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Merger Agreement and Asset Purchase Agreement | 12 Months Ended
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Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Merger Agreement and Asset Purchase Agreement |
3. | Merger Agreement and Asset Purchase Agreement
Proposed Merger with Brooklyn Immunotherapeutics LLC On August 12, 2020, the Company entered into an agreement and plan of merger and reorganization (the “Merger Agreement”) with Brooklyn Immunotherapeutics LLC (“Brooklyn”), a privately-held, biopharmaceutical company focused on exploring the role that cytokine-based therapy can have in treating patients with cancer. Pursuant to the Merger Agreement, subject to the satisfaction or waiver of the conditions set forth in the agreement, BIT Merger Sub, Inc., the Company’s wholly-owned subsidiary formed solely for purposes of carrying out the merger, will merge with and into Brooklyn, with Brooklyn surviving the merger as a wholly-owned subsidiary of the Company and Brooklyn’s members receiving newly issued shares of the Company’s common stock in exchange for their ownership interests in Brooklyn (the “Merger”). The Merger, if completed, will result in a change in control of the Company. If the Merger is completed, the Company expects to change its name to Brooklyn ImmunoTherapeutics, Inc. and the combined company will focus on Brooklyn’s business of exploring the role that cytokine-based therapy can have on the immune system in treating patients with cancer. Upon completion of the Merger, the board of directors of the combined company is expected to consist entirely of individuals designated by Brooklyn and the officers of the combined company are expected to be members of Brooklyn’s current management team. If the Merger is completed, at the effective time of the Merger, Brooklyn’s members will exchange their equity interests in Brooklyn for shares of the Company’s common stock representing between approximately 94.08% and 96.74% of the outstanding common stock of the Company immediately following the effective time of the Merger on a fully diluted basis (less a portion of such shares which will be allocated to Brooklyn’s banker, Maxim, in respect of the success fee owed to it by Brooklyn), and the Company’s stockholders as of immediately prior to the effective time, will own between approximately 5.92% and 3.26% of the outstanding common stock of the Company immediately after the effective time of the Merger on a fully diluted basis. The exact number of shares to be issued in the Merger will be determined pursuant to a formula in the Merger Agreement that takes into account the amount of Brooklyn’s cash and cash equivalents as of the closing of the Merger and the amount by which the Company’s net cash is less than zero at the closing. Proposed Asset Sale to eGames.com Holdings LLC When the Company announced the signing of the Merger Agreement, it also announced that it was continuing to explore the sale of substantially all of the assets relating to its current business to provide additional capital and allow the combined company following the closing of the Merger, if it closes, to be in a position to focus exclusively on Brooklyn’s business. On September 18, 2020, the Company and eGames.com Holdings LLC (“eGames.com”) entered into an asset purchase agreement (as amended from time to time, the “APA”) pursuant to which, subject to the terms and conditions thereof, the Company will sell and assign (the “Asset Sale”) all of its right, title and interest in and to the assets relating to its current business (the “Purchased Assets”) to eGames.com. The Purchased Assets comprise substantially all of the Company’s assets. At the closing of the Asset Sale, in addition to assuming specified liabilities of the Company, eGames.com will pay the Company $2.0 million in cash. In connection with entering into the APA, the sole owner of eGames.com absolutely, unconditionally and irrevocably guaranteed to the Company the full and prompt payment when due of any and all amounts, from time to time, payable by eGames.com under the APA. In connection with entering into the APA, Fertilemind Management, LLC, an affiliate of eGames.com (“Fertilemind”), on behalf of eGames.com, made a $1.0 million bridge loan to the Company. On November 19, 2020, the Company, eGames.com and Fertilemind entered into an omnibus amendment and agreement pursuant to which, among other things, eGames.com agreed to provide, or cause Fertilemind, on behalf of eGames.com, to provide, an additional $0.5 million bridge loan to the Company on December 1, 2020, and the parties agreed to increase the interest rate on the $1.0 million bridge loan Fertilemind made to the Company in September 2020 from 8% to 10% effective December 1, 2020. Fertilemind provided the $0.5 million bridge loan to the Company on December 1, 2020. On January 12, 2021, the Company, eGames.com and Fertilemind entered into a second omnibus amendment and agreement pursuant to which, among other things, eGames.com agreed to provide, or cause Fertilemind, on behalf of eGames.com, to provide an additional $0.2 million bridge loan to the Company on January 12, 2021. Fertilemind provided the $0.2 million bridge loan to the Company on January 12, 2021. The principal and accrued interest of each of the loans provided by Fertilemind to the Company will be applied toward the $2.0 million purchase price at the closing of the Asset Sale.

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