors because of his extensive experience in the restaurant industry.

Miller was appointed to our board of directors in August 2019.

Miller is a partner with Morgan Kingston Advisors,

LLC a boutique investment bank she co-founded in September 2018 focused on supporting middle market companies and their stakeholders

across the restaurant and restaurant technology sectors, among others.

From March 2007 until September 2018, Ms.

Miller served

as a managing director at Mastodon Ventures, Inc., a strategic advisory firm focused on the restaurant industry, and from June

2002 until March 2007 she held various positions with J.P.

Morgan Securities Inc.

Miller was a Cornell Tradition Fellow and

graduated cum laude with a B.S.

degree in applied economics and management from Cornell University and holds FINRA Series 63 and

79 securities licenses.

Miller was chosen to serve on our board of directors because of her advisory, investment banking and

capital markets experience in the restaurant and technology markets.

Gottlieb was appointed to our board of directors in November 2019.

Since May 2020, Mr.

Gottlieb has been serving as vice

president of operations for Robot Cache USA, Inc., a company that offers a blockchain-based digital marketplace for videogames.

From December 2019 until April 2020, Mr.

Gottlieb provided consulting services to Digital Gaming Corporation, a computer software

company, and from October 2019 until December 2019, he was in charge of its US business development.

From April 2017 until October

Gottlieb served as the studio head for MahiGaming San Diego, a developer of online and mobile gaming software, and from

November 2014 until March 2017, Mr.

Gottlieb served as senior director of game development for Bally Technologies and Scientific

Games, gaming manufacturers.

Gottlieb has a business degree from Northern Illinois University.

He was chosen to serve on our

board of directors because of his expertise in developing interactive gaming experiences and turning them into successful businesses.

following table sets forth certain information regarding our executive officers as of March 9, 2021:

Executive Officer

Vice President of Finance

regarding Mr.

Wolff can be found under “Board of Directors”

Gurrola was appointed as our senior vice president of finance in September 2019 and served as vice president of finance

from September 2014 until September 2019.

From November 2009 through September 2014, Ms.

Gurrola served in various leadership

accounting roles including director of accounting, director of financial reporting and compliance, and controller.

July 2007 until April 2009, Ms.

Gurrola served as senior manager of financial reporting for Metabasis Therapeutics, Inc., a biotechnology

company, and served as a consultant to Metabasis from September 2009 to November 2009.

Gurrola holds a B.A.

in English from

San Diego State University.

Relationships;

Arrangements;

Legal Proceedings

are no family relationships among any of our directors and executive officers.

There are no arrangements or understandings with

another person under which our directors and officers was or is to be selected as a director or executive officer.

Additionally,

none of our directors or executive officers is involved in any legal proceeding that requires disclosure under Item 401(f) of

Regulation S-K.

Charters and Code of Ethics

board of directors has adopted charters for its audit and nominating & corporate governance/compensation (N&CG/C) committees,

which, among other things, outline the respective duties of the committees.

Our board of directors has also adopted a code of

conduct and ethics that applies to all our employees, officers and directors.

Our code of conduct and ethics, our corporate governance

guidelines and the charter of our audit and N&CG/C committee is available at www.buzztime.com/investors/ under the “Corporate

Governance”

We intend to disclose any amendment to, or a waiver from, a provision of our code of conduct and ethics

that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons

performing similar functions and that relates to any element of the code of ethics definition enumerated in paragraph (b) of Item

406 of Regulation S-K by posting such information on that website.

The information on our website is not incorporated by reference

in this report.

Committee and Audit Committee Financial Expert

audit committee is currently comprised of two non-employee directors:

Simtob and Ms.

Miller, each of whom our board of directors

has determined is an independent director under the rules of the NYSE American and of the Securities Exchange Act of 1934.

Board of Directors has determined that each member of the audit committee is able to read and understand fundamental financial

statements including our balance sheet, income statement and statement of cash flows.

Our former director, Gregory Thomas, served

on our audit committee and was determined by our board of directors to qualify as an “audit committee financial expert,”

as that term is defined in Item 407(d)(5) of Regulation S-K.

Thomas resigned from our board of directors and from the committees

on which he served on April 30, 2020.

Our board of directors has determined that none of the current members of the audit committee

qualifies as an “audit committee financial expert.”

Due in part to the fact that we were in the middle of a strategic

process when Mr.

Thomas resigned, the outcome of which could have led to a reverse merger, a reorganization, an assignment for

the benefit of creditors, a bankruptcy, a liquidation, or similar transaction, and in part to our financial condition and the

risks to which we have been subject since March 2020 arising from the effects of the COVID-19 pandemic on our business and financial

condition, we have not appointed been successful in finding an individual to join our board of directors to replace

Thomas as an audit committee financial expert.

in Stockholder Nomination Procedures

have been no material changes to the procedures by which stockholders may recommend nominees to our board of directors since such

procedures were last described in our definitive proxy statement filed with the SEC on April 26, 2019.

Executive Compensation

information required by this item will be set forth under the heading “EXECUTIVE OFFICER COMPENSATION”

in the Definitive

Proxy Statement and is incorporated in this report by reference.

Processes and Procedures

nominating and corporate governance committee (the “N&CG/C Committee”) of the NTN board of directors is responsible

for determining the amount and form of compensation paid to our executive officers, including our chief executive officer.

chief executive officer presents compensation recommendations to the N&CG/C Committee with respect to the executive officers

who report to him.

The N&CG/C Committee may accept or adjust such recommendations.

The N&CG/C Committee is solely responsible

for determining the compensation of our executive officers.

Our full board of directors participates in evaluating the performance

of our executive officers, except that Mr.

Wolff, our chief executive officer and a member of our board of directors, does not

participate when our board of directors evaluates his performance and he is not present during voting or deliberations regarding

his performance or compensation matters.

determining executive officer compensation, and the various components that comprise it, the N&CG/C Committee evaluates and

considers publicly available executive officer compensation survey data, to present a competitive compensation package to attract

and retain top talent, including an appropriate level of salary, performance-based bonus, and/or equity incentives.

the N&CG/C Committee evaluates between three and five different sources of compensation data to provide relevant market benchmark

data for a given executive role.

Additionally, the N&CG/C Committee is authorized to engage outside advisors and experts to

assist and advise the N&CG/C Committee on matters relating to executive compensation.

The N&CG/C Committee did not engage

any outside advisors or experts to assist or advise the N&CG/C Committee on any matters relating to executive compensation

during 2020 or the hiring of any executive officers.

Named Executive Officers

applicable SEC rules and regulations, all individuals who served as our principal executive officer during 2020, our two most

highly compensated executive officers (other than our principal executive officer) who were serving as executive officers at the

end of 2020, and up to two additional individuals who would have been one of our top two most highly compensated executive officer

had they been serving as an executive officer at the end of 2020 are referred to as our “named executive officers.”

Our named executive officers for 2020 were:

Executive Officer

Vice President of Finance

Named Executive Officers Compensation Overview

2020, our named executive officers received an annual base salary.

As explained in more detail below under the caption entitled

“2020 Incentive Plan,”

the total amount of the performance bonuses earned by our named executive officers for 2020

has not yet been determined.

None of our named executive officers receive or are eligible for any perquisites or benefits, other

than benefits that are available to our other full-time employees.

The employment of each of our named executive officers is at-will.

During 2020, we had written employment agreements with Mr.

Wolff and Ms.

Each of the components of our 2020 executive

compensation program is discussed below under the Summary Compensation Table.

Compensation Table

following table sets forth information concerning compensation during the years ended December 31, 2020 and 2019 awarded to, earned

by or paid to our named executive officers.

2020 Summary Compensation Table

Name and Principal Position

Incentive Plan

All Other Compensation

Chief Executive Officer

Sandra Gurrola

Senior Vice President of Finance

The amounts reported in this column represents the aggregate grant date fair value of stock awards granted during the applicable

These amounts were calculated in accordance with FASB ASC Topic 718, Compensation –

Stock Compensation, except that

any estimate of forfeitures was disregarded.

For a description of the assumptions used in computing the dollar amount recognized

for financial statement reporting purposes with respect to the stock awards granted during 2019, see Note 13, Shareholders’

Equity, in the Notes to the accompanying Consolidated Financial Statements below.

The dollar amount recognized for financial statement

reporting purposes with respect to the stock awards granted during 2020 is based on the quoted market price of the stock at the

measurement date, which is the grant date, and consist of, with respect to Mr.

Wolff, the 75,000 stock unit award granted to him

in January 2020 and the $20,000 he earned under the 2019 Interim CEO Performance Incentive Plan that was paid to him in March

2020 in 9,506 shares of our common stock, and with respect to Ms.

Gurrola, the 25,000 stock unit award granted to her in January

For additional information regarding such compensation, see the discussion under the caption entitled “2019 Interim

CEO Performance Incentive Plan”

and “Employment Agreements—Equity Grants.”

Represents performance bonuses earned by the applicable named executive officer for 2020 based on our company’s achievement

of performance objectives, as determined by the N&CG/C Committee.

For additional information regarding 2020 performance bonuses,

see the discussion under the caption entitled “2020 Incentive Plan.”

Represents a cash retention bonus that was paid in shares of our common stock to help us conserve cash.

For additional information,

see the discussion under the caption entitled “Employment Agreements—Stay Bonus.”

Represents a cash retention bonus.

For additional information, see the discussion under the caption entitled “Retention

Agreement.”

Each of our named executive officers receives a base salary.

The base salary is the fixed cash compensation component of our executive

compensation program and it recognizes individual performance, time in role, scope of responsibility, leadership skills and experience.

The base salary compensates an executive for performing his or her job responsibilities on a day-to-day basis.

Generally, base

salaries are reviewed annually company-wide and adjusted (upward or downward) when appropriate based upon individual performance,

expanded duties, changes in the competitive marketplace and, with respect to upward adjustments, if we are, financially and otherwise,

able to pay it.

We try to offer competitive base salaries to help attract and retain executive talent.

Interim CEO Performance Incentive Plan

connection with Mr.

Wolff’s appointment as interim chief executive officer in September 2019, Mr.

Wolff was eligible to

participate in the 2019 Interim CEO Performance Incentive Plan (the “2019 Interim CEO PIP”).

The 2019 Interim CEO

PIP is a performance incentive plan under which, for the achievement of each of the performance goals thereunder, we agreed to

Wolff such number of shares of our common stock equal to $20,000 divided by the closing price per share of our common

stock on the date of grant.

Upon grant, such shares would be fully vested.

The performance goals were related to:

(1) the retainment

of certain key employees determined by the N&CG/C Committee through at least March 17, 2020;

(2) having a target amount of

unrestricted cash, as determined and approved by the N&CG/C Committee, as of March 17, 2020;

and (3) meeting target sales

for our Buzztime Basic product offering, as determined and approved by the N&CG/C Committee, by March 31, 2020.

In March 2020,

the N&CG/C Committee determined that the performance goal related to the retainment of key employees was achieved, and we

issued 9,506 shares to Mr.

Wolff, representing $20,000 worth of shares of our common stock, net of withholding taxes.

of these shares is reflected in Mr.

Wolff’s 2020 compensation in the “Stock Awards”

column in the 2020 Summary

Compensation Table.

Incentive Plan

June 1, 2020, the N&CG/C Committee approved the NTN Buzztime, Inc.

Executive Incentive Plan for Eligible Employees of NTN

Buzztime, Inc.

Fiscal Year 2020 (the “2020 Incentive Plan”).

The 2020 Incentive Plan permits the payout of any incentive

compensation earned under the plan to be paid, at the discretion and in the sole determination of the N&CG/C Committee, either

in (i) cash, (ii) shares of our common stock issued under the NTN Buzztime, Inc.

2019 Performance Incentive Plan or any successor

long-term incentive plan, or (iii) any combination of (i) and (ii).

If incentive compensation is paid in shares, the number of

shares issued is determined by dividing the amount earned by the closing price of our common stock on the date on which the N&CG/C

Committee approves the amount of incentive compensation earned.

Payments under the 2020 Incentive Plan, if any, are contingent

on the applicable participant’s continued employment with us on the payout date.

2020 Incentive Plan participant has a target payout amount assigned according to such participant’s position and job level.

The table below sets forth the target payout amounts for our named executive officers under the 2020 Incentive Plan, assuming

all performance measures are achieved at a rate of 100%:

Target Payment Amount

Sandra Gurrola

performance targets were established by the N&CG/C Committee in June 2020 and fall into three categories, the achievement

of which will be determined following each quarter or year, as applicable:

strategic, financial and operational.

All incentive-based

compensation payable to Mr.

Wolff and Ms.

Gurrola is subject to any clawback policy that we may establish.

the terms of the 2020 Incentive Plan, the performance-based bonuses, if earned, were to be paid as follows:

16.66% if the applicable

performance targets for each of our 1st, 2nd and 3rd fiscal quarters were or are achieved, and 50% if the applicable performance

targets for the applicable fiscal year are achieved.

To preserve cash, we did not pay any amounts in respect of the performance

targets for either of the 1 st , 2 nd or 3 rd fiscal quarters despite the applicable performance

targets being achieved at certain levels.

As of December 31, 2020, approximately $63,000 has been accrued for bonuses earned under

the 2020 Incentive Plan.

entered into an employment agreement with Mr.

Wolff dated March 19, 2018, which was amended in each of September 2019, January

2020, March 2020 and September 2020.

We entered into an employment agreement with Ms.

Gurrola dated September 17, 2010, which

was amended in each of January 2020 and May 2020.

The following is a summary of the material terms of those employment agreements,

Wolff’s base salary is $325,000 and will increase to $350,000 effective July 1, 2021.

However, in an effort

to help preserve cash, up to 20% of Mr.

Wolff’s base salary may be paid in shares of our common stock at Mr.

Wolff’s

Wolff elected to receive 20% of his base salary in shares of our common stock from January 2020 through March

Gurrola’s base salary is $190,000.

The target payout amount of Mr.

Wolff’s and Ms.

Gurrola’s incentive performance-based bonus for 2020 is

$150,000 and $38,000, respectively.

See “2020 Incentive Plan,”

above for additional information.

Wolff was also entitled to receive a $30,000 cash bonus if he were to remain employed with us for at least 180

days from September 17, 2019, the date on which he was appointed as interim chief executive officer.

To preserve cash, we agreed

to issue to him such number of shares of our common stock equal to a pro rata amount of the $30,000 bonus (determined by multiplying

$30,000 by a fraction, the numerator of which is the number of days lapsed between September 17, 2019 and January 14, 2020, the

effective date of the amendment to his employment agreement appointing him as chief executive officer, and the denominator of

which is 180) divided by the closing price of our common stock on January 14, 2020.

As a result, we issued 5,102 shares of our

common stock to Mr.

Wolff in respect of this bonus, the value of which was net of withholding taxes on the amount of bonus earned.

The value of these shares issued is reflected in Mr.

Wolff’s 2020 compensation in the “Bonus”

column in the

2020 Summary Compensation Table.

Under the terms of the amendment we entered into with Mr.

Wolff in September 2020 to his employment agreement, if Mr.

Wolff is continuously employed by us through the consummation of a change in control (as defined in his employment agreement)

and such transaction is consummated before March 31, 2021 (a “Qualifying CiC”), then he is eligible to receive a cash

bonus of $162,500, subject to tax withholding and other authorized deductions and subject to Mr.

Wolff delivering a general release

of claims in our favor, and we will pay his COBRA premiums for up to six months following the termination of his employment with

us or, if earlier, until he becomes eligible for medical insurance coverage in connection with new employment.

that he will not be eligible for his severance payments or benefits under the terms of his employment agreement upon the consummation

of a Qualifying CiC because his employment with us will automatically terminate upon the consummation of such Qualifying CiC due

to his resignation without good reason.

Under the terms of their employment agreements, in January 2020, Mr.

Wolff and Ms.

Gurrola were each granted a stock

unit award of 75,000 and 25,000 shares of our common stock, respectively.

The awards were made under, and are subject to, our

2019 Performance Incentive Plan, and vest quarterly beginning on the 3-month anniversary of the grant date, in each case, subject

to the executive’s continued service to us as of the applicable vesting date.

connection with entering into the amendment to Ms.

Gurrola’s employment agreement in May 2020, we entered into a retention

bonus and general release of all claims agreement with Ms.

Gurrola, pursuant to which, in exchange for the reduction in her severance

compensation from nine months of her base salary to two months of her base salary, and subject to Ms.

Gurrola signing and not

revoking a general release of claims in our favor, we agreed to pay her a retention bonus of $110,833, which is equivalent to

seven months of her monthly salary, and which was payable in three installments, the last of which was made on June 19, 2020.

If, prior to August 31, 2020, Ms.

Gurrola’s employment was terminated by us for cause or by her without good reason, she

agreed to return to us 50% of the amount of the retention bonus paid to her on or before such termination of employment and we

would have had no obligation to pay any unpaid retention bonus.

of Employment and Change-in-Control Arrangements

of the employment agreements of Mr.

Wolff and Ms.

Gurrola provides for certain benefits upon termination of employment under specified

circumstances.

If the executive’s employment is terminated by us or by the executive, we will pay him or her any accrued

and unpaid base salary and reimburse him or her for expenses incurred through the date of termination of employment.

to the foregoing as the “accrued obligations.”

addition to the accrued obligations, if Mr.

Wolff’s employment with us is terminated by us without cause or by him for good

reason, subject to him delivering to us a general release of claims in our favor, we will pay him as severance an amount equal

to one month of his base salary for every full year of full-time employment, subject to a minimum of six months and a maximum

of nine months, payable in substantially equal installments on a bi-weekly basis over the applicable severance period, and we

will reimburse him for COBRA insurance premiums for a period of months equal to the number of months paid in severance.

has been employed with us for six years.

Wolff will not receive any such severance payment or benefits upon the consummation

of a Qualifying CiC because his employment with us will automatically terminate upon the consummation of such Qualifying CiC due

to his resignation without good reason.

addition to the accrued obligations, if Ms.

Gurrola’s employment with us is terminated by us without cause or by her for

good reason, subject to her delivering to us a general release of claims in our favor, we will pay her as severance an amount

equal to two months of her base salary, payable in one lump sum, plus the incentive compensation she is eligible to receive under

the 2020 Incentive Plan, and if so paid, she will waive payment to her of such incentive compensation under the 2020 Incentive

We will also reimburse her for COBRA insurance premiums for a period of nine months.

Gurrola has been employed with

us for over 11 years.

the event of a change in control and if the executive is employed by us through the effective date of the change in control, then

100% of the then unvested portion of the stock units and stock options we granted to each of Mr.

Wolff and Ms.

Gurrola then outstanding

will vest and, as applicable, become exercisable as of immediately before such effective date.

than as described above and the agreements that govern their equity awards, we do not have any contract, agreement, plan or arrangement,

whether written or unwritten, that provides for payment to a named executive officer at, following, or in connection with the

resignation, retirement or other termination of a named executive officer, or a change in control or a change in the named executive

officer’s responsibilities following a change in control.

Equity Awards at Fiscal Year-End

following table sets forth information concerning equity awards held by the named executive officers that were outstanding as

of December 31, 2020:

2020 Outstanding Equity Awards at Fiscal Year-End Option Awards

Exercisable (#)

Unexercisable

Shares or Units

of Stock that

have not Vested

Sandra Gurrola

restricted stock units vest at a rate of 12.50% of the shares subject to the award in eight substantially equal quarterly

installments beginning on the three-month anniversary of the grant date.

restricted stock units vest at a rate of 16.67% of the shares subject to the award on the six-month anniversary of the grant

date and the remaining units vest in 30 substantially equal monthly installments thereafter.

option vests and becomes exercisable at the rate of 25% of the shares underlying the option on the first anniversary of the

option grant date, and the remaining shares underlying the option vest in 36 substantially equal monthly installments thereafter.

account for stock-based payments including equity awards under our equity incentive plans in accordance with the requirements

of FASB ASC No.

718, Compensation –

Stock Compensation.

For a discussion regarding the effect of a change in control on

certain equity awards held by Mr.

Wolff and Ms.

Gurrola, see “Termination of Employment and Change-in-Control Arrangements,”

compensate our non-employee directors for their service in such capacity with annual retainers and equity compensation as described

Directors who are also our employees do not receive any additional compensation for their services as directors.

not pay fees to any of our directors for meeting attendance.

The N&CG/C Committee reviews our non-employee director compensation

practices and policies at least annually and makes a recommendation to our board of directors as to the amount, form and terms

of non-employee director compensation.

Our board of directors, taking the N&CG/C Committee’s recommendation into consideration,

sets the amount, form and terms of non-employee director compensation.

pay our non-employee directors a $25,000 annual retainer for their services as directors.

We pay the chairman of our board of

directors, assuming she or he is a non-employee director, an additional $20,000 annual retainer for services in such capacity.

We pay our non-employee directors an additional annual retainer for their service on board committees as set forth in the table

Audit Committee

N&CG/C Committee

annual retainers are paid quarterly in arrears and are paid no later than 30 days following the end of the applicable quarter.

Each non-employee director may elect that the retainer payment he or she is eligible to receive, or a portion of such retainer,

be paid in the form of a restricted stock award under our equity incentive plan rather than cash.

Such an election must be made

during an open trading window under our insider trading policy and no later than the 15th day of the last month of the quarter

for which the retainer is to be paid.

An election applies only to the quarter for which it is made.

Once an election is made with

respect to a quarter, it may not be withdrawn or substituted unless our board of directors determines, in its sole discretion,

that the withdrawal or substitution is occasioned by an extraordinary or unanticipated event.

Restricted stock awards will be

made on the same date as a cash retainer payment would otherwise be paid, will vest in full on the date of grant, and the amount

of shares subject to such award will equal the amount of the applicable cash retainer payment divided by the closing price of

our common stock on the last day of the applicable quarter.

grant stock options to our non-employee directors upon the commencement of their service as a director and upon their re-election

to our board of directors.

The stock options are granted under our stockholder-approved equity incentive plan.

connection with the commencement of a new non-employee director’s term of service, we grant to such new director a stock

option to purchase 600 shares of our common stock.

These stock options have an exercise price equal to the closing price of our

common stock on the date of grant, and are fully vested and exercisable on the date of grant as to 50% of the shares and the remaining

50% of the shares vest and become exercisable, subject to the director’s continued service on our board of directors, in

12 equal monthly installments beginning in the month immediately following the date of grant.

non-employee director who is re-elected for an additional term of service on our board of directors is automatically granted a

stock option to purchase 400 shares of our common stock on the date of our annual stockholder meeting.

These stock options have

an exercise price equal to the closing price of our common stock on the date of grant and vest and become exercisable, subject

to the director’s continued service on our board of directors, in 12 equal monthly installments thereafter.

stock options described above expire on the earlier of 10 years from the date of grant or 90 days from the date the director ceases

to serve on our board of directors.

In the event of a change in control the N&CG/C Committee may in its discretion determine

that these stock options vest and become fully exercisable as of immediately before such change in control.

Director Compensation

following table sets forth the compensation of each director, who is not a named executive officer, for service during 2020.

table excludes Mr.

Wolff, who is a named executive officer and does not receive any compensation from us for his service as a

See the section above entitled “Executive Compensation”

for information about Mr.

Wolff’s compensation.

2020 Director Compensation

Option Awards (2)

Richard Simtob

Michael Gottlieb

Gregory Thomas (1)

Thomas resigned from our board of directors effective April 30, 2020.

stock option awards were granted during 2020.

As of December 31, 2020, our non-employee directors had options outstanding

to purchase the following number of shares of our common stock:

# of Shares Subject

to Outstanding

Richard Simtob

Michael Gottlieb

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

information required by this item will be set forth under the headings “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

AND MANAGEMENT”

and “EQUITY COMPENSATION PLAN INFORMATION”

in the Definitive Proxy Statement and is incorporated

in this report by reference.

following table sets forth the number and percentage ownership of NTN common stock as of March 9, 2021 by:

persons known to NTN to be the beneficial owner of more than 5% of NTN common stock;

of NTN’s directors;

of NTN’s named executive officers;

of NTN’s current executive officers and directors as a group.

as otherwise indicated in the footnotes to the table below:

(i) each of the persons named has sole voting and investment power

with respect to the shares of common stock shown, subject to applicable community property and similar laws;

and (ii) the address

for each director and named executive officer is c/o NTN Buzztime, Inc., 6965 El Camino Real, Suite 105-Box 517, Carlsbad, California

The information in the table is based solely on statements in filings with the SEC or other reliable information.

Directors and Named Executive Officers:

Allen Wolff (2)

Richard Simtob (3)

Michael Gottlieb (4)

Sandra Gurrola (5)

Susan Miller (6)

All executive officers and directors as a group (5 persons) (7)

5 % Stockholders:

Ault Global Holdings, Inc.

Gentile Guy (9)

as outstanding for purposes of this calculation are 2,976,774 shares of common stock outstanding as of March 9, 2021 plus,

in the case of each particular person, the shares of common stock subject to options exercisable for, or restricted stock

units that may be settled in, shares of common stock within 60 days after March 9, 2021 held by that person, which instruments

are specified by footnote.

Shares subject to outstanding options and restricted stock units other than as described in the

preceding sentence are not deemed to be outstanding for purposes of this calculation.

15,000 shares subject to options and 10,347 shares subject to restricted stock units held by Mr.

1,400 shares subject to options held by Mr.

600 shares subject to options held by Mr.

5,700 shares subject to options and 3,597 shares subject to restricted stock units held by Ms.

of 600 shares subject to options held by Ms.

23,300 shares subject to options and 13,944 shares subject to restricted stock units held by our directors and executive officers.

number of shares is the number stated as beneficially owned as of January 28, 2021 in a Schedule 13D filed with the SEC on

January 29, 2021.

In that filing, Ault Global Holdings, Inc.

states that it has sole power to vote and dispose of 295,000

shares of our common stock, and lists its address as 11411 Southern Highlands Parkway, Suite 240, Las Vegas, NV 89141.

number of shares is the number stated as beneficially owned as of February 10, 2021 in a Schedule 13G filed with the SEC on

February 16, 2021.

In that filing, Gentile Guy states that he has sole power to vote and dispose of 175,000 shares of our

common stock, and lists his address as 103 Ave De Deigo , San Juan, Puerto Rico 00911.

Compensation Plan Information

following table sets forth information as of December 31, 2020 regarding our compensation plans authorizing us to issue equity

securities and the number of securities.

Plan Category

securities to be issued

upon exercise of

outstanding options,

warrants and rights

(b)Weighted-average

exercise price of

outstanding options,

warrants and rights

securities remaining

available for future

issuance under equity

compensation plans,

excluding securities

reflected in column (a)

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

(a) 33,000 shares issuable upon exercise of options and vesting of RSUs granted pursuant to the NTN Buzztime, Inc.

2010 Performance

Incentive Plan, as amended, and (b) 84,000 shares issuable upon exercise of options and vesting of RSUs granted pursuant to

the NTN Buzztime, Inc.

2019 Performance Incentive Plan.

Both of those plans are broad-based incentive plans, which allows

for the grant of stock options, restricted stock, restricted stock units, stock appreciation rights, and cash awards to employees,

consultants and non-employee directors.

plan allows for the issuance of non-qualified stock options to any prospective employee who has not previously been an employee

or director of the company or who has not been employed by the company for a bonafide period of time.

Certain Relationships and Related Transactions , and Director Independence

information required by this item will be set forth under the headings “PROPOSAL 1:

ELECTION OF DIRECTORS,”

OF DIRECTORS AND CORPORATE GOVERNANCE”

and “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS”

in the Definitive

Proxy Statement and is incorporated in this report by reference.

Principal Accounting Fees and Services

information required by this item will be set forth under the headings “PRINCIPAL ACCOUNTING FIRM FEES”

in the Definitive

Proxy Statement and is incorporated in this report by reference.

Party Transactions

January 1, 2019, there has not been nor are there currently proposed any transactions or series of similar transactions to which

we were or are to be a party in which the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets

at year-end for the last two completed fiscal years (which was $89,000) and in which any director, executive officer, holder of

more than 5% of our common stock or any member of the immediate family of any of the foregoing persons had or will have a direct

or indirect material interest.

Policy Regarding Related Party Transactions

to its charter, our audit committee has the responsibility to review, approve and oversee any transaction between the Company

and a related person (as defined in Item 404 of Regulation S-K) and to develop policies and procedures for the committee’s

approval of such transactions.

have entered into indemnity agreements with each of our directors and executive officers.

The indemnity agreements provide that

we will indemnify these individuals under certain circumstances against certain liabilities and expenses they may incur in their

capacities as our directors or officers.

We believe that the use of such indemnity agreements is customary and that the terms

of the indemnity agreements are reasonable and fair to us, and are in our best interests to attract and retain experienced directors

and officers.

board of directors has determined that each of our current directors other than Mr.

Wolff is independent as defined under NYSE

American listing standards.

Our board of directors has also determined that each current member of each of our Audit Committee

and Nominating and Corporate Governance/Compensation Committee is independent as defined under the NYSE American listing standards

and applicable SEC rules.

In making this determination, our board of directors found that none of these directors had a material

or other disqualifying relationship with us.

Principal Accountant Fees and Services

following table presents the aggregate fees billed for each of the last two fiscal years for professional services rendered by

Squar Milner LLP (which effective as of November 1, 2020, merged with Baker Tilly US, LLP) for the audit of our annual financial

statements, review of our quarterly financial statements and for other services:

Audit-Related Fees

All Other Fees

Committee Pre-Approval Policies and Procedures

audit committee has adopted a policy whereby all engagements of our independent auditor must be pre-approved by the audit committee.

The audit committee has delegated to its chairman the authority to evaluate and approve engagements on behalf of the committee

in the event that a need arises for pre-approval between committee meetings.

If the chairman approves any such engagements, the

chairman reports that approval to the full committee at the next committee meeting.

audit and permitted non-audit and tax services must be pre-approved by the audit committee except for certain services other than

audit, review or attest services that meet the “de minimis exception”

under 17 CFR Section 210.2-01, namely:

aggregate amount of fees paid for all such services is not more than 5% of the total fees paid by the Company to its auditor

during the fiscal year in which the services are provided;

services were not recognized by the Company at the time of the engagement to be non-audit services;

services are promptly brought to the attention of the audit committee and approved prior to the completion of the audit.

fiscal years 2020 and 2019, there were no such services that were performed pursuant to the “de minimis exception.”

Exhibits, Financial Statement Schedules

4 unchanged sentences

Financial Statement Schedules.

By Reference From the Document Indicated Previously Filed by the Registrant

Filed or Furnished Herewith

Incorporated By Reference From the Document Indicated Previously Filed by the Registrant

Agreement and Plan of Merger and Reorganization, dated August 12, 2020, among NTN Buzztime, Inc., BIT Merger Sub, Inc.

and Brooklyn Immunotherapeutics LLC **

Annex A to the proxy statement/prospectus/consent solicitation statement forming a part of the S-4 Registration Statement filed on January 20, 2021

Form of Support Agreement among NTN Buzztime, Inc., Brooklyn Immunotherapeutics LLC and the officers and directors of NTN Buzztime, Inc.

Exhibit to Form 8-K filed on August 14, 2020

Form of Support Agreement among NTN Buzztime, Inc., Brooklyn Immunotherapeutics LLC and certain beneficial holders of Class A membership interests of Brooklyn Immunotherapeutics LLC

Exhibit to Form 8-K filed on August 14, 2020

Asset Purchase Agreement dated September 18, 2020 by and between NTN Buzztime, Inc.

and eGames.com Holdings LLC **

Annex D-1 to the proxy statement/prospectus/consent solicitation statement forming a part of the S-4 Registration Statement filed on January 20, 2021

Omnibus Amendment and Agreement entered into as of November 19, 2020 by and among eGames.com Holdings LLC, NTN Buzztime, Inc., and Fertilemind Management, LLC

Annex D-2 to the proxy statement/prospectus/consent solicitation statement forming a part of the S-4 Registration Statement filed on January 20, 2021

Second Omnibus Amendment and Agreement entered into as of January 12, 2021 by and among eGames.com Holdings LLC, NTN Buzztime, Inc., and Fertilemind Management, LLC

Annex D-3 to the proxy statement/prospectus/consent solicitation statement forming a part of the S-4 Registration Statement filed on January 20, 2021

Restated Certificate of Incorporation.

to Form 10-Q filed on August 14, 2013

Exhibit to Form 10-Q filed on August 14, 2013

Certificate of Amendment to the Restated Certificate of Incorporation (reverse/forward split).

to Form 8-K filed on June 17, 2016

Exhibit to Form 8-K filed on June 17, 2016

Certificate of Decrease of the Series A Convertible Preferred Stock.

to Form 8-K filed on April 12, 2017

Exhibit to Form 8-K filed on April 12, 2017

Certificate of Amendment to the Restated Certificate of Incorporation (decrease in authorized capital stock).

to Form 8-K filed on June 9, 2017

Exhibit to Form 8-K filed on June 9, 2017

Bylaws (as amended and restated and further amended through December 6, 2018).

to Form 8-K filed on December 7, 2018

Exhibit to Form 8-K filed on December 7, 2018

Form of Certificate of Common Stock of NTN Buzztime, Inc.

to Form 8-K filed on June 17, 2016

Description of securities of the registrant

Exhibit to Form 8-K filed on June 17, 2016

Description of registrant’s securities

Exhibit to Form 10-K filed on March 19, 2020

8% Promissory Note issued by NTN Buzztime, Inc.

on September 18, 2020.

Exhibit to Form 8-K filed on September 18, 2020

Guaranty by Aram Fuchs in favor of NTN Buzztime, Inc.

Exhibit to Form 8-K filed on September 18, 2020

10% Promissory Note issued by NTN Buzztime, Inc.

on December 1, 2020

Exhibit to Form 8-K filed on November 23, 2020

10% Promissory Note issued by NTN Buzztime, Inc.

on January 12, 2021

Exhibit to Form 8-K filed on January 15, 2021

Asset Purchase Agreement between NTN Buzztime, Inc.

and Sporcle, Inc.

dated January 13, 2020

Exhibit to Form 8-K filed on January 15, 2020

Amended 2010 Performance Incentive Plan.

to Definitive Proxy Statement on Schedule 14A filed on April 24, 2015

Exhibit to Definitive Proxy Statement on Schedule 14A filed on April 24, 2015

NTN Buzztime, Inc.

2014 Inducement Plan.

to Form 10-Q filed on November 7, 2014

Exhibit to Form 10-Q filed on November 7, 2014

Limited Term Employment and Separation Agreement and General Release of All Claims dated September 17, 2019 by and between NTN Buzztime, Inc.

5 unchanged sentences

to Form 10-Q filed on May 11, 2018

First Amendment to Employment Agreement dated September 17, 2019 by and between NTN Buzztime, Inc.

and Allen Wolff.

First Amendment to Employment Agreement by and between NTN Buzztime, Inc.

and Allen Wolff dated September 17, 2019.

to Form 8-K filed on September 17, 2019

1 unchanged sentence

to Form 8-K filed on September 17, 2019

Second Amendment to Employment Agreement by and between NTN Buzztime, Inc.

and Allen Wolff dated January 14, 2020.

to Form 8-K filed on January 15, 2020

Third Amendment to Employment Agreement by and between NTN Buzztime, Inc.

and Allen Wolff dated March 27, 2020.

to Form 8-K filed on March 30, 2020

Amendment #4 to Employment Agreement made and entered into as of September 18, 2020 between NTN Buzztime, Inc.

and Allen Wolff.

to Form 8-K filed on September 18, 2020

Employment Agreement dated September 17, 2019 by and between NTN Buzztime, Inc.

1 unchanged sentence

to Form 8-K filed on September 17, 2019

First Amendment to Employment Agreement by and between NTN Buzztime, Inc.

and Sandra Gurrola dated January 14, 2020.

to Form 8-K filed on January 15, 2020

Second Amendment to Employment Agreement by and between NTN Buzztime, Inc.

and Sandra Gurrola dated May 27, 2020.

to Form 8-K filed on June 2, 2020

Retention Bonus and General Release of Claims Agreement by and between NTN Buzztime, Inc.

and Sandra Gurrola dated May 27, 2020.

to Form 8-K filed on June 2, 2020

NTN Buzztime, Inc.

Executive Incentive Plan for Eligible Employees of NTN Buzztime, Inc.

fiscal Year 2020.

to Form 8-K filed on June 2, 2020

2019 Performance Incentive Plan.

10 unchanged sentences

to Form S-8 filed on June 14, 2019

The NTN Buzztime, Inc.

Executive Incentive Plan for Eligible Employees of NTN Buzztime, Inc.

Fiscal Year 2019 dated March 19, 2019.

to Form 8-K filed on March 20, 2019

NTN Buzztime, Inc.

1 unchanged sentence

to Form 10-Q filed on August 6, 2018

Loan and Security Agreement by and between Avidbank and the registrant dated September 28, 2019.

to Form 8-K filed on October 1, 2018

First Amendment to the Loan and Security Agreement by and between Avidbank and the registrant dated March 12, 2020.

to Form 8-K filed on March 17, 2020

Paycheck Protection Program Note issued by NTN Buzztime, Inc.

in favor of Level One Bank dated April 18, 2020.

to Form 8-K filed on April 21, 2020

Acknowledgment and Agreement Regarding Loan Forgiveness dated April 18, 2020.

to Form 8-K filed on April 21, 2020

Office lease, dated for reference purposes only July 26, 2018, by and between Burke Aston Partners, LLC and the registrant

to Form 10-Q filed on November 9, 2018

Lease Termination, Surrender and Buy-Out Agreement by and between NTN Buzztime, Inc.

and Burke Aston Partners, LLC dated June 25, 2020.

to Form 8-K filed on July 1, 2020

Form of Director and Officer Indemnification Agreement

to Form 10-K filed on March 22, 2019.

Subsidiaries of Registrant

Consent of Squar Milner LLP

Subsidiaries of NTN Buzztime, Inc.

Consent of Baker Tilly US, LLP

Power of attorney (included on the signatures page of this report)

9 unchanged sentences

Contract or Compensatory Plan

schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

A copy of any omitted schedule and/or

exhibit will be furnished to the SEC or its staff upon request.

This certification is being furnished solely to accompany this report pursuant to U.S.C.

23 unchanged sentences

Executive Officer and Director

(Principal Executive Officer)

Executive Officer)

Sandra Gurrola

President of Finance

Financial Officer and Principal Accounting Officer)

of the Board of Directors

President of Finance (Principal Financial

and Principal Accounting Officer)

Richard Simtob

Michael Gottlieb

NTN BUZZTIME, INC.

BUZZTIME, INC.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

Financial Statements:

Balance Sheets as of December 31, 2019 and 2018

Statements of Operations and Comprehensive Loss for the years ended December 31, 2019

Consolidated Balance Sheets as of December 31, 2020 and 2019

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2020 and 2019

Consolidated Statements of Shareholders’

1 unchanged sentence

Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019

to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

7 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for

the years then ended, in conformity with accounting principles generally accepted in the United States of America.

in Accounting Principle

discussed in Note 3 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019

due to the adoption of Accounting Standards Codification Topic 842, Leases.

financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for the

years then ended, in conformity with accounting principles generally accepted in the United States of America.

Concern Uncertainty

1 unchanged sentence

in Note 5 to the financial statements, the Company incurred a significant net loss for the year ended December 31, 2020 and as

of December 31, 2019 had a negative working capital balance.

In addition, in March 2020, the Company’s agreement with its

secured creditor was amended requiring an acceleration of scheduled debt payments during the remainder of 2020.

These factors

raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters

also are described in Note 2.

The financial statements do not include any adjustments that might result from the outcome of this

of December 31, 2020 had a negative working capital balance, and does not expect to have sufficient cash or working capital resources

to fund operations for the twelve-month period subsequent to the issuance date of these financial statements.

These factors raise

substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these

matters also are described in Note 5.

The financial statements do not include any adjustments that might result from the outcome

of this uncertainty.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

4 unchanged sentences

for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

we express no such opinion.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

5 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements

that were communicated or required to be communicated to the Company’s audit committee and that:

(i) relate to accounts

or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective,

or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial

statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on

the critical audit matters or on the accounts or disclosures to which they relate.

Audit Matter Description

discussed in Note 6 to the consolidated financial statements, the Company generates revenue by charging subscription fees to partners

for access to its 24/7 trivia network, by selling and leasing tablet and hardware equipment for custom usage beyond trivia/entertainment,

by selling digital-out-of-home advertising direct to advertisers and on national ad exchanges, by licensing its entertainment

and trivia content to other entities, and by providing professional services such as custom game design or development of new

platforms on its existing tablet form factor.

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

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

obligation has been satisfied.

Discounts are treated as a reduction to the overall transaction price and allocated to the performance

obligations based on the relative stand-alone selling prices.

All revenues are recognized net of sales tax collected from the

related audit effort in evaluating management’s judgments in determining revenue recognition for these customer agreements

was extensive and required a high degree of auditor judgment.

We Addressed the Matter in Our Audit

primary procedures we performed to address this critical audit matter included:

evaluated management’s significant accounting policies related to these customer agreements for reasonableness.

selected a sample of customer agreements and performed the following procedures:

and read contract source documents for each selection, including master agreements, and other documents that were part of

the agreement.

management’s identification of significant terms for completeness, including the identification of distinct performance

obligations and variable consideration.

the terms in the customer agreement and evaluated the appropriateness of management’s application of their accounting

policies, along with their use of estimates, in the determination of revenue recognition conclusions.

evaluated the reasonableness of management’s estimate of stand-alone selling prices for products and services that are

not sold separately.

tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized

in the financial statements.

software development costs

Audit Matter Description

in Note 6 to the consolidated financial statements, the Company capitalizes costs related to developing certain internal-use

software in accordance with ASC No.

The Company recognizes the capitalized costs on a straight-line basis over

the estimated useful lives, which are generally two to three years.

The Company capitalized $244,000 and impaired $248,000

of software costs in the year ended December 31, 2020 and had total capitalized software development costs, net of accumulated

amortization, of $1.36 million as of December 31, 2020.

the Company’s capitalization of software development costs is complex.

Management applies significant judgment in determining

which software projects, and activities within those projects, qualify for capitalization, as only those costs incurred in certain

stages of software development or implementation can be capitalized in accordance with the applicable accounting standards.

addition, measuring the appropriate amounts to capitalize requires the Company to maintain detailed records of time spent by personnel

on implementation and development activities across all projects in development.

Finally, management applies judgment in determining

when to cease the capitalization of costs that will be placed in service.

We Addressed the Matter in Our Audit

primary procedures we performed to address this critical audit matter included, among others:

inspected underlying documentation to evaluate whether the costs were appropriately capitalizable under the applicable accounting

inquired of project managers for significant projects to assess the nature of the costs, including the internal time devoted

to capitalizable activities and the externally contracted costs.

evaluated the software implementation timeline and the related underlying documentation obtained to support the capitalization

period for implementation and development amounts as well as the date the costs were placed in service.

BAKER TILLY US, LLP

have served as the Company’s auditor since 2013.

4 unchanged sentences

thousands, except par value amount)

and cash equivalents

receivable, net of allowances of $354 and $374, respectively

equipment to be installed

expenses and other current assets

Current Assets:

cash, long-term

lease right-of-use assets

development costs, net of accumulated amortization of $3,341 and $2,973, respectively

AND SHAREHOLDERS’

taxes payable

portion of long-term debt

portion of obligations under operating leases

portion of obligations under financing leases

portion of deferred revenue

current liabilities

Cash and cash equivalents

Restricted cash

Accounts receivable, net of allowances of $748 and $354, respectively

Site equipment to be installed

Prepaid expenses and other current assets

Total current assets

Restricted cash, long-term

Operating lease right-of-use assets

Fixed assets, net

Software development costs, net of accumulated amortization of $3,081 and $3,341,

Deferred costs

LIABILITIES AND SHAREHOLDERS’

Current Liabilities:

obligations under operating leases

obligations under financing leases

deferred revenue

Shareholders’

Series A 10% cumulative

convertible preferred stock, $0.005 par value, $156 liquidation preference, 156 shares authorized, issued and outstanding

at December 31, 2019 and 2018

stock, $0.005 par value, 15,000 shares authorized at December 31, 2019 and 2018;

2,901 and 2,875 shares issued at December

31, 2019 and 2018, respectively

stock, at cost, 10 shares at December 31, 2019 and 2018

paid-in capital

other comprehensive income

Accounts payable

Accrued compensation

Accrued expenses

Sales taxes payable

Income taxes payable

Current portion of long-term debt

Current portion of obligations under operating leases

Current portion of obligations under finance leases

Current portion of deferred revenue

Other current liabilities

Total current liabilities

Long-term debt

Long-term obligations under operating leases

Long-term obligations under finance leases

Long-term deferred revenue

Other liabilities

Total liabilities

Shareholders’

liabilities and shareholders’

Series A 10% cumulative convertible preferred stock, $0.005 par value, $156 liquidation preference, 156 shares

authorized, issued and outstanding at December 31, 2020 and 2019

Common stock, $0.005 par value, 15,000 shares authorized at December 31, 2020 and 2019;

and 2,901 shares issued at December 31, 2020 and 2019, respectively

Treasury stock, at cost, 10 shares at December 31, 2020 and 2019

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive income

Total shareholders’

Total liabilities and shareholders’

accompanying notes to consolidated financial statements

3 unchanged sentences

thousands, except per share amounts)

Ended December 31,

from contracts with customers

lease revenue Hardware revenue

Years Ended December 31,

Revenue from contracts with customers

operating costs (includes depreciation and amortization of $2,517 and $2,449, respectively)

general and administrative

of capitalized software

and amortization (excluding depreciation and amortization included in direct operating costs)

Subscription revenue

Hardware revenue

Other revenue

Total revenue from contracts with customers

Operating expenses:

(loss) income

expense, net:

Direct operating costs (includes depreciation and amortization of $1,538 and $2,517,

respectively)

Selling, general and administrative

Impairment of capitalized software

Impairment of goodwill

Depreciation and amortization (excluding depreciation and amortization

included in direct operating costs)

Total operating expenses

Operating loss

Other expense, net:

before income taxes

benefit for income taxes

A preferred stock dividend

loss attributable to common shareholders

loss per common share - basic and diluted

average shares outstanding - basic and diluted

Comprehensive

currency translation adjustment

Interest expense, net

Other income (expense), net

Total other income (expense), net

Loss before income taxes

Benefit (provision) for income taxes

Series A preferred stock dividend

Net loss attributable to common shareholders

Net loss per common share - basic and diluted

Weighted average shares outstanding - basic and diluted

Comprehensive loss

Foreign currency translation adjustment

Total comprehensive loss

accompanying notes to consolidated financial statements

3 unchanged sentences

the years ended December 31, 2020 and 2019

A Cumulative Convertible Preferred Stock

Other Comprehensive

at January 1, 2018

currency translation

proceeds from issuance of common stock related to registered direct offering

of common stock upon vesting of restricted stock units

paid to Series A preferred stockholders

stock based compensation

at December 31, 2018

currency translation adjustment

of common stock upon vesting of restricted stock units

paid to Series A preferred stockholders

stock based compensation

at December 31, 2019

Series A Cumulative Convertible Preferred Stock

Additional Paid-in

Accumulated Other Comprehensive

Balances at January 1, 2019

Foreign currency translation adjustment

Issuance of common stock upon vesting of restricted stock units

Dividend paid to Series A preferred stockholders

Non-cash stock based compensation

Balances at December 31, 2019

Foreign currency translation adjustment

Issuance of common stock in lieu of cash compensation

Issuance of common stock upon vesting of restricted stock units

Dividend paid to Series A preferred stockholders

Non-cash stock based compensation

Balances at December 31, 2020

accompanying notes to consolidated financial statements

2 unchanged sentences

STATEMENTS OF CASH FLOWS

the years ended December 31,

Cash flows provided

by operating activities:

to reconcile net loss to net cash provided by operating activities:

and amortization

for doubtful accounts

of fixed assets to sales-type lease

of operating lease right-of-use-assets

of debt issuance costs

from the sale or disposition of assets

of capitalized software

For the years ended December

Cash flows provided by operating activities:

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization

Provision for doubtful accounts

Transfer of fixed assets to sales-type lease

Amortization of operating lease right-of-use-assets

Stock-based compensation

Amortization of debt issuance costs

Common stock issued for compensation in lieu of cash payment

Gain from the asset sale of Stump!

Trivia and OpinioNation

Loss from the termination of operating lease

Loss from the disposition of assets

Gain from PPP loan forgiveness

Impairment of capitalized software

Impairment of goodwill

in assets and liabilities:

equipment to be installed

lease liabilities

expenses and other assets

payable and accrued liabilities

taxes payable

cash provided by operating activities

Cash flows used in

investing activities:

software development expenditures

from sale of assets

cash used in investing activities

Cash flows used in

financing activities:

proceeds from issuance of common stock related to registered direct offering

from long-term debt

on long-term debt

issuance costs on long-term debt

payments on finance leases

withholding related to net share settlement of vested restricted stock units

paid to Series A preferred shareholders

cash used in financing activities

of exchange rate on cash and cash equivalents

Net increase (decrease)

in cash, cash equivalents and restricted cash

cash equivalents and restricted cash at beginning of year

cash equivalents and restricted cash at end of year

Supplemental disclosures

of cash flow information:

paid during the period for:

Supplemental disclosure

of non-cash investing and financing activities:

equipment transferred to fixed assets

tenant improvements paid by landlord

measurement of operating lease right-of-use assets and liabilities

acquired under operating lease

acquired under financing lease

Reconciliation of cash,

cash equivalents and restricted cash at end of period:

and cash equivalents

cash, long-term

cash, cash equivalents and restricted cash at end of period

Changes in assets and liabilities:

Accounts receivable

Site equipment to be installed

Operating lease liabilities

Prepaid expenses and other assets

Accounts payable and accrued liabilities

Income taxes payable

Deferred costs

Deferred revenue

Other liabilities

Net cash (used in) provided by operating activities

Cash flows provided by (used in) investing activities:

Capital expenditures

Capitalized software development expenditures

Net proceeds from the sale of Stump!

Proceeds from sale of other assets

Net cash provided by (used in) investing activities

Cash flows provided by (used in) financing activities:

Proceeds from long-term debt

Payments on long-term debt

Debt issuance costs on long-term debt

Principal payments on finance leases

Payroll tax remitted on net share settlement of equity awards

Dividends paid to Series A preferred shareholders

Net cash provided by (used in) financing activities

Effect of exchange rate on cash and cash equivalents

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

Cash, cash equivalents and restricted cash at beginning of year

Cash, cash equivalents and restricted cash at end of year

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Supplemental disclosure of non-cash investing and financing activities:

Site equipment transferred to fixed assets

Initial measurement of operating lease right-of-use assets and liabilities

Assets acquired under operating lease

Reconciliation of cash, cash equivalents and restricted cash at end of period:

Cash and cash equivalents

Restricted cash

Restricted cash, long-term

Total cash, cash equivalents and restricted cash at end of period

accompanying notes to consolidated financial statements

3 unchanged sentences

the Years Ended December 31, 2020 and 2019

Organization of Company

Buzztime, Inc.

13 unchanged sentences

and has also created a large and engaged audience which it connects with through its in-venue TV network.

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

Company generates revenue by charging subscription fees to partners for access to its 24/7 trivia network, by charging equipment

fees to select partner venues 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 its entertainment and trivia content to other parties, and by providing professional services such

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

Up until February 1, 2020, the Company

also generated revenue by hosting live trivia events (see Note 18).

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 the Company’s network each month.

Since March 2020, approximately 100,000 hours per month of such games have been played on the network each month.

Company generates revenue by charging subscription fees to partners for access to its 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 the Company’s entertainment and trivia content to other

parties, and by providing professional services such as custom game design or development of new platforms on the Company’s

existing tablet form factor.

Until February 1, 2020, the Company also generated revenue by hosting live trivia events.

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

(See Note 4).

of December 31, 2020, 1,036 venues subscribed to the Company’s interactive entertainment network and approximately 18% of

its network subscriber venues were affiliated with national and regional restaurant brands.

As of December 31, 2019, those numbers

declined to 1,440 venues and to approximately 26%, in each case, primarily due to the termination of the Company’s relationship

with Buffalo Wild Wings corporate-owned restaurants and most of its franchisees in November 2019.

See Note 2 for more information regarding

the impact of the COVID-19 pandemic on these venues and the Company’s subscription revenues.

Company owns several trademarks and consider the Buzztime®, Playmaker®, Mobile Playmaker, and BEOND Powered by Buzztime

trademarks to be among its most valuable assets.

These and the Company’s other registered and unregistered trademarks used

in this document are the Company’s property.

Other trademarks are the property of their respective owners.

of Accounting Presentation

2 unchanged sentences

IWN, Inc., IWN,

L.P., Buzztime Entertainment, Inc., NTN Wireless Communications, Inc., NTN Software Solutions, Inc., NTN Canada, Inc., and NTN

Buzztime, Ltd., all of which, other than NTN Canada, Inc., are dormant subsidiaries.

Unless otherwise indicated, references to

the Company include its consolidated subsidiaries.

L.P., Buzztime Entertainment, Inc., NTN Wireless Communications, Inc., NTN Software Solutions, Inc., NTN Canada, Inc., NTN Buzztime,

and BIT Merger Sub Inc., all of which, other than NTN Canada, Inc.

and BIT Merger Sub, Inc., are dormant subsidiaries.

otherwise indicated, references to the Company include its consolidated subsidiaries.

Reclassifications

2 unchanged sentences

reclassifications had no effect on previously reported results of operations or retained earnings.

Going Concern Uncertainty

negative impact of the COVID-19 pandemic on the restaurant and bar industry was abrupt and substantial, and the Company’s

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

In many jurisdictions,

including those in which the Company has 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.

The Company has experienced

material decreases in subscription revenue, advertising revenue and cash flows from operations, which the Company expects 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 the Company’s customers had

their subscriptions to our services temporarily suspended.

As of December 31, 2020, approximately 19% of the Company’s customers

remain on subscription suspensions.

Company’s consolidated financial statements reflect estimates and assumptions made by management that affect the reported

amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses

during the reporting periods presented.

Such estimates and assumptions affect, among other things, the allowance for doubtful

accounts, site equipment to be installed, fixed assets, capitalized software development and right-of-use assets.

Events and changes

in circumstances that affect such estimates and assumptions after December 31, 2020, including those resulting from the impacts

of the pandemic, will be reflected in future periods.

Agreement and Asset Purchase Agreement

Merger with Brooklyn Immunotherapeutics LLC

August 12, 2020, the Company 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., the Company’s 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 the Company and Brooklyn’s members receiving newly issued shares of the Company’s common

stock in exchange for their ownership interests in Brooklyn (the “Merger”).

The Merger, if completed, will result

in a change in control of the Company.

If the Merger is completed, the Company expects to change its name to Brooklyn ImmunoTherapeutics,

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 the Company’s common stock representing between approximately 94.08% and 96.74% of the outstanding

common stock of the Company 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 the Company’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 the Company immediately after the effective time of the Merger on a fully diluted basis.

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

the Company’s net cash is less than zero at the closing.

Asset Sale to eGames.com Holdings LLC

the Company announced the signing of the Merger Agreement, it 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, the Company 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, the Company

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 the Company’s

At the closing of the Asset Sale, in addition to assuming specified liabilities of the Company, eGames.com will pay the

Company $2.0 million in cash.

In connection with entering into the APA, the sole owner of eGames.com absolutely, unconditionally

and irrevocably guaranteed to the Company 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 the Company.

On November 19, 2020, the Company, 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 the Company on December 1, 2020, and

the parties agreed to increase the interest rate on the $1.0 million bridge loan Fertilemind made to the Company in September

2020 from 8% to 10% effective December 1, 2020.

Fertilemind provided the $0.5 million bridge loan to the Company on December 1,

On January 12, 2021, the Company, 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 the Company on January 12, 2021.

Fertilemind provided the $0.2 million bridge loan to the Company

on January 12, 2021.

The principal and accrued interest of each of the loans provided by Fertilemind to the Company will be applied

toward the $2.0 million purchase price at the closing of the Asset Sale.

Hosted Trivia Asset Sale

January 13, 2020, the Company entered into an asset purchase agreement with Sporcle, Inc., a Delaware corporation (“Sporcle”),

pursuant to which the Company agreed to sell to Sporcle all of its assets necessary for Sporcle to conduct the live-hosted knowledge-based

trivia events known as Stump!

Trivia and OpinioNation for $1,360,000 in gross proceeds.

On the closing date of the transaction

(January 31, 2020), the Company received $1,260,000.

The remaining $100,000 was being held back until the one-year anniversary

of the closing date, or January 31, 2021, to satisfy indemnification claims, if any, for which the Company is liable.

2020, the Company and Sporcle entered into an agreement and amendment to the asset purchase agreement to change the end of the

indemnification period from January 31, 2021 to August 31, 2020 in exchange for a $40,000 reduction to the $100,000 holdback amount.

On September 1, 2020, the Company received the $60,000 holdback amount.

The Company recorded a net gain of approximately $1,225,000

on this asset sale.

Concern Uncertainty

connection with preparing its financial statements as of and for the year ended December 31, 2020, the Company’s management

3 unchanged sentences

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

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.

As of December 31, 2019, the Company had $3,209,000 of unrestricted cash and total debt outstanding

of $2,750,000, which was the outstanding principal balance of the Company’s term loan with Avidbank.

Under the terms of

the amendment to the Company’s loan and security agreement that the Company entered into with Avidbank on March 12, 2020,

during 2020 the Company will be required to make monthly payments that, if made in accordance with their terms, will result in

the Company paying off the 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, 2019.

As a result of the foregoing, and taking into account

the Company’s current financial condition, the Company’s management concluded there is substantial doubt about the

Company’s ability to continue as a going concern through March 19, 2021.

January 1, 2020, the Company has reduced headcount by approximately $2.2 million in annualized salaries and implemented measures

to preserve capital.

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

The Company needs to raise capital to meet its debt service obligations to Avidbank and to fund its working capital needs.

Company continues to explore and evaluate opportunities to raise capital, including through equity financings, alternative sources

of debt, or strategic transactions, which may include selling a portion or all of the Company’s assets.

However, none of

these potential sources of capital are currently assured, and the actions to reduce operating expenses the Company has implemented

may not sufficiently mitigate the conditions and events that raise substantial doubt about the Company’s ability to continue

as a going concern through March 19, 2021.See PART I —

ITEM 1A, Risk Factors.

addition, any actions the Company took or may take to reduce planned capital expenses or operational cash uses may not cover shortfalls

in available funds and may negatively impact the Company’s ability to effectively manage, operate and grow its business,

to introduce new offerings to its 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 PART I —

ITEM 1A, Risk Factors.

As of December 31, 2020, the Company had $777,000 of cash, total debt outstanding of $2,032,000, and negative working capital

The total debt outstanding consists of $532,000 of principal outstanding under the loan the Company received in April

2020 under the Paycheck Protection Program and $1,500,000 of principal outstanding under the loans the Company received in connection

with entering into the APA, as amended, which, if the closing of the Asset Sale occurs, will be applied toward the $2.0 million

purchase price eGames.com will owe the Company at the closing of the Asset Sale.

See Note 2 for more information on the Asset

In November 2020, the Company was informed that approximately $1,093,000 of the $1,625,100 loan under the Paycheck Protection

Program would be forgiven, leaving a principal balance of approximately $532,000.

All amounts owing under the loan and security

agreement with Avidbank were paid on December 31, 2020, when the term loan matured, and Avidbank released its security interest

in all of the Company’s existing personal property.

a result of the impact of the COVID-19 pandemic on the Company’s business and taking into account its current financial

condition and its existing sources of projected revenue and cash flows from operations, the Company believes it will have sufficient

cash resources to pay forecasted cash outlays only through mid-March 2021, assuming the Company is able to continue to successfully

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

on the factors described above, management concluded that there is substantial doubt regarding the Company’s ability to

continue as a going concern through the twelve-month period subsequent to the issuance date of these financial statements.

Company needs to complete the Merger or the Asset Sale or raise capital to meet its debt service obligations and fund its working

capital needs.

The Company currently has no arrangements for such capital and no assurances can be given that it will be able

to raise such capital when needed, on acceptable terms, or at all.

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

4 unchanged sentences

as a going concern.

Summary of Significant Accounting Policies and Estimates

of Significant Accounting Policies and Estimates

Consolidation —The

18 unchanged sentences

months or less, or any investment redeemable without penalty or loss of interest, to be cash equivalents.

Resources —

In September 2018, the Company entered into a loan and security agreement with Avidbank (the “Original

LSA”) that provides for a $4,000,000 48-month term loan, all of which the Company used to pay-off the $4,050,000 of principal

borrowed from its then-existing lender..

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

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.

The Company has no more borrowing

availability under this credit facility.

March 12, 2020, the Company entered into an amendment to its loan and security agreement with Avidbank.

In connection with

entering into the amendment, the Company made a $433,000 payment on its 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 its term loan to $2.0 million.

Under the terms of the amendment, the Company’s financial covenants were changed, the

maturity date of its term loan was changed from September 28, 2022 to December 31, 2020 (and as a result, the Company classified

the total outstanding principal balance as a current liability on its balance sheet as of December 31, 2019), and commencing on

April 30, 2020, the Company must make principal plus accrued interest payments on the last day of each month, such that its term

loan will be repaid by December 31, 2020.

The principal payment the Company 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.

of Functional Currencies —The United States dollar is the Company’s functional currency, except for its operations

16 unchanged sentences

For the years ended December

31, 2019 and 2018, the Company recorded $48,000 of foreign currency transaction losses and $41,000 in foreign currency transaction

gains, respectively, due to settlements of intercompany transactions, re-measurement of intercompany balances with its Canadian

subsidiary and other non-functional currency denominated transactions, which are included in other income in the accompanying

statements of operations.

31, 2020 and 2019, the Company recorded $16,000 and $48,000 of foreign currency transaction losses, respectively, due to settlements

of intercompany transactions, re-measurement of intercompany balances with its Canadian subsidiary and other non-functional currency

denominated transactions, which are included in other income (expense) in the accompanying consolidated statements of operations.

Fluctuations in the rate of exchange between the U.S.

dollar and Canadian dollar may affect the Company’s

results of operations and period-to-period comparisons of its operating results.

The Company does not currently engage in hedging

or similar transactions to reduce these risks.

For the year ended December 31, 2019, the net impact to the Company’s results

of operations from the effect of exchange rate fluctuations was immaterial.

dollar and Canadian dollar may affect the Company’s results of operations

and period-to-period comparisons of its operating results.

The Company does not currently engage in hedging or similar transactions

to reduce these risks.

For the year ended December 31, 2020, the net impact to the Company’s results of operations from

the effect of exchange rate fluctuations was immaterial.

for Doubtful Accounts —The Company maintains allowances for doubtful accounts for estimated losses resulting from nonpayment

13 unchanged sentences

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

These assets remain in site equipment to be installed

until it is installed at the Company’s customer sites.

For tablet platform customers that are under sales-type lease arrangements,

the cost of the equipment is recognized in direct costs upon installation.

For all other tablet platform customers, the cost of

the equipment is reclassified to fixed assets upon installation and depreciated over its estimated useful life.

The Company evaluates

the recoverability of site equipment to be installed for impairment whenever events or circumstances indicate that the carrying

amounts of such assets may not be recoverable.

Recoverability is measured by comparing the carrying amount of an asset or asset

group to estimated undiscounted future net cash flows expected to be generated.

If the carrying amount of the asset or asset group

is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds

its fair value.

Fair value is determined through various valuation techniques including discounted cash flow models, quoted market

values, and third-party independent appraisals, as considered necessary.

Due to the termination

of our relationship with Buffalo Wild Wing corporate-owned restaurants and most of its franchisees in November 2019, Buffalo Wild

Wings offered the Company the opportunity to take back title to all of the tablets, cases and charging trays located at sites

that terminated service with the Company at zero cost to the Company other than for shipping and related charges of approximately

As a result, the Company received approximately 45,000 tablets and cases and approximately 4,500 charging trays during

the fourth quarter of 2019.

Many of these items are the Company’s newer technology tablets and cases that can be redeployed

to its customer sites or used in other possible partnerships.

Although the Company has not yet completed its assessment of the

items it received to determine how many the Company will ultimately retain, the Company determined that it would no longer have

a future use for certain older tablets and cases it had on hand.

Accordingly, during the quarter ended December 31, 2019, the

Company recognized a loss of approximately $580,000 for the disposition of those older tablets and related cases

recorded in site equipment to be installed for which it did not expect to generate future cash flows.

Total loss for the disposition

of site equipment for the year ended December 31, 2019 was approximately $591,000.

There were no indications of impairment

for the year ended December 31, 2018.

Such equipment includes the Classic Playmaker, tablets,

other associated electronics and the computers located at customer’s sites.

These assets remain in site equipment to be

installed until installed at the Company’s customer sites, at which point, the cost of the deployed site equipment is reclassified

to fixed assets and depreciated over the estimated useful life.

The Company evaluates the recoverability of site equipment to

be installed for impairment whenever events or circumstances indicate that the carrying amounts of such assets may not be recoverable.

Recoverability is measured by comparing the carrying amount of an asset or asset group to estimated undiscounted future net cash

flows expected to be generated.

If the carrying amount of the asset or asset group is not recoverable on an undiscounted cash

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

Fair value is determined

through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent

appraisals, as considered necessary.

During the year ended December 31, 2020 and 2019, the Company recognized a loss of approximately

$307,000 and $591,000, respectively, for the disposition of site equipment to be installed for which the Company did not expect

to generate future cash flows.

Assets —

2 unchanged sentences

minimum lease payments.

The Company evaluates the recoverability of our fixed assets for impairment whenever events or circumstances

The Company evaluates the recoverability of its fixed assets for impairment whenever events or circumstances

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

2 unchanged sentences

its fair value.

Due to the tablets, cases and charging trays the Company received as a result of the termination of the relationship

with Buffalo Wild Wing corporate-owned restaurants and most of its franchisees in November 2019 discussed above, the Company determined

that it would no longer have a future use for certain older tablets and cases it had on hand.

Accordingly, during the quarter

ended December 31, 2019, the Company recognized a loss of approximately $96,000 primarily for the disposition of

those older tablets and the related cases recorded in fixed assets for which the Company did not expect to generate future cash

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

There were no indications of impairment for the year ended December 31, 2018.

During the year ended December 31, 2020, the Company recognized a loss of approximately $54,000 of fixed assets

related to deployed site equipment in the ordinary course of business.

As discussed further in Note 16, the Company terminated

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

As a result, during the year ended December

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

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

fixtures and the Company’s vehicle.

During the year ended December 31, 2019, total loss for the disposition of fixed assets

was approximately $127,000.

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

5 unchanged sentences

expense in any fiscal year is largely related to the equipment located at the Company’s customers’

sites that are

not under sales-type lease arrangements.

Such equipment includes the Classic Playmaker, tablet, other associated electronics and

the computers located at customer’s sites (collectively, “Site Equipment”).

The components within Site Equipment

are depreciated over one to three years based on the shorter of the contractual finance lease period or the estimated useful life,

Such equipment

is depreciated over one to three years based on the shorter of the contractual finance lease period or the estimated useful life,

which considers anticipated technology changes.

Machinery and equipment are depreciated over three to five years, furniture and

fixtures is depreciated over five to seven years and the vehicle is depreciated over five years.

If the Company’s fixed

assets turn out to have longer lives, on average, than estimated, then its depreciation expense would be significantly reduced

Machinery and equipment are depreciated over three to five years.

If the Company’s

fixed assets turn out to have longer lives, on average, than estimated, then its depreciation expense would be significantly reduced

in those future periods.

16 unchanged sentences

Goodwill and Other.

Company has goodwill resulting from the excess of costs over the fair value of assets it acquired in 2003 related to its Canadian

business (the “Reporting Unit”).

The Company performed the quantitative impairment test of its goodwill in each of

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

the decline in the Company’s stock price and other general market conditions, it was more likely than not that there were

indications of impairment.

The Company 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, and then the Company compared this fair value to the carrying value of the reporting unit.

The impairment test performed

during 2018resulted in the carrying value exceeding the fair value.

Accordingly, the Company recognized a goodwill impairment

loss of approximately $261,000 during the year ended December 31, 2018.

The impairment test performed during 2019 resulted in

the fair value exceeding the carrying value.

Therefore, the Company did not record any goodwill impairment for the year ended

December 31, 2019.

Recognition —

Revenue Recognition —

The Company recognizes revenue in accordance with ASC No.

from Contracts with Customers .

606 provides a five-step analysis in determining when and how revenue is recognized:

the contract(s) with customers

the performance obligations

the transaction price

the transaction price to the performance obligations

revenue when the performance obligations have been satisfied

606 requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects

the consideration a company expects to receive in exchange for those goods or services.

Company generates revenue by charging subscription fees to partners for access to its 24/7 trivia network, charging equipment

fees to certain customers for use of tablets and other equipment, by selling and leasing tablet and hardware equipment for custom

usage beyond trivia/entertainment, by selling DOOH advertising direct to advertisers and on national ad exchanges, by licensing

its entertainment and trivia content to other entities, and by providing professional services such as custom game design or development

of new platforms on its existing tablet form factor.

Up until February 1, 2020, the Company also generated revenue from hosting

live trivia events (see Note 18).

Recognition —The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”)

606, Revenue from Contracts with Customers .

Company generates revenue by charging subscription fees to partners for access to its 24/7 trivia network, by selling and leasing

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

and on national ad exchanges, by licensing its entertainment and trivia content to other entities, and by providing professional

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

Until February 1, 2020,

the Company also generated revenue from hosting live trivia events.

The Company sold all of its assets used to host live trivia

events in January 2020.

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

4 unchanged sentences

All revenues are recognized net of sales tax collected from the

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 the Company will collect the consideration to which it will

be entitled under the contract.

As a result of the impact that the COVID-19 pandemic has had, and continues to have, on the Company’s

customers, the Company determined that due to the uncertainty of collectability of the subscription fees for certain customers,

the Company’s arrangement with those customers no longer meets all the criteria needed for a contract to exist for revenue

recognition purposes.

Therefore, the Company did not recognize revenue for these customers and fully reserved for accounts receivable

in the allowance for doubtful accounts.

The Company only recognized revenue for the arrangements that continued to meet the contract

criteria, including the criteria that collectability was probable.

Company disaggregates revenue by material revenue stream as follows:

ended December 31,

Years ended December 31,

Subscription revenue

Hardware revenue

Other revenue

following describes how the Company recognizes revenue under ASC No.

Revenue - The Company recognizes the recurring subscription fees it receives for its services, which includes the Company’s

content, over time as customers receive and consume the benefits of such services, the Company’s equipment to access the

Company’s content and the installation of the equipment.

In general, customers pay for the subscription services during

the month in which they receive the services.

Due to the timing of providing the services and receiving payment for the services,

the Company does not record any unbilled contract asset.

Occasionally, a customer will prepay up to one year of services, in which

case, the Company will record deferred revenue on the balance sheet related to such prepayment and will recognize the revenue

over the time the customer receives the Company’s services.

Revenue from installation services is also recorded as deferred

revenue and recognized over the longer of the contract term and the expected term of the customer relationship using the straight-line

The Company has certain contingent performance obligations with respect to repairing or replacing equipment and will recognize

any revenue related to the performance of such obligations at the point in time the Company performs them.

Revenue - Prior to the COVID-19 pandemic, the Company recognized the recurring subscription fees it received for its services

over time as customers received and consumed the benefits of such services, the Company’s equipment to access the Company’s

content and the installation of the equipment.

In general, customers pay for the subscription services during the month in which

they receive the services.

Due to the timing of providing the services and receiving payment for the services, the Company does

not record any unbilled contract asset.

Occasionally, a customer will prepay up to one year of services, in which case, the Company

will record deferred revenue on the balance sheet related to such prepayment and will recognize the revenue over the time the

customer receives the Company’s services.

Revenue from installation services is also recorded as deferred revenue and recognized

over the longer of the contract term and the expected term of the customer relationship using the straight-line method.

has certain contingent performance obligations with respect to repairing or replacing equipment and will recognize any revenue

related to the performance of such obligations at the point in time the Company performs them.

discussed above, as a result of the impact that the COVID-19 pandemic has had, and continues to have, on the Company’s customers,

the Company determined that due to the uncertainty of collectability of the subscription fees for certain customers, the Company’s

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

Therefore, the Company did not recognize revenue for these customers and fully reserved for accounts receivable in the allowance

for doubtful accounts.

associated with installing the equipment are considered direct costs.

24 unchanged sentences

as the revenue.

The Company does not expect to recognize revenue under sales-type lease arrangements after the year ended December

The Company has not recognized revenue under sales-type lease arrangements after the year ended December 31, 2019

and does not expect to in the future.

Sales –

8 unchanged sentences

Costs associated with the equipment sold is recognized at the same point in time as the revenue.

The Company expects

to recognize an immaterial amount of equipment sales revenue in the future.

Revenue –

23 unchanged sentences

recognizes costs related to developing the content during the period incurred.

Hosted Trivia Revenue –

The Company recognize its live-hosted trivia revenue at a point in time, which is when the event

Some customers host their own trivia events and the Company provides the game materials.

In these cases, the Company

recognizes the revenue at the point in time the Company sends the game materials to the customer.

The Company recognizes related

costs at the same point in time the revenue is recognized.

Generally, there is no unbilled revenue or deferred revenue associated

with live hosted trivia events.

The Company does not expect to recognize revenue for live hosted trivia events after January 31,

See Note 18 for more information on the live hosted trivia product line.

Revenue –

The Company recognizes revenue generated from its customers’

patrons who access the Company’s

premium games on the tablets.

This revenue is recognized at a point in time based on usage-based royalty revenue guidance.

Company generally shares the revenue with the customer whose patrons generated the revenue.

In cases where the Company determines

that it is the principal and the customer is the agent, the Company recognizes this revenue on a gross basis, with the amount

of revenue shared with the customer as a direct expense.

In cases where the Company determines it is the agent and the principal

is the customer, the Company recognizes the revenue on a net basis.

Costs associated with procuring the game license or developing

the games are recognized over the life of the license or expected life of the developed game.

Generally, there is no unbilled

revenue or deferred revenue associated with the Company’s pay-to-play games.

Trivia Revenue –

As of February 1, 2020, the Company no longer has revenue related to hosting live- trivia events as

a result of the sale of all of the Company’s assets used to host live trivia events in January 2020.

The Company recognized

revenue from hosting live-trivia events at a point in time, which is when the event took place.

Some customers hosted their own

trivia events and the Company provided the game materials.

In those cases, the Company recognized the revenue at the point in

time the Company sent the game materials to the customer.

The Company recognized related costs at the same point in time the revenue

was recognized.

Generally, there was no unbilled revenue or deferred revenue associated with live-hosted trivia events.

Development Revenue –

10 unchanged sentences

This results in diverse venue sizes and locations.

As of December 31, 2018, 2,639 venues in the U.S.

subscribed to our interactive entertainment network, of which approximately 46% were Buffalo Wild Wings corporate-owned restaurants

and its franchisees.

As of December 31, 2019, the Company’s site count declined to 1,440 venues primarily due to the termination

of its agreement with Buffalo Wild Wings corporate-owned restaurants and most of its franchisees in November 2019 in accordance

with the terms of the agreement.

See Note (1) BASIS OF PRESENTATION—Basis of Accounting Presentation, below and PART I —

ITEM 1A, Risk Factors

During 2019, the Company’s agreements with Buffalo

Wild Wings corporate-owned restaurants and most of its franchisees ended in November 2019 in accordance with their terms.

result, the Company ended 2019 with 1,440 sites.

As of December 31, 2020, the number of sites declined to 1,036 venues, primarily

due to customers terminating their subscriptions or going out of business relating to the effects of the COVID-19 pandemic on

their business.

table below sets forth the approximate amount of revenue the Company generated from Buffalo Wild Wings corporate-owned restaurants

1 unchanged sentence

for such periods:

Wild Wings revenue

Buffalo Wild Wings revenue

Percent of total revenue

of December 31, 2019 and 2018, approximately $158,000 and $552,000, respectively, was included in accounts receivable from Buffalo

Wild Wings corporate-owned restaurants and its franchisees.

of December 31, 2020 and 2019, approximately $112,000 and $158,000, respectively, was included in gross accounts receivable from

Buffalo Wild Wings corporate-owned restaurants and its franchisees.

geographic breakdown of the Company’s revenue for the years ended December 31, 2020 and 2019 were as follows:

the years ended

United States

Assets and Liabilities

8 unchanged sentences

The table below shows the balance

of contract liabilities as of December 31, 2019 and December 31, 2018, including the change during the period.

of contract liabilities as of January 1, 2020 and December 31, 2020, including the change during the period.

Balance at January 1, 2020

New performance obligations

Revenue recognized

Balance at December 31, 2020

non-current portion

Current portion

at December 31, 2019

Less non-current portion

Current portion at December 31, 2020

Company capitalizes installation costs associated with installing equipment in a customer location and sales commissions as a

8 unchanged sentences

and the expected term of the customer relationship.

The tables below show the balance of the unamortized installation cost and

sales commissions as of December 31, 2019 and December 31, 2018, including the change during the period.

The table below shows the balance of the unamortized installation cost and

sales commissions as of January 1, 2020 and December 31, 2020, including the change during the period.

Deferred Costs

1 unchanged sentence

Incremental costs deferred

costs recognized

Deferred costs recognized

Balance at December 31, 2020

16 unchanged sentences

industry for which the content was intended.

As a result, for the quarter ended December 31, 2019, the Company recognized an impairment

There was no impairment charge for the quarter ended December 31, 2018.

For the year ended December 31, 2019 and

2018, the Company recognized an impairment charge of $550,000 and $23,000, respectively.

Impairment of capitalized software is

shown separately on the Company’s consolidated statement of operations.

As a result, for the year ended December 31, 2020 and 2019, the Company recognized

an impairment charge of $248,000 and $550,000, respectively.

Impairment of capitalized software is shown separately on the Company’s

consolidated statement of operations.

Costs –

9 unchanged sentences

share-based payment awards is recognized using the straight-line single-option method.

On January 1, 2019, the Company adopted

Accounting Standards Update (“ASU”) No.

2018-07, Compensation –

Stock Compensation (Topic 718) –

to Nonemployee Share-Based Payment Accounting.

The adoption of this ASU did not have a material impact on the Company’s

consolidated financial statements.

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

34 unchanged sentences

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

The amendment will

be effective for public companies with fiscal years beginning after December 15, 2020, (which will be January 1, 2021 for the

The amendment is

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

early adoption is permitted.

The Company is currently assessing the impact of this pronouncement to its consolidated

financial statements.

November 2019, the FASB issued ASU No.

2019-08, Compensation –

Stock Compensation (Topic 718) and Revenue from Contracts

with Customers (Topic 606) (“ASU No.

2019-08”).

This ASU requires that an entity measure and classify share-based

payment awards granted to a customer by applying the guidance in Topic 718.

The amount recorded as a reduction of the transaction

price is required to be measured on the basis of the grant-date fair value of the share-based payment award in accordance with

The grant date is the date at which a grantor (supplier) and a grantee (customer) reach a mutual understanding of the

key terms and conditions of a share-based payment award.

The classification and subsequent measurement of the award are subject

to the guidance in Topic 718 unless the share-based payment award is subsequently modified and the grantee is no longer a customer.

The standard is effective for fiscal years beginning after December 15, 2019 (which was January 1, 2020 for the Company).

adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

November 2018, the FASB issued ASU No.

2018-18, Collaborative Arrangements (Topic 808):

Clarifying the Interaction between

Topic 808 and Topic 606.

This ASU requires certain transactions between participants in a collaborative arrangement to be

accounted for as revenue under the new revenue standard when the participant is a customer.

The standard is effective for fiscal

years beginning after December 15, 2019 (which was January 1, 2020 for the Company).

The adoption of this standard is not expected

to have a material impact on the Company’s consolidated financial statements.

August 2018, the FASB issued ASU No.

2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Customer’s

Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract .

This ASU aligns

the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements

for capitalizing implementation costs incurred to develop or obtain internal-use software.

The standard is effective for fiscal

years beginning after December 15, 2019 (which was January 1, 2020 for the Company) and can be applied either retrospectively

or prospectively to all implementation costs incurred after the date of adoption.

The adoption of this ASU is not expected to

have a significant impact on the Company’s consolidated financial statements.

August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure

Requirements for Fair Value Measurement .

This ASU modifies certain disclosure requirements on fair value measurements.

standard is effective for fiscal years beginning after December 15, 2019 (which was January 1, 2020 for the Company).

of this ASU is not expected to have a significant impact on the Company’s consolidated financial statements.

The Company does not expect that the adoption of this accounting standard update to have a material

impact on its consolidated financial statements.

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

7 unchanged sentences

The Company is evaluating

the impact that the adoption of this standard will have on its consolidated financial statements.

February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842);

in July 2018, the FASB issued ASU No.

2018-11, Leases

Targeted Improvements ;

and in December 2018, the FASB issued ASU No.

2018-20, Leases (Topic 842) –

Improvements for Lessors , (collectively “Topic 842”).

Topic 842 primarily requires lessees to recognize at the

lease commencement date a lease liability, which is the lessee’s obligation to make lease payments arising from a lease,

measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or

control the use of, a specified asset for the lease term.

Topic 842 was effective for fiscal periods beginning after December

15, 2018 (which was January 1, 2019 for the Company), including interim periods within those fiscal years.

Lessees and lessors

must either (i) apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning

of the earliest comparative period presented in the financial statements or (ii) recognize a cumulative-effect adjustment to the

opening balance of retained earnings in the period of adoption.

Applying a full retrospective transition approach is not allowed.

The Company has elected to use the cumulative-effect transition method upon adoption.

842 also allows lessees and lessors to elect certain practical expedients.

The Company elected the following practical expedients:

practical expedients, which must be elected as a package and applied consistently to all of the Company’s leases:

Company need not reassess whether any expired or existing contracts are or contain leases.

Company need not reassess the lease classification for any expired or existing leases (that is, all existing leases that were

classified as operating leases in accordance with the previous guidance will be classified as operating leases, and all existing

leases that were classified as capital leases in accordance with the previous guidance will be classified as finance leases).

Company need not reassess initial direct costs for any existing leases.

practical expedient.

The Company elected the hindsight practical expedient in determining the lease term (that is, when considering

lessee options to extend or terminate the lease and to purchase the underlying asset) and in assessing impairment of the Company’s

right-of-use assets.

The Company may elect this practical expedient separately or with the “practical expedient package,”

and the Company must apply it consistently to all of its leases.

adoption of Topic 842, the Company recognized on its consolidated balance sheet as of January 1, 2019 approximately $3.5 million

of operating lease liabilities, and approximately $2.3 million of corresponding operating right-of use assets, net of tenant improvement

The Company also shows the initial recognition of the leases as a supplemental noncash financing activity on the statement

of cash flows and the amortization of the noncash lease expense in operating activities.

The adoption of Topic 842 did not have

a material impact on the Company’s consolidated statement of operations.

(See Note 14 for more information.)

Restricted Cash

the Company entered the lease for its corporate headquarters, the Company’s bank, Avidbank, issued a $250,000 letter of

credit to the lessor as security, which amount will be reduced by $50,000 on December 1 of each year beginning on December 1,

2019, provided there has been no default under the lease.

Avidbank required the Company to deposit $250,000 in a restricted cash

account maintained with the bank, which amount will be reduced as the amount required under the letter of credit is reduced.

of December 31, 2019, the letter of credit and the corresponding restricted cash recorded on the accompanying consolidated balance

sheet was $200,000, with $50,000 plus any earned interest being recorded in short-term restricted cash and the balance being recorded

in long-term restricted cash.

The amount deposited in the restricted cash account does not count toward the covenant in the Avidbank

loan and security agreement (see Note 13) that requires the Company to have an aggregate amount of unrestricted cash in

deposit accounts or securities accounts maintained with Avidbank of not less than $2,000,000 at all times.

Fixed Assets, Net

the impact that the adoption of this accounting standard update will have on its consolidated financial statements.

the commencement date of the Company’s lease for its corporate headquarters on December 1, 2018, the Company’s primary

lender, Avidbank, issued a $250,000 letter of credit to the lessor as security, which amount was reduced by $50,000 to $200,000

on December 1, 2019 and was to be reduced by the same amount December 1 of each year thereafter, provided there has been no default

under the lease.

Avidbank required the Company to deposit $250,000 in a restricted cash account maintained with the bank, which

amount was and would be reduced as the amount required under the letter of credit is reduced.

The Company recorded the $250,000

deposit as restricted cash on its balance sheet, with $50,000 plus any earned interest being recorded in short-term restricted

cash and the balance being recorded in long-term restricted cash.

June 2020, the Company terminated its lease for its corporate headquarters, and as part of the consideration to the lessor for

the early least termination, the lessor received the $200,000 of restricted cash provided for under the letter of credit in July

(See Note 16 for more information on the lease termination.)

assets are recorded at cost and consist of the following at December 31, 2020 and 2019:

of December 31,

As of December 31,

Site equipment

2 unchanged sentences

Leasehold improvements

(10,502,000 )

Accumulated depreciation and amortization

expense totaled $1,188,000 and $2,358,000 for the years ended December 31, 2020 and 2019, respectively.

geographic breakdown of the Company’s long-term tangible assets for the last two fiscal years were as follows:

of December 31,

Company’s goodwill balance of $696,000 and $667,000 as of December 31, 2019 and 2018, respectively, relates to the excess

of costs over the fair value of assets the Company acquired in 2003 related to its Canadian business (the “Reporting Unit”).

The Company performed the quantitative impairment test of its goodwill in each of the years ended December 31, 2019 and 2018,

as it determined that because of declines in revenue of the Reporting Unit, the decline in the Company’s stock price and

other general market conditions, it was more likely than not that there were indications of impairment.

The Company used three

methods to determine 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, and then the Company compared

this fair value to the carrying value of the reporting unit.

The impairment test performed during 2018resulted in the carrying

value exceeding the fair value.

Accordingly, the Company recognized a goodwill impairment loss of $261,000.

The impairment test

performed during 2019 resulted in the fair value exceeding the carrying value.

Therefore, the Company did not record any goodwill

impairment for the year ended December 31, 2019.

In addition to the impairment loss recognized, fluctuations in the amount of

goodwill shown on the accompanying balance sheets can occur due to changes in the foreign currency exchange rates used when translating

NTN Canada’s financial statement from Canadian dollars to US dollars during consolidation.

The following table shows the

changes in the carrying amount of goodwill for the years ended December 31, 2019 and 2018:

the year ended

Carrying Value

Foreign Currency

Carrying Value

for the period

Foreign Currency

Carrying Value

Fair Value of Financial Instruments

As of December 31,

United States

Total fixed assets

Company’s goodwill balance of $696,000 as of December 31, 2019 related to the excess of costs over the fair value of assets

the Company acquired in 2003 related to its Canadian business (the “Reporting Unit”).

In the Company’s evaluation

of impairment indicators as of March 31, 2020, it determined that the uncertainty relating to the impact of the COVID-19 pandemic

on the Reporting Unit’s future operating results represented an indicator of impairment.

Accordingly, the Company compared

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

was warranted and recognized an impairment charge of $662,000 for the three months ended March 31, 2020.

No further evaluations

are necessary after March 31, 2020.

addition to the impairment loss recognized, fluctuations in the amount of goodwill shown on the accompanying balance sheets can

occur due to changes in the foreign currency exchange rates used when translating NTN Canada’s financial statement from

Canadian dollars to US dollars during consolidation.

The following table shows the changes in the carrying amount of goodwill

for the year ended December 31, 2020.

Goodwill balance at January 1, 2020

Activity for the three months ended March 31, 2020

Effects of foreign currency

Goodwill impairment

Goodwill balance at December 31, 2020

Value of Financial Instruments

carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued liabilities

approximate fair value due to the short maturity of these instruments.

The fair value of long-term debt is based on the Company’s

current borrowing rate for similar types of borrowing arrangements.

The carrying value of the Company’s debt approximates

fair value as interest rates approximate market rates for similar types of borrowing arrangements.

820, Fair Value Measurements and Disclosures, applies to certain assets and liabilities that are being measured and

10 unchanged sentences

Unobservable inputs that are not corroborated by market data.

and Liabilities that are Measured at Fair Value on a Recurring Basis:

Company does not have assets or liabilities that are measured at fair value on a recurring basis.

and Liabilities that are Measured at Fair Value on a Nonrecurring Basis:

assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments only in certain circumstances.

Goodwill is written down to fair value when determined to be impaired, and long-lived assets, including capitalized software,

are written down to fair value when they are held for sale or determined to be impaired.

The valuation methods for goodwill and

long-lived assets involve assumptions concerning interest and discount rates, growth projections, and/or other assumptions of

future business conditions.

As all of the assumptions employed to measure these assets and liabilities on a nonrecurring basis

are based on management’s judgment using internal and external data, these fair value determinations are classified in Level

3 of the valuation hierarchy.

were no transfers between fair value measurement levels during the year ended December 31, 2019.

Accrued Compensation

compensation consisted of the following at December 31, 2019 and 2018:

of December 31,

Accrued salaries

Accrued bonuses

accrued compensation

Concentrations of Risk

the year ended December 31, 2020, there were no assets or liabilities that were measures at fair value on a recurring or non-recurring

There were no transfers between fair value measurement levels during the year ended December 31, 2020.

times, the Company’s cash balances held in financial institutions are in excess of federally insured limits.

10 unchanged sentences

provide for credit losses.

the years ended December 31, 2019 and 2018, the Company generated approximately $6,820,000 and $10,180,000, respectively, of total

revenue from Buffalo Wild Wings corporate-owned restaurants and its franchisees, which represented approximately 34% and 44% of

total revenue in each of those years, respectively.

As of December 31, 2019 and 2018, approximately $158,000 and $552,000, respectively,

was included in accounts receivable from Buffalo Wild Wings corporate-owned restaurants and its franchisees.

November 2018, the Company’s relationship with Buffalo Wild Wings corporate-owned and most of the franchisee-owned restaurants

terminated in accordance with the terms of the agreements the Company had with Buffalo Wild Wings and such franchisees.

Buffalo Wild Wings franchisee-owned locations extended their relationship with the Company through the end of 2020.

Equipment Supplier

Company currently purchases the tablets, cases and charging trays used in its tablet platform from one unaffiliated third-party

manufacturer.

The Company currently does not have an alternative manufacturer for its tablets or an alternative manufacturer or

device for the tablet cases or tablet charging trays.

The Company no longer purchases playmakers for its Classic platform.

of December 31, 2019 and 2018, approximately $629,000 and $15,000, respectively, was included in accounts payable or accrued expenses

for the tablet equipment purchased from its sole supplier.

Basic and Diluted Earnings Per Common Share

and Diluted Earnings Per Common Share

net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period,

9 unchanged sentences

Shareholders’

Direct Offerings

June 2018, the Company sold approximately 345,000 shares of its common stock at a purchase price of $4.50 per share and received

net proceeds of approximately $1,375,000, after deducting estimated offering expenses.

The Company used the net proceeds from

the offering for general corporate purposes, which included working capital, general and administrative expenses, capital expenditures

and implementation of its strategic priorities.

were no equity offerings during the year ended December 31, 2019.

Incentive Plans

25 unchanged sentences

entering into employment with the Company and expires in September 2024.

As of December 31, 2019, there were stock options to

purchase approximately 85,000 shares of common stock and no restricted stock units outstanding under the 2014 Plan.

As of December 31, 2020, there were no stock options

or restricted stock units outstanding under the 2014 Plan.

Compensation Valuation Assumptions

Company records stock-based compensation in accordance with ASC No.

718 , Compensation –

Stock Compensation.

estimates the fair value of stock options using the Black-Scholes option pricing model.

The fair value of stock options granted

is recognized as expense over the requisite service period.

Stock-based compensation expense for share-based payment awards is

recognized using the straight-line single-option method.

On January 1, 2019, the Company adopted ASU No.

2018-07, Compensation

Stock Compensation (Topic 718) –

Improvements to Nonemployee Share-Based Payment Accounting.

The adoption of

this ASU did not have a material impact on the Company’s consolidated financial statements.

Company uses the historical stock price volatility as an input to value its stock options under ASC No.

5 unchanged sentences

yield assumption is based on the Company’s history and expectation of dividend payouts.

following weighted-average assumptions were used for grants issued during 2019 and 2018 under the ASC No.

following weighted-average assumptions were used for grants issued during 2019 under the ASC No.

718 requirements:

Weighted average risk-free

Weighted average risk-free rate

Weighted average volatility

1 unchanged sentence

Expected term

were no stock option grants issued during the year ended December 31, 2020.

Company estimates forfeitures, based on historical activity, at the time of grant and revised if necessary in subsequent periods

7 unchanged sentences

Price per Share

January 1, 2018

Life (in years)

Aggregate Intrinsic

Outstanding January 1, 2019

Outstanding December 31, 2019

December 31, 2019

vested and exercisable at December 31, 2019

per share weighted average grant-date fair value of stock options granted during the years ended December 31, 2019 and 2018 was

$2.49 and $3.90, respectively.

of December 31, 2019, the unamortized stock based compensation expense related to outstanding unvested options was approximately

$8,000 with a weighted average remaining requisite service period of 0.9 years.

The Company expects to amortize this expense over

the remaining requisite service period of these stock options.

A deferred tax asset generally would be recorded related to the

expected future tax benefit from the exercise of the non-qualified stock options.

However, due to a history of net operating losses

(“NOLs”), a full valuation allowance has been recorded related to the tax benefit for non-qualified stock options.

Outstanding December 31, 2020

Options vested and exercisable at December 31, 2020

per-share weighted average grant-date fair value of stock options granted during the year ended December 31, 2019 and $2.49.

were no stock options granted during the year ended December 31, 2020.

of December 31, 2020, all stock options were fully vested and there was no unamortized stock based compensation expense remaining.

A deferred tax asset generally would be recorded related to the expected future tax benefit from the exercise of the non-qualified

stock options.

However, due to a history of net operating losses (“NOLs”), a full valuation allowance has been recorded

related to the tax benefit for non-qualified stock options.

Stock Unit Activity

restricted stock units are settled in an equal number of shares of common stock on the vesting date of the award.

award is settled only to the extent vested.

Vesting generally requires the continued employment or service by the award recipient

through the respective vesting date.

Because restricted stock units are settled in an equal number of shares of common stock without

any offsetting payment by the recipient, the measurement of cost is based on the quoted market price of the stock at the measurement

date, which is the grant date.

The weighted average grant date fair value of the restricted stock units awarded during the years

ended December 31, 2019 and 2018 was $3.35 and $5.13 per restricted stock unit, respectively.

the year ended December 31, 2019, 30,000 restricted stock units were awarded as a performance-based award granted to the Company’s

former chief executive officer in connection with his resignation.

The award will vest in full upon the effective date of a change

in control transaction in which an individual, entity or group acquires all of the Company’s then-outstanding equity interests

on or before March 17, 2020, or in which an individual, entity or group acquires 51% of our then-outstanding equity interests

on or before March 17, 2020, and then that same individual, entity or group acquires the remaining equity so that it holds all

of the Company’s then-outstanding equity interests on or before June 17, 2020.

Continuing service is not required for vesting

Because a change in control is not considered probable until a change in control occurs, the Company will not recognize

stock compensation expense on this award until such change in control occurs.

connection with the resignation of the Company’s former chief executive officer, the vesting of 10,000 of his restricted

stock units was accelerated, 5,000 in September 2019 and 5,000 in October 2019.

The modification of this award resulted in the

Company recognizing stock compensation expense for the accelerated vesting of restricted stock units in the period in which the

vesting was accelerated.

the exception of the performance-based award and the acceleration of vesting of restricted stock units discussed above, all restricted

stock units granted vest as to 16.67% of the total underlying shares on the six month anniversary of the grant date and as to

the balance of the total underlying shares in 30 substantially equal monthly installments, beginning on the seven month anniversary

of the grant date, subject to accelerated vesting in the event of a change in control.

restricted stock units (“RSUs”) are settled in an equal number of shares of common stock on the vesting date of the

A stock unit award is settled only to the extent vested.

Vesting generally requires the continued employment or service

by the award recipient through the respective vesting date.

Because RSUs are settled in an equal number of shares of common stock

without any offsetting payment by the recipient, the measurement of cost is based on the quoted market price of the stock at the

measurement date, which is the grant date.

During the years ended December 31, 2020 and 2019, the Company granted approximately

172,000 and 77,000 RSUs, respectively.

The weighted average grant date fair value of the restricted stock units awarded during

the years ended December 31, 2020 and 2019 was $2.51 and $3.35, respectively.

the year ended December 31, 2019, 30,000 of the 77,000 RSUs granted for the period were awarded as a performance-based award granted

to the Company’s former chief executive officer in connection with his resignation.

The award would have vested in full

upon the effective date of a change in control transaction in which an individual, entity or group acquired all of the Company’s

then-outstanding equity interests on or before March 17, 2020, or in which an individual, entity or group acquired 51% of our

then-outstanding equity interests on or before March 17, 2020, and then that same individual, entity or group acquired the remaining

equity so that it held all of the Company’s then-outstanding equity interests on or before June 17, 2020.

Continuing service

was not required for vesting to occur.

Because a change in control is not considered probable until a change in control occurs,

and because the change in control did not occur as discussed above, the Company did not recognize stock compensation expense on

this award and this award expired unvested.

connection with the resignation of the Company’s former chief executive officer, the vesting of 10,000 of his RSUs was accelerated,

5,000 in September 2019 and 5,000 in October 2019.

The modification of this award resulted in the Company recognizing stock compensation

expense for the accelerated vesting of RSUs in the period in which the accelerated vesting occurred.

the exception of the performance-based award and the acceleration of vesting of RSUs discussed above, RSUs typically vest over

a period of two to three years, generally in monthly or quarterly increments.

Some awards may have an initial cliff period of

six months before the monthly vesting begins.

All outstanding RSUs as of December 31, 2020 are subject to accelerated vesting

in the event of a change in control.

following table summarizes restricted stock unit activity for the years ended December 31, 2020 and 2019:

3 unchanged sentences

December 31, 2019

expected to vest at December 31, 2019

December 31, 2020

Balance expected to vest at December 31, 2020

the 2010 Plan, in lieu of paying cash to satisfy withholding taxes due upon the settlement of vested restricted stock units, an

4 unchanged sentences

withholding taxes by having the Company withhold shares, approximately 42,000 and 26,000 shares of common stock were issued, respectively.

following summarizes warrant activities for the years ended December 31, 2019 and 2018:

Average Exercise Price per Share

Average Remaining Contractual Life (in years)

January 1, 2018

December 31, 2018

2013, the Company issued warrants to purchase an aggregate of 72,000 shares of common stock in connection with a private placement.

The fair value of the warrants was approximately $1,379,000 in aggregate and was determined using the Black-Scholes model using

the following weighted-average assumptions:

risk-free interest rates of 1.06%;

dividend yield of 0%;

expected volatility of 80.25%;

and a term of 5 years.

The Company concluded that these warrants qualify as equity instruments and not liabilities.

None of these

warrants were exercised, and as of December 31, 2018, all outstanding warrants expired.

There were no new warrants granted during

the year ended December 31, 2019.

Convertible Preferred Stock

10 unchanged sentences

equals the number of shares of Series A Preferred Stock that are surrendered for conversion divided by the conversion rate.

December 31, 2019, the conversion rate was 13.434 and, based on that conversion rate, all outstanding shares of Series A Preferred

Stock would have converted into approximately 12,000 shares of common stock.

The conversion rate is subject to adjustment in certain

events and is established at the time of conversion.

There were no conversions during either of the years ended December 31, 2019

There is no mandatory conversion term, date or any redemption features associated with the Series A Preferred Stock.

December 31, 2020, the conversion rate was 1.8563 and, based on that conversion rate, one share of Series A Convertible Preferred

Stock would have converted into approximately 0.54 shares of common stock, and all the outstanding shares of the Series A Convertible

Preferred Stock would have converted into approximately 84,000 shares of common stock in the aggregate.

There were no conversions

during either of the years ended December 31, 2020 and 2019.

There is no mandatory conversion term, date or any redemption features

associated with the Series A Preferred Stock.

The conversion rate will adjust under the following circumstances:

the Company (a) pays a dividend or makes a distribution in shares of its common stock, (b) subdivides its outstanding shares

of common stock into a greater number of shares, (c) combines its outstanding shares of common stock into a smaller number

of shares, or (d) issues by reclassification of its shares of common stock any shares of its common stock (other than a change

in par value, or from par value to no par value, or from no par value to par value), then the conversion rate in effect immediately

prior to the applicable event will be adjusted so that the holders of the Series A Convertible Preferred Stock will be entitled

to receive the number of shares of common stock which they would have owned or have been entitled to receive immediately following

the happening of the event, had the Series A Convertible Preferred Stock been converted immediately prior to the record or

effective date of the applicable event.

the outstanding shares of the Company’s common stock are reclassified (other than a change in par value, or from par

value to no par value, or from no par value to par value, or as a result of a subdivision, combination or stock dividend),

or if the Company consolidates with or merge into another corporation and the Company is not the surviving entity, or if the

Company sells all or substantially all of its property, assets, business and goodwill, then the holders of the Series A Convertible

Preferred Stock will thereafter be entitled upon conversion to the kind and amount of shares of stock or other equity securities,

or other property or assets which would have been receivable by such holders upon such reclassification, consolidation, merger

or sale, if the Series A Convertible Preferred Stock had been converted immediately prior thereto.

the Company issues common stock without consideration or for a consideration per share less than the then applicable Equivalent

Preference Amount (as defined below), then the Equivalent Preference Amount will immediately be reduced to the amount determined

by dividing (A) an amount equal to the sum of (1) the number of shares of common stock outstanding immediately prior to such

issuance multiplied by the Equivalent Preference Amount in effect immediately prior to such issuance and (2) the consideration,

if any, received by the Company upon such issuance, by (B) the total number of shares of common stock outstanding immediately

after such issuance.

The “Equivalent Preference Amount”

is the value that results when the liquidation preference

of one share of Series A Convertible Preferred Stock (which is $1.00) is multiplied by the conversion rate in effect at that

thus the conversion rate applicable after the adjustment in the Equivalent Preference Amount as described herein will

be the figure that results when the adjusted Equivalent Preference Amount is divided by the liquidation preference of one

share of Series A Convertible Preferred Stock.

each of the years ended December 31, 2020 and 2019, current tax provisions and current deferred tax provisions were recorded as

of December 31,

Years ended December 31,

Current Tax Provision

3 unchanged sentences

31, 2020 and 2019 as follows:

of December 31,

As of December 31,

Deferred Tax Assets:

carryforwards

NOL carryforwards

for doubtful accounts

and vacation accrual

and experimentation, AMT and foreign tax credits

margin tax credit

gross deferred tax assets

(16,218,000 )

UK NOL carryforwards

Allowance for doubtful accounts

Compensation and vacation accrual

Operating accruals

Research and experimentation, AMT and foreign tax credits

Texas margin tax credit

Fixed assets and intangibles

Lease liabilities

Total gross deferred tax assets

Valuation allowance

(16,218,000 )

deferred tax assets

Net deferred tax assets

Deferred Tax Liabilities:

of use assets

assets and intangibles

gross deferred liabilities

deferred taxes

Capitalized software

Right of use assets

Fixed assets and intangibles

Total gross deferred liabilities

Net deferred taxes

reconciliation of computed expected income taxes to effective income taxes by applying the federal statutory rate of 21% is as

of December 31,

federal income tax rate

As of December 31,

Tax at federal income tax rate

State provision

Foreign tax differential

Change in valuation

Change in valuation allowance

Permanent items

net change in the total valuation allowance for the year ended December 31, 2019 was an increase of $429,000.

The net change in

the total valuation allowance for the year ended December 31, 2018 was an increase of $20,000.

In assessing the realizability

of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax

assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable

income during periods in which those temporary differences become deductible.

The Company considers the scheduled reversal of

deferred tax liabilities, projected future taxable income, and planning strategies in making this assessment.

Based on the level

of historical operating results and projections for the taxable income for the future, the Company has determined that it is more

likely than not that the portion of deferred taxes not utilized through the reversal of deferred tax liabilities will not be realized.

Accordingly, the Company has recorded a valuation allowance to reduce deferred tax assets to the amount that is more likely than

not to be realized.

December 31, 2019, the Company had NOL carryforwards of approximately $63,354,000 for federal income tax purposes, which will

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

There can be no assurance that the Company will ever be able to realize the benefit of some or all of the federal and state NOL

carryforwards due to continued operating losses.

Under Internal Revenue Code (“IRC”) Section 382 and similar state

provisions, ownership changes may limit the annual utilization of NOL carryforwards existing prior to a change in control that

are available to offset future taxable income.

Such limitations would reduce, potentially significantly, the gross deferred tax

assets disclosed in the table above related to the NOL carryforwards.

The Company performed a Section 382 analysis as of December

31, 2018 to determine the impact of any changes in ownership.

Based on this analysis, no ownership change occurred that would

limit the use of the NOLs.

The Company does not believe there has been a material change in its 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 Company continues to disclose the NOL carryforwards at their original amount in the table above as no potential

limitation has been quantified.

The Company also established a full valuation allowance for substantially all deferred tax assets,

including the NOL carryforwards, since the Company could not conclude that it was more likely than not able to generate future

taxable income to realize these assets.

In addition, the Company has approximately $133,000 of state tax credit tax carryforwards

that expire in the years 2020 through 2026.

Total Provision

net change in the total valuation allowance for the year ended December 31, 2020 was an increase of approximately $939,000.

net change in the total valuation allowance for the year ended December 31, 2019 was an increase of approximately $429,000.

assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion

or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the

generation of future taxable income during periods in which those temporary differences become deductible.

Management considers

the scheduled reversal of deferred tax liabilities, projected future taxable income, and planning strategies in making this assessment.

Based on the level of historical operating results and projections for the taxable income for the future, management has determined

that it is more likely than not that the portion of deferred taxes not utilized through the reversal of deferred tax liabilities

will not be realized.

Accordingly, the Company has recorded a valuation allowance to reduce deferred tax assets to the amount

that is more likely than not to be realized.

December 31, 2020, the Company has available net operating loss (“NOL”) carryforwards of approximately $5,310,000

for federal income tax purposes.

The NOL carryforwards for state purposes are approximately $16,051,000.

There can be no assurance

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

operating losses.

Further, the Company performed an analysis as of December 31, 2020 to determine limitations on its ability to

utilize 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 of NOLs.

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

Such limitations have reduced the gross deferred tax assets disclosed in the table above related to the NOL carryforwards

by an estimated $11,021,000.

The Company discloses the NOL carryforwards at their 382 limitation amount in the table above as

potential limitation has been quantified.

The Company has also established a full valuation allowance for substantially all deferred

tax assets, including the NOL carryforwards, since the Company could not conclude that it was more likely than not that it would

be able to generate future taxable income to realize these assets.

Merger described in Note 3 above will likely result in an ownership change for purposes of Section 382, but no formal analysis

is expected to be undertaken in this regard.

addition, the Company has approximately $114,000 of state tax credit tax carryforwards that expire in the years 2021 through 2027.

deferred tax assets as of December 31, 2020 include a deferred tax asset of $439,000 representing NOLs arising from the exercise

12 unchanged sentences

examination by the IRS or state taxing authorities.

Long-term Debt

September 2018, the Company entered into a loan and security agreement with Avidbank for a 48-month term loan in the amount of

The Company makes monthly electronic principal payments initiated by Avidbank of approximately $83,000 plus accrued

and unpaid interest.

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

The Company recorded debt issuance

costs of $23,000, which includes a $20,000 facility fee.

The debt issuance costs are 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

approximately $11,000 and is recorded as a reduction of long-term debt.

Through the year ended December 31, 2019, the Company

was required to comply with the following financial covenants:

(as defined below) must be at least $1,000,000 for the trailing six-month period as of the last day of each fiscal quarter.

The Company refers to this covenant as the EBITDA covenant.

“EBITDA”

means (a) net profit (or loss), after provision

for taxes, plus (b) interest expense, plus (c) to the extent deducted in the calculation of net profit (or loss), depreciation

expense and amortization expense, plus (d) income tax expense, plus (e) to the extent approved by Avidbank, other noncash

expenses and charges, other onetime charges, and any losses arising from the sale, exchange, transfer or other disposition

of assets not in the ordinary course of business.

aggregate amount of unrestricted cash the Company has in deposit accounts or securities accounts maintained with Avidbank

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

The Company refers to this covenant as the minimum liquidity covenant.

of December 31, 2019, the Company was in compliance with these covenants.

February 2020, the Company made a pre-payment on its long-term debt with Avidbank of approximately $150,000 as a result of selling

certain assets related to the Company’s Stump!

Trivia product line.

(See Note 18).

to the amended agreement the Company entered into with Avidbank on March 12, 2020, the total outstanding principal of $2,750,000

was classified as a current liability as of December 31, 2019 and will be paid in full by December 31, 2020.

(See Note 18.)

expense related to long-term debt for the years ended December 31, 2019 and 2018 was $236,000 and $296,000, respectively.

January 1, 2019, the Company adopted ASC No.

842, Leases (“ASC No.

842 primarily requires lessees

to recognize at the lease commencement date a lease liability, which is the lessee’s obligation to make lease payments arising

from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right

to use, or control the use of, a specified asset for the lease term.

Lessees and lessors must either (i) apply a modified retrospective

transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented

in the financial statements or (ii) recognize a cumulative-effect adjustment to the opening balance of retained earnings in the

period of adoption.

Applying a full retrospective transition approach is not allowed.

The Company elected to use the cumulative-effect

transition method upon adoption.

842 also allows lessees and lessors to elect certain practical expedients.

The Company elected the following practical expedients:

practical expedients:

Company need not reassess whether any expired or existing contracts are or contain leases.

Company need not reassess the lease classification for any expired or existing leases (that is, all existing leases that were

classified as operating leases in accordance with the previous guidance will be classified as operating leases, and all existing

leases that were classified as capital leases in accordance with the previous guidance will be classified as finance leases).

Company need not reassess initial direct costs for any existing leases.

practical expedient.

The Company elected the hindsight practical expedient in determining the lease term (that is, when considering

lessee options to extend or terminate the lease and to purchase the underlying asset) and in assessing impairment of the Company’s

right-of-use assets.

a lessor, the Company elected to not separate nonlease components from lease components when both of the following are met:

timing and patterns of transfer for the lease component and nonlease component associated with that lease component are the

lease component, if accounted for separately, would be classified as an operating lease.

Company has entered into operating leases for office and production facilities and equipment under agreements that expire at various

dates through 2026.

Certain of these leases contain renewal provisions and escalating rental clauses and generally require the

Company to pay utilities, insurance, taxes and other operating expenses.

The Company also has property held under finance leases

that expire at various dates through 2021.

The Company’s leases do not contain any residual value guarantees or material

restrictive covenants.

a loan and security agreement the Company entered into with Avidbank in September 2018, or the Original LSA, the Company borrowed

$4,000,000 in the form of a 48-month term loan, all of which it used to pay-off the $4,050,000 of principal borrowed from its

then-existing lender.

In February 2020, the Company made a pre-payment on the term loan of approximately $150,000 following the

sale in January 2020 of all its assets used to conduct live-hosted trivia events.

In March 2020, the Company entered into an amendment

to the Original LSA.

In connection with entering into the amendment, the Company made a $433,000 payment on the term loan, which

included the $83,333 monthly principal payment for March 2020 plus accrued interest and a $350,000 principal prepayment.

owing under the term loan were paid on December 31, 2020, when the term loan matured, and Avidbank released its security interest

in all of the Company’s existing personal property.

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

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

fully amortized as of December 31, 2020.

Protection Program Loan

April 18, 2020, the Company issued a note in the principal amount of approximately $1,625,000 evidencing a loan the Company received

under the Paycheck Protection Program (the “PPP Loan”) of the Coronavirus Aid, Relief, and Economic Security Act administered

Small Business Administration (the “CARES Act”).

The PPP Loan bears interest at a rate of 1.0% per annum.

the terms of the Paycheck Protection Program, certain amounts of the PPP Loan may be forgiven if they are used for qualifying

expenses as described in the CARES Act.

In October 2020, the Company submitted its loan forgiveness application for the PPP Loan,

and in November 2020, the lender informed the Company that the U.S Small Business Administration approved the forgiveness of approximately

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

The unforgiven principal balance, plus

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

if the Merger occurs.

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

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

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

Company may prepay the PPP Loan at any time with no prepayment penalties.

As of December 31, 2020, the outstanding principal balance

of the PPP Loan was approximately $532,000.

(See Note 3 for more information on the Asset Sale and the Merger.)

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

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

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

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

On November 19, 2020, eGames.com agreed to

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

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

evidencing such loan.

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

from 8% to 10% beginning on December 1, 2020.

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

of eGames.com, to loan an additional $200,000 to the Company on January 12, 2021.

Upon receipt of such $200,000 loan, on January

12, 2021, the Company issued a third unsecured promissory note (the “Third Note,”

and together with the First Note

and the Second Note, the “Bridge Notes”) evidencing such loan.

The principal amount of the Second Note and the Third

Note accrues interest at the rate of 10% per annum (increasing to 15% per annum upon the occurrence of an event of default), compounded

The principal amount of the Bridge Notes and accrued interest thereon is due and payable upon the earlier of (i) the

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

Upon the closing of the Asset Sale, the outstanding principal amount of the Bridge Notes and all accrued and unpaid interest thereon

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

The Company may use the proceeds

under the Bridge Notes for, among other things, the payment of obligations related to the transactions contemplated by the APA

and the Merger and other general working capital purposes.

As of December 31, 2020, the outstanding principal balance of the First

Note and Second Note was $1,500,000 in the aggregate, and combined with the Third Note in January 2021, the outstanding principal

balance of the Bridge Notes is currently $1,700,000.

As of December 31, 2020, the Company recorded approximately $29,000 of accrued

and unpaid interest related to the First Note and Second Note.

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

if the Company defaults in the performance of any other material term, agreement, covenant or condition of either of the Bridge

Notes, subject to a cure period;

if any final judgment for the payment of money is rendered against the Company and it does not

discharge the same or cause it to be discharged or vacated within 90 days;

if the Company makes an assignment for the benefit

of creditors, if the Company generally does not pay its debts as they become due;

if a receiver, liquidator or trustee is appointed

for the Company, or if it is adjudicated bankrupt or insolvent.

In the event of an event of default, the Bridge Notes will accelerate

and become immediately due and payable at the option of the holder.

expense related to total long-term debt for the years ended December 31, 2020 and 2019 was $118,000 and $236,000, respectively.

Company has an operating lease for its warehouse facility in Ohio.

The warehouse lease requires the Company to pay utilities,

insurance, taxes and other operating expenses.

The Company terminated its lease for its corporate headquarters as of June 30,

2020, which is discussed further below.

The Company also has property held under finance leases that expire at various dates through

The Company’s leases do not contain any residual value guarantees or material restrictive covenants.

adoption of ASC No.

842, the Company recognized on its consolidated balance sheet as of January 1, 2019 an initial measurement

of approximately $3,458,000 of operating lease liabilities, and approximately $2,336,000 of corresponding operating right-of use

assets, net of tenant improvement allowances.

842, Leases (“ASC No.

842”), the Company recognized on its consolidated balance sheet as

of January 1, 2019 an initial measurement of approximately $3,458,000 of operating lease liabilities and approximately $2,336,000

of corresponding operating right-of use assets, net of tenant improvement allowances, the amounts of which were primarily related

to the Company’s corporate headquarters.

The initial measurement of the finance leases under ASC No.

842 did not have a material

change from the balances of the finance lease liabilities and assets recorded prior to the adoption of ASC No.

also no cumulative effect adjustment to retained earnings as a result of the transition to ASC No.

The Company recorded the

initial recognition of the operating leases as a supplemental noncash financing activity on the accompanying consolidated statement

of cash flows.

842 did not have a

material change from the balances of the finance lease liabilities and assets recorded prior to the adoption of ASC No.

was also no cumulative effect adjustment to accumulated deficit as a result of the transition to ASC No.

The Company recorded

the initial recognition of the operating leases as a supplemental noncash financing activity on the accompanying consolidated

statement of cash flows.

The adoption of ASC No.

842 did not have a material impact on the Company’s consolidated statement of operations.

842 did not have a material impact on the Company’s consolidated statement

of operations.

Headquarters Lease Termination

part of the Company’s on-going efforts to implement measures designed to reduce operating expenses and preserve capital

as it continued to seek to mitigate the substantial negative impact of the COVID-19 pandemic on the Company’s business,

on June 25, 2020, the Company entered into a Lease Termination, Surrender and Buy-Out Agreement (the “Lease Termination

Agreement”) with Burke Aston Partners, LLC (the “Lessor”) to terminate, effective June 30, 2020, the lease dated

July 26, 2018 for the Company’s corporate headquarters.

Absent the Lease Termination Agreement, the lease would have expired

in accordance with its terms in April 2026.

Since January 1, 2020, the Company reduced its headcount from 74 to 22 employees,

all of whom are currently working remotely, and the Company did not currently need a corporate headquarters of the size subject

to that lease.

to the Lease Termination Agreement, in exchange for allowing the Company to terminate the lease early, the Company agreed to (i)

allow the Lessor to keep its security deposits of approximately $260,000, which includes $200,000 of restricted cash under a letter

of credit, (ii) pay the Lessor approximately $121,000 for past due rent, and (iii) pay the Lessor $80,000 if the Company sells

all or any material part of its assets or all or any material part of its equity interests and $5,000 if the Lessor needs to dispose

of furniture that remained in the office space.

In July 2020, the Lessor informed the Company that it needed to dispose of the

remaining furniture, and the Company paid the Lessor $5,000 to do so.

a result of the lease termination, the Company recorded a gain on the termination of the lease of approximately $9,000 during

the three months ended June 30, 2020, which includes writing off the remaining balances of the right-of-use asset of approximately

$1,913,000 and the corresponding lease liability of approximately $3,135,000, applying the principal portion of past due rents

to be paid in July 2020 of approximately $64,000, writing off of the unamortized tenant improvement allowance of approximately

$890,000, and applying the security deposit of approximately $260,000.

Additionally,

as part of the lease termination and vacating the facility, the Company recorded a loss on the disposal of fixed assets of approximately

$282,000 during the three months ended June 30, 2020, which includes approximately $197,000 in furniture and fixtures and the

Company’s vehicle, and $85,000 in other leasehold improvement assets.

tables below show the initial measurement of the operating lease right-of-use assets and liabilities as of January 1, 2020 and

the balances as of December 31, 2020, including the changes during the year.

lease right-of-use assets

Initial measurement at January

tenant improvement allowance

Net right-of-use assets

at January 1, 2019

Initial measurement

of new operating lease right-of-use-assets

Less amortization of

operating lease right-of-use assets

Operating lease right-of-use

assets at December 31, 2019

lease liabilities

Initial measurement at January

Initial measurement

of new operating lease liabilities

Less principal payments

on operating lease liabilities

Operating lease liabilities

at December 31, 2019

non-current portion

Current portion

at December 31, 2019

of December 31, 2019, the Company’s operating leases have a weighted-average remaining lease term of 6.3 years and a weighted-average

Operating lease right-of use assets at January 1, 2020

Amortization of operating lease right-of-use assets

Addition of operating lease right-of -use asset

Write-off of right-of-use asset due to headquarters lease termination

Write-off of right-of-use asset related to other lease terminations

Operating lease right-of-use assets at December 31, 2020

Operating lease

Operating lease liabilities at January 1, 2020

Principal payments on operating lease liabilities

Addition of operating lease liability

Write-off of lease liability related to headquarters lease termination

Write-off of lease liability related to other lease terminations

Operating lease liabilities at December 31, 2020

Less non-current portion

Current portion at December 31, 2020

of December 31, 2020, the Company’s operating lease has a weighted-average remaining lease term of 0.8 years and a weighted-average

discount rate of 5.0%.

The maturities of the operating lease liabilities are as follows:

operating lease payments

imputed interest

value of operating lease liabilities

The maturity of the operating lease liability is as follows:

December 31, 2020

Total operating lease payments

Less imputed interest

Present value of operating lease liabilities

lease expense was approximately $294,000 and $542,000 for the twelve months ended December 31, 2020 and 2019, respectively.

expense was recorded in selling, general and administrative expenses.

tables below show the initial measurement of the finance lease right-of-use assets and liabilities as of January 1, 2019 and the

balances as of December 31, 2019, including the changes during the year.

The Company’s finance lease right-of-use assets

are included in “Fixed assets, net”

tables below show the beginning balances of the finance lease right-of-use assets and liabilities as of January 1, 2020 and the

ending balances as of December 31, 2020, including the changes during the periods.

The Company’s finance lease right-of-use

assets are included in “Fixed assets, net”

on the accompanying consolidated balance sheet.

Finance lease

Finance lease right-of-use

Initial measurement at January 1, 2020

Less depreciation of

Finace lease right-of-use assets

Finace lease right-of-use

assets at December 31, 2019

Less depreciation of Finance lease right-of-use assets

Finance lease right-of-use assets at December 31, 2020

Initial measurement at January 1, 2020

Less principal payments

on Finace lease liabilities

Finace lease liabilities as of December 31,

non-current portion

Current portion

at December 31, 2019

Less principal payments on Finance lease liabilities

Finance lease liabilities as of December 31, 2020

Less non-current portion

Current portion at December 31, 2020

of December 31, 2020, the Company’s finance leases have a weighted-average remaining lease term of 0.9 years and a weighted-average

1 unchanged sentence

The maturities of the finance lease liabilities are as follows:

Finace lease payments

imputed interest

value of Finace lease liabilities

the twelve months ended December 31, 2019 and 2018, total lease costs under finance leases were approximately $48,000 and $191,000,

respectively.

December 31, 2020

Total Finance lease payments

Less imputed interest

Present value of Finance lease liabilities

the years ended December 31, 2020 and 2019, total lease costs under finance leases were approximately $21,000 and $48,000, respectively.

842 did not make fundamental changes to lease accounting guidance for lessors.

29 unchanged sentences

statement of operations.

Commitments and Contingencies

Company is subject to litigation from time to time in the ordinary course of its business.

There can be no assurance that any

claims will be decided in the Company’s favor and the Company is not insured against all claims made.

During the pendency

of such claims, the Company will continue to incur the costs of its legal defense.

Currently, there is no material litigation

pending or threatened against the Company.

time to time, state tax authorities will make inquiries as to whether or not a portion of the Company’s services require

the collection of sales and use taxes from customers in those states.

Many states have expanded their interpretation of their

sales and use tax statutes to subject more activities to tax.

The Company evaluates such inquiries on a case-by-case basis and

has favorably resolved the majority of these tax issues in the past without any material adverse consequences.

There were no liabilities

recorded in either of the years ended December 31, 2019 or 2018.

Accumulated Other Comprehensive Income

Since November 2019, the Company no longer has contracts under sales-type lease arrangements and does

not expect to enter into contracts with sales-type lease arrangements in the future.

and Contingencies

time to time, the Company is subject to legal proceedings in the ordinary course of business.

While management presently believes

that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm its financial position,

cash flows, or overall trends in results of operations, legal proceedings are subject to inherent uncertainties, and unfavorable

rulings or outcomes could occur that have, individually or in the aggregate, a material adverse effect on the Company’s

business, financial condition or operating results.

The Company is not currently subject to any pending material legal proceedings

except as described below.

Company and its directors were named as defendants in ten substantially similar actions brought by purported stockholders of the

Company arising out of the Merger:

NTN Buzztime, Inc.

1:20-cv-08663-LGS (S.D.N.Y.

NTN Buzztime, Inc.

1:20-cv-08755-LGS (S.D.N.Y.

NTN Buzztime, Inc.

1:20-cv-08747-LGS (S.D.N.Y.

NTN Buzztime, Inc.

1:21-cv-00047-LGS (S.D.N.Y.

NTN Buzztime, Inc.

1:21-cv-00728-LGS (S.D.N.Y.

NTN Buzztime,

1:20-cv-05106-EK-SJB (E.D.N.Y.

NTN Buzztime, Inc.

3:20-cv-02123-BAS-JLB

NTN Buzztime, Inc.

3:21-cv-00157-WQH-AGS (S.D.

NTN Buzztime, Inc.

1:20-cv-01401-CFC (D.

and Nicosia v.

NTN Buzztime, Inc.

1:21-cv-00125-CFC (D.

30, 2021 ) (collectively, the “Stockholder Actions”).

Brooklyn also was named

as a defendant in two of the actions ( Chinta and Nicosia ).

The Stockholder Actions assert claims asserting violations of

Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and Rule 14a-9 promulgated thereunder.

Henson and Monsour

assert additional claims for breach of fiduciary duty.

The complaints allege that defendants failed to disclose allegedly

material information in the Form S-4 Registration Statement filed with the SEC on October 2, 2020, including (1) certain details

regarding any projections or forecasts the Company or Brooklyn may have made, and the analyses performed by the Company’s

financial advisor, Newbridge Securities Corporation;

(2) conflicts concerning the sales process;

and (3) disclosures regarding

whether or not the Company entered into any confidentiality agreements with standstill and/or “don’t ask, don’t

The complaints allege that these purported failures to disclose rendered the Form S-4 false and misleading.

The complaints request a preliminary and permanent injunction of the Merger;

rescission of the Merger if executed and/or rescissory

damages in unspecified amounts;

direction to the individual directors to disseminate a compliant Registration Statement;

an accounting

by the Company for all alleged damages suffered;

a declaration that certain federal securities laws have been violated;

including attorneys’

and expert fees and expenses.

Process was served in Henson , Chinta , Amanfo , Falikman ,

Carlson and Gallo, but not in any of the other Stockholder Actions.

Although plaintiffs request injunctive relief

in their complaints, they have not filed motions for such relief.

Company and its directors deny any wrongdoing or liability with respect to the allegations and claims asserted, or which could

have been asserted, in the Stockholder Actions, as the Company believes the disclosures set forth in the Form S-4 complied fully

with applicable law.

Nevertheless, in order to avoid nuisance, potential expense and delay, and to provide additional information

to the Company’s stockholders, the Company determined to voluntarily supplement the Form S-4 with further disclosures (the

“Supplemental Disclosures”) on Form 8-K, filed on February 26, 2021.

These Supplemental Disclosures discussed, inter

alia , (1) certain details regarding any projections or forecasts the Company or Brooklyn may have made, and the analyses performed

by the Company’s financial advisor, Newbridge Securities Corporation;

and (2) information regarding whether or not the Company

entered into any confidentiality agreements with standstill and/or “don’t ask, don’t waive”

The Company believes that as a consequence of the issuance of the Supplemental Disclosures all claims asserted in the Stockholder

Actions have been rendered moot, and have requested that all plaintiffs in the Stockholder Actions dismiss their claims voluntarily

(or immediately inform the Company if they are not willing to do so).

Since the issuance of the Supplemental Disclosures, the

plaintiffs in Henson , Chinta , Monsour , Amanfo , Carlson and Nicosia have voluntarily

dismissed their cases.

The Company expects the plaintiffs in the other Stockholder Actions to do the same.

On March 2, 2021, the

court in Haas issued an order to show cause why the case should not be dismissed for failure to prosecute.

Plaintiffs in

the Stockholder Actions reserve the right to seek payment by the Company to their attorneys of a “mootness fee”

an amount yet to be determined in connection with the issuance of the Supplemental Disclosures.

On March 5, 2021, the

Company and its directors were named as defendants in a putative class action brought by a purported stockholder in the Court

of Chancery of the State of Delaware, entitled Carlson v.

NTN Buzztime, Inc ., Case No.

2021-0193- (Del.

The action asserts claims for violations of Section 211(c) of the Delaware General Corporation Law and the Company’s

bylaws (and a concomitant breach of fiduciary duty), alleging that the Company failed to conduct an annual meeting of stockholders

within thirteen months of the previous annual meeting of stockholders, which took place on June 7, 2019.

Plaintiff is requesting

certification of a class, declaratory relief, injunctive relief to compel an annual meeting of stockholders, and fees and costs.

The complaint does not yet appear to have been served upon any of the defendants.

The Company expects this action will be

rendered moot upon the Company’s holding of its special meeting of stockholders on March 15, 2021.

Other Comprehensive Income

other comprehensive income includes the accumulated gains or losses from foreign currency translation adjustments.

5 unchanged sentences

recorded in accumulated other comprehensive income.

Retirement Savings Plan

1994, the Company established a defined contribution plan, organized under Section 401(k) of the Internal Revenue Code, which

3 unchanged sentences

contribution.

Subsequent Events

January 13, 2020, the Company entered into an asset purchase agreement with Sporcle, Inc., a Delaware corporation (“Sporcle”),

pursuant to which the Company agreed to sell to Sporcle all of its assets necessary for Sporcle to conduct the live hosted knowledge-based

trivia events known as Stump!

Trivia and OpinioNation for $1,360,000.

The transaction closed on January 31, 2020, and the Company

recorded a net gain of approximately $1,265,000 in January 2020.

to Loan and Security Agreement

March 12, 2020, the Company entered into an amendment to the loan and security agreement it entered into with Avidbank in September

In connection with entering into the amendment, the Company made a $433,000 payment on its 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 its term loan to $2,000,000.

Under the terms of the amendment, the Company’s financial

covenants were changed, the maturity date of its term loan was changed from September 28, 2022 to December 31, 2020 (and as a

result, the Company classified the total outstanding principal balance as a current liability on its balance sheet as of December

31, 2019), and commencing on April 30, 2020, the Company must make principal plus accrued interest payments on the last day of

each month, such that its term loan will be repaid by December 31, 2020.

The principal payment the Company 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 loan and security agreement, the Company’s 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 it 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,

the Company was in compliance with both of those covenants.

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

the Company refers to as the ACR covenant, and the minimum liquidity covenant was amended to provide that the aggregate amount

of unrestricted cash the Company has in deposit accounts or securities accounts maintained with Avidbank must be at all times

not less than the principal balance outstanding under the term loan.

Under the ACR covenant, the ratio of (i) the Company’s

unrestricted cash at Avidbank as of the last day of a calendar month plus 75% of its outstanding accounts receivable accounts

that are within 90 days of invoice date to (ii) the outstanding principal balance of the term loan on such day must be no less

than 1.25 to 1.00.

discussed in Note 3 and Note 15, in addition to the First Note and Second Note the Company issued in exchange for the $1,000,000

bridge loan and the $500,000 bridge loan Fertilemind, on behalf of eGames.com, gave to the Company on September 18, 2020 and December

1, 2021, respectively, on January 12, 2021, eGames.com agreed to loan, or cause Fertilemind, on behalf of eGames.com, to loan

an additional $200,000 to the Company on January 12, 2021.

Upon receipt of such $200,000 loan, on January 12, 2021, the Company

issued a third unsecured promissory note (the “Third Note,”

and together with the First Note and the Second Note,

the “Bridge Notes”) evidencing such loan.

The principal amount of the Third Note accrues interest at the rate of 10%

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

The principal amount

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

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

Upon the closing of the Asset Sale,

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

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

The Company may use the proceeds under the Bridge Notes for, among

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

working capital purposes.

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

What changed 10-K

Item 9A. Controls and Procedures