NOTE 4

NTN BUZZTIME, INC TRANSACTION

Merger Agreement with NTN Buzztime, Inc.

On August 12, 2020, the Company, NTN and the Merger Sub, entered into the Merger Agreement. The merger closed on March 25, 2021. After the merger, NTN Buzztime, Inc. changed its name to Brooklyn ImmunoTherapeutics, Inc. The merger was accounted for as a reverse acquisition with Brooklyn LLC being deemed the acquiring company for accounting purposes. Brooklyn LLC, as the accounting acquirer, recorded the assets acquired and liabilities assumed of NTN in the merger at their fair values as of the acquisition date. The Company is trading on the NYSE American under the ticker symbol “BTX”.

Merger Agreement with NTN Buzztime, Inc. (Continued)

Brooklyn LLC was determined to be the accounting acquirer based upon the terms of the merger and other factors including (i) Brooklyn LLC members and Maxim Group LLC, Brooklyn LLC’s financial advisor (the “Financial Advisor”) received 96.35% of NTN’s outstanding common stock on a fully diluted basis immediately following the effective time of the merger, (ii) all of the board of directors of combined company was composed of directors designated by Brooklyn LLC under the terms of the Merger Agreement and (iii) existing members of Brooklyn LLC’s management became the management of the combined company.

At the closing of the merger, all the outstanding membership interests of Brooklyn LLC’s converted into the right to receive shares of the Company’s common stock equal to the exchange ratio of 1-for-2. Brooklyn LLC exchanged all of their equity interests in Brooklyn LLC for an aggregate of 39,991,625 shares of common stock, of which 1,067,668 shares were issued as compensation to the Financial Advisor for its services to Brooklyn LLC in connection with the merger.

The purchase price, which represents the consideration transferred in the merger to NTN’s stockholders, is calculated based on the fair value of the common stock of the combined company that NTN’s stockholders owned as of the closing date of the merger because that represents a more reliable measure of the fair value of consideration transferred in the merger. Accordingly, the purchase price of $8,177,614, which was calculated as follows:

Number of shares of the Common Stock owned by NTN stockholders (i)		1,514,373
Multiplied by the fair value per share of Common Stock (ii)		5.40
Total purchase price	$	8,177,614

(i)

The purchase price was determined based on the number of shares of common stock of the combined company that NTN’s stockholders owned immediately prior to the merger.

(ii)

The fair value per share is based on the closing price of $5.40 (post reverse stock split) per share of thecommon stock as reported on the NYSE American on March 25, 2021, the date of the merger.

Under the acquisition method of accounting, the total purchase price is allocated to the acquired tangible and intangible assets and assumed liabilities of NTN based on their estimated fair values as of the merger closing date. Because the consideration paid by Brooklyn LLC in the merger is more than the estimated fair values of NTN’s net assets acquired, goodwill equal to the difference has been reflected in the unaudited pro forma condensed consolidated balance sheet. The goodwill of $8,588,576 has been calculated using the fair values of the net assets of NTN as of March 25, 2021.

Merger Agreement with NTN Buzztime, Inc. (Continued)

The preliminary allocation of the estimated purchase price to the tangible and intangible assets acquired and liabilities assumed from NTN, based on their estimated fair values as of March 25, 2021, is as follows:

	Historical Balance Sheet of NTN at March 25, 2020			Pro Forma Fair Value Adjustment to NTN Assets			Preliminary Purchase Price Allocation Pro Forma Adjustment
Cash and cash equivalents	$	147,728		$	-		$	147,728
Accounts receivable		102,517			-			102,517
Prepaid expense and other current assets		329,596			-			329,596
Property and equipment, net		1,015,370			-			1,015,370
Software development costs		1,296,460			(368,460	)		928,000
Customers		-			548,000			548,000
Trade name		-			299,000			299,000
Accounts payable, accrued liabilities and other current liabilities		(3,781,173	)		-			(3,781,173	)
Net assets acquired, excluding goodwill	$	(889,502	)	$	478,540		$	(410,962	)

Total consideration	$	8,177,614
Net assets acquired, excluding goodwill		(410,962	)
Goodwill	$	8,588,576

Disposition

On March 26, 2021, the Company sold its rights, title and interest in and to the assets relating to the business operated by NTN prior to the merger to eGames.com in exchange for a payment of a purchase price of $2,000,000 and assumption of specified liabilities relating to the NTN business. The sale was completed in accordance with the terms of the Asset Purchase Agreement.

In the Disposition, the Company sold specified NTN assets and liabilities acquired as a result of the reverse acquisition to eGames.com, an unrelated party, for cash consideration of $2,000,000. Details of the Disposition are as follows:

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	)

Rights Offering

The Company was obligated under the Merger Agreement to have $10,000,000 in cash and cash equivalents on its balance sheet at the effective time of the merger (the “Required Funds”). To ensure that the Company has the Required Funds, certain beneficial holders of Brooklyn LLC’s Class A membership interests have entered into contractual commitments to invest $10,000,000 into Brooklyn LLC immediately prior to the closing of the merger with NTN. During March 2021 the Company offered to its Class A unit holders an additional 5% rights offering, a total amount of $500,000 was raised by this right offering. Funding to the rights offering was received between February 17 and April 5, 2021.

Unaudited Pro Forma Disclosure

The following unaudited pro forma financial information summarizes the results of operations for the three months ended March 31, 2021 and 2020 as if the merger and disposal described above had been completed as of January 1, 2020. Pro forma information primarily reflects adjustments relating to the reversal of transaction costs. Assuming that the merger had been completed as of January 1, 2020, the transaction costs would have been expensed in the prior period.

	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	)