(14) SUBSEQUENT EVENT

9 Months Ended

Sep. 30, 2011

(14)	SUBSEQUENT EVENT

On October 5, 2011, NTN Buzztime, Inc. (the “Company”) entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Trailside Entertainment Corporation, a Massachusetts corporation (“Trailside Entertainment”), which provides for the Company to purchase certain Trailside Entertainment assets used in the conduct of Trailside Entertainment’s business of providing live hosted trivia events at hospitality venues (the “Acquired Assets”). The asset purchase was also consummated on October 5, 2011.

Pursuant to the terms of the Asset Purchase Agreement, in consideration for the Acquired Assets, the Company paid to Trailside Entertainment the sum of $250,000 in cash, $200,000 of which was paid on the closing date of the acquisition. The Company will hold back $50,000 (the “Holdback Amount”) of the purchase price for a period of six months to secure payment of the Company’s right to indemnification under the Asset Purchase Agreement. On the date that is six months following the closing of the asset purchase, the Company will deliver to Trailside Entertainment any remaining amount of the Holdback Amount, less amounts that would be necessary to satisfy any then pending and unsatisfied or unresolved claims for indemnification made by the Company.

In addition to the $250,000 cash payment, the Company agreed to pay additional consideration to Trailside Entertainment upon achieving certain gross profit objectives relating to the acquired business (as set forth in the Asset Purchase Agreement) for fiscal years 2012, 2013 and 2014. The Asset Purchase Agreement contains customary representations, warranties and covenants.

In connection with this transaction, the Company entered into employment agreements (the “Employment Agreements”) with Trailside Entertainment’s founder and shareholder, Robert D. Carney, and with shareholder George Groccia, both of whom will serve as Vice Presidents of the Company. The Company will use the acquired assets to complement its existing social entertainment offerings.

The Company will account for the acquisition pursuant to ASC No. 805, Business Combinations. Accordingly, it will record net assets and liabilities acquired at their fair values. The following purchase price allocation is preliminary and could change as the purchase price allocation is finalized, which is expected to occur by December 31, 2011.

Intangible assets - customer relationships	$	435,000
Total assets		435,000

Earnout liability		(185,000	)
Total liabilities		(185,000	)

Purchase price allocated to assets and liabilities acquired	$	250,000

The purchase price may be increased or decreased if certain gross profit objectives relating to the acquired business deviate from estimations in calendar years 2012, 2013 and 2014. In that event, the liability will be adjusted and the change will be reflected in current earnings in the period that the adjustment becomes necessary.

The Company incurred approximately $48,000 in acquisition-related expenses, which are recorded in selling, general and administrative expense on the accompanying statement of operations.

The following unaudited pro forma information assumes that the October 5, 2011 asset acquisition occurred on January 1, 2011 and 2010, respectively. These unaudited pro forma results have been prepared for comparative purposes only and are not indicative of the results of operations that would have actually resulted had the acquisition been in effect as of the periods indicated above, or of future results of operations. The unaudited pro forma results for the three and nine months ended September 30, 2011 and 2010 are as follows:

	Three months ended September 30,					Nine months ended September 30,
	2011			2010		2011			2010
Revenue	$	6,104		$	6,692	$	18,390		$	19,396
Net (loss) income	$	(805	)	$	86	$	(2,420	)	$	(969	)

Earnings per share - basic	$	(0.01	)	$	0.00	$	(0.04	)	$	(0.02	)
Earnings per share - diluted	$	(0.01	)	$	0.00	$	(0.04	)	$	(0.02	)

Weighted average shares - basic		60,404			60,209		60,394			60,100
Weighted average shares - diluted		60,404			60,849		60,394			60,100

The unaudited pro forma information presented above has been adjusted for material, nonrecurring items directly related to the asset acquisition such as recording amortization expense on the acquired intangible asset, removing acquisition related costs incurred in the periods presented, and increasing the salary expense for the two shareholders who entered into employment agreements effective upon the acquisition date.