SECURITIES AND EXCHANGE COMMISSION 2021 (State of incorporation) (I.R.S. Employer Identification No.) Yes ☒ No ☐ ☐ ☐ Yes ☐ No ☒ March 31, 2020 December 31, 2019 Series A Cumulative Convertible Preferred Stock Additional Paid-in Additional Paid-in Three months ended March 31, Three months ended March 31, May 11, 2021. reaches certain milestones. 2020 21, 2021 when compared against the same period in 2020 due to stock-based compensation modification for the conversion of common units into common shares and increase in clinical trials for new trial initiation. For the three months ended March 31, 2020, Incorporated By ReferenceQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 2020☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 numbernumber: 001-11460NTN Buzztime,DELAWAREDelaware 31-1103425 1800 ASTON AVENUE, SUITE 100, CARLSBAD,CALIFORNIA 92008 (Address of principal executive offices) (Zip Code) (760) 438-7400 Symbol(s)symbol Common Stockstock, $0.005 par value per share NTNBTX NYSE American YES [X] NO [ ][X]☒ No [ ]Registrantregistrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in in Rule 12b-2 of the Exchange Act.Large accelerated filer [ ]☐Accelerated filer [ ]☐ Non-accelerated filer [X]☒Smaller reporting company [X]☒ Emerging growth company [ ]☐[ ]YES [ ] NO [X]18, 2020,13, 2021, the registrant had outstanding 2,936,76941,562,739 shares of common stock, $0.005 par value per share. Page PART I – FINANCIAL INFORMATION NTN BUZZTIME, INC. AND SUBSIDIARIESFORM 10-QTABLE OF CONTENTSDisclosure Required Under the SEC’s Order dated March 25, 2020The Securities and Exchange Commission, or the SEC, issued an Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies, dated March 25, 2020 (Release No. 34-88465), or the Order, which provides conditional relief to registrants subject to the reporting requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that are unable to meet a filing deadline due to circumstances related to COVID-19.On April 21, 2020, NTN Buzztime, Inc. (“we,” “us,” or “our”) filed a Current Report on Form 8-K (the “April 21 8-K”) with the SEC disclosing its intention to rely on the Order with respect to this Quarterly Report on Form 10-Q. As stated in that Form 8-K, we experienced, and continue to experience, significant disruptions to our business and operations due to circumstances related to COVID-19, and we were unable to file this report on a timely basis. Among other factors that contributed to us requiring additional time to prepare and finalize this report, we reduced the number of our employees significantly, including a portion of our finance staff, all of our personnel have been and continue to be working remotely, and we rely on third parties to perform analyses and other services related to the preparation of our financial statements, and those third parties also experienced, and continue to experience, disruptions to their operations due to circumstances related to COVID-19.PART I – FINANCIAL INFORMATIONItem 1.Financial Statements.NTN BUZZTIME, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except par value amount) ASSETS Current Assets: Cash and cash equivalents $ 2,221 $ 3,209 Restricted cash 50 50 Accounts receivable, net of allowances of $838 and $354, respectively 383 1,195 Site equipment to be installed 856 1,090 Prepaid expenses and other current assets 755 526 Total current assets 4,265 6,070 Restricted cash, long-term 150 150 Operating lease right-of-use assets 2,002 2,101 Fixed assets, net 2,489 2,822 Software development costs, net of accumulated amortization of $2,735 and $3,341, respectively 1,749 1,915 Deferred costs 239 274 Goodwill - 696 Other assets 120 97 Total assets $ 11,014 $ 14,125 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 787 $ 835 Accrued compensation 236 588 Accrued expenses 237 490 Sales taxes payable 19 131 Income taxes payable 8 3 Current portion of long-term debt, net 1,990 2,739 Current portion of obligations under operating leases 385 409 Current portion of obligations under financing leases 21 21 Current portion of deferred revenue 383 460 Other current liabilities 286 419 Total current liabilities 4,352 6,095 Long-term obligations under operating leases 2,782 2,891 Long-term obligations under financing leases 15 20 Long-term deferred revenue 1 2 Other liabilities 15 26 Total liabilities 7,165 9,034 Shareholders’ Equity Series A 10% cumulative convertible preferred stock, $0.005 par value, $156 liquidation preference, 156 shares authorized, issued and outstanding at March 31, 2020 and December 31, 2019 1 1 Common stock, $0.005 par value, 15,000 shares authorized at March 31, 2020 and December 31, 2019; 2,926 and 2,901 shares issued at March 31, 2020 and December 31, 2019, respectively 15 14 Treasury stock, at cost, 10 shares at March 31, 2020 and December 31, 2019 (456 ) (456 ) Additional paid-in capital 136,800 136,721 Accumulated deficit (132,675 ) (131,457 ) Accumulated other comprehensive income 164 268 Total shareholders’ equity 3,849 5,091 Total liabilities and shareholders’ equity $ 11,014 $ 14,125 See accompanying notes to unaudited condensed consolidated financial statements.4NTN BUZZTIME, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(In thousands, except per share amounts)(unaudited) Three Months Ended March 31, 2020 2019 Revenue from contracts with customers Subscription revenue $ 1,999 $ 3,833 Hardware revenue 16 205 Other revenue 379 794 Total revenue from contracts with customers 2,394 4,832 Operating expenses: Direct operating costs (includes depreciation and amortization of $461 and $651, respectively) 950 1,484 Selling, general and administrative 3,080 3,468 Impairment of capitalized software 138 1 Impairment of goodwill 662 - Depreciation and amortization (excluding depreciation and amortization included in direct operating costs) 85 96 Total operating expenses 4,915 5,049 Operating loss (2,521 ) (217 ) Other income (expense), net 1,284 (85 ) Loss before income taxes (1,237 ) (302 ) Benefit (provision) for income taxes 19 (11 ) Net loss (1,218 ) (313 ) Net loss per common share - basic and diluted $ (0.42 ) $ (0.11 ) Weighted average shares outstanding - basic and diluted 2,901 2,866 Comprehensive loss Net loss $ (1,218 ) $ (313 ) Foreign currency translation adjustment (104 ) 33 Total comprehensive loss $ (1,322 ) $ (280 ) See accompanying notes to unaudited condensed consolidated financial statements.NTN BUZZTIME, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITYFor the three months ended March 31, 2020 and 2019 (unaudited)(in thousands) Common Stock Treasury Accumulated Accumulated Other Comprehensive Shares Amount Shares Amount Stock Capital Deficit Income Total Balances at January 1, 2020 156 $ 1 2,901 $ 14 $ (456 ) $ 136,721 $ (131,457 ) $ 268 $ 5,091 Foreign currency translation adjustment - - - - - - - (104 ) (104 ) Net loss - - - - - - (1,218 ) - (1,218 ) Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes - - 3 - - (3 ) - - (3 ) Issuance of common stock in lieu of cash compensation, net of shares withheld for payroll taxes - - 22 1 - 43 - - 44 Non-cash stock based compensation - - - - - 39 - - 39 Balances at March 31, 2020 156 $ 1 2,926 $ 15 $ (456 ) $ 136,800 $ (132,675 ) $ 164 $ 3,849 Series A Cumulative Convertible Preferred Stock Common Stock Treasury Accumulated Accumulated Other Comprehensive Shares Amount Shares Amount Stock Capital Deficit Income Total Balances at January 1, 2019 156 $ 1 2,875 $ 14 $ (456 ) $ 136,552 $ (129,394 ) $ 200 $ 6,917 Foreign currency translation adjustment - - - - - - - 33 33 Net loss - - - - - - (313 ) - (313 ) Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes - - 3 - - (5 ) - - (5 ) Non-cash stock based compensation - - - - - 59 - - 59 Balances at March 31, 2019 156 $ 1 2,878 $ 14 $ (456 ) $ 136,606 $ (129,707 ) $ 233 $ 6,691 See accompanying notes to unaudited condensed consolidated financial statements.6NTN BUZZTIME, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(unaudited) For the three months ended March 31, 2020 2019 Cash flows (used in) provided by operating activities: Net loss $ (1,218 ) $ (313 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 546 747 Provision for doubtful accounts 189 30 Amortization of operating lease right-of-use-assets 73 72 Common stock issued for compensation in lieu of cash payment 61 - Stock-based compensation 39 59 Gain of asset sale (1,265 ) - Loss from the disposition of assets 188 9 Impairment of capitalized software 138 1 Impairment of goodwill 662 - Amortization of debt issuance costs 3 3 Changes in assets and liabilities: Accounts receivable 723 264 Site equipment to be installed 1 87 Operating lease liabilities (106 ) (28 ) Prepaid expenses and other assets (254 ) 58 Accounts payable and accrued liabilities (765 ) 2 Income taxes payable 7 10 Deferred costs 34 (3 ) Deferred revenue (77 ) (184 ) Other liabilities (144 ) (34 ) Net cash (used in) provided by operating activities (1,165 ) 780 Cash flows used in investing activities: Capital expenditures (19 ) (41 ) Capitalized software development expenditures (121 ) (355 ) Net cash used in investing activities (140 ) (396 ) Cash flows provided by (used in) financing activities: Proceeds from the sale of assets, net 1,166 - Payments on long-term debt (750 ) (250 ) Debt issuance costs on long-term debt (3 ) - Principal payments on finance leases (5 ) (18 ) Payroll tax remitted on net share settlement of equity awards (20 ) (5 ) Net cash provided by (used in) financing activities 388 (273 ) Effect of exchange rate on cash and cash equivalents (71 ) 19 Net (decrease) increase in cash, cash equivalents and restricted cash (988 ) 130 Cash, cash equivalents and restricted cash at beginning of period 3,409 2,786 Cash, cash equivalents and restricted cash at end of period $ 2,421 $ 2,916 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 37 $ 71 Income taxes $ - $ 1 Supplemental disclosure of non-cash investing and financing activities: Site equipment transferred to fixed assets $ 66 $ 268 Initial measurement of operating lease right-of-use assets and liabilities $ - $ 3,458 Reconciliation of cash, cash equivalents and restricted cash at end of period: Cash and cash equivalents $ 2,221 $ 2,666 Restricted cash 50 50 Restricted cash, long-term 150 200 Total cash, cash equivalents and restricted cash at end of period $ 2,421 $ 2,916 See accompanying notes to unaudited condensed consolidated financial statements.NTN BUZZTIME, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)(1)BASIS OF PRESENTATIONDescription of BusinessNTN Buzztime, Inc. (the “Company”) was incorporated in Delaware in 1984 as Alroy Industries and changed its corporate name to NTN Communications, Inc. in 1985. The Company changed its name to NTN Buzztime, Inc. in 2005 to better reflect the growing role of the Buzztime consumer brand.The Company delivers interactive entertainment and innovative technology, including performance analytics, to help its customers acquire, engage and retain its patrons. The Company’s tablets and technology offer engaging solutions to establishments with guests who experience dwell time, such as in bars, restaurants, casinos and senior living centers. Casual dining venues subscribe to the Company’s customizable solution to differentiate themselves via competitive fun by offering guests trivia, card, sports and arcade games. The Company’s platform creates connections among the players and venues, and amplifies guests’ positive experiences, and its in-venue TV network creates one of the largest digital out of home advertising audiences in the United States and Canada. The Company also continues to support its legacy network product line, which it calls its Classic platform.The Company generates revenue by charging subscription fees for its service to network subscribers, by leasing tablet platform equipment to certain network subscribers, by selling tablet platform equipment, by hosting live trivia events, by selling advertising aired on in-venue screens and as part of customized games, by licensing its content for use with third-party equipment, from providing professional services (such as developing certain functionality within the Company’s platform for customers), and from pay-to-play arcade games.At March 31, 2020, 1,396 venues in the U.S. and Canada subscribed to the Company’s interactive entertainment network. See Note 2 for more information regarding the impact of COVID-19 on these venues and the Company’s subscription revenues.Basis of Accounting PresentationThe accompanying unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments that are necessary, which are of a normal and recurring nature, for a fair presentation for the periods presented of the financial position, results of operations and cash flows of the Company and its wholly-owned subsidiaries: 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. All significant intercompany transactions have been eliminated in consolidation.These condensed consolidated financial statements should be read with the audited consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2019. The accompanying condensed balance sheet as of December 31, 2019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2020, or any other period.ReclassificationsCertain reclassifications have been made to the prior period’s financial statements to conform to the current period presentation. These reclassifications had no effect on previously reported results of operations or retained earnings.(2)COVID-19 UPDATEThe 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 have been ordered by the government to shut down or close all on-site dining since the latter half of March 2020. At its peak, approximately 70% of the Company’s customers requested that their subscriptions to the Company’s services be temporarily suspended. As governmental orders and restrictions impacting restaurants and bars are eased or lifted, the Company expects the temporary subscription suspensions to end, however, even in jurisdictions in which such orders and restrictions are eased or lifted, the Company’s customers could request to continue their subscription suspensions if, for example, such customers choose not to re-open despite being permitted to do so. The Company has experienced material decreases in subscription revenue, advertising revenue and cash flows from operations, which it 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 states are eased or lifted. The Company cannot predict with certainty whether, when or the manner in which the impact of the pandemic will improve, including when restaurants will be permitted to offer on-site dining or when bars will be permitted to re-open or to what degree, when the Company’s customers will re-open, or if they will subscribe to the Company’s service if and when they do, or if and when there will be a resurgence in COVID-19 transmission or infection after the easing or lifting of stay-at-home orders, and if three is, the impact of such resurgence on the Company’s business. Similarly, the Company cannot predict with certainty the duration of the negative effects of the pandemic on its business and liquidity, however, unless in the very near term the Company’s subscription revenue, advertising revenue and cash flows from operations return to pre-pandemic levels and/or the Company raises substantial capital, the amount of time and the amount of cash the Company has to maintain operations and sustain the negative effects of the pandemic is very limited. See Item 2 “—Liquidity and Capital Resources,” and “Item 1A. Risk Factors” in Part II of this report for additional information regarding the impact of the pandemic on our business and outlook.While the Company expects the effects of COVID-19 to negatively impact its future results of operations, cash flows and financial position, the current level of uncertainty over the economic and operational impacts of COVID-19 means the related financial impact cannot be reasonably estimated at this time. The Company’s consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, 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, goodwill and right-of-use assets. Events and changes in circumstances arising after the issuance of the financial statements as of and for the three months ended March 31, 2020, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods(3)going concern uncertaintyIn connection with preparing its financial statements as of and for the three months ended March 31, 2020, the Company’s management evaluated whether there are conditions or events, considered in the aggregate, that are known and reasonably knowable that would raise substantial doubt about the Company’s ability to continue as a going concern through twelve months after the date that such financial statements are issued. During the three months ended March 31, 2020, the Company incurred a net loss of $1,218,000, and the Company’s current liabilities exceeded its current assets at March 31, 2020 by $87,000. As of March 31, 2020, the Company had $2,221,000 of unrestricted cash and total debt outstanding of $2,000,000, 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. See Note 9 for additional information on this term loan.As discussed further in Note 16, subsequent to March 31, 2020, the Company received $1,625,100 loan (the “PPP Loan”) under the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S. Small Business Administration. The Company may use funds from the PPP Loan for payroll costs, costs used to continue group health care benefits, mortgage interest payments, rent payments, utility payments, and interest payments on other debt obligations incurred before February 15, 2020. The Company intends to use the entire PPP Loan for qualifying expenses. Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. No assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part.As 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 revenue, unless in the very near term the Company’s subscription revenue, advertising revenue and cash flows from operations returns to pre-pandemic levels and/or the Company raises substantial capital, the Company believes it will have sufficient cash resources to pay forecasted cash outlays through October 2020, assuming the Company delivers a significant hardware order as scheduled during the second quarter of 2020, Avidbank does not take actions to foreclose on the Company’s assets in the event the Company becomes out of compliance with its financial covenants, and 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.Based 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. Management’s plans for addressing the liquidity shortfall include continuing efforts to raise additional capital through equity financings and alternative sources of debt. However, there can be no assurances that the Company will be able to raise sufficient capital when needed, on acceptable terms, or at all.The accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.(4)RESTRICTED CASHAt the commencement date of the Company’s lease for its corporate headquarters on December 1. 2018, 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. 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. The amount deposited in the restricted cash account does not count toward the covenant in the Avidbank loan and security agreement (see Note 9) 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.(5)asset saleOn 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 is 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. The hold-back amount is recorded in accounts receivable in the consolidated balance sheet. The Company recorded a net gain of approximately $1,265,000 in January 2020.(6)Revenue RecognitionThe Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) No. 606,Revenue from Contracts with Customers. ASC No. 606 provides a five-step analysis in determining when and how revenue is recognized:1. Identify the contract(s) with customersFinancial Statements (unaudited) 2.Identify the performance obligations1 3.Determine the transaction price2 4.Allocate the transaction price to the performance obligations3 5.Recognize revenue when the performance obligations have been satisfiedASC No. 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.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 (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 5).In 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 customer.Revenue StreamsThe Company disaggregates revenue by material revenue stream as follows: Three months ended March 31, 2020 2019 $ % of Total Revenue $ % of Total Revenue $ Change % Change Subscription revenue 1,999,000 83.5 % 3,833,000 79.3 % (1,834,000 ) (47.8 )% Hardware revenue 16,000 0.7 % 205,000 4.2 % (189,000 ) (92.2 )% Other revenue 379,000 15.8 % 794,000 16.5 % (415,000 ) (52.3 )% Total 2,394,000 100.0 % 4,832,000 100.0 % (2,438,000 ) (50.5 )% The following describes how the Company recognizes revenue under ASC No. 606.Subscription 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 method. 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.Costs associated with installing the equipment are considered direct costs. Costs associated with sales commissions are considered incremental costs for obtaining the contract because such costs would not have been incurred without obtaining the contract. The Company expects to recover both costs through future fees it collects and both costs are recorded in deferred costs on the balance sheet and amortized on a straight-line basis. For installation costs that are of an amount that is less than or equal to the deferred installation revenue for the related contract, the amortization period approximates the longer of the contract term and the expected term of the customer relationship. For any excess costs that exceed the deferred revenue, the amortization period of the excess cost is the initial term of the contract, which is generally one to two years because the Company can still recover that excess cost in the initial term of the contract. The Company amortizes commissions over the longer of the contract term and the expected term of the customer relationship.Sales-type Lease Revenue – For certain customers that lease equipment under sale-type lease arrangements, the Company recognizes revenue in accordance with ASC No. 842,Leases. Such revenue is recognized at the time of installation based on the net present value of the leased equipment. Interest income is recognized over the life of the lease for customers who have remaining lease payments to make. In the event a customer under a sales-type lease arrangement prepays for the lease in full prior to receiving the equipment under the lease, such amounts are recorded in deferred revenue and recognized as revenue once the equipment has been installed and activated at the customer’s location. The cost of the leased equipment is recognized at the same time as the revenue. The Company does not expect to recognize revenue under sales-type lease arrangements after the year ended December 31, 2019.Equipment Sales – The Company recognizes revenue from equipment sales at a point in time, which is when control has been transferred to the customer, the customer holds legal title and the customer has significant risks and rewards of ownership. Generally, the Company has determined that any customer acceptance provisions of the equipment is a formality, as the Company has historically demonstrated the ability to produce and deliver similar equipment. If the Company sells equipment with unique specifications, then customer control of the equipment will occur upon customer acceptance as defined in the contract, and revenue will be recognized at that time. Costs associated with the equipment sold is recognized at the same point in time as the revenue.Advertising Revenue – The Company recognizes advertising revenue either over the time the advertising campaign airs in its customers’ locations or at a point in time by impression. For advertising campaigns that are airing over a specific period of time (regardless of number of impressions), the Company uses the time elapsed output method to measure its progress toward satisfying the performance obligation. When the Company contracts with an advertising agent, the Company shares in the advertising revenue generated with that agent. In these cases, the Company generally recognizes revenue on a net basis, as the agent typically has the responsibility for the relationship with the advertiser and the credit risk. When the Company contracts directly with the advertiser, it will recognize the revenue on a gross basis and will recognize any revenue share arrangement it has with a third party as a direct expense, as the Company has the responsibility for the relationship with the advertiser and the credit risk. Generally, there is no unbilled revenue associated with the Company’s advertising activities.Content Licensing – The Company licenses content (trivia packages) to a certain customer, who in turn installs the content on its equipment that it sells to its customers. The content license is characterized as a “right to use intellectual property as it exists at the point in time at which the license is granted,” meaning the Company is not expected to undertake activities that affect the intellectual property or any such activities would not affect the intellectual property the customer is using. The content license is considered to be on consignment, and the Company retains title of the licensed content throughout the license period. The Company’s customer has no obligation to pay for the licensed content until the customer sells and installs the content to its customer. Accordingly, the Company recognizes revenue at the point in time when such installation occurs. The Company recognizes costs related to developing the content during the period incurred.Live-hosted Trivia Revenue – The Company recognizes its live-hosted trivia revenue at a point in time, which is when the event takes place. 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 live-hosted trivia revenue after January 31, 2020. See Note 5 for more information on the live-hosted trivia product line.Professional Development Revenue – Depending on the type of development work the Company is performing, the Company will recognize revenue, and associated costs, at the point in time when the Company satisfies each performance obligation, which is generally when the customer can direct the use of, and obtain substantially all of the remaining benefits of the goods or service provided. For services provided over time, the corresponding revenue is generally recognized over the time the Company provides such services. Any payments received before satisfying the performance obligations are recorded as deferred revenue and recognized as revenue when or as such obligations are satisfied. The Company does not have unbilled revenue assets associated with professional development services.Revenue ConcentrationsThe Company’s customers predominantly range from small independently operated bars and restaurants to bars and restaurants operated by national chains. This results in diverse venue sizes and locations. As of March 31, 2019, 2,632 venues in the U.S. and Canada subscribed to the Company’s interactive entertainment network, of which approximately 46% were Buffalo Wild Wings corporate-owned restaurants and its franchisees. As of March 31, 2020, the Company’s site count declined to 1,396 venues primarily due to the termination of its agreements with Buffalo Wild Wings corporate-owned restaurants and most of its franchisees in November 2019 in accordance with their terms.The table below sets forth the approximate amount of revenue the Company generated from Buffalo Wild Wings corporate-owned restaurants and its franchisees during the three months ended March 31, 2020 and 2019, and the percentage of total revenue that such amount represents for such periods: 2020 2019 Buffalo Wild Wings revenue $ 101,719 $ 1,936,000 Percent of total revenue 4 % 40 % As of March 31, 2020 and December 31, 2019, approximately $178,000 and $158,000, respectively, was included in accounts receivable from Buffalo Wild Wings corporate-owned restaurants and its franchisees.The geographic breakdown of the Company’s revenue for the three months ended March 31, 2020 and 2019 were as follows: 2020 2019 United States $ 2,249,000 $ 4,661,000 Canada 145,000 171,000 Total revenue $ 2,394,000 $ 4,832,000 Contract Assets and LiabilitiesThe Company enters into contracts and may recognize contract assets and liabilities that arise from these contracts. The Company recognizes revenue and corresponding cash for customers who auto pay via their bank account or credit card, or the Company recognizes a corresponding accounts receivable for customers the Company invoices. The Company may receive consideration from customers, per the terms of the contract, prior to transferring goods or services to the customer. In such instances, the Company records a contract liability and recognizes the contract liability as revenue when all revenue recognition criteria are met. The table below shows the balance of contract liabilities as of January 1, 2020 and March 31, 2020, including the change during the period. Deferred Revenue Balance at January 1, 2020 $ 460,000 New performance obligations 180,000 Revenue recognized (256,000 ) Balance at March 31, 2020 384,000 Less non-current portion (1,000 ) Current portion at March 31, 2020 $ 383,000 The Company capitalizes installation costs associated with installing equipment in a customer location and sales commissions as a deferred cost asset on the balance sheet. For installation costs that are of an amount that is less than or equal to the deferred installation revenue for the related contract, the amortization period approximates the longer of the contract term and the expected term of the customer relationship. For any excess installation costs that exceed the deferred revenue, the amortization period of the excess cost is the initial term of the contract, which is generally one to two years because the Company can still recover that excess cost in the initial term of the contract. The Company amortizes commission costs over the longer of the contract term and the expected term of the customer relationship. The table below shows the balance of the unamortized installation cost and sales commissions as of January 1, 2020 and March 31, 2020, including the change during the period. Installation Costs Sales Commissions Total Deferred Costs Balance at January 1, 2020 $ 187,000 $ 87,000 $ 274,000 Incremental costs deferred 68,000 53,000 121,000 Deferred costs recognized (92,000 ) (64,000 ) (156,000 ) Balance at March 31, 2020 163,000 76,000 239,000 (7)Basic and Diluted Earnings Per Common ShareBasic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period, without consideration of potential common shares. Diluted net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding plus potential common shares. Stock options, restricted stock units, and other convertible securities are considered potential common shares and are included in the calculation of diluted net loss per share using the treasury method when their effect is dilutive. Options, restricted stock units and convertible preferred stock representing approximately 172,000 and 262,000 shares of common stock were excluded from the computations of diluted net loss per common share for the three months ended March 31, 2020 and 2019, respectively, as their effect was anti-dilutive.(8)SHAREHOLDERS’ EQUITYEquity Incentive PlansThe Company’s stock-based compensation plans include the NTN Buzztime, Inc. 2019 Performance Incentive Plan (the “2019 Plan”), the NTN Buzztime, Inc. Amended 2010 Performance Incentive Plan (the “2010 Plan”) and the NTN Buzztime, Inc. 2014 Inducement Plan (the “2014 Plan”). The Company’s board of directors designated its nominating and corporate governance/compensation committee as the administrator of the foregoing plans (the “Plan Administrator”). Among other things, the Plan Administrator selects persons to receive awards and determines the number of shares subject to each award and the terms, conditions, performance measures, if any, and other provisions of the award.The 2019 Plan provides for the issuance of up to 240,000 shares of Company common stock. Awards under the 2019 Plan may be granted to officers, directors, employees and consultants of the Company. Stock options granted under the 2019 Plan may either be incentive stock options or nonqualified stock options, have a term of up to ten years, and are exercisable at a price per share not less than the fair market value on the date of grant. As of March 31, 2020, there were stock options to purchase approximately 2,000 shares of common stock and 108,000 restricted stock units outstanding under the 2019 Plan.As a result of stockholder approval of the 2019 Plan in June 2019, no future grants will be made under the 2010 Plan. All awards that are outstanding under the 2010 Plan will continue to be governed by the 2010 Plan until they are exercised or expire in accordance with the terms of the applicable award or the 2010 Plan. As of March 31, 2020, there were stock options to purchase approximately 32,000 shares of common stock and 18,000 restricted stock units outstanding under the 2010 Plan.The 2014 Plan provides for the grant of up to 85,000 share-based awards to a new employee as an inducement material to the new employee entering into employment with the Company and expires in September 2024. As of March 31, 2020, there were no equity grants outstanding under the 2014 Plan.Stock-Based CompensationThe Company records stock-based compensation in accordance with ASC No. 718, Compensation – Stock Compensation. The Company 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.The Company uses the historical stock price volatility as an input to value its stock options under ASC No. 718. The expected term of stock options represents the period of time options are expected to be outstanding and is based on observed historical exercise patterns of the Company, which the Company believes are indicative of future exercise behavior. For the risk-free interest rate, the Company uses the observed interest rates appropriate for the term of time options are expected to be outstanding. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts.The Company did not grant any stock options and no options were exercised during the three months ended March 31, 2020 or 2019.The Company estimates forfeitures, based on historical activity, at the time of grant and revised if necessary in subsequent periods if actual forfeiture rates differ from those estimates. Stock-based compensation expense for employees during the three months ended March 31, 2020 and 2019 was $39,000 and $59,000, respectively, and is expensed in selling, general and administrative expenses and credited to the additional paid-in-capital account.Outstanding restricted stock units (“RSUs”) are settled in an equal number of shares of common stock on the vesting date of the award. An RSU 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. For the three months ended March 31, 2020 and 2019, the Company granted the following awards:Three months ended RSUs Granted Weighted averge grant date fair value per RSU Vesting terms March 31, 2020 153,000 $ 2.43 12.5% every three months from grant date over two years March 31, 2019 47,000 $ 3.72 16.67% on six month anniversary of grant date, then equal monthly installments over following 30 months The following table shows the number of RSUs that vested and were settled during the three months ended March 31, 2020 and 2019, as well as the number of shares of common stock issued upon settlement. In lieu of paying cash to satisfy withholding taxes due upon the settlement of vested RSUs, an employee may elect to have shares of common stock withheld that would otherwise be issued at settlement, the value of which is equal to the amount of withholding taxes payable. Three months ended March 31, 2020 2019 Restricted stock units vested and settled 4,000 4,000 Common stock issued, net of shares withheld 3,000 3,000 14(9)DEBTTerm LoanIn September 2018, the Company entered into a loan and security agreement with Avidbank for a 48-month term loan in the amount of $4,000,000, under which the Company was obligated to make monthly principal payments of approximately $83,000 plus accrued and unpaid interest. In February 2020, the Company made a pre-payment on the term loan of approximately $150,000 following the sale of all of the Company’s assets used to conduct the live-hosted knowledge-based trivia events known as Stump! Trivia and OpinioNation in January 2020 (see Note 5). On March 12, 2020, the Company entered into an amendment to the loan and security agreement. In connection with entering into the amendment, the Company made a $433,000 payment on its term loan, which included 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 as of March 31, 2020.The Company incurred approximately $26,000 of debt issuance costs related to loan and security agreement and its amendment, of which approximately $3,000 was related to the amendment. 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 March 31, 2020 and December 31, 2019 was $10,000 and $11,000, respectively, and is recorded as a reduction of long-term debt.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 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.Under the terms of the original loan and security agreement, the Company’s adjusted earnings before interest, taxes, depreciation and amortization (“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.Under 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. As of March 31, 2020, the Company was in compliance with both of those covenants.(10)LEASESOn January 1, 2019, the Company adopted ASC No. 842,Leases (“ASC No. 842”). 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.ASC No. 842 also allows lessees and lessors to elect certain practical expedients. The Company elected the following practical expedients:●Transitional practical expedients:○The Company need not reassess whether any expired or existing contracts are or contain leases.4 ○The 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). 5○The Company need not reassess initial direct costs for any existing leases.●Hindsight 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.●As a lessor, the Company elected to not separate nonlease components from lease components when both of the following are met:○The timing and patterns of transfer for the lease component and nonlease component associated with that lease component are the same; and○The lease component, if accounted for separately, would be classified as an operating lease.As LesseeThe 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.Upon 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. 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. 842. There was also no cumulative effect adjustment to retained earnings as a result of the transition to ASC No. 842. 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.The tables below show the beginning balances of the operating lease right-of-use assets and liabilities as of January 1, 2019 and the ending balances as of March 31, 2020, including the changes during the periods. Operating lease right-of-use assets Operating lease right-of use assets at January 1, 2020 $ 2,101,000 Amortization of operating lease right-of-use assets (73,000 ) Write-off of right-of-use asset related to asset sale (Note 5) (26,000 ) Operating lease right-of-use assets at March 31, 2020 $ 2,002,000 Operating lease liabilities Operating lease liabilities at January 1, 2020 $ 3,300,000 Principal payments on operating lease liabilities (106,000 ) Write-off of lease liability related to asset sale (Note 5) (27,000 ) Operating lease liabilities at March 31, 2020 3,167,000 Less non-current portion (2,782,000 ) Current portion at March 31, 2020 $ 385,000 As of March 31, 2020, the Company’s operating leases have a weighted-average remaining lease term of 6.0 years and a weighted-average discount rate of 7.25%. The maturities of the operating lease liabilities are as follows: As of March 31, 2020 2020 $ 450,000 2021 613,000 2022 634,000 2023 655,000 2024 670,000 Thereafter 931,000 Total operating lease payments 3,953,000 Less imputed interest (786,000 ) Present value of operating lease liabilities $ 3,167,000 For the three months ended March 31, 2020 and 20198, total lease expense under operating leases was approximately $134,000 and $135,000, respectively, and was recorded in selling, general and administrative expenses.The 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 March 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 right-of-use assets Finance lease right-of use assets at January 1, 2020 $ 41,000 Depreciation of finance lease right-of-use assets (5,000 ) Finance lease right-of-use assets at March 31, 2020 $ 36,000 Finace lease liabilities Finance lease liabilities at January 1, 2020 $ 41,000 Principal payments on finance lease liabilities as of March 31, 2020 (5,000 ) Finance lease liabilities at March 31, 2020 36,000 Less non-current portion (21,000 ) Current portion at March 31, 2020 $ 15,000 As of March 31, 2020, the Company’s finance leases have a weighted-average remaining lease term of 1.7 years and a weighted-average discount rate of 5.52%. The maturities of the finance lease liabilities are as follows: As of March 31, 2020 2020 17,000 2021 21,000 Total Finance lease payments 38,000 Less imputed interest (2,000 ) Present value of Finance lease liabilities $ 36,000 For the three months ended March 31, 2020 and 2019, total lease costs under finance leases were approximately $6,000 and $22,000, respectively.As LessorASC No. 842 did not make fundamental changes to lease accounting guidance for lessors. Therefore there was no financial statement impact due to the adoption of ASC No. 842. As a lessor, the Company has two types of customer contracts that involve leases: right-to-use operating leases and sales-type leases.Right-to-use operating leases. Certain customers enter into contracts to obtain subscription services from the Company, which includes the Company’s content (nonlease component) and equipment installed in the customer locations so the customer can access the content (lease component). The timing and pattern of the transfer of both the subscription services and the equipment are the same, that is, the Company’s subscription services are made available to its customer at the same time as the equipment is installed. Additionally, the Company has determined that the lease component of these customer contracts is an operating lease. Accordingly, the Company has concluded that these contracts qualify for the practical expedient permitted under ASC No. 842 to not separate the nonlease component from the related lease component. Instead, the Company treats the combined component as a single performance obligation under Topic 606,Revenue from Contracts with Customers, as the Company has concluded that the nonlease component (subscription services) is the predominant component of the combined component.Sales-type leases. As with the contracts under right-of-use operating leases, certain customers enter into contracts to obtain subscription services from the Company, which includes the Company’s content (nonlease component) and equipment installed in the customer locations so the customer can access the content (lease component). Generally, the equipment lease term is for three years and the customer prepays its lease in full. After the lease term, the lessee may purchase the equipment for a nominal fee or lease new equipment. Although the timing and pattern of the transfer of both the subscription services and the equipment may be the same, the provisions of the contract related to the equipment results in a sales-type lease, and therefore, the Company cannot treat both the nonlease component and the lease component as a combined component. Accordingly, the nonlease component is accounted for under Topic 606 and the sales-type lease is accounted for under Topic 842 and separately disaggregated on the Company’s statement of operations. The Company does not anticipate entering into any sales-type lease arrangements after December 31, 2019.(11)DISPOSITION OF SITE EQUIPMENT TO BE INSTALLED AND FIXED ASSETSSite equipment to be installed consists of fixed assets related to the Company’s tablet platform that have not yet been placed in service and are stated at cost. These assets remain in site equipment to be installed until they are deployed 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 and fixed assets 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.Based on the Company’s on-going review of its equipment in site equipment to be installed and in fixed assets, the Company determined that it would no longer be deploying some of the Company’s older tablets, related cases and card readers. Accordingly, the Company wrote off approximately $188,000 related to this equipment during the three months ended March 31, 2020. The expense associated with this write-off is in direct operating costs in the Company’s consolidated statement of operations. Due to uncertainty of the longer-term impact COVID-19 will have on the Company’s business, the Company did not record any additional equipment write-offs for the three months ended March 31, 2020, but will continue to monitor the recoverability of these assets and recognize any additional write-offs during the period in which it determines that impairment exists.(12)SOFTWARE DEVELOPMENT COSTSThe Company capitalizes costs related to developing certain software programs in accordance with ASC No. 350,Intangibles – Goodwill and Other. When the Company deploys the programs, it begins to recognize costs related to the programs on a straight-line basis over the programs’ estimated useful lives, generally two to three years. Amortization expense relating to capitalized software development costs totaled $149,000 and $97,000 for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020 and December 31, 2019, approximately $144,000 and $177,000, respectively, of capitalized software costs were not subject to amortization as the development of various software projects was not complete.The Company performed its quarterly review of software development projects for the three months ended March 31, 2020 and 2019, and determined to abandon various software development projects that the Company concluded were no longer a current strategic fit or for which it determined that the marketability of the content had decreased due to obtaining additional information regarding the specific industry for which the content was intended. As a result, the Company recognized an impairment of $138,000 and $1,000 for the three months ended March 31, 2020 and 2019, respectively. Impairment of capitalized software is shown separately on the Company’s consolidated statement of operations. Due to uncertainty of the longer-term impact COVID-19 will have on the Company’s business, the Company did not record any additional software development impairment charges for the three months ended March 31, 2020, but will continue to monitor the recoverability of these assets and recognize any additional write-offs during the period in which it determines that impairment exists.(13)GOODWILLThe Company’s goodwill balance of $696,000 as of December 31, 2019 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”). In the Company’s evaluation of impairment indicators as of March 31, 2020, it determined that the uncertainty relating to COVID-19’s impact 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. There was no goodwill impairment recorded for the three months ended March 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 three months ended March 31, 2020.Goodwill balance at January 1, 2020 $ 696,000 Effects of foreign currency (34,000 ) Goodwill impairment (662,000 ) Goodwill balance at March 31, 2020 $ - (14)ACCUMULATED OTHER COMPREHENSIVE INCOMEThe United States dollar is the Company’s functional currency, except for its operations in Canada where the functional currency is the Canadian dollar. The financial position and results of operations of the Company’s foreign subsidiaries are measured using the foreign subsidiary’s local currency as the functional currency. In accordance with ASC No. 830,Foreign Currency Matters, revenues and expenses of the Company’s foreign subsidiaries have been translated into U.S. dollars using the average exchange rates during the reporting period, and the assets and liabilities of such subsidiaries have been translated using the period end exchange rate. Accumulated other comprehensive income includes the accumulated gains or losses from these foreign currency translation adjustments. As of March 31, 2020 and December 31, 2019, $164,000 and $268,000 of foreign currency translation adjustments were recorded in accumulated other comprehensive income, respectively.(15)RECENT ACCOUNTING PRONOUNCEMENTSIn December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2019-12,Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes.This ASU enhances and simplifies various aspect of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year and interim-period accounting for enacted changes in tax law. The amendment will be effective for public companies with fiscal years beginning after December 15, 2020, (which will be 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.In 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 Topic 718. 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). The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.In 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 did not have a material impact on the Company’s consolidated financial statements.In 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 did not have a material impact on the Company’s consolidated financial statements.In 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. The standard is effective for fiscal years beginning after December 15, 2019 (which was January 1, 2020 for the Company). The adoption of this ASU did not have a significant impact on the Company’s consolidated financial statements.In June 2016, the FASB issued ASU 2016-13,Measurement of Credit Losses on Financial Instruments, which supersedes current guidance requiring recognition of credit losses when it is probable that a loss has been incurred. The ASU requires an entity to establish an allowance for estimated credit losses on financial assets, including trade and other receivables, at each reporting date. This ASU will result in earlier recognition of allowances for losses on trade and other receivables and other contractual rights to receive cash. For smaller reporting companies, the effective date for this standard has been delayed and will be effective for fiscal years beginning after December 15, 2022 (which will be January 1, 2023 for the Company). The Company is evaluating the impact that the adoption of this standard will have on its consolidated financial statements.(16)SUBSEQUENT EVENTPaycheck Protection Program LoanOn April 18, 2020, the Company issued a note in the principal amount of $1,625,100 to Level One Bank evidencing the PPP Loan the Company received under CARES Act administered by the U.S. Small Business Administration.The PPP Loan matures on April 18, 2022 and bears interest at a rate of 1.0% per annum. The Company must make monthly interest only payments beginning on November 18, 2020. One final payment of all unforgiven principal plus any accrued unpaid interest is due at maturity. Under the terms of the PPP, the Company may prepay the PPP Loan at any time with no prepayment penalties. The Company may use funds from the PPP Loan for payroll costs, costs used to continue group health care benefits, mortgage interest payments, rent payments, utility payments, and interest payments on other debt obligations incurred before February 15, 2020. The Company intends to use the entire PPP Loan for qualifying expenses. Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. No assurance is provided that the Company will obtain forgiveness of the loan in whole or in part.29 Item 3. 38 Item 4. 38 PART II – OTHER INFORMATION Item 1. 39 Item 1A. 39 Item 6. 40 41 CAUTION CONCERNINGand the documents incorporated by reference herein, if any, containcontains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995, or the Forward-Looking Statements Safe Harbor, as codified in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts could be deemed forward-looking statements. We have tried, whenever possible, to identify these statements by using words such as “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “seeks,” or words of similar meaning, or future or conditional verbs, such as “may,” “will,” “should,” “could,” “aims,” “intends” or “projects,” and similar expressions, whether in the negative or the affirmative. Forward-looking statements reflect management’s beliefs and assumptions, are all based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Forward-looking statements by their nature address matters that are, to different degrees, subject to risks and uncertainties that could cause actual results to differ materially and adversely from those expressed in any forward-looking statement. For us, particular that might cause or contribute to such differences include (1) our ability to raise substantial capital in the very near-termcautionary statements included, or incorporated by reference, in this report, particularly in “Risk Factors,” that we believe could cause actual results or events to allow us to maintain operationsdiffer materially from our forward-looking statements. You should also carefully review the risk factors and sustain the negative impact of the COVID-19 pandemic on our business and financial condition, and if we are able to sustain such impact, our ability to recover from the impact; (2) our ability to successfully manage our liquidity and our working capital deficit by managing the timing of payments to our third parties; (3) our ability to comply with our financial covenants in our loan and security agreement with Avidbank and its right to declare a default if we do not, which could lead to all payment obligations becoming immediately due and payable and which could lead to a foreclosure on our assets; (4) when, and the extent to which, the negative impact of the pandemic will improve, including when restaurants will be permitted to offer on-site dining or when bars will be permitted to re-open and to what degree, when our customers will re-open, or if they will subscribe to our service if and when they do; (5) the negative impact that measures we implemented and may implement to reduce our operating expenses and planned capital expenses (including investments in our business) may have on our ability to effectively manage and operate our business; (5) our ability to maintain or grow our revenue; (6) our ability to compete effectively within the highly competitive interactive games, entertainment and marketing services industries, including our ability to successfully commercially launch attractive product offerings, and the impact of new products and technological change, especially in the mobile and wireless markets, on our operations and competitiveness; (7) our ability to adequately protect our proprietary rights and intellectual property; and (8) the other risks and uncertaintiescautionary statements described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (our “2019 10-K”), and described in other documents we file from time to time with the Securities and Exchange Commission, or SEC, includingspecifically under “Risk Factors” in Item 8.01 of our Current ReportsReport on Form 8-K8‑K filed with the SEC on March 30, 2020 and April 21, 2020, this report and our other Current Reports and Quarterly Reports.Readers are urged not to place undue reliance on the forward-looking statements in this report or incorporated by reference herein, which speak only as of the date of this report. We are including this cautionary note to make applicable, and take advantage of, the safe harbor provisions of the Forward-Looking Statements Safe Harbor.We historically have operated in a continually changing business environment. The country and both the global economy generally and, for our purposes, the U.S. economy face profound dislocations and unprecedented uncertainty as a result of the COVID-19 pandemic. The full extent to which the COVID-19 pandemic will, directly or indirectly, impact our business, results of operations and financial condition is currently highly uncertain, including due to factors that currently are also highly uncertain, including a resurgence in COVID-19 transmission or infection after the easing or lifting of stay-at-home restrictions, actions required or recommended to contain or treat COVID-19, and the direct and indirect economic impact of COVID-19.We believe that the expectations reflected in forward-looking statements in this report or incorporated herein by reference are based upon reasonable assumptions at the time made. However, given the risks and uncertainties, you should not rely on any forward- looking statements as a prediction of actual results, developments or other outcomes. You should read these forward-looking statements with the understanding that we may be unable to achieve projected results, developments or other outcomes and that actual results, developments or other outcomes may be materially different from what we expect. You are cautioned not to place undue reliance on these forward-looking statements. December 31, 2021 2020 Assets (Unaudited) Current Assets: Cash $ 8,409,938 $ 1,630,455 Subscription receivable 24,918 - Tax receivable 28,490 - Prepaid expenses and other current assets 250,243 102,322 Total Current Assets 8,713,589 1,732,777 Long-Term Assets: Property and equipment, net 568,943 594,106 Right of use assets - operating leases 2,023,263 2,092,878 Goodwill 2,043,747 2,043,747 In process research and development 6,860,000 6,860,000 Security deposits and other assets 488,534 453,252 Total Assets $ 20,698,076 $ 13,776,760 Liabilities and Stockholders’ Deficit Current Liabilities: Accounts payable $ 1,812,017 $ 1,275,223 Accrued expenses 1,160,344 1,051,020 Loans payable 410,000 410,000 PPP loan, current 232,235 115,972 Current portion of lease liability 287,359 273,217 Total Current Liabilities 3,901,955 3,125,432 Long-Term Liabilities: Contingent consideration 19,290,000 20,110,000 Lease liability, non-current 1,826,863 1,905,395 PPP loan, non-current 77,670 193,933 Other liabilities 22,863 22,863 Total Liabilities 25,119,351 25,357,623 Commitments and contingencies Stockholders’ Deficit: Class A membership units - 23,202,005 Class B membership units - 1,400,000 Class C membership units - 1,000,000 Common units - 197,873 Common stock, $0.005 par value; 100,000,000 shares authorized; 41,505,998 shares issued and outstanding as of March 31, 2021, and no shares issued and outstanding as of December 31, 2020 207,530 - Additional paid-in capital 50,453,489 - Series A preferred stock 781 - Accumulated deficit (55,083,075 ) (37,380,741 ) Total Stockholders’ Deficit (4,421,275 ) (11,580,863 ) Total Liabilities and Stockholders’ Deficit $ 20,698,076 $ 13,776,760 Three Months Ended March 31, 2021 2020 Operating Expenses: Research and development $ (38,971 ) General and administrative Transaction costs - Change in fair value of contingent consideration - Total operating expenses Loss from operations (1,014,534 ) Other Expenses: Other expense, net (4,678 ) Loss on sales of NTN assets - Total other expenses Net loss attributable to common stockholders $ (17,702,334 ) $ (1,019,212 ) Basic and diluted net loss per share attributable to common stockholders $ (0.64 ) $ (0.06 ) Basic and diluted weighted average number of shares outstanding 27,799,415 17,501,813 Membership Equity Common Stock Class A Class B Class C Common Shares Amount Total
Stockholders’
Equity (Deficit) $ - $ 23,202,005 $ 1,400,000 $ 1,000,000 $ 197,873 - $ - $ - $ (37,380,741 ) $ (11,580,863 ) Brooklyn rights offerings membership units - 10,500,000 - - - - - - - 10,500,000 Elimination of Brooklyn’s historical members’ equity - (33,702,005 ) (1,400,000 ) (1,000,000 ) (197,873 ) - - 36,299,878 - - Common stock to be retained by NTN stockholders - - - - - 7,572 8,170,042 - 8,177,614 Issuance of Series A preferred stock retained by NTN stockholders 781 - - - - - - (781 ) - - Issuance of common stock to Brooklyn members - - - - - 194,620 (194,620 ) - - Issuance of common stock to Financial Advisor upon consummation of merger - - - - - 5,338 5,760,069 - 5,765,407 Stock based compensation: Modification of vested restricted common shares - - - - - - - 249,905 - 249,905 - - - - - - - 168,996 - 168,996 Net loss - - - - - - - - (17,702,334 ) (17,702,334 ) $ 781 $ - $ - $ - $ - 41,505,998 $ 207,530 $ 50,453,489 $ (55,083,075 ) $ (4,421,275 ) Membership Equity Accumulated Total Members’ Class A Class B Class C Common Deficit Equity Balance - January 1, 2020 $ 18,177,692 $ 1,400,000 $ 1,000,000 $ 106,937 $ (10,941,526 ) $ 9,743,103 Stock based compensation: Amortization of restricted common units - - - 22,734 - 22,734 Sale of members’ equity 312,500 - - - - 312,500 Net loss - - - - (1,019,212 ) (1,019,212 ) Balance - March 31, 2020 $ 18,490,192 $ 1,400,000 $ 1,000,000 $ 129,671 $ (11,960,738 ) $ 9,059,125 Three Months Ended March 31, 2021 2020 Cash Flows from Operating Activities: Net loss $ (17,702,334 ) $ (1,019,212 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 25,287 22,999 Modification of vested restricted common shares 249,905 - Equity compensation 168,996 22,734 Amortization of right-to-use asset 69,615 - Transaction costs - shares to Financial Advisor 5,765,407 - Loss on sales of NTN assets 9,598,173 - Change in fair value of contingent consideration (820,000 ) - Change in operating assets and liabilities: Account receivable 4,680 - Prepaid expenses and other current assets 41,594 (53,459 ) Security deposits and other non-current assets (1,018 ) (84,915 ) Accounts payable and accrued expenses (765,842 ) (761,925 ) Operating lease liability (64,390 ) - Other liabilities - 685 Total adjustments 14,272,407 (853,881 ) Net Cash Used in Operating Activities (3,429,927 ) (1,873,093 ) Cash Flows from Investing Activities: Purchase of property and equipment - (4,457 ) Purchase of NTN, net of cash acquired 147,728 - Proceeds from the sales of NTN assets, net of cash disposed 118,594 - Net cash provided by / (used in) investing activities 266,322 (4,457 ) Cash Flows from Financing Activities Repayment of NTN's PPP Loan (531,994 ) - Proceeds from sale of members' equity 10,475,082 312,500 Net Cash Provided by Financing Activities 9,943,088 312,500 Net Increase / (Decrease) in Cash 6,779,483 (1,565,050 ) Cash - Beginning of Period 1,630,455 5,100,819 Cash - End of Period $ 8,409,938 $ 3,535,769 Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $ - $ - Income taxes $ - $ - Non-cash Investing and Financing Activities: Issuance of common stock for business combination $ 8,177,614 $ - Repayment of aquired NTN debts upon disposition of assets to eGames $ 1,700,000 $ - Preferred shares issued in connection with reverse merger $ 781 $ - NOTE 1 ORGANIZATION AND DESCRIPTION OF BUSINESS OPERATIONS NOTE 2 LIQUIDITY AND CAPITAL RESOURCES NOTE 3 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE 3 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) NOTE 3 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) NOTE 3 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) NOTE 3 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) NOTE 3 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) NOTE 4 NTN BUZZTIME, INC TRANSACTION NOTE 4 NTN BUZZTIME, INC TRANSACTION (Continued) Number of shares of the Common Stock owned by NTN stockholders (i) Multiplied by the fair value per share of Common Stock (ii) Total purchase price (i) (ii) NOTE 4 NTN BUZZTIME, INC TRANSACTION (Continued) Preliminary Purchase
Price
Allocation Pro Forma
Adjustment Cash and cash equivalents Accounts receivable Prepaid expense and other current assets Property and equipment, net Software development costs (368,460 ) Customers Trade name Accounts payable, accrued liabilities and other current liabilities (3,781,173 ) (3,781,173 ) Net assets acquired, excluding goodwill Total consideration Net assets acquired, excluding goodwill (410,962 ) Goodwill NOTE 4 NTN BUZZTIME, INC TRANSACTION (Continued) Proceeds from sale: Cash $ 132,055 Escrow 100,000 Assume advance/loans 1,700,000 Interest on advance/loans 67,945 Carrying value of assets sold: Cash and cash equivalents (13,461 ) Accounts receivable (75,153 ) Prepaids and other current assets (123,769 ) Property and equipment, net (1,013,950 ) Software development costs (927,368 ) Customers (548,000 ) Trade name (299,000 ) Goodwill (8,588,576 ) Other assets (103,173 ) Liabilities transferred upon sale: Accounts payable and accrued expenses 113,156 Obligations under finance leases 16,676 Lease liability 25,655 Deferred revenue 54,803 Other current liabilities 148,987 Transaction costs (265,000 ) Total loss on sale of assets $ (9,598,173 ) NOTE 4 NTN BUZZTIME, INC TRANSACTION (Continued) Three Months Ended March 31, 2021 2020 Net loss attributable to common stockholders $ (17,702,334 ) $ (1,019,212 ) Basic and diluted net loss per share attributable to common stockholders $ (0.64 ) $ (0.06 ) NOTE 5 FAIR VALUE OF FINANCIAL INSTRUMENTS NOTE 5 FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued) March 31, 2021 Description Level 1 Level 2 Level 3 Liabilities: Contigent consideration - - 19,290,000 Total $ - $ - $ 19,290,000 December 31, 2020 Description Level 1 Level 2 Level 3 Liabilities: Contigent consideration - - 20,110,000 Total $ - $ - $ 20,110,000 Balance at December 31, 2020 $ 20,110,000 Fair value adjustments included in operating expenses (820,000 ) Balance at March 31, 2021 $ 19,290,000 NOTE 5 FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued) 20PROPERTY AND EQUIPMENT March 31, December 31, 2021 2020 Laboratory and manufacturing equipment $ 299,839 $ 299,839 Leasehold improvements 414,504 414,504 714,343 714,343 Less: accumulated depreciation and amortization (145,400 ) (120,237 ) Property and equipment, net $ 568,943 $ 594,106 NOTE 7 LEASES NOTE 7 LEASES (Continued) NOTE 7 LEASES (Continued) Operating lease expense Sublease income Variable lease expense 9,002 Total $ 138,822 Three Months Ended
March 31, 2021 Cash paid within operating cash flow $ 154,641 Weighted average remaining lease term (years) 5.25 Weighted average discount rate 14.5 % Amount Remaining of 2021 $ 428,878 2022 588,918 2023 606,864 2024 624,172 2025 641,981 Thereafter 105,674 Future lease payments 2,996,487 Less: Imputed interest $ 882,265 Total operating lease liabilities 2,114,222 NOTE 7 LEASES (Continued) Amount Remaining of 2021 $ 60,655 2022 82,419 2023 84,194 2024 86,010 2025 87,867 Thereafter 74,590 Total $ 475,735 NOTE 8 GOODWILL AND IN PROCESS RESEARCH AND DEVELOPMENT NOTE 9 SECURITY DEPOSITS AND OTHER ASSETS SECURITY DEPOSITS AND OTHER ASSETS (Continued) ACCRUED EXPENSES March 31, December 31, 2021 2020 Compensation payable $ 588,266 $ 293,534 Accrued general and administrative expenses 57,702 207,468 Accrued research and development expenses 349,592 399,893 Accrued interest 164,784 150,125 Total accrued expenses $ 1,160,344 $ 1,051,020 NOTE 11 LOANS PAYABLE NOTE 12 COMMITMENTS AND CONTINGENCIES NOTE 12 COMMITMENTS AND CONTINGENCIES (Continued) NOTE 12 COMMITMENTS AND CONTINGENCIES (Continued) NOTE 12 COMMITMENTS AND CONTINGENCIES (Continued) NOTE 12 COMMITMENTS AND CONTINGENCIES (Continued) NOTE 13 STOCK-BASED COMPENSATION NOTE 14 STOCKHOLDERS’ DEFICIT STOCKHOLDERS’ DEFICIT (Continued) NOTE 15 SUBSEQUENT EVENTS NOTE 15 SUBSEQUENT EVENTS (Continued) Item 2. Quarterly Report on Form 10-Q,report, to help provide an understanding of our financial condition, the changes in our financial condition and our results of operations. All dollar amountsthis discussion are roundedaccordance with the terms of an agreement and plan of merger and reorganization dated August 12, 2020 among Brooklyn Inc. (then known as NTN Buzztime, Inc.), BIT Merger Sub, Inc. and Brooklyn LLC. In accordance with such agreement and plan of merger, on March 25, 2021 Brooklyn Inc. amended its restated certificate of incorporation in order to effect:nearest thousand. Our discussion is organized as follows:●Overview and Highlights. This section describes our business and significant events and transactions we believe are important in understanding our financial condition and results of operations.●Critical Accounting Policies. This section lists our significant accounting policies, including any material changes in our critical accounting policies, estimates and judgments during the three months ended March 31, 2020 from those described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our 2019 10-K.●Results of Operations. This section provides an analysis of our results of operations presented in the accompanying unaudited condensed consolidated statements of operations by comparing the results for the three months ended March 31, 2020 to the results for the three months ended March 31, 2019.●Liquidity and Capital Resources. This section provides an analysis of our historical cash flows, and our future capital requirements.●Recent Accounting Pronouncements. This section provides information related to new or updated accounting guidance that may impact our consolidated financial statements.●Off-Balance Sheet Arrangements. This section provides information related to any off-balance sheet arrangement we may have that would affect our consolidated finance statements.OVERVIEW AND HIGHLIGHTSAbout Our Business and How We Talk About ItWe deliver interactive entertainment and innovative technology to our partners inMerger, a wide rangereverse stock split of verticals – from bars and restaurants to casinos and senior living centers. By enhancing the overall guest experience, we believe we help our hospitality partners acquire, engage, and retain patrons.Through social fun and friendly competition, our platform creates bonds between our hospitality partners and their patrons, and between patrons themselves. We believe this unique experience increases dwell time, revenue, and repeat business for venues – and has also createdits common stock, par value $0.005 per share, at a large and engaged audienceratio of one-for-two, which we connect with through our in-venue TV network. Untilrefer to as the significant disruptionsReverse Split; andrestaurantassets relating to the business it operated prior to the Merger, which it had operated under the name “NTN Buzztime, Inc.,” to eGames.com Holdings LLC, or eGames.com, in exchange for eGames.com’s payment of a purchase price of $2.0 million and bar industry resultingassumption of specified liabilities relating to such pre-Merger business. This transaction, which we refer to as the Asset Sale, was completed in accordance with the terms of an asset purchase agreement dated September 18, 2020, as amended, between Brooklyn Inc. and eGames.com. that began in March 2020, over 1 million hours2020. While the constraints of trivia, card, sports and arcade games were played on our network each month.We generate revenue by charging subscription fees to our partners for access to our 24/7 trivia network, by selling and leasing tablet and hardware equipment for custom usage beyond trivia/entertainment, by selling digital-out-of-home (DOOH) advertising direct to advertisers and on national ad exchanges, by licensing our entertainment and trivia content to other parties, and by providing professional services such as custom game design or development of new platforms on our existing tablet form factor. Up until February 1, 2020,the pandemic are slowly being lifted, we also generated revenue by hosting live trivia events (see Note 5 toare still assessing the consolidated financial statements included in Item 1 of this report).We own several trademarks and consider the Buzztime®, Playmaker®, Mobile Playmaker, and BEOND Powered by Buzztime trademarks to be among our most valuable assets. These and our other registered and unregistered trademarks used in this document are our property. Other trademarks are the property of their respective owners.Unless otherwise indicated, references in this report: (a) to “Buzztime,” “NTN,” “we,” “us” and “our” refer to NTN Buzztime, Inc. and its consolidated subsidiaries; (b) to “network subscribers,” “customers,” or “partners” refer to venues that subscribe to our network service; (c) to “consumers,” “patrons” or “players” refer to the individuals that engage in our games, events, and entertainment experiences available at venues and (d) to “venues” or “sites” refer to locations (such as a bar or restaurant) of our customers at which our games and entertainment experiences are available to consumers.Recent DevelopmentsCOVID-19 Impact UpdateThe negativelonger term impact of the COVID-19 pandemic on our development plans, and on the restaurant and bar industry was abrupt and substantial, andability to conduct our clinical trials There can be no assurance that this analysis will enable us to avoid or remediate part or all of any impact from the spread of COVID-19 or its consequences, including downturns in business cash flows from operations and liquidity suffered, and continuessentiment generally. The extent to suffer, materially as a result. In many jurisdictions, including those in which we have many customers and prospective customers, restaurants and bars have been ordered by the government to shut down or close all on-site dining since the latter half of March 2020. At its peak, approximately 70% of our customers requested that their subscriptions to our services be temporarily suspended. As governmental orders and restrictions impacting restaurants and bars are eased or lifted, we expect the temporary subscription suspensions to end, however, even in jurisdictions in which such orders and restrictions are eased or lifted, our customers could request to continue their subscription suspensions if, for example, such customers choose not to re-open despite being permitted to do so. We have experienced material decreases in subscription revenue, advertising revenue and cash flows from operations, which we expect to continue for at least as long as the restaurant and bar industry continues to be negatively impacted by the COVID-19 pandemic and global efforts to contain its spread will impact our operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the pandemic and the actions taken to contain or treat the COVID‑19 pandemic.continue thereafter if restaurants and bars seek to reduce their operating costs or are unable to re-open even if restrictions within their states are lifted. We cannot predict with certainty whether, when or the mannerresult in “cytokine storm syndrome,” in which the impactbody releases cytokines into the body too quickly, which can create symptoms such as high fever, inflammation, severe fatigue and nausea and can lead to severe or life-threatening symptoms.pandemic will improve, includingbody’s natural response to microbial infection, and in discriminating between foreign (“non-self”) and “self,” IL‑2 mediates its effects by binding to IL‑2 receptors, which are expressed by lymphocytes. The major sources of IL‑2 are activated CD4+ T cells and activated CD8+ T cells.restaurants willadditively administered with IRX‑2.permitted to offer on-site dining or when bars willfound at clinicaltrials.gov (NCT02609386).permitted to re-open or to what degree, when our customers will re-open, or if they will subscribe to our service if and when they do, or if and when there will be a resurgence in COVID-19 transmission or infection after the easing or lifting of stay-at-home orders, and if there is, the impact of such resurgence on our business. Similarly, we cannot predict with certainty the durationfound at clinicaltrials.gov (NCT02950259).effectsbreast cancer, held at the Providence Portland Medical Center using IRX‑2 in conjunction with a programmed cell death protein 1 (PD1) and chemotherapy treatments. Details of this trial can be found at clinicaltrials.gov (NCT04373031).pandemic onstudies described above is an investigator-sponsored study for which we are providing IRX‑2 as study drug and financial support to conduct the trial.businessIRX 2 platform to become a leader in immunologic therapy for various types of cancer as both a first-line therapy and liquidity, however, unlessin combination with other cancer treatments, and to commercialize the gene editing technology licensed from the Licensor:very near termtreatment of indications of high unmet medical need in oncology and other conditions.subscription revenue, advertising revenue and cash flows from operations return to pre-pandemic levels and/or we raise substantial capital, the amountproduct candidate IRX 2 through clinical development. IRX 2 is a human blood-based IL 2 therapy being studied for multiple types of time and the amount of cash we have to maintain operations and sustain the negative effectscancer, including squamous cell cancer of the pandemic is very limited. See “—Liquidityhead and Capital Resources,” below,neck. Treatment of patients in the INSPIRE trial has been completed, and “Item 1A. Risk Factors”patients who participated in Part IIthe trial are currently being monitored for event-free survival with top-line data estimated to be available in the first half of this report2022.the impact of the pandemic on our business, and outlook.Our current focus is on maintaining operations and at this time we are no longer focusing on the areas in which we intended to focus during 2020 as reported in the section titled, “Our Strategy,” in ITEM 1. Businessplease see Item 8.01 of our 2019 10-K.Paycheck Protection Program NoteInCurrent Report on Form 8-K filed with the SEC on May 11, 2021. 2020, we received a $1,625,100 loan under the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security Act administered by the U.S. Small Business Administration. The loan matures on April 18, 2022 and bears interest at a rate of 1.0% per annum. We must make monthly interest only payments beginning on November 18, 2020. One final payment of all unforgiven principal plus any accrued unpaid interest is due at maturity. See “—Liquidity and Capital Resources,” below.Amended Loan and Security AgreementOn March 12, 2020, we 26, 2021 , Brooklyn LLC entered into an amendmentexclusive license agreement, or the License Agreement, with the Licensor to license the Licensor’s IP and mRNA cell reprogramming and gene editing technology for use in the development of certain cell-based therapies to be evaluated and developed for treating human diseases, including certain types of cancer, sickle cell disease, and beta thalassemia. Through the License Agreement, Brooklyn LLC acquired an exclusive worldwide license to develop and commercialize certain cell-based therapies to treat cancer and rare blood disorders, including sickle cell disease, based on patented technology and know-how of Novellus Therapeutics Limited.loanLicensor additional fees of $5,000,000 in October 2021 and security agreement that we entered into with Avidbank$7,000,000 in September 2018 for a $4,000,000 four-year term loan. In connection with entering into the amendment, we made a $433,000 payment on our term loan, which includes the $83,333 monthly principal payment plus accrued interest for March 2020 and a $350,000 principal prepayment, thereby reducing the outstanding principal balance of our term loan to $2.0 million. Additionally, underOctober 2022.amendment,License Agreement, Brooklyn LLC is required to use commercially reasonably efforts to achieve certain delineated milestones, including specified clinical development and regulatory milestones and specified commercialization milestones. In general, upon its achievement of these milestones, Brooklyn LLC will be obligated, in the maturitycase of development and regulatory milestones, to make milestone payments to Licensor in specified amounts and, in the case of commercialization milestones, to specified royalties with respect to product sales, sublicense fees or sales of pediatric review vouchers. In the event Brooklyn LLC fails to timely achieve certain delineated milestones, the Licensor may have the right to terminate the rights of Brooklyn LLC under provisions of the License Agreement relating to those milestones.our term loan was changedthe Purchase Agreement with respect to common stock. The purchase price per share for each such Regular Purchase will be based on prevailing market prices of the common stock immediately preceding the time of sale, as determined under the Purchase Agreement.September 28, 2022product sales to December 31, 2020, and the amount and timingdate. We will not have revenues from product sales until such time as we receive regulatory approval of our payment obligations accelerated significantly.OtherIn January 2020, we solddrug candidates, successfully commercialize our products or enter into a licensing agreement which may include up-front licensing fees, of which there can be no assurance.assets usedresearch and development resources have been devoted to conduct the live-hosted knowledge-based trivia events known as Stump! Triviadevelopment of IRX-2, and OpinioNation for approximately $1.4 million in cash.Strategic ProcessOur board of directors continueswe expect this to explore and evaluate strategic alternatives focused on maximizing shareholder value, while also exploring and evaluating financing alternatives to increase the likelihood that we will be able to avoid a restructuring, which may include a reorganization, bankruptcy, assignmentcontinue for the benefitforeseeable future.creditors, or a dissolution, liquidation and/or winding up,our business, we contract with third parties to perform various clinical study and trial activities in the event the strategic process does noton-going development and testing of potential products. The financial terms of these agreements are subject to negotiation and vary from contract to contract and may result in a transaction. Our boarduneven payment flows. Payments under the contracts depend on factors such as the achievement of directors has not set a timetable forcertain events or milestones, the strategic process nor has it made any decisions relating to any strategic alternatives at this time, and no assurance can be given assuccessful enrollment of patients, the allocation of responsibilities among the parties to the outcomeagreement, and the completion of portions of the process.clinical study or trial or similar conditions. Preclinical and clinical study and trial associated activities such as production and testing of clinical material require significant up-front expenditures. We do not intend to discloseanticipate paying significant portions of a study or trial’s cost before such begins and incurring additional details regardingexpenditures as the strategic process unlessstudy or trial progresses and until further disclosure is appropriate or necessary.accounting principles generally accepted in the United States (“GAAP”).GAAP. The preparation of these consolidated financial statements requires us to make judgments, estimates, and judgmentsassumptions that affect the reported amounts of assets and liabilities revenues and expenses, and relatedthe disclosure of contingent assets and liabilities. On an ongoing basis, weliabilities at the date of the consolidated financial statements, as well as the reported revenue and expenses during the reporting periods. We continually evaluate our judgments, estimates including those related to deferred costs and revenues, depreciation and amortization of fixed assets, the provision for income taxes including the valuation allowance, stock-based compensation, bad debts, impairment of software development costs, goodwill, intangible assets and contingencies.assumptions. We base our estimates on the terms of underlying agreements, our expected course of development, historical experience and on various other assumptionsfactors we believe to beare reasonable underbased on the circumstances, the results of which form theour management’s basis for making judgments about the carrying valuesvalue of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates underestimates.assumptions or conditions. Criticalresult. Our consolidated financial statements and the notes thereto included elsewhere in this report contain accounting policies and other disclosures as required by GAAP.defined as thosea measure of our cash on hand and any highly liquid investments with maturity dates within the next three months. At December 31, 2020 and March 31, 2021, we had cash of $1.6 million and $8.4 million, respectively.both most importantable to commercialize IPR&D assets, the lives of the assets are reduced and the amounts are amortized based on the estimated useful lives beginning at that point in time. Where development is terminated or abandoned, there may be a small impairment charge related to the portrayalIPR&D assets.condition and results and require management’s most subjective judgments.Therestatements are measured based on the largest benefit that has at least a 50% likelihood of being realized. At this time, we have been no material changes in our critical accounting policies, estimates and judgments during the three months endeduncertain tax positions for any recording period.2020 from those described in the “Management’s Discussion2021 and Analysis of Financial Condition and Results of Operations” section of our 2019 10-K.RESULTS OF OPERATIONS For the three months ended March 31, 2021 2020 Change $ Change % Operating Expenses: Research and development $ 1,519,633 $ (38,971 ) 1,558,604 -3999 % General and administrative 1,636,557 1,053,505 583,052 55 % Transaction costs 5,765,407 - 5,765,407 N/A Change in fair value of contingent consideration (820,000 ) - (820,000 ) N/A Total operating expenses 8,101,597 1,014,534 Loss from operations (8,101,597 ) (1,014,534 ) Other Expenses: Other expense, net (2,564 ) (4,678 ) 2,114 -45 % Loss on sales of NTN assets (9,598,173 ) - (9,598,173 ) N/A Total other expenses (9,600,737 ) (4,678 ) Net loss attributable to common stockholders $ (17,702,334 ) $ (1,019,212 ) incurred a net loss of $1,218,000had no revenues for the three months ended March 31, 2020, compared2021 or 2020.net losspublicly traded company.$313,000 forour investigator-sponsored studies.31, 2019.Revenuegenerate revenue by charging subscription feesexpect research and development expenses to grow as we expand our partners for access to our 24/7 trivia network, by selling and leasing tablet and hardware equipment for custom usage beyond trivia/entertainment, by selling digital-out-of-home (DOOH) advertising direct to advertisers and on national ad exchanges, by licensing our entertainment and trivia content to other parties, and by providing professional services such as custom game design or development of new platforms on our existing tablet form factor. Up until February 1, 2020, we also generated revenue by hosting live trivia events (see Note 5 to the consolidated financial statements included in Item 1 of this report). The table below summarizes the type of revenue we generatedclinical trial activities.2020 and 2019 and the change in such revenue between the two periods: Three months ended March 31, 2020 2019 $ % of Total Revenue $ % of Total Revenue $ Change % Change Subscription revenue 1,999,000 83.5 % 3,833,000 79.3 % (1,834,000 ) (47.8 )% Hardware revenue 16,000 0.7 % 205,000 4.2 % (189,000 ) (92.2 )% Other revenue 379,000 15.8 % 794,000 16.5 % (415,000 ) (52.3 )% Total 2,394,000 100.0 % 4,832,000 100.0 % (2,438,000 ) (50.5 )% Subscription RevenueThe decrease in subscription revenue for the three months ended March 31, 2020 was primarily due to lower average site count and lower average revenue per site when compared to the same period in 2019. We previously reported that our subscription revenue would materially decrease beginning in the first quarter of 2020 if we did not add network subscribers or other revenue sources sufficient to replace the revenue historically received from Buffalo Wild Wings corporate-owned restaurants and its franchisees, after our existing relationships with BWW terminated in November 2019. To date, we have not offset the lost subscription revenue from Buffalo Wild Wings corporate-owned restaurants and its franchisees.Because shelter-in-place orders and governmental orders for restaurants and bars to shut down or close all on-site dining were generally issued toward the end of the first quarter of 2020, we expect the negative impacts of the COVID-19 pandemic on our subscription revenue to be significantly greater in the second quarter of 2020 compared to the first quarter of 2020. At its peak, approximately 70% of our customers requested that their subscriptions to our services be temporarily suspended. As governmental orders and restrictions impacting restaurants and bars are eased or lifted, we expect the temporary subscription suspensions to end, however, even in jurisdictions in which such orders and restrictions are eased or lifted, our customers could request to continue their subscription suspensions if, for example, such customers choose not to re-open despite being permitted to do so. See “Item 1A. Risk Factors” in Part II of this report for additional information regarding the impact of the pandemic on our business and outlook.The table below provides a geographic breakdown of our site count as of the date indicated: Network Subscribers as of March 31, 2020 2019 United States 1,277 2,491 Canada 119 141 Total 1,396 2,632 Hardware RevenueThe decrease in hardware revenue for the three months ended March 31, 2020 was primarily due to decreased sales-type lease arrangements when compared to the same period in 2019. As previously reported, we did not, and do not, expect to continue recognizing hardware revenue under sales-type lease arrangements during 2020 or thereafter. Unless we license or otherwise dispose of our hardware business, we expect to continue recognizing hardware revenue throughout 2020 under our existing contract from our jail services partner, however, we are uncertain if we will enter into another equipment sale contract with our jail services partner or any other party. We are in early stage discussions to license our hardware business to a third party to help preserve capital as the cost to service this revenue stream is significant relative to our existing cash on hand.Other RevenueThe decrease in other revenue for the three months ended March 31, 2020 was primarily due to a decrease in revenue from our live-hosted trivia events when compared to the same period in 2019 as a result of the sale of all our assets used to conduct the live-hosted knowledge-based trivia events known as Stump! Trivia and OpinioNation in January 2020. We do not expect to recognize revenue from live-hosted trivia events in the future. We also recognized less license revenue and advertising revenue during the three months ended March 31, 2020 when compared to the same period in 2019. We expect our advertising revenue will continue to be materially adversely impacted because of a decrease in advertising sales arising from a slowdown in consumer traffic of the restaurant and bars that subscribe to our service as a result of the COVID-19 pandemic.Direct Operating Costs and Gross MarginA comparison of direct costs and gross margin for the periods indicated is shown in the table below: For the three months ended March 31, 2020 2019 Change % Change Revenues $ 2,394,000 $ 4,832,000 $ (2,438,000 ) (50.5 )% Direct Costs 950,000 1,484,000 (534,000 ) (36.0 )% Gross Margin $ 1,444,000 $ 3,348,000 $ (1,904,000 ) (56.9 )% Gross Margin Percentage 60.3 % 69.3 % the decrease in directtransaction costs was primarily due to (1) decreases in direct wages of approximately $199,000 as a result of no longer providing live-hosted trivia events after January 2020 duerelated to the saleissuance of allcommon stock to our assets used to conductfinancial advisor upon consummation of the live-hosted knowledge-based trivia events discussed above; (2) decreased depreciation expenseMerger.$190,000; and (3) decreased service provider and freight expenseContingent Considerationapproximately $89,000; (4) decreased license fees of $39,000; and (5) decreased other miscellaneous expenses of $16,000, in each case, when compared to the same period in 2019.The decrease in gross margincontingent consideration was $820,000 for the three months ended March 31, 2020 was primarily due to revenue mix2021 and writing off approximately $188,000 in older technology equipment$0 for the three months ended March 31, 2020 when compared to the same period in 2019.Operating Expenses For the three months ended March 31, 2020 2019 Change % Change Selling, general and administrative $ 3,080,000 $ 3,468,000 $ (388,000 ) (11.2 )% Impairment of capitalized software $ 138,000 $ 1,000 $ 137,000 13,700.0 % Impairment of goodwill $ 662,000 $ - $ 662,000 100.0 % Depreciation and amortization (non-direct) $ 85 $ 96 $ (11 ) (11.5 )% Selling, General and Administrative ExpensesThe decrease in selling, general and administrative expenses2020.was primarily duemainly related to decreased (1) payroll and related expensepayments of $283,000, (2) marketing feesinterest on notes in the principal amount of $198,000 and (3) professional fees of $60,000 due to fewer consulting expenses. These decreases were partially offset by increased bad debt expense of $159,000. In light$410,000 that we assumed as part of the recent measures we implementedacquisition of the assets of IRX Therapeutics, LLC in 2018. The notes bear interest at the rate of 14% and were due on December 31, 2019. On January 27, 2020, the notes were amended to reduce operating expensesextend the maturity date to the earlier of (i) a change of control and to preserve capital, we expect our selling, general and administrative expenses to decrease in 2020. However, such actions, and any similar actions we may implement in the future, could adversely affect our business and we may not realize the operation or financial benefits(ii) December 31, 2021, whichever comes first.such actions.ImpairmentNTN AssetsCapitalized SoftwareImpairment of capitalized software increasedNTN assets for the three months ended March 31, 20202021 was incurred when we completed the Asset Sale.abandoning certain capitalized softwareany changes in regulatory oversight applicable to our products;projectsactivities and working capital requirements through public or private equity offerings, debt financings, corporate collaborations or other means. We may also seek governmental grants to support our clinical trials and preclinical trials. Further, we may seek to raise capital to fund additional product development efforts even if we have sufficient funds for our planned operations. Any sale by us of additional equity or convertible debt securities could result in dilution to our stockholders. There can be no assurance that any such required additional funding will be available to us at all or available on terms acceptable to us.concluded were no longerraise additional funds through collaborative arrangements, it may be necessary to relinquish some rights to our technologies or grant sublicenses on terms that are not favorable to us. If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more research and development programs, which could have an adverse effect on our business.current strategic fit or for which we determined thatcondition to the marketabilityclosing of the content had decreased due to obtaining additional information regarding the specific purpose for which the content was intended.Impairment of GoodwillWe have goodwill resulting from the excess of costs over the fair value of assetsMerger, we acquired in 2003 related to our Canadian business (the “Reporting Unit”). Goodwill and intangible assets acquired in a purchase combination that are determinedwere required to have an indefinite useful life are not amortized, but instead are assessed annually, or at interim periods, for impairment based on qualitative factors, such as macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other relevant events, to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of the Reporting Unit is less than its carrying amount. If there are indications of impairment, then we perform a quantitative impairment test.During the Company’s evaluation of impairment indicators as of March 31, 2020, we determined that the uncertainty relating to COVID-19’s impact on the Reporting Unit’s future operating results represented an indicator of impairment. Accordingly, we compared the estimated fair value of the Reporting Unit to its carrying value at March 31, 2020, determined that a full impairment loss was warranted and recognized an impairment charge of $662,000 for the three months ended March 31, 2020. There was no goodwill impairment recorded for the three months ended March 31, 2019.Depreciation and AmortizationThe decrease in depreciation and amortization expense for the three months ended March 31, 2020 was primarily due to various equipment becoming fully depreciated and not replacing with new assets.Other Income (Expense), Net For the three months ended March 31, Increase in other 2020 2019 income, net Total other income (expense), net $ 1,284,000 $ (85,000 ) $ 1,369,000 For the three months ended March 31, 2020, the increase in other income (expense), net, was primarily due to a $1,265,000 gain related to the asset sale of all our assets used to conduct the live-hosted knowledge-based trivia events, increased foreign currency gains related to our Canadian subsidiary, and decreased interest expense due to lower long-term debt balances when compared to the same period in 2019.Income Taxes For the three months ended March 31, 2020 2019 Change % Change Benefit (provision) for income taxes $ 19,000 $ (11,000 ) $ 30,000 (273 )% We expect to incur state income tax liability in 2020 related to our U.S. operations. For the three months ended March 31, 2020, an impairment to goodwill resulted in a in a net tax benefit in Canada. We have established a full valuation allowance for substantially all of our deferred tax assets, including the NOL carryforwards, since we do not believe we are likely to generate future taxable income to realize these assetsEBITDA—Consolidated OperationsEarnings before interest, taxes, depreciation and amortization, or EBITDA, is not intended to represent a measure of performance in accordance with GAAP. Nor should EBITDA be considered as an alternative to statements of cash flows as a measure of liquidity. EBITDA is included herein because we believe it is a measure of operating performance that financial analysts, lenders, investors and other interested parties find to be a useful tool for analyzing companies like us that carry significant levels of non-cash depreciation and amortization charges compared to their net income or loss calculation in accordance with GAAP.The tables below shows a reconciliation of our consolidated net loss calculated in accordance with GAAP to EBITDA for the periods indicated. EBITDA should not be considered a substitute for, or superior to, net loss calculated in accordance with GAAP. For the three months ended March 31, 2020 2019 Net loss per GAAP $ (1,218,000 ) $ (313,000 ) Interest expense, net 45,000 67,000 Income tax (benefit) provision (19,000 ) 11,000 Depreciation and amortization 546,000 747,000 EBITDA $ (646,000 ) $ 512,000 LIQUIDITY AND CAPITAL RESOURCESAs of March 31, 2020, we had cash, cash equivalents and restricted cash of approximately $2.4 million (including the approximately $1.4least $10.0 million in cash we received in January 2020 from the sale of all our assets used to conduct our live-hosted knowledge-based trivia events) compared to cash,and cash equivalents at the effective time of the Merger. In furtherance of, and restricted cashprior to, the Merger, certain of approximately $3.4our members entered into agreements pursuant to which those members purchased units of Brooklyn LLC for an aggregate purchase price of $10.5 million.as of December 31, 2019.shares of common stock from time to time during the term of the Purchase Agreement. As discussedof May 14, 2021, we had issued and sold an aggregate of 302,358 shares of common stock to Lincoln Park pursuant to the Purchase Agreement, resulting in gross proceeds of $6.3 million. For further below, subsequentinformation, see “—Recent Developments—Purchase Agreement.”March 31, 2020,eGames.com our rights, title and interest in and to the assets relating to the business we received a loan of approximately $1.6 millionoperated prior to the Merger under the Paycheck Protection Program (the “PPP”)name “NTN Buzztime, Inc.” in exchange for eGames.com’s payment of a purchase price of $2.0 million and assumption of specified liabilities relating to such pre-Merger business.(the “CARES Act”) administeredor the CARES Act, as amended on June 5, 2020 by the U.S. Small Business Administration.In connection with preparing our financial statements asPaycheck Protection Program, or PPP. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carry back periods, and for the three months ended March 31, 2020, our management evaluated whether there are conditions or events, considered in the aggregate, that are known and reasonably knowable that would raise substantial doubt about our ability to continue as a going concern through twelve months after the date that such financial statements are issued. During the three months ended March 31, 2020, we incurred a net loss of $1,281,000, and our current liabilities exceeded our current assets at March 31, 2020 by $87,000. Since January 1, 2020, Avidbank required us to pay $750,000 of the principal balance of our term loan, thereby reducing it to $2,000,000 as of March 19, 2020. Under the terms of the amendment to our loan and security agreement that we entered into with Avidbank in March 2020, during 2020 we will be required to make monthly payments that, if made in accordance with their terms, will result in us paying off our term loan by December 31, 2020.The negative impact of the COVID-19 pandemic on the restaurant and bar industry was abrupt and substantial, and our business, cash flows from operations and liquidity suffered, and continues to suffer, materially as a result. In many jurisdictions, including those in which we have many customers and prospective customers, restaurants and bars have been ordered by the government to shut down or close all on-site dining. At its peak, approximately 70% of our customers requested that their subscriptions to our services be temporarily suspended. As governmental orders and restrictions impacting restaurants and bars are eased or lifted, we expect the temporary subscription suspensions to end, however, even in jurisdictions in which such orders and restrictions are eased or lifted, our customers could request to continue their subscription suspensions if, for example, such customers choose not to re-open despite being permitted to do so. We have experienced material decreases in subscription revenue, advertising revenue and cash flows from operations, which we expect to continue for at least as long as the restaurant and bar industry continues to be negatively impacted by the COVID-19 pandemic, and which may continue thereafter if restaurants and bars seek to reduce their operating costs or are unable to re-open even if restrictions within their states are eased or lifted.In responsealternative minimum tax credit refunds, modifications to the substantial negative impact of the pandemic on our business, we implemented measuresnet interest deduction limitations and technical corrections to reduce our operating expenses and preserve capital. We reduced our headcount (as oftax depreciation methods for qualified improvement property. On May 20, 2020, we have 17 employees compared to 74 at December 31, 2019) and our chief executive officer agreed to defer payment of 45% of all of his annual base salary payments between May 1, 2020 and October 31, 2020 until the earlier of October 31, 2020 or such time as our board of directors determines in good faith that we are in the financial position to pay his accumulated deferred salary. We eliminated all capital projects and are aggressively managing our payables and rent payments to limit further cash outlays and manage our working capital. We are continuing to carefully monitor our liquidity and our current focus is on maintaining operations. We are prioritizing payments to mission critical vendors and deferring all non-essential payables. We may implement additional measures designed to reduce operating expenses and/or preserve capital. We began discussions with Avidbank to modify our payment obligations under our term loan, to modify our financial covenants under our loan and security agreement and/or to obtain covenant relief. We also began discussions with our landlord to reduce or defer our rent payments, including vacating the space for an early termination of the lease. We are also in discussions with vendors to extend payment terms. We are unable to predict the outcome of these discussions or the extent to which we will be able to successfully modify our payment obligations or our financial covenants (or obtain covenant relief) related to our term loan, reduce or defer our rent payments, and/or extend vendor payment terms.While we expect to meet our near term debt service obligations on our term loan with Avidbank and we satisfied our financial covenants under our related loan and security agreement as of March 31, 2020, unless in the very near term our subscription revenue, advertising revenue and cash flow from operations return to pre-pandemic levels and/or we raise substantial capital, we do not expect that we will be able to satisfy our asset coverage ratio covenant at the end of June 2020, which may result in Avidbank declaring a default under our loan and security agreement. As a result of the impact of the COVID-19 pandemic on our business and taking into account our current financial condition and our existing sources of revenue, unless in the very near term our subscription revenue, advertising revenue and cash flow from operations return to pre-pandemic levels and/or we raise substantial capital, we believe we will have sufficient cash resources to pay forecasted cash outlays through October 2020, assuming we deliver a significant hardware order as scheduled during the second quarter of 2020, Avidbank does not take actions to foreclose on our assets in the event we are out of compliance with our financial covenants, and we are able to continue to successfully manage our working capital deficit by managing the timing of payments to our vendors and other third parties.We need in the very near term our subscription revenue, advertising revenue and cash flow from operations return to pre-pandemic levels, and/or we need to raise substantial capital in the very near-term to maintain operations. We continue to explore and evaluate opportunities to raise capital, including through equity financings, alternative sources of debt, and strategic transactions, which may include a business combination transaction and/or selling a portion or all of our assets. We currently have no arrangements for capital or for a strategic transaction, and no assurances can be given that we will be able to raise sufficient capital when needed, on acceptable terms, or at all, or that we will be able to complete a strategic transaction. If we are unable to raise sufficient additional capital in the very near term, we may default on our payment obligations to Avidbank or not satisfy our financial covenants to Avidbank, and if we do, Avidbank may declare a default, which could lead to all payment obligations becoming immediately due and payable and Avidbank has a first-priority security interest in all our existing and future personal property. In addition, we will be required to curtail or terminate some or all of our business operations and we may determine to pursue a restructuring, which may include a reorganization or bankruptcy under Federal bankruptcy laws, assignment for the benefit of creditors, or a dissolution, liquidation and/or winding up. Our investors may lose their entire investment in the event Avidbank forecloses on our personal property to satisfy our payment obligations and/or in the event of a reorganization, bankruptcy, assignment for the benefit of creditors, liquidation, dissolution or winding up.See the risk factors titled, “Our cash flows from operations and liquidity have been materially adversely affected by the effects of the COVID-19 pandemic. We need to raise capital in the near term and our inability to do so could result in our lender foreclosing on all of our assets and/or us pursuing a restructuring, which may include a reorganization or bankruptcy under Federal bankruptcy laws, assignment for the benefit of creditors, or a dissolution, liquidation and/or winding up” and “If we fail to comply with our financial covenants to Avidbank, it may declare a default, which could lead to all payment obligations becoming immediately due and payable and have a material adverse effect on our financial condition and business,” in Item 1A. Risk Factors in Part II of this report, below.Based on the factors described above, management concluded that there is substantial doubt regarding our ability to continue as a going concern through the twelve month period subsequent to the issuance date of these financial statements. Management’s plans for addressing the liquidity shortfall include continuing efforts to raise additional capital through equity financings and alternative sources of debt. However, there can be no assurances that we will be able to raise sufficient capital when needed, on acceptable terms, or at all.The accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to our ability to continue as a going concern.Avidbank Term LoanUnder a loan and security agreement we entered into with Avidbank in September 2018, or the Original LSA, we borrowed $4,000,000 in the form of a 48-month term loan, all of which we used to pay-off the $4,050,000 of principal borrowed from our then-existing lender. In February 2020, we made a pre-payment on the term loan of approximately $150,000 following the sale of all our assets used to conduct the live-hosted knowledge-based trivia events known as Stump! Trivia and OpinioNation in January 2020. On March 12, 2020, we entered into an amendment to the Original LSA. We refer to the Original LSA, as amended, as the Avidbank LSA. In connection with entering into the amendment, we made a $433,000 payment on our term loan, which included the $83,333 monthly principal payment plus accrued interest for March 2020 and a $350,000 principal prepayment, thereby reducing the outstanding principal balance of our term loan to $2,000,000 as of March 31, 2020.We incurred approximately $26,000 of debt issuance costs related to the Original LSA and the amendment to the LSA. 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 March 31, 2020 was $10,000 and is recorded as a reduction of long-term debt.Under the terms of the Avidbank LSA, our financial covenants were changed, the maturity date of our term loan was changed from September 28, 2022 to December 31, 2020, and commencing on April 30,4, 2020, we were required to make principal plus accrued interest payments on the last day of each month, such that our termgranted a loan will be repaid by December 31, 2020. The principal payment we must make each month will be $125,000 for each of April, May and June, $300,000 for each of July, August, September, October and November, and $125,000 for December.Under the Avidbank LSA, we have a monthly minimum asset coverage ratio covenant,from Silicon Valley Bank, which we refer to as the ACR covenant, and a minimum liquidity covenant. Under the ACR covenant, the ratio of (i) our unrestricted cash at Avidbank as of the last day of a calendar month plus 75% of our outstanding accounts receivable accounts that are within 90 days of invoice date to (ii) the outstanding principal balance of our term loan on such day must be no less than 1.25 to 1.00. As of March 31, 2020, we wereBrooklyn PPP Loan, in compliance with both of those covenants. Under the minimum liquidity covenant, the aggregate amount of unrestricted cash we have in deposit accounts or securities accounts maintained with Avidbank must be at all times not less than$309,905, pursuant to the principal balance outstandingPPP under our term loan.Under the Avidbank LSA, subject to customary exceptions, we are prohibited from borrowing additional indebtedness. We granted and pledged to Avidbank a first-priority security interest in all our existing and future personal property.The Avidbank LSA includes customary representations, warranties and covenants (affirmative and negative), including restrictive covenants that, subject to specified exceptions, limit our ability to: dispose of our business or property; merge or consolidate with or into any other business organization; incur or prepay additional indebtedness; create or incur any liens on its property; declare or pay any dividend or make a distribution on any class of our stock; or enter specified material transactions with our affiliates. The Avidbank LSA also includes customary events of default, including: payment defaults; breaches of covenants following any applicable cure period; material breaches of representations or warranties; the occurrence of a material adverse effect; events relating to bankruptcy or insolvency; and the occurrence of an unsatisfied material judgment against us. Upon the occurrence of an event of default, Avidbank may declare all outstanding obligations immediately due and payable, do such acts as it considers necessary or reasonable to protect its security interest in the collateral, and take such other actions as are set forth in the Avidbank LSA.Paycheck Protection Program LoanOn April 18, 2020, we issued a note in the principal amount of $1,625,100 evidencing a loan (the “PPP Loan”) we received under the PPPDivision A, Title I of the CARES Act administered by the U.S. Small Business Administration.Act. The Brooklyn PPP Loan, which was in the form of a Note we issued as of May 4, 2020, matures on April 18,May 5, 2022 and bears interest at a rate of 1.0% per annum. We must makeannum, payable monthly interest only payments beginningcommencing on November 18,4, 2020. One final payment of all unforgiven principal plus any accrued unpaid interest is due at maturity. Under the terms of the PPP, weWe may prepay the PPP LoanNote at any time prior to maturity, with no prepayment penalties. We may use fundsFunds from the Brooklyn PPP Loan may only be used for payroll costs, rent and utilities. We are using the funds received from the Brooklyn PPP Loan for payroll costs, costs used to continue group health care benefits, mortgage interest payments, rent payments, utility payments, and interest payments on other debt obligations incurred before February 15, 2020. We intend to use the entire PPP Loan forwhat we believe are qualifying expenses. Under the terms of the Brooklyn PPP Loan, certain amounts of the Brooklyn PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. No assurance is provided that we will obtain forgivenessthe loanFundswhole orOperating Activities. Our operations used $3,429,927 million in part. Avidbank consented to us borrowing the PPP Loan.Working CapitalAs of March 31, 2020, we had negative working capital (current liabilities in excess of current assets) of $87,000 compared to negative working capital of $25,000 as of December 31, 2019. The following table shows our change in working capital from December 31, 2019 to March 31, 2020. Increase (Decrease) Working capital as of December 31, 2019 $ (25,000 ) Changes in current assets: Cash and cash equivalents (988,000 ) Accounts receivable, net of allowance (812,000 ) Site equipment to be installed (234,000 ) Prepaid expenses and other current assets 229,000 Net decrease in current assets (1,805,000 ) Changes in current liabilities: Accounts payable (48,000 ) Accrued compensation (352,000 ) Accrued expenses (253,000 ) Sales taxes payable (112,000 ) Income taxes payable 5,000 Current portion of long-term debt (749,000 ) Current portion of obligations under capital leases (24,000 ) Deferred rent (77,000 ) Other current liabilities (133,000 ) Net decrease in current liabilities (1,743,000 ) Net decrease in working capital (62,000 ) Working capital as of March 31, 2020 $ (87,000 ) Cash FlowsCash flows from operating, investing and financing activities, as reflected in the accompanying consolidated statements of cash flows, are summarized as follows: For the three months ended March 31, 2020 2019 Change Cash (used in) provided by: Operating activities $ (1,165,000 ) $ 780,000 $ (1,945,000 ) Investing activities (140,000 ) (396,000 ) 256,000 Financing activities 388,000 (273,000 ) 661,000 Effect of exchange rates (71,000 ) 19,000 (90,000 ) Net (decrease) increase in cash, cash equivalents and restricted cash $ (988,000 ) $ 130,000 $ (1,118,000 ) Net cash provided by operations. The decrease in cash provided by operating activities was due to an increase in net loss of $1,192,000, after giving effect to adjustments made for non-cash transactions and an increase in cash used for operating assets and liabilities of $753,000, during the three months ended March 31, 2021. Our cash use for operating activities is influenced by the level of our net loss and the amount of cash we invest in personnel and technology development to support anticipated growth in our business.when comparedNTN Buzztime, Inc. was granted a loan, which we refer to as the NTN PPP Loan, in the aggregate amount of $1,625,000, pursuant to the same period in 2019.Our largest usePPP under the CARES Act. Under the terms of cash is payroll and related costs. Cashthe NTN Loan, certain amounts of the NTN PPP Loan could be forgiven if they were used for payroll and related costs decreased $285,000 to $2,265,000 forqualifying expenses as described in the three months ended March 31,CARES Act. In October 2020 from $2,550,000 for the same period in 2019, primarily due to reduced headcount. In lightU.S. Small Business Administration approved the forgiveness of $1,093,000 of the recent measures we implemented to reduce operating expenses and to preserve capital, we expect our selling, general and administrative expenses to decrease in 2020. See “—Results of Operations—Operating Expenses,” above.Our primary source of cash is cash we generate from customers. Cash received from customers decreased $2,001,000 to $3,163,000 for the three months ended March 31, 2020 from $5,164,000 for the same period in 2019. This decrease was primarily related to decreased subscription revenue, hardware revenue and revenue from live-hosted trivia events. The negative impact$1,625,000 principal amount of the COVID-19 pandemic on the restaurantNTN PPP Loan, leaving a principal balance of $532,000, all of which, plus accrued and bar industryunpaid interest, was abrupt,due and, our business suffered materially as a result. We cannot predict whether, when or the manner in which the impact of the pandemic will improve, including when the shut down or close of on-site dining restrictions will be eased or lifted or to what degree, when our customers will re-open, or if they will subscribe to our service if and when they do. See “—Results of Operations—Revenue,” above.Net cash used in investing activities. The $256,000 decrease in cash used in investing activities was primarily due to decreased capital expenditures and capitalized software development expenses.Net cash used in financing activities. During the three months ended March 31, 2020, we received $1,166,000 in net proceeds from the sale of all our assets used to conduct the live-hosted knowledge-based trivia events known as Stump! Trivia and OpinioNation. There was no similar transaction during the same period in 2019. During the three months ended March 31, 2020, we made $750,000 more in principal payments on long-term debt when compared to the same period in 2019.RECENT ACCOUNTING PRONOUNCEMENTSIn December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2019-12,Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes.This ASU enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year and interim-period accounting for enacted changes in tax law. The amendment will be effective for public companies with fiscal years beginning after December 15, 2020, (which will be January 1, 2021 for us); early adoption is permitted. We are currently assessing the impact of this pronouncement to our consolidated financial statements.In 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 Topic 718. The grant date is the date at which a grantor (supplier) and a grantee (customer) reach a mutual understandingterms of the key termsagreement and conditionsplan of a share-based payment award. The classificationmerger and subsequent measurementreorganization for the Merger, paid by us upon the closing of the award are subjectMerger.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 us). The adoption of this standard did not have a material impact on ourcondensed consolidated financial statements.In November 2018, the FASB issued ASU No. 2018-18,Collaborativestatements included in this report. (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 will be January 1, 2020 for us). The adoption of this standard did not have a material impact on our consolidated financial statements.In 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 us) and can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The adoption of this ASU did not have a material impact on our consolidated financial statements.In 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. The standard is effective for fiscal years beginning after December 15, 2019 (which was January 1, 2020 for us). The adoption of this ASU did not have a significant impact on our consolidated financial statements.In June 2016, the FASB issued ASU 2016-13,Measurement of Credit Losses on Financial Instruments, which supersedes current guidance requiring recognition of credit losses when it is probable that a loss has been incurred. The ASU requires an entity to establish an allowance for estimated credit losses on financial assets, including trade and other receivables, at each reporting date. This ASU will result in earlier recognition of allowances for losses on trade and other receivables and other contractual rights to receive cash. For smaller reporting companies, the effective date for this standard has been delayed and will be effective for fiscal years beginning after December 15, 2022 (which will be January 1, 2023 for us). We are evaluating the impact that the adoption of this standard will have on our consolidated financial statements.OFF-BALANCE SHEET ARRANGEMENTSItem 3. Risk.Risk. Securities and Exchange Commission, or SEC rules and regulations, as a smaller reporting company we are not required to provide the information otherwise required by this item.Item 4. Item4.Procedures.Procedures. the Securities Exchange Act of 1934, or the Exchange Act, designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.Senior Vice President of Finance,(who serves as our principal executive officer and principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures.Senior Vice President of Finance(who serves as our principal executive officer and principal financial officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report inMarch 31, 2021 providing reasonable assurance of achieving the desired control objectives.our most recently completed fiscal quarterthe three months ended March 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
We will continue to review and document our disclosure controls and procedures, including our internal control over financial reporting and may from time to time make changes to enhance their effectiveness and ensure that our systems evolve with our business.31Item 1. Item1.Proceedings.Proceedings.are subject tomay become involved in legal proceedings arising in the ordinary course of business. While management presently believesExcept as described above, we do not believe there is any litigation pending that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our 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 our business,results of operations, financial condition or operating results. We are not currently subject to any pending material legal proceedings.cash flows.Item 1A. Factors.Factors.risk. risk. You should consider carefully the risks and uncertainties described under Item 1A of Part Iin the “Risk Factors” section of our 2019 10-K and in our other filingsCurrent Report on Form 8-K filed with the SEC subsequent to December 31, 2019, on May 11, 2021 together with all other information contained or incorporated by reference in this report before you invest in our common stock. If any of the risks described in this report in our 2019 10-K or in our other filings with the SEC subsequent to December 31, 2019such Current Report occur, our business, financial condition, results of operations and our future growth prospects could be materially and adversely affected.affected. Under these circumstances, the trading price of our common stock could decline, and you may lose all or part of your investment. Asthe date of this report, we do not believe there have been any material changes to the risk factors disclosed in our 2019 10-K except as described below.Our cash flows from operations and liquidity have been materially adversely affected by the effects of the COVID-19 pandemic. We need to raise capital in the near term and our inability to do so could result in our lender foreclosing on all of our assets and/or us pursuing a restructuring, which may include a reorganization or bankruptcy under Federal bankruptcy laws, assignment for the benefit of creditors, or a dissolution, liquidation and/or winding up.ContentsThe negative impact of the COVID-19 pandemic on the restaurant and bar industry was abrupt and substantial, and our business, cash flows from operations and liquidity suffered, and continues to suffer, materially as a result. In many jurisdictions, including those in which we have many customers and prospective customers, restaurants and bars have been ordered by the government to shut down or close all on-site dining since the latter half of March 2020. At its peak, approximately 70% of our customers requested that their subscriptions to our services be temporarily suspended. As governmental orders and restrictions impacting restaurants and bars are eased or lifted, we expect the temporary subscription suspensions to end, however, even in jurisdictions in which such orders and restrictions are eased or lifted, our customers could request to continue their subscription suspensions if, for example, such customers choose not to re-open despite being permitted to do so. We have experienced material decreases in subscription revenue, advertising revenue and cash flows from operations, which we expect to continue for at least as long as the restaurant and bar industry continues to be negatively impacted by the COVID-19 pandemic, and which may continue thereafter if restaurants and bars seek to reduce their operating costs or are unable to re-open even if restrictions within their states are eased or lifted. We cannot predict with certainty whether, when or the manner in which the impact of the pandemic will improve, including when restaurants will be permitted to offer on-site dining or when bars will be permitted to re-open or to what degree, when our customers will re-open, or if they will subscribe to our service if and when they do, or if and when there will be a resurgence in COVID-19 transmission or infection after the easing and lifting of stay-at-home orders, and if there is, the impact of such resurgence on our business. Similarly, we cannot predict with certainty the duration of the negative effects of the pandemic on our business and liquidity, however, unless in the very near term our subscription revenue, advertising revenue and cash flows from operations return to pre-pandemic levels and/or we raise substantial capital, the amount of time and the amount of cash we have to maintain operations and sustain the negative effects of the pandemic is very limited.In response to the substantial negative impact of the pandemic on our business, we implemented measures to reduce our operating expenses and preserve capital. We reduced our headcount (as of May 20, 2020, we have 17 employees compared to 74 at December 31, 2019) and our chief executive officer agreed to defer payment of 45% of all of his annual base salary payments between May 1, 2020 and October 31, 2020 until the earlier of October 31, 2020 or such time as our board of directors determines in good faith that we are in the financial position to pay his accumulated deferred salary. We eliminated all capital projects and are aggressively managing our payables and rent payments to limit further cash outlays and manage our working capital. We are continuing to carefully monitor our liquidity and our current focus is on maintaining operations. We are prioritizing payments to mission critical vendors and deferring all non-essential payables. We may implement additional measures designed to reduce operating expenses and/or preserve capital. We began discussions with Avidbank to modify our payment obligations under our term loan, to modify our financial covenants under our loan and security agreement and/or to obtain covenant relief. We also began discussions with our landlord to reduce or defer our rent payments, including vacating the space for an early termination of the lease. We are also in discussions with vendors to extend payment terms. We are unable to predict the outcome of these discussions or the extent to which we will be able to successfully modify our payment obligations or our financial covenants (or obtain covenant relief) related to our term loan, reduce or defer our rent payments, and/or extend vendor payment terms.As of March 31, 2020, we had cash, cash equivalents and restricted cash of approximately $2,421,000. As of that date $2.0 million of principal was outstanding under our term loan with Avidbank. While we expect to meet our near term debt service obligations on our term loan and we satisfied our financial covenants under our loan and security agreement with Avidbank as of March 31, 2020, unless in the very near term our subscription revenue, advertising revenue and cash flows from operations return to pre-pandemic levels and/or we raise substantial capital, we do not expect that we will be able to satisfy our asset coverage ratio covenant at the end of June 2020, which may result in Avidbank declaring a default under our loan and security agreement. See, “If we fail to comply with our financial covenants to Avidbank, it may declare a default, which could lead to all payment obligations becoming immediately due and payable and have a material adverse effect on our financial condition and business,” below.In our 2019 10-K, we included a statement regarding a substantial doubt about our ability to continue as a going concern through March 19, 2021. As a result of the impact of the COVID-19 pandemic on our business and taking into account our current financial condition and our existing sources of revenue, in the very near term our subscription revenue, advertising revenue and cash flows from operations return to pre-pandemic levels and/or we raise substantial capital, we believe we will have sufficient cash resources to pay forecasted cash outlays through October 2020, assuming we deliver a significant hardware order as scheduled during the second quarter of 2020, Avidbank does not take actions to foreclose on our assets in the event we are out of compliance with our financial covenants, and we are able to continue to successfully manage our working capital deficit by managing the timing of payments to our vendors and third parties.We need a substantial portion of our customers to be removed from billing suspension, and/or we need to raise substantial capital in the very near-term to maintain operations. We continue to explore and evaluate opportunities to raise capital, including through equity financings, alternative sources of debt, and strategic transactions, which may include a business combination transaction and/or selling a portion or all of our assets. We currently have no arrangements for capital or for a strategic transaction, and no assurances can be given that we will be able to raise sufficient capital when needed, on acceptable terms, or at all, or that we will be able to complete a strategic transaction. The effects of the COVID-19 pandemic on macroeconomic conditions and the capital markets make it more challenging to raise capital and to complete a strategic transaction. If we are unable to raise sufficient additional capital in the very near term, we may default on our payment obligations to Avidbank or not satisfy our financial covenants to Avidbank, and if we do, Avidbank may declare a default, which could lead to all payment obligations becoming immediately due and payable. See, “If we fail to comply with our financial covenants to Avidbank, it may declare a default, which could lead to all payment obligations becoming immediately due and payable and have a material adverse effect on our financial condition and business,” below. In addition, we will be required to curtail or terminate some or all of our business operations and we may determine to pursue a restructuring, which may include a reorganization or bankruptcy under Federal bankruptcy laws, assignment for the benefit of creditors, or a dissolution, liquidation and/or winding up. Our investors may lose their entire investment in the event Avidbank forecloses on our personal property to satisfy our payment obligations and/or in the event of a reorganization, bankruptcy, assignment for the benefit of creditors, liquidation, dissolution or winding up.If we fail to comply with our financial covenants to Avidbank, it may declare a default, which could lead to all payment obligations becoming immediately due and payable and have a material adverse effect on our financial condition and business.We must comply with financial covenants our loan and security agreement with Avidbank: our unrestricted cash we have in deposit accounts or securities accounts maintained with Avidbank must be not less than $2,000,000 at all times and our asset coverage ratio must be no less than 1.25 to 1.00 at each month-end. As of March 31, 2020, we were in compliance with these covenants. However, there can be no assurance we will be in compliance with these covenants in the future. See“Our cash flows from operations and liquidity have been materially adversely affected by the effects of the COVID-19 pandemic. We need to raise capital in the near term and our inability to do so could result in our lender foreclosing on all of our assets and/or us pursuing a restructuring, which may include a reorganization or bankruptcy under Federal bankruptcy laws, assignment for the benefit of creditors, or a dissolution, liquidation and/or winding up,” above.If we fail to comply with our covenants, Avidbank may declare a default, which could lead to all payment obligations becoming immediately due and payable and have a material adverse effect on our financial condition and business. Avidbank has a first-priority security interest in all our existing and future personal property. Accordingly, in an event of a default, Avidbank could dispose of such property to satisfy our payment obligations.Our common stock could be delisted or suspended from trading on the NYSE American if we do not regain compliance with continued listing criteria with which we are currently not compliant or if we fail to meet any other continued listing criteria.As previously reported, in March 2020, we received a letter from NYSE Regulation Inc. stating that we are not in compliance with NYSE American LLC continued listing standards. Specifically, we are not in compliance with Section 1003(a)(iii) of the Company Guide because we reported stockholders’ equity of less than $6 million as of December 31, 2019 and had net losses in five of our most recent fiscal years ended December 31, 2019. Our stockholders’ equity was $5.1 million as of December 31, 2019. As a result, we are now subject to the procedures and requirements of Section 1009 of the Company Guide.On April 26, 2020, we submitted a plan to NYSE Regulation advising of actions we have taken or will take to regain compliance with Section 1003(a)(iii) by September 27, 2021. As of the date of this report, the NYSE Regulation has not informed us whether it has accepted our plan. If NYSE Regulation determines to accept the plan, we will be subject to periodic reviews, including quarterly monitoring, for compliance with the plan. If the plan is not accepted, delisting proceedings will commence. Furthermore, if the plan is accepted but we are not in compliance with the continued listing standards by September 27, 2021, or if we do not make progress consistent with the plan during the plan period, the NYSE American staff will initiate delisting proceedings as appropriate.We can give no assurances that NYSE Regulation will accept our plan or that we will be able to address our non-compliance with the NYSE American continued listing standards or, even if we do, that we will be able to maintain the listing of our common stock on the NYSE American. Our common stock could be delisted because NYSE Regulation does not accept our plan, because we do not make progress consistent with our plan, if it is accepted, during the plan period, because we do not regain compliance by September 27, 2021, or because we fall below compliance with other NYSE American listing standards. In addition, we may determine to pursue business opportunities that reduces our stockholders’ equity below the level required to maintain compliance with NYSE American continued listing standards. The delisting of our common stock for whatever reason could, among other things, substantially impair our ability to raise additional capital; result in a loss of institutional investor interest and fewer financing opportunities for us; and/or result in potential breaches of representations or covenants in agreements pursuant to which we made representations or covenants relating to our compliance with applicable listing requirements. Claims related to any such breaches, with or without merit, could result in costly litigation, significant liabilities and diversion of our management’s time and attention and could have a material adverse effect on our financial condition, business and results of operations. In addition, the delisting of our common stock for whatever reason may materially impair our stockholders’ ability to buy and sell shares of our common stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock.If our common stock were delisted and determined to be a “penny stock,” a broker-dealer may find it more difficult to trade our common stock and an investor may find it more difficult to acquire or dispose of our common stock in the secondary market.If our common stock were delisted or suspended from trading on the NYSE American, it may be subject to the so-called “penny stock” rules. The SEC has adopted regulations that define a “penny stock” to be any equity security that has a market price per share of less than $5.00, subject to certain exceptions, such as any securities listed on a national securities exchange. For any transaction involving a “penny stock,” unless exempt, the rules impose additional sales practice requirements on broker-dealers, subject to certain exceptions. If our common stock were delisted and determined to be a “penny stock,” a broker-dealer may find it more difficult to trade our common stock and an investor may find it more difficult to acquire or dispose of our common stock.Item 2. 6.Unregistered Sales of Equity Securities and Use of Proceeds.Exhibits.NoneItem 3.ExhibitDefaults Upon Senior Securities.NoneItem4.Mine Safety Disclosures.Not ApplicableItem5.Other Information.None34Description Item6.Exhibits.ExhibitDescription3.1 (a) Exhibit to Form 10-Q filed on August 14, 2013 3.1(a) 3.1 (b) Exhibit to Form 8-K filed on June 17, 2016 3.1(b) 3.1 (c) Exhibit to Form 8-K filed on April 12, 2017 3.1(c) 3.1 (d) Exhibit to Form 8-K filed on June 9, 2017 3.2Bylaws (as amended and restated and further amended through December 6, 2018).Exhibit to Form 8-K filed on December 7, 201810.1Asset Purchase Agreement dated January 13, 2020 between NTN Buzztime, Inc. and Sporcle, Inc.Exhibit to Form 8-K filed on January 15, 202010.2 (a)*SecondCertificate of Amendment to Employment AgreementRestated Certificate of Amendment, dated January 14, 2020 by and between NTN Buzztime, Inc. and Allen WolffExhibit to Form 8-K filed on January 15, 202010.2 (b)*Third Amendment to Employment Agreement dated January 14, 2020 by and between NTN Buzztime, Inc. and Allen WolffMarch 25, 2021 (Reverse Stock Split) Exhibit to Form 8-K filed on March 30, 202031, 202110.3 *FirstCertificate of Amendment to Employment AgreementRestated Certificate of Amendment, dated January 14, 2020 by and between NTN Buzztime, Inc. and Sandra GurrolaExhibit to Form 8-K filed on January 15, 202010.4First Amendment to the Loan and Security Agreement dated as of March 12, 2020 between NTN Buzztime, Inc. and Avidbank.25, 2021 (Authorized Share Increase) Exhibit to Form 8-K filed on March 17, 202031, 202110.5 (a)Paycheck Protection Program NoteCertificate of Amendment to Restated Certificate of Amendment, dated April 18, 2020 issued by NTN Buzztime, Inc. in favor of Level One Bank.March 25, 2021 (Name Change) Exhibit to Form 8-K filed on April 21, 2020March 31, 202110.5 (b)AcknowledgmentAmended and Agreement Regarding Loan Forgiveness dated April 18, 2020.Restated Bylaws Exhibit to Form 8-K filed on April 21, 2020March 31, 2021 31.1 Executive Employment Agreement, dated as of April 1, 2021 and effective as of April 16, 2021, between Brooklyn ImmunoTherapeutics, Inc. and Howard J. Federoff. Form of Indemnification Agreement Schedule identifying agreements substantially identical to the form of indemnification agreement filed as Exhibit 10.6 Registration Rights Agreement, dated as of April 26, 2021, between Brooklyn ImmunoTherapeutics, Inc. and Lincoln Park Capital Fund, LLC Exclusive License Agreement, dated as of April 26, 2021, between Factor Bioscience Limited, Novellus Therapeutics Limited and Brooklyn ImmunoTherapeutics LLC 31.2Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Filed herewith32.1# 32.2#Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002Furnished herewith101. INSXBRL Instance DocumentFiled herewith101. SCH 101. CAL 101. DEF 101. LAB Certain addenda have been omitted pursuant to Item 601(a)(5) of Regulation S-K. We hereby undertake to furnish copies of the omitted addenda upon request by the Securities and Exchange Commission, provided that we may request confidential treatment pursuant to Rule 24b‑2 of the Securities Exchange Act of 1934 for the addenda so furnished. #Certain exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted exhibit will be furnished to the Securities and Exchange Commission or its staff upon request. as amended, and is not to be incorporated herein by reference into any filing of the Companyregistrant whether made before or after the date hereof, regardless of any general incorporation language in such filing.35SIGNATURES NTN BUZZTIME,BROOKLYN IMMUNOTHERAPEUTICS, INC. Date: May 20, 202017, 2021By: Sandra M. Gurrola Howard J. FederoffHoward J. Federoff Sandra M. GurrolaSenior ViceChief Executive Officer and President of Finance(on behalf of the Registrant, and as its Principal Financial Officer)36