NTN BUZZTIME INC (Form: 10-Q, Received: 05/14/2010 15:23:38)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

Commission file number 001-11460

NTN Buzztime, Inc.

(Exact name of registrant as specified in its charter)

DELAWARE	31-1103425
(State of incorporation)	(I.R.S. Employer Identification No.)

5966 LA PLACE COURT, CARLSBAD, CALIFORNIA	92008
(Address of principal executive offices)	(Zip Code)

(760) 438-7400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

As of May 12, 2010 the registrant had outstanding 60,687,549 shares of common stock, $.005 par value.

NTN BUZZTIME, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

Item		Page
PART I

1.	Financial Statements

	Condensed Consolidated Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009	1

	Condensed Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009 (unaudited)	2

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009 (unaudited)	3

	Notes to Condensed Consolidated Financial Statements	4

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

3.	Quantitative and Qualitative Disclosures About Market Risk	16

4.	Controls and Procedures	16

PART II

1.	Legal Proceedings	17

1A.	Risk Factors	17

2.	Unregistered Sales of Equity Securities and Use of Proceeds	17

3.	Defaults Upon Senior Securities	17

4.	(Removed and Reserved)	17

5.	Other Information	17

6.	Exhibits	18

	Signatures	19

PART I

ITEM 1.

Financial Statements .

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amount)

	March 31,			December 31,
	2010			2009
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	3,105		$	3,637
Accounts receivable, net of allowances of $396 and $321, respectively		1,003			606
Investments available-for-sale (Note 5)		169			180
Prepaid expenses and other current assets		512			634
Total current assets		4,789			5,057
Broadcast equipment and fixed assets, net		4,216			3,809
Software development costs, net of accumulated amortization of $1,319 and $1,197, respectively		1,174			1,374
Deferred costs		968			1,080
Goodwill (Note 4)		1,237			1,202
Intangible assets, net (Note 4)		1,325			1,585
Other assets		192			190
Total assets	$	13,901		$	14,297

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	2,371		$	2,285
Sales taxes payable		865			855
Obligations under capital lease - current portion		435			300
Deferred revenue		375			523
Other current liabilities		119			294
Total current liabilities		4,165			4,257
Sales taxes payable, excluding current portion		74			128
Obligations under capital leases, excluding current portion		208			173
Deferred revenue, excluding current portion		89			82
Other liabilities		188			239
Total liabilities		4,724			4,879
Commitments and contingencies (Notes 10 and 11)

Shareholders' Equity:
Series A 10% cumulative convertible preferred stock, $.005 par value, $161 liquidation preference, 5,000 shares authorized; 161 shares issued and outstanding at March 31, 2010 and December 31, 2009		1			1
Common stock, $.005 par value, 84,000 shares authorized; 60,688 and 60,359 shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively		303			302
Treasury stock, at cost, 503 shares at March 31, 2010 and December 31, 2009		(456	)		(456	)
Additional paid-in capital		115,855			115,740
Accumulated deficit		(107,257	)		(106,868	)
Accumulated other comprehensive income (Note 12)		731			699
Total shareholders' equity		9,177			9,418
Total shareholders' equity and liabilities	$	13,901		$	14,297

See accompanying notes to unaudited condensed consolidated financial statements.

NTN BUZZTIME, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)

	Three months ended March 31,
	2010			2009

Revenues	$	6,271		$	6,196
Operating expenses:
Direct operating costs (includes depreciation and amortization of $608 and $493, respectively)		1,534			1,502
Selling, general and administrative		4,924			4,832
Depreciation and amortization (excluding depreciation and amortization included in direct operating costs)		172			127
Total operating expenses		6,630			6,461
Operating loss		(359	)		(265	)
Other income, net		6			41
Loss before income taxes		(353	)		(224	)
Provision for income taxes		(36	)		(31	)
Net loss	$	(389	)	$	(255	)

Net loss per common share - basic and diluted	$	(0.01	)	$	(0.00	)

Weighted average shares outstanding - basic and diluted		59,900			55,224

See accompanying notes to unaudited condensed consolidated financial statements.

NTN BUZZTIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)


	Three months ended March 31,
	2010			2009
Cash flows provided by (used in) operating activities:
Net loss	$	(389	)	$	(255	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		780			620
Provision for doubtful accounts		94			31
Gain on contract termination		(11	)		-
Stock-based compensation		60			39
Loss from disposition of equipment and capitalized software		2			39
Changes in assets and liabilities:
Accounts receivable		(488	)		(12	)
Prepaid expenses and other assets		77			(91	)
Accounts payable and accrued expenses		8			169
Income taxes payable		50			(14	)
Deferred costs		115			33
Deferred revenue		(142	)		19
Net cash provided by operating activities		156			578
Cash flows used in investing activities:
Capital expenditures		(302	)		(338	)
Software development expenditures		(314	)		(200	)
Trademark license		(35	)		-
Net cash used in investing activities		(651	)		(538	)
Cash flows provided by (used in) financing activities:
Principal payments on capital lease		(83	)		(9	)
Proceeds from exercise of stock options		56			-
Net cash used in financing activities		(27	)		(9	)
Net (decrease) increase in cash and cash equivalents		(522	)		31
Effect of exchange rate on cash		(10	)		(82	)
Cash and cash equivalents at beginning of period		3,637			3,362
Cash and cash equivalents at end of period	$	3,105		$	3,311

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	27		$	1
Income taxes	$	18		$	90
Supplemental disclosure of non-cash investing and financing activities:
Unrealized holding (loss) gain on investments available-for-sale	$	(11	)	$	18
Equipment acquired under capital lease	$	254		$	149

See accompanying notes to unaudited condensed consolidated financial statements.

NTN BUZZTIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1)	BASIS OF PRESENTATION

Description of Business

NTN 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 has been in the business of social interactive entertainment for over 25 years. Its primary source of revenue is its Buzztime iTV Network, which focuses on distributing the Company’s interactive promotional television game network programming, primarily to over 4,000 hospitality venues such as restaurants and bars throughout North America. Additionally, the Company distributes its game content and technology through other third-party consumer platforms, including online, retail games and books.

Basis of Accounting Presentation

The 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 NTN Buzztime, Inc. 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. IWN, Inc., IWN, L.P., Buzztime Entertainment, Inc., NTN Wireless Communications, Inc., NTN Software Solutions, Inc., and NTN Buzztime, Ltd. are dormant subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2009. The accompanying condensed balance sheet as of December 31, 2009 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, 2010 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2010, or any other period.

Reclassifications

The Company reclassified the condensed consolidated balance sheet for the period ended December 31, 2009 to conform to the 2010 presentation.

(2)	BASIC AND DILUTED EARNINGS PER COMMON SHARE

The Company computes basic and diluted earnings per common share in accordance with the provisions of ASC No. 260, Earnings per Share . Basic earnings per share excludes the dilutive effects of options, warrants and other convertible securities. Diluted earnings per share reflects the potential dilution of securities that could share in our earnings. Options, warrants, convertible preferred stock and deferred stock units representing approximately 7,981,000 and 6,580,000 as of March 31, 2010 and 2009, respectively, were excluded from the computations of diluted net loss per common share as their effect was anti-dilutive.

(3)	ACQUISITIONS

iSports Acquisition

In April 2009, the Company entered into an asset purchase agreement with iSports Inc., a California corporation. iSports was a provider of mobile sports scores, news and interactive gameplay. Pursuant to the terms of the agreement, in consideration for the acquired assets, the Company issued (i) five hundred thousand (500,000) unregistered shares of the Company’s common stock, (ii) a warrant to purchase one million (1,000,000) shares of unregistered common stock, with an exercise price of $0.30 per share, and (iii) a warrant to purchase five hundred thousand (500,000) shares of unregistered common stock, with an exercise price of $0.50 per share. In addition, if certain business conditions are satisfied in each of calendar years 2009, 2010 and 2011, the Company would be required to pay as additional consideration 35% of the amount by which the Company’s net media revenues (as defined in the Asset Purchase Agreement) for such years exceed specified threshold amounts. The agreement also contains customary representations, warranties and covenants.

The total value assigned to the transaction, including liabilities assumed, was calculated as $599,000. The purchase price of $599,000 was comprised of $371,000 in warrants to purchase shares of unregistered common stock of the Company, $166,000 in unregistered shares of common stock of the Company and approximately $62,000 in assumed liabilities. The fair values of the warrants were determined using the Black-Scholes model using the following weighted-average assumptions: risk-free interest rates of 2.79%; dividend yield of 0%; expected volatility of 78.1%; and a term of 8 years.

The Company is using the acquired assets to accelerate the development of its mobile gaming platform. Following the closing, the Company employed a co-founder of iSports, Inc. as the Company’s Executive Vice President of Programming and Technology.

The Company accounted for the acquisition pursuant to ASC No. 805, Business Combinations . Accordingly, it recorded net assets and liabilities acquired at their fair values. The purchase price allocation amounts reflected in the Company’s financial statements were final as of December 31, 2009. The purchase price allocation was as follows:

Intangible assets – acquired technology	$	599,000
Total assets		599,000

Accounts payable		(62,000	)
Total liabilities		(62,000	)

Purchase price allocated to assets and liabilities acquired	$	537,000

The purchase price may be increased if certain thresholds of net media revenues are exceeded in calendar years 2010 and 2011. The thresholds of net media revenues were not exceeded in 2009, and the Company does not estimate that they will be met in the future. In the event the thresholds are met, the purchase price allocation will be adjusted and reflected in current earnings in the period that the additional purchase price amount is earned.

As a result of the iSports acquisition, the impact to revenue and net loss for the three months ended March 31, 2010 was immaterial. Because there was no continuity of iSports operations after the acquisition date, the Company has determined that the proforma revenue and net loss information for the three months ended March 31, 2010 and 2009 generally required by ASC No. 805 would not be meaningful and may be misleading. The Company has therefore omitted these disclosures from the financial statements.

i-am TV Acquisition

In May 2009, the Company entered into an asset purchase agreement (the “i-am TV Agreement”) through which it acquired certain assets of “i-am TV” from Instant Access Media, LLC. i-am TV had been in the business of providing programming and advertising to hospitality venues located in the top 15 designated market areas throughout the United States. The transaction included the acquisition of approximately 1,400 flat panel television screens installed in 368 locations as well as the related communication equipment. Pursuant to the terms of the i-am TV Agreement, in consideration for the acquired assets, the Company issued (i) one million five hundred thousand (1,500,000) unregistered shares of the Company’s common stock, (ii) warrants to purchase one million (1,000,000) shares of unregistered common stock with an exercise price of $0.50 per share, (iii) warrants to purchase one million (1,000,000) shares of unregistered common stock with an exercise price of $1.00 per share and (iv) warrants to purchase one million (1,000,000) shares of unregistered common stock with an exercise price of $1.50 per share. In addition, the Company has agreed to provide future earnout consideration (the “Earnout”) in calendar years 2010 through 2012 based on net advertising revenues as defined in the i-am TV Agreement. The Earnout will be calculated as the product of the total net advertising revenues for the Company multiplied by the percentage of qualifying venues that have converted from i-am TV to the Company’s Buzztime iTV Network in relation to the total population of Buzztime iTV Network subscribers. The i-am TV Agreement also contained customary representations, warranties and covenants.

The total value assigned to the transaction, including liabilities assumed, was calculated as $1,176,000. The purchase price of $1,176,000 was comprised of $537,000 in warrants to purchase shares of unregistered common stock of the Company, $450,000 in unregistered shares of common stock of the Company, $188,000 of contingent consideration in the form of an earnout and approximately $1,000 in assumed liabilities. The fair values of the warrants were determined using the Black-Scholes model using the following weighted-average assumptions: risk-free interest rates of 2.79%; dividend yield of 0%; expected volatility of 78.1%; and a term of 8 years.

The Company also entered into an agreement with certain investors in Instant Access Media, LLC whereby they purchased 2,419,355 shares of the Company’s common stock in a private placement raising $750,000 in additional working capital.

The Company accounted for the acquisition pursuant to ASC No. 805. Accordingly, it recorded net assets and liabilities acquired at their fair values. The fair value calculations are based on certain assumptions, including the number of i-am TV sites that will be converted to Buzztime customers and the incremental cash flows to the Company from those sites. The purchase price allocation amounts reflected in the Company’s financial statements were final as of December 31, 2009. The purchase price allocation was as follows:

Intangible assets – customer relationships – advertising	$	302,000
Intangible assets – customer relationships – subscription		874,000
Total assets		1,176,000

Accounts payable		(1,000	)
i-am TV earnout – long term liabilities		(188,000	)
Total liabilities		(189,000	)

Purchase price allocated to assets and liabilities acquired	$	987,000

The purchase price may be increased or decreased if net advertising revenues for the Company deviate from estimations in calendar years 2010, 2011 and 2012. In that event, the purchase price allocation will be adjusted and reflected in current earnings in the period that the adjustment becomes necessary.

As a result of the i-am TV acquisition, the Company recognized approximately $91,000 in subscription and other revenue for the three months ended March 31, 2010, b ased on the sales efforts of the Company to convert approximately 110 legacy i-am TV customers to the Buzztime platform. Based on the post acquisition integration efforts of the Company, it is not practical to determine the impact on net loss for the three months ended March 31, 2010.

Because there was no continuity of i-am TV’s operations after the acquisition date, the Company has determined that the proforma revenue and net loss information for the three months ended March 31, 2010 and 2009 generally required by ASC No. 805 would not be meaningful and may be misleading. The Company has therefore omitted these disclosures from the financial statements.

(4)	GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The Company’s goodwill balance relates to the purchase of NTN Canada. The Company performed its annual test for goodwill impairment for NTN Canada as of September 30, 2009 and determined that there were no indications of impairment at that time. The Company considered the need to perform an additional test of goodwill of its Canadian business as of March 31, 2010, but determined that the overall health of the underlying Canadian business has remained stable since the September 30, 2009 valuation.

Other Intangible Assets

As discussed in Note 3, during the quarter ended June 30, 2009, the Company acquired certain assets of iSports Inc. and Instant Access Media, LLC. As a result of those transactions, the Company recorded $1,176,000 in customer relationship intangible assets and $599,000 in unpatented technology. The majority of the customer relationship intangible asset will be amortized on a straight line basis over a period of 44 months and recorded in selling, general and administrative expenses. Approximately $300,000 was amortized over the three months ended August 31, 2009 coinciding with the period that the related advertising revenue was recognized. The unpatented technology intangible asset will be amortized on a straight line basis over a period of 60 months and recorded in direct expenses. The useful lives reflect the estimated period of time and method by which the underlying intangible asset benefits will be realized.

The Company also has other intangible assets comprised predominantly of developed technology, trivia databases and trademarks. Amortization expense relating to all intangible assets totaled $123,000 and $18,000 for the three months ended March 31, 2010 and 2009, respectively.

(5)	INVESTMENTS AVAILABLE-FOR-SALE

Investment securities consist of equity securities, which are classified as available-for-sale securities. Available-for-sale securities are recorded at fair value and unrealized holding gains and losses are excluded from earnings and are reported as a separate component of comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a specific-identification basis. A decline in the market value of any available-for-sale security below cost that is deemed to be other-than-temporary results in a reduction in the carrying amount to fair value. Any resulting impairment is charged to other income (expense) and a new cost basis for the security is established.

The one investment available-for-sale that the Company holds is 2,518,000 shares of its Australian licensee eBet Limited (eBet), an Australian gaming technology corporation. The Company’s holding in eBet represents less than 1% of the current outstanding shares. The value of the investment decreased $11,000 for the three months ended March 31, 2010 and increased $18,000 for the three months ended March 31, 2009. Based on the closing market price at March 31, 2010, the value of the investment was approximately $169,000. The unrealized gains and losses of this investment are recorded as other comprehensive income (loss) in the Company’s consolidated balance sheet (see Note 12). As of March 31, 2010, the cumulative gain of the eBet investment was $5,000. The Company will continue to monitor this investment for any decline in value that could be deemed other-than-temporary ultimately resulting in future impairments.

(6)	FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC No. 820, Fair Value Measurements and Disclosures, applies to certain assets and liabilities that are being measured and reported on a fair value basis. Broadly, the ASC No. 820 framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC No. 820 also establishes a fair value hierarchy for ranking the quality and reliability of the information used to determine fair values. This hierarchy is as follows:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis:

The fair value of the Company’s investment in eBet Limited is determined based on quoted market prices, which is a Level 1 classification. The Company records the investment on the balance sheet at fair value with changes in fair value recorded as a component of other comprehensive income (loss) in the consolidated balance sheet (see Note 12).

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis:

Certain assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Included in this category are goodwill written down to fair value when determined to be impaired, assets and liabilities with respect to the business combinations closed during 2009, and long-lived assets including capitalized software that are written down to fair value when they are held for sale or determined to be impaired. The valuation methods for goodwill, assets and liabilities resulting from business combinations, and long-lived assets involve assumptions concerning interest and discount rates, growth projections, and/or other assumptions of future business conditions. As all of the assumptions employed to measure these assets and liabilities on a nonrecurring basis are based on management’s judgment using internal and external data, these fair value determinations are classified in Level 3 of the valuation hierarchy.

(7)	EQUITY INCENTIVE PLANS

Subject to shareholder approval at the Company’s 2010 Annual Meeting of Stockholders, the Board of Directors has adopted a new performance incentive plan (the “2010 Plan”). The 2010 Plan provides for the issuance of up to 6,000,000 shares of NTN common stock. Under the 2010 Plan, options for the purchase of NTN common stock or other instruments such as deferred stock units may be granted to officers, directors, employees and consultants. The 2010 Plan will be administered by the 2010 Plan Committee whose composition will consist of members of the Board of Directors. The Board of Directors has designated its Nominating and Corporate Governance/Compensation Committee as the 2010 Plan Committee. Stock options granted under the 2010 Plan may either be incentive stock options or nonqualified stock options. A stock option granted under the 2010 Plan generally cannot be exercised until it becomes vested. The 2010 Plan Committee establishes the vesting schedule of each stock option at the time of grant. At its discretion, the 2010 Plan Committee can accelerate the vesting, extend the post-termination exercise term or waive restrictions of any stock options or other awards under the 2010 Plan. Options under the 2010 Plan 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. In September 2009, the Company’s 2004 Performance Incentive Plan (the “2004 Plan”) expired. All awards that were granted under the 2004 Plan will continue to be governed by the 2004 Plan until they are exercised or expire in accordance with their original terms.

(8)	STOCK-BASED COMPENSATION

The 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 all 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 following weighted-average assumptions were used for grants issued during the three months ended 2009 under the ASC No. 718 requirements. No options were granted for the three months ended March 31, 2010.

						Three months ended
						March 31, 2009
Weighted-average risk-free rate						1.52%
Weighted-average volatility						86.85%
Dividend yield						0.00%
Forfeiture rate						17.63%
Expected life						3.97 years

ASC No. 718 requires forfeitures to be estimated at the time of grant and revised if necessary in subsequent periods if actual forfeiture rates differ from those estimates. Forfeitures were estimated based on historical activity for the Company. Stock-based compensation expense for employees for the three months ended March 31, 2010 and 2009 was $60,000 and $39,000, respectively, and is expensed in selling, general and administrative expenses and credited to additional paid-in-capital.

(9)	CAPITAL LEASES

In 2009, the Company entered into a $500,000 equipment lease facility with an equipment leasing company. The terms of that agreement allow for use of the facility in multiple tranches with each individual tranche having a 24 month term. Additionally, the equipment lease has a collateral obligation whereby the Company has pledged certain equipment located at the Carlsbad, California location to satisfy the equipment leasing company’s requirements. As of March 31, 2010, the Company had utilized $457,000 of this facility, which has been accounted for as a capital lease.

In October 2009, the Company entered into a $1,000,000 equipment lease facility with an equipment leasing company. The terms of that agreement allow for use of the facility for 24 months and for use of the facility in multiple tranches with each individual tranche having a 24 month term. As of March 31, 2010, the Company had utilized $390,000 of this facility, which has been accounted for as a capital lease.

Total depreciation expense under capital leases was $83,000 and $5,000 for the three months ended March 31, 2010 and 2009, respectively.

(10)	COMMITMENTS

The Company is subject to litigation from time to time in the ordinary course of business. There can be no assurance that any claims that may be made against the Company, including the claim described below, will be decided in the Company’s favor and the Company is not insured against all claims made. During the pendency of any such claims, the Company may continue to incur the costs for its legal defense.

Purchase Commitment Disputes

The Company had a commitment under a long-term agreement to purchase equipment from a vendor. Under the original terms of the agreement, the Company was obligated to purchase $835,000 and $76,000 of equipment in 2008 and 2009, respectively, after the Company’s acceptance of certain milestones. Issues arose under the terms of the agreement, which still remain unresolved as of March 31, 2010. In early 2008, the Company informed the vendor that numerous defects existed with the equipment. The vendor failed to remedy the defects in a timely manner and the Company was forced to purchase equipment from a different manufacturer. Due to the vendor's failure to cure the defects in accordance with the provisions in the agreement, the Company does not believe the required milestones were met.

On April 15, 2009, the Company received a letter from the vendor requesting $300,000 to cover certain costs incurred citing breach of the agreement. The Company responded to the letter, indicating that certain contract milestones had not been met by the vendor and therefore, the Company was not obligated to purchase equipment under the contract. The Company ultimately requested a mutual release to the agreement without any cash payment by either party. The vendor responded to the Company's rebuttal indicating that it disagreed with the Company's assertions, however, was willing to resolve the matter amicably. The last communication was on May 19, 2009, whereby the Company sent a letter which reaffirmed its desire to bring closure to this issue amicably and with no payment by either party. The Company believes the vendor's claim lacks merit and does not plan to make any payments. The Company has not recorded a reserve as it has assessed the likelihood that it would have to pay any amounts as being less than probable.

During the quarter ended June 30, 2009, the Company entered into a material manufacturing and supply agreement with a vendor to manufacture certain equipment. Under the terms of that agreement as amended, the Company was obligated to purchase approximately $1 million in equipment over the three year term of the agreement. As of December 31, 2009, the Company had satisfied $38,000 of that obligation. In January 2010, the Company provided written notice of its intention to terminate the material manufacturing and supply agreement, citing failure to deliver certain prototypes on the contractually agreed upon dates. The vendor has verbally accepted the termination and has agreed to refund the $38,000 deposit.

(11)	CONTINGENCIES

Sales and Use Tax

From time to time, state tax authorities will make inquiries as to whether or not a portion of the Company’s services require the collection of sales and use taxes from customers in those states. Many states have expanded their interpretation of their sales and use tax statutes to derive additional revenue. The Company evaluates such inquiries on a case-by-case basis and has favorably resolved the majority of these tax issues in the past without any material adverse consequences.

During the quarter ended March 31, 2009, the Company settled a long ongoing sales tax evaluation with the State of Texas. The Company and the State of Texas executed an Audit Resolution Agreement and Joint Motion to Dismiss pursuant to which the Company will pay the state approximately $450,000 over a 2 year period. As part of those agreements, both parties agreed to waive all rights to any redetermination or refund hearings. In February 2009, the Company began collecting and remitting sales tax in Texas in accordance with the state tax statutes. As of March 31, 2010, $284,000 remains due to the State of Texas under this settlement agreement.

The Company is involved in ongoing sales tax inquiries, including certain formal assessments which total $705,000, with other states and provinces. As a result of those inquiries, including the Texas liability discussed above, the Company recorded a total liability of $826,000 and $847,000 as of March 31, 2010 and December 31, 2009, respectively. Based on the guidance set forth by ASC No. 450, Contingencies, management has deemed the likelihood that it will be forced to pay all or part of these assessments with other states as reasonably possible.

(12)	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) is the combination of accumulated net unrealized gains or losses on investments available-for-sale and the accumulated gains or losses from foreign currency translation adjustments. The Company translated the assets and liabilities of its Canadian statement of financial position into U.S. dollars using the period end exchange rate. Revenue and expenses were translated using the weighted-average exchange rates for the reporting period.

The carrying value of the Company’s Australian investment, eBet, has fluctuated and the respective unrealized gains and losses are recorded in accumulated other comprehensive income (loss). For the three months ended March 31, 2010 and 2009, the components of accumulated other comprehensive income (loss) are as follows:

	Three months ended March 31,
	2010		2009
Unrealized gain (loss) on investment available-for-sale	$	5,000	$	(88,000	)
Foreign currency translation adjustment		726,000		(4,000	)
Ending balance	$	731,000	$	(92,000	)

(13)	RECENT ACCOUNTING PRONOUNCEMENTS

In October 2009, the FASB issued an accounting standards update to ASC No. 605-25, Revenue Recognition—Multiple-Element Arrangements . The purpose of this update is to amend the criteria used for separating consideration in multiple-deliverable arrangements. In particular, the amendment:

●

Establishes a selling price hierarchy for determining the selling price of a deliverable; replaces the term “fair value” in the revenue allocation guidance with “selling price” to clarify that the allocation of revenue is based on entity-specific assumptions rather than assumptions of a marketplace participant;

●

Eliminates using the residual method of allocation and requires that the arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method; and

●

Requires that the best estimate of a selling price is determined in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis.

The amendments in this update will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, which will be the Company’s 2011 fiscal year. Early adoption is permitted. If adopted early, the Company would be required to apply the amendments retrospectively from the beginning of the fiscal year of adoption. The Company does not intend to adopt the amendments early. The Company does not anticipate that the adoption of these amendments will have a material impact on the Company’s consolidated financial statements.

In October 2009, the FASB issued an accounting standards update to ASC No. 985, Software. The purpose of this update is to change the accounting model for revenue arrangements that include both tangible products and software elements. Tangible products containing software components and nonsoftware components that function together to deliver the tangible product’s essential functionality are no longer within the scope of the software revenue guidance in Subtopic 985-605. In addition, this update requires that hardware components of a tangible product containing software components always be excluded from the software revenue guidance. In addition, the update provides guidance on how a vendor should allocate arrangement consideration to deliverables in an arrangement that includes both tangible products and software. The amendments in this update will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, which will be the Company’s 2011 fiscal year. Early adoption is permitted. If adopted early, the Company would be required to apply the amendments retrospectively from the beginning of the fiscal year of adoption. The Company does not intend to adopt the amendments early. The Company does not anticipate that the adoption of this amendment will have a material impact on the Company’s consolidated financial statements.

In April 2010, the FASB issued an accounting standards update to ASC Topic No. 718, Compensation – Stock Compensation. ASC No. 718 stipulates that a share-based payment award that contains a condition that is not a market, performance, or a service condition is required to be classified as a liability. This update clarifies that when an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s securities trades differs from the functional currency of the employer entity or payroll currency of the employee, such award should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this update will be effective for fiscal years beginning on or after December 15, 2010, which will be the Company’s 2011 fiscal year. The amendments in this update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied and should be presented separately. Early adoption is permitted; however, the Company does not plan to adopt the amendments early. The Company does not anticipate that the adoption of this amendment will have a material impact on its consolidated financial statements.

(14)	SIGNIFICANT CUSTOMER

For the three months ended March 31, 2010 and 2009, the Company generated approximately 18% and 15%, respectively, of total revenue from a national chain, Buffalo Wild Wings together with its franchisees. As of March 31, 2010 and December 31, 2009, approximately $329,000 and $71,000, respectively, was included in accounts receivable from this customer.

(15)	GEOGRAPHICAL INFORMATION

Geographic breakdown of the Company’s revenue for the three months ended March 31, 2010 and 2009 is as follows:

	Three months ended March 31,
	2010		2009
United States	$	5,624,000	$	5,557,000
Canada		647,000		639,000
Total revenue	$	6,271,000	$	6,196,000

Geographic breakdown of the Company’s long-term tangible assets as of March 31, 2010 and December 31, 2009 is as follows:

	March 31, 2010		December 31, 2009
United States	$	4,015,000	$	3,588,000
Canada		201,000		221,000
Total assets	$	4,216,000	$	3,809,000

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations .

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements reflect future events, results, performance, prospects and opportunities, including statements related to our strategic plans and targets, revenue generation, product availability and offerings, reduction in cash usage, reliance on cash on hand and cash from operations, capital needs, capital expenditures, industry trends and financial position of NTN Buzztime, Inc. and its subsidiaries. Forward-looking statements are based on information currently available to us and our current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of management. Words such as “expects,” “anticipates,” “could,” “targets,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” “would,” variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements which refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that may be difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, under the section entitled “Risk Factors,” and in Item 1A of Part II of this Quarterly Report on Form 10-Q, and in other reports we file with the Securities and Exchange Commission from time to time. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.

Our trademarks, trade names and service marks referenced herein include Buzztime, IWN, iTV Network, iSports, Playmakers and i-am TV. Each other trademark, trade name or service mark appearing in this quarterly report belongs to its owner.

OVERVIEW

We have been in the business of social interactive entertainment for over 25 years. Our primary source of revenue is our Buzztime iTV Network, which focuses on the distribution of our interactive promotional television game network programming, primarily to over 4,000 hospitality venues such as restaurants and bars throughout North America. Additionally, we distribute our game content and technology through other third-party consumer platforms, including online, retail games and books.

The out-of-home Buzztime iTV Network has maintained a unique position in the hospitality industry for over 25 years as a promotional platform providing interactive entertainment to patrons in restaurants and bars (hospitality venues). The iTV Network distributes a wide variety of engaging interactive multi-player games, including trivia quiz shows, play-along sports programming and casino-style and casual games to our Network subscribers. Patrons use our wireless game controllers, or Playmakers, to play along with the Buzztime games which are displayed on television screens. In late 2009, we introduced a downloadable application available on the iPhone that will enable patrons to use their iPhone in-venue instead of the Playmaker to play these Buzztime games. Buzztime players can compete with other players within their hospitality venue and also against players in other Network subscriber venues.

We target national and regional hospitality chains as well as local independent hospitality venues that desire a competitive point-of-difference to attract and retain customers. As of March 31, 2010, we had 3,718 United States Network subscribers and 323 Canadian subscribers. Approximately 29% of our Network subscribers come from leading national chains in the casual-dining restaurant segment such as Buffalo Wild Wings, TGI Friday’s and Old Chicago.

Through the transmission of interactive game content stored on a site server at each location, our Buzztime iTV Network enables single-player and multi-player participation as part of local, regional, national or international competitions supported with prizes and player recognition. Our Buzztime iTV Network also generates revenue through the sale of advertising and marketing services to companies seeking to reach the millions of consumers that visit the Buzztime iTV Network’s venues.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to deferred costs and revenues, depreciation of broadcast equipment, the provision for income taxes including the valuation allowance, stock-based compensation, bad debts, investments, purchase price allocations related to acquisitions, impairment of software development costs, goodwill, broadcast equipment, intangible assets and contingencies, including the reserve for sales tax inquiries. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Critical accounting policies and estimates are defined as those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most subjective judgments.

There have been no material changes in our critical accounting policies, estimates and judgments during the three months ended March 31, 2010 from those described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended December 31, 2009.

RESULTS OF OPERATIONS

Three months ended March 31, 2010 compared to the three months ended March 31, 2009

We generated a net loss of $389,000 for the three months ended March 31, 2010, compared to net loss of $255,000 for the three months ended March 31, 2009.

Revenue

Revenue increased $75,000 or 1%, to $6,271,000 for the three months ended March 31, 2010 from $6,196,000 for the three months ended March 31, 2009, primarily due to an increase in site count offset by a decrease in the average revenue generated per site. Comparative site count information for Buzztime iTV Network is as follows:

	Network Subscribers as of March 31,
	2010		2009
United States		3,718		3,446
Canada		323		318
Total		4,041		3,764

Direct Costs and Gross Margin

The following table compares the direct costs and gross margin for the three months ended March 31, 2010 and 2009:

	For the three months ended March 31,
	2010		2009
Revenues	$	6,271,000	$	6,196,000
Direct Costs		1,534,000		1,502,000
Gross Margin	$	4,737,000	$	4,694,000

Gross Margin Percentage		76%		76%

Gross margin as a percentage of revenue remained flat at 76% for both the three months ended March 31, 2010 and 2009. Direct costs increased $32,000 to $1,534,000 for the three months ended March 31, 2010 from $1,502,000 for the three months ended March 31, 2009. This increase was primarily due to higher depreciation and amortization expense of $115,000 resulting from increased equipment purchases under capital leases as well as the intangible assets that were acquired during the second quarter of 2009. These increases were offset by a decrease of $52,000 in communications expense as we completed the conversion of customers from satellite to cable during 2009, a decrease in Playmaker repair costs of $16,000 and a decrease in other direct costs of $18,000 during the three months ended March 31, 2010 as compared to the same period in 2009.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $92,000 or 2%, to $4,924,000 for the three months ended March 31, 2010 from $4,832,000 for the three months ended March 31, 2009. Selling, general and administrative expenses increased primarily due to increased payroll and payroll related expense of $239,000 due to increased headcount during the three months ended March 31, 2010 as compared to the same period in 2009; increased travel expense of $120,000 related to the expansion of our account management team, increased bad debt expense of $48,000 and increased software maintenance costs of $43,000. These increases were offset by reductions in severance expense of $165,000 related to the reduction in workforce that occurred in the first quarter of 2009, decreased recruiting expense of $103,000 related to our search for a new chief executive officer during the first quarter of 2009 and decreased legal fees of $98,000, which primarily related to legal fees associated with the asset acquisitions that were completed during 2009.

Depreciation and Amortization Expense

Depreciation and amortization expense (excluding depreciation and amortization included in direct operating costs) increased $45,000 to $172,000 for the three months ended March 31, 2010 from $127,000 for the three months ended March 31, 2009 primarily due to the acquisition of intangible assets, which has resulted in increased amortization expense.

Other Income, Net

Other income, net decreased $35,000 to $6,000 for the three months ended March 31, 2010 from $41,000 for the three months ended March 31, 2009. The decrease was due to less interest income of $42,000 resulting from a decrease in our average cash balance invested in interest bearing securities and an increase in interest expense of $26,000 related to capital equipment leases. Offsetting the net decrease are foreign currency exchange gains of $33,000 related to intercompany activity with our Canadian subsidiary.

Income Taxes

We expect to incur federal alternative minimum tax, or AMT, and minimum state income tax liability in 2010 related to our U.S. operations. We also expect to pay income taxes in Canada due to the profitability of NTN Canada. Our tax provision for the three months ended March 31, 2010 increased $5,000 to $36,000 compared to the $31,000 provision for income taxes recorded for the three months ended March 31, 2009 primarily related to the federal AMT. We continue to provide a 100% valuation allowance against our deferred tax assets related to certain net operating losses as realization of such tax benefits is not assessed as more likely than not.

EBITDA

Earnings before interest, taxes, depreciation and amortization, or EBITDA, is not intended to represent a measure of performance in accordance with U.S. 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 in comparison to their GAAP earnings or loss.

The following table reconciles our consolidated net loss per GAAP to EBITDA:

	For the three months ended March 31,
	2010			2009
Net loss per GAAP	$	(389,000	)	$	(255,000	)
Interest expense (income), net		27,000			(41,000	)
Depreciation and amortization		780,000			620,000
Income taxes		36,000			31,000
EBITDA	$	454,000		$	355,000

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2010, we had cash and cash equivalents of $3,105,000 compared to cash and cash equivalents of $3,637,000 as of December 31, 2009. We believe existing cash and cash equivalents, together with funds generated from operations, will be sufficient to meet our operating cash requirements for at least the next 12 months. We have no debt obligations other than capital leases. It is our intention to continue entering into capital lease facilities for certain equipment requirements when economically advantageous. In the event that net cash provided by operating activities and cash on hand are not sufficient to meet future cash requirements, we may be required to reduce planned capital expenses, further reduce operational cash uses, sell assets or seek financing. Any actions we may undertake to reduce planned capital purchases, further reduce expenses, or generate proceeds from the sale of assets may be insufficient to cover shortfalls in available funds. If we require additional capital, we may be unable to secure additional financing on terms that are acceptable to us, or at all.

Working Capital

As of March 31, 2010, we had working capital (current assets in excess of current liabilities) of $624,000 compared to $800,000 as of December 31, 2009. The following table shows our change in working capital from December 31, 2009 to March 31, 2010.

	Increase (Decrease)
Working capital as of December 31, 2009	$	800,000
Changes in current assets:
Cash and cash equivalents		(532,000	)
Accounts receivable, net of allowance		397,000
Investment available-for-sale		(11,000	)
Prepaid expenses and other current assets		(122,000	)
Total current assets		(268,000	)
Changes in current liabilities:
Accounts payable and accrued liabilities		86,000
Sales taxes payable		10,000
Obligations under capital lease - current portion		135,000
Deferred revenue		(148,000	)
Other current liabilities		(175,000	)
Total current liabilities		(92,000	)
Net change in working capital		(176,000	)
Working capital as of March 31, 2010	$	624,000

Cash Flows

Cash 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,
	2010			2009
Cash (used in) provided by:
Operating activities	$	156,000		$	578,000
Investing activities		(651,000	)		(538,000	)
Financing activities		(27,000	)		(9,000	)
Effect of exchange rates		(10,000	)		(82,000	)
Net decrease in cash and cash equivalents	$	(532,000	)	$	(51,000	)

Net cash from operating activities. We are dependent on cash flows from operations to meet our cash requirements. Net cash generated from operating activities was $156,000 for the three months ended March 31, 2010 compared to net cash generated from operating activities of $578,000 for the same period in 2009. The $422,000 decrease in cash provided by operations was primarily due to an increase of $484,000 in cash used by operating assets and liabilities, offset by an increase of $62,000 in cash provided by net loss excluding non-cash charges.

Our largest use of cash is payroll and related costs. Cash used related to payroll increased $400,000 to $2,020,000 for the three months ended March 31, 2010 from $1,620,000 during the same period in 2009. This increase is the result of higher headcount related to our account management team during the three months ended March 31, 2010 compared to the same period in 2009. Our primary source of cash is cash we generate from customers. Cash received from customers decreased $344,000 to $5,978,000 for the three months ended March 31, 2010 from $6,322,000 during the same period in 2009. The decrease in cash received from our customers was substantially due to the timing of March billings, as there were certain delays encountered as we migrated to a new billing system. Of the $344,000 decrease in cash collected, $258,000 was related to our significant customer, Buffalo Wild Wings, which was subsequently collected in April 2010.

Net cash used in investing activities. We used $651,000 in cash for investing activities for the three months ended March 31, 2010 compared to $538,000 used in cash for investing activities during the same period in 2009. The $113,000 increase in cash flows used in investing activities was primarily due to an increase of $114,000 in cash used for software development initiatives and $35,000 related to a trademark license, offset by a decrease of $36,000 in cash used for capital expenditures.

We currently anticipate investing approximately $2.2 million in the next nine months for software development and equipment purchases, including payments on capitalized leases. Our actual future capital requirements will depend on a number of factors, including our cash availability, success in increasing sales, industry competition and technological developments.

Net cash used in financing activities. Net cash used in financing activities increased $18,000 to $27,000 for the three months ended March 31, 2010 compared to net cash used of $9,000 for the same period in 2009. Included in net cash used in financing activities for the three months ended March 31, 2010 was $56,000 in proceeds we received from the exercise of 328,125 stock options, offset by $83,000 in principal payments on capital leases.

RECENT ACCOUNTING PRONOUNCEMENTS

Refer to Note 13 of the condensed consolidated financial statements, “Recent Accounting Pronouncements.”

Item 3.

Quantitative and Qualitative Disclosures About Market Risk .

Under SEC rules and regulations, as a smaller reporting company we are not required to provide the information otherwise required by this item.

Item 4.

Controls and Procedures .

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, our management evaluated our disclosure controls and procedures (as defined in Securities Exchange Act Rule 13a-15(e)) as to whether such disclosure controls and procedures were effective in providing reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and ensuring that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

During the quarter ended March 31, 2010, the Company implemented a new general ledger accounting system. The new system was not implemented in response to any deficiency in internal controls over financial reporting. Other than ongoing modifications to the new system following its initial implementation, which the Company believes enhanced its internal control over financial reporting, there was no change in the Company's internal control over financial reporting during the Company's most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.

Legal Proceedings .

None

Item 1A.

Risk Factors .

An investment in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described under Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2009 together with all other information contained or incorporated by reference in this report before you decide to invest in our common stock. If any of the risks described in our annual report occur, our business, financial condition, results of operations and our future growth prospects could be materially and adversely affected. Under these circumstances, the trading price of our common stock could decline, and you may lose all or part of your investment. As of the date of this report, we do not believe that there have been any material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3.

Defaults Upon Senior Securities.

None

Item 4.

(Removed and Reserved).

Item 5.

Other Information .

None

Item 6.

Exhibits.

Exhibit	Description
2.1	Asset Purchase Agreement dated May 11, 2009 between NTN Buzztime, Inc. and Instant Access Media, LLC (1)

2.2	Asset Purchase Agreement dated April 24, 2009 between NTN Buzztime, Inc. and iSports Inc. (2)

3.1	Amended and Restated Certificate of Incorporation of the Company, as amended (3)

3.2	Certificate of Designations, Rights and Preferences of Series B Convertible Preferred Stock (4)

3.3	Bylaws of the Company, as amended (5)

10.1*	2010 Performance Incentive Plan (6)

10.2	Form of incentive stock option agreement under the 2010 Performance Incentive Plan

10.3	Form of nonstatutory stock option agreement under the 2010 Performance Incentive Plan

10.4*	NTN Buzztime, Inc. Executive Incentive Plan for Eligible Employees of NTN Buzztime, Inc. Fiscal Year 2010

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1#	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2#	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	*	Management Contract or Compensatory Plan
	#	These exhibits are being furnished solely to accompany this report pursuant to U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated herein by reference into any filing of the Company whether made before or after the date hereof, regardless of any general incorporation language in such filing.
	(1)	Previously filed as an exhibit to the registrant's current report on Form 8-K filed on May 15, 2009 and incorporated by reference.
	(2)	Previously filed as an exhibit to the registrant’s report on Form 10-K for the fiscal year ended December 31, 2009 and incorporated herein by reference.
	(3)	Previously filed as an exhibit to the registrant’s report on Form 10-Q for the quarter ended June 30, 2008 and incorporated herein by reference.
	(4)	Previously filed as an exhibit to the registrant’s report on Form 8-K filed on November 7, 1997 and incorporated herein by reference.
	(5)	Previously filed as an exhibit to the registrant’s report on Form 10-K for the fiscal year ended December 31, 2007 and incorporated herein by reference.
	(6)	Previously filed as Exhibit A to the Definitive Proxy Statement on Schedule 14A filed by the registrant on April 30, 2010 and incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NTN BUZZTIME, INC.


Date: May 14, 2010	By:	/s/ Kendra Berger
		Kendra Berger
		Chief Financial Officer
		(on behalf of the Registrant, and as its Principal Financial and Accounting Officer)

Exhibit 10.2

NTN BUZZTIME INC.

2010 PERFORMANCE INCENTIVE PLAN

INCENTIVE STOCK OPTION AGREEMENT

NTN Buzztime, Inc., a Delaware corporation (the “Company”), hereby grants an Option to purchase shares of its Common Stock (the “Shares”) to the Optionee named below. The terms and conditions of the Option are set forth in this cover sheet, in the attachment and in the NTN Buzztime, Inc. 2010 Performance Incentive Plan (the “Plan”).

Date of Option Grant : __________________, [YEAR]

Name of Optionee : _________________________________________________

Number of Shares Covered by Option : ______________

Exercise Price per Share : $_____.___

Fair Market Value of a Share on Date of Option Grant : $_____.___

Expiration Date : _____________, [YEAR] [DO NOT EXCEED TEN YEARS FROM GRANT]

Vesting Calculation Date : _____________, [YEAR]

Vesting Schedule :

Subject to all the terms of the attached Agreement, your right to purchase Shares under this Option shall vest as to one-fourth (1/4) of the total number of Shares covered by this Option, as shown above, on the first anniversary of the Vesting Calculation Date. Thereafter, the number of Shares which you may purchase under this Option shall vest at the rate of one-forty-eighth (1/48) of the total number of Shares covered by this Option per calendar month on the last day of each of the thirty-six (36) months following the month of the first anniversary of the Vesting Calculation Date. The resulting aggregate number of vested Shares will be rounded to the nearest whole number. No Shares will vest after your Service has terminated for any reason.

By signing this cover sheet, you agree to all of the terms and conditions described in the attached Agreement, the Plan and Plan prospectus, copies of which are also enclosed.

Optionee: ________________________________________________________________________________

(Signature)

Company: ________________________________________________________________________________

(Signature)

Title: ____________________________________________________________________________________

Attachment

NTN BUZZTIME, INC.

2010 PERFORMANCE INCENTIVE PLAN

INCENTIVE STOCK OPTION AGREEMENT

The Plan and Other Agreements	The text of the Plan is incorporated in this Agreement by reference. Certain capitalized terms used in this Agreement are defined in the Plan. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments or negotiations concerning this Option are superseded.
Incentive Stock Option	This Option is intended to be an Incentive Stock Option under section 422 of the Code and will be interpreted accordingly. However, this Option will be treated as a Nonstatutory Stock Option on the day after three (3) months after you cease to be an employee of the Company (and any Subsidiary or any Parent): (i) even if you continue to provide Service after your employment has terminated or (ii) if your termination of employment was for any reason other than due to your death or Disability. In addition, to the extent that all or part of this Option exceeds the $100,000 limitation rule of section 422(d) of the Code, this Option or the lesser excess part will be treated as a Nonstatutory Stock Option. This Option is not intended to be deferred compensation under section 409A of the Code and will be interpreted accordingly.
Vesting	This Option is only exercisable before it expires and then only with respect to the vested portion of the Option. This Option will vest according to the Vesting Schedule on the attached cover sheet.
Term	Your Option will expire in any event no later than the Expiration Date, as shown on the cover sheet. Your Option will expire earlier if your Service terminates, as described below. If the Expiration Date specified in the attached cover sheet falls on a day on which the NYSE Amex (“AMEX”) is open for trading, then any unexercised portion of this Option that is outstanding shall be forfeited without consideration as of 3:45 P.M. New York time on the Expiration Date. However, if the Expiration Date specified in the attached cover sheet falls on any day on which the AMEX is not open for trading, then your ability to exercise this Option will terminate as of 3:45 P.M. New York time on the last day in which the AMEX is open for trading that occurs immediately prior to the Expiration Date.

Termination of Service - General	If your Service terminates for any reason other than (i) being terminated by the Company for Cause or (ii) due to your death or Disability, then your Option will expire at the close of business at Company headquarters on the date that is ninety (90) days after your Termination Date.
Termination of Service - Death or Disability	If your Service terminates because of your death or Disability, then your Option will expire at the close of business at Company headquarters on the date that is twelve (12) months after your Termination Date. If your Service terminates because of your death, then your estate or heirs may exercise the vested portion of your Option during this twelve (12) month period.
Termination of Service – by the Company for Cause	If your Service is terminated by the Company for Cause or if you commit an act(s) of Cause while this Option is outstanding, as determined by the Committee in its sole discretion, then you shall immediately forfeit all rights to your Option and the Option shall immediately expire.
Leaves of Absence	For purposes of this Option, your Service does not terminate when you go on a bona fide leave of absence that was approved by the Company in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. However, no portion of this Option will be treated as an Incentive Stock Option as of the day after three (3) months after you went on leave, unless your right to return to active work is guaranteed by law or by a contract. Your Service terminates in any event when the approved leave ends unless you immediately return to active work. The Company determines which leaves count for this purpose, and when your Service terminates for all purposes under the Plan.
Notice of Exercise	When you wish to exercise this Option, you must notify the Company by filing a “Notice of Exercise” form at the address given on the form. Your notice must specify how many Shares you wish to purchase. Your notice must also specify how your Shares should be registered (in your name only or in your and your spouse’s names as community property or as joint tenants with right of survivorship). The notice will be effective when it is received by the Company. If someone else wants to exercise this Option after your death, that person must prove to the Company’s satisfaction that he or she is entitled to do so.

Form of Payment	When you submit your notice of exercise, you must include payment of the Exercise Price for the Shares you are purchasing. Payment may be made in one (or a combination) of the following forms: · Cash, your personal check, a cashier’s check or a money order. · Shares which have already been owned by you for more than six (6) months and which are surrendered to the Company. The Fair Market Value of the Shares, determined as of the effective date of the Option exercise, will be applied to the Exercise Price. · To the extent a public market for the Shares exists as determined by the Company, by Cashless Exercise through delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price.
Withholding Taxes	You will be solely responsible for payment of any and all applicable taxes associated with this Option. You will not be allowed to exercise this Option unless you make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the Option exercise or sale of Shares acquired under this Option.
Restrictions on Exercise and Resale	By signing this Agreement, you agree not to (i) exercise this Option (“Exercise Prohibition”), or (ii) sell, transfer, dispose of, pledge, hypothecate, make any short sale of, or otherwise effect a similar transaction of any Shares acquired under this Option (each a “Sale Prohibition”) at a time when applicable laws, regulations or Company or underwriter trading policies prohibit the exercise or disposition of Shares. The Company will not permit you to exercise this Option if the issuance of Shares at that time would violate any law or regulation. Notwithstanding anything to the contrary, this Option is granted on the condition that the Company’s stockholders approve the Plan prior to February 3, 2011. You understand and agree that this Option may not be exercised unless the Company's stockholders timely approve the Plan. If the Company’s stockholders do not approve the Plan prior to February 3, 2011, then this Option shall be immediately forfeited without consideration . The Company shall have the right to designate one or more periods of time, each of which generally will not exceed one hundred eighty (180) days in length (provided however, that such period may be extended in connection with the Company’s release (or announcement of release) of earnings results or other material news or events), and to impose an Exercise Prohibition and/or Sale Prohibition, if the Company determines (in its sole discretion) that such limitation(s) is needed in connection with a public offering of Shares or to comply with an underwriter’s request or trading policy, or could in any way facilitate a lessening of any restriction on transfer pursuant to the Securities Act or any state securities laws with respect to any issuance of securities by the Company, facilitate the registration or qualification of any securities by the Company under the Securities Act or any state securities laws, or facilitate the perfection of any exemption from the registration or qualification requirements of the Securities Act or any applicable state securities laws for the issuance or transfer of any securities. The Company may issue stop/transfer instructions and/or appropriately legend any stock certificates issued pursuant to this Option in order to ensure compliance with the foregoing. Any such Exercise Prohibition shall not alter the vesting schedule set forth in this Agreement other than to limit the periods during which this Option shall be exercisable.

	If the sale of Shares under the Plan is not registered under the Securities Act, but an exemption is available which requires an investment or other representation, you shall represent and agree at the time of exercise that the Shares being acquired upon exercise of this Option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel. You may also be required, as a condition of exercise of this Option, to enter into any Company stockholder agreement or other agreements that are applicable to stockholders. If you sell or otherwise dispose of any of the Shares acquired pursuant to the exercise of this Option on or before the later of (i) the date that is two years after the Date of Option Grant or (ii) the date that is one year after the applicable exercise of this Option, then you shall within ten days of any and all such sales or dispositions provide the Company with written notice of such transactions including without limitation the date of each disposition, the number of Shares that you disposed of in each transaction and their original Date of Option Grant, and the amount of proceeds you received from each disposition.
Transfer of Option	Prior to your death, only you may exercise this Option. You cannot transfer, assign, alienate, pledge, attach, sell, or encumber this Option. If you attempt to do any of these things, this Option will immediately become invalid. You may, however, dispose of this Option in your will or it may be transferred by the laws of descent and distribution. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your spouse, nor is the Company obligated to recognize your spouse’s interest in your Option in any other way.
Retention Rights	Your Option or this Agreement does not give you the right to be retained by the Company (or any Parent or any Subsidiaries or Affiliates) in any capacity. The Company (or any Parent and any Subsidiaries or Affiliates) reserves the right to terminate your Service at any time and for any reason. This Option and the Shares subject to the Option are not intended to constitute or replace any pension rights or compensation and are not to be considered compensation of a continuing or recurring nature, or part of Optionee’s normal or expected compensation, and in no way represent any portion of Optionee’s salary, compensation or other remuneration for any purpose, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
Stockholder Rights	You, or your estate or heirs, have no rights as a stockholder of the Company until a certificate for your Option’s Shares has been issued. No adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued, except as described in the Plan.
Adjustments	In the event of a stock split, a stock dividend or a similar change in the Company stock, the number of Shares covered by this Option (rounded down to the nearest whole number) and the Exercise Price per Share may be adjusted pursuant to the Plan. Your Option shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity.

Legends	All certificates representing the Shares issued upon exercise of this Option shall, if applicable, have endorsed thereon the following legends:
	“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE.”
	“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

Applicable Law	This Agreement will be interpreted and enforced under the laws of the State of Delaware.
Voluntary Participant	Optionee acknowledges that Optionee is voluntarily participating in the Plan.
No Rights to Future Awards	Optionee’s rights, if any, in respect of or in connection with this Option or any other Award are derived solely from the discretionary decision of the Company to permit Optionee to participate in the Plan and to benefit from a discretionary Award. By accepting this Option, Optionee expressly acknowledges that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards to Optionee or benefits in lieu of Options or any other Awards even if Options have been granted repeatedly in the past. All decisions with respect to future Option grants, if any, will be at the sole discretion of the Committee.
Future Value	The future value of the underlying Shares is unknown and cannot be predicted with certainty. If the underlying Shares do not increase in value after the Date of Option Grant, the Option will have little or no value. If Optionee exercises the Option and obtains Shares, the value of the Shares acquired upon exercise may increase or decrease in value, even below the Exercise Price.
No Advice Regarding Grant	The Company has not provided any tax, legal or financial advice, nor has the Company made any recommendations regarding Optionee’s participation in the Plan, or Optionee’s acquisition or sale of the underlying Shares. Optionee is hereby advised to consult with Optionee’s own personal tax, legal and financial advisors regarding Optionee’s participation in the Plan before taking any action related to the Plan.

By signing the cover sheet of this Agreement, you agree to all of the terms and conditions described above, and in the Plan and Plan prospectus.

NTN BUZZTIME, INC.

NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION BY OPTIONEE

NTN Buzztime, Inc.

5966 La Place Court

Carlsbad, California 92008

Attention: Secretary

Re:	Exercise of Incentive Stock Option to Purchase Shares of Company Stock

_____________________________________________

[PRINT NAME OF OPTIONEE]

Pursuant to the Incentive Stock Option Agreement dated ___________________, ______ between NTN Buzztime, Inc., a Delaware corporation, (the “Company”) and me, made pursuant to the 2010 Performance Incentive Plan (the “Plan”), I hereby request to purchase _______ Shares (whole number only and must be not less than 100 Shares or the remaining number of vested Shares under this Option) of common stock of the Company (the “Shares”), at the exercise price of $__________ per Share. I am hereby making full payment of the aggregate exercise price by one or more of the following forms of payment in accordance with the whole number percentages that I have provided below. I further understand and agree that I will timely satisfy any and all applicable tax withholding obligations as a condition of this Option exercise.

Percentage of Payment	Form of Payment As Provided In the Incentive Stock Option Agreement

________ %	Cash/My Personal Check/Cashier’s Check/Money Order (payable to “NTN Buzztime, Inc.”)

________ %	Cashless Exercise as provided in the Incentive Stock Option Agreement

________ %	Surrender of Vested Shares (Valued At Their Fair Market Value) Owned

100%	By Me For More Than Six (6) Months

Check one: ¨ The Shares certificate is to be issued and registered in my name only.

¨ The Shares certificate is to be issued and registered in my name and my spouse’s name.

___________________________________________

[PRINT SPOUSE’S NAME, IF CHECKING SECOND BOX]

Check one (if checked second box above):

¨ Community Property or ¨ Joint Tenants With Right of Survivorship

I acknowledge that I have received, understand and continue to be bound by all of the terms and conditions set forth in the Plan, Plan prospectus and in the Incentive Stock Option Agreement.

Dated: __________________

________________________________________________	________________________________________________
(Optionee’s Signature)	(Spouse’s Signature)**

	**Spouse must sign this Notice of Exercise if listed above.

________________________________________________	________________________________________________

________________________________________________	________________________________________________
(Full Address)	(Full Address)

* THIS NOTICE OF EXERCISE MAY BE REVISED BY THE COMPANY AT ANY TIME WITHOUT NOTICE.

Exhibit 10.3

NTN BUZZTIME INC.

2010 PERFORMANCE INCENTIVE PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

Date of Option Grant :

, [YEAR]

Name of Optionee :

Number of Shares Covered by Option :

Exercise Price per Share :

$ .

Fair Market Value of a Share on Date of Option Grant :

$ .

Expiration Date :

, [YEAR] [DO NOT EXCEED TEN YEARS FROM GRANT]

Vesting Calculation Date :

, [YEAR]

Vesting Schedule :

By signing this cover sheet, you agree to all of the terms and conditions described in the attached Agreement, the Plan and Plan prospectus, copies of which are also enclosed.

Optionee:
	(Signature)
Company:
	(Signature)
Title:

Attachment

NTN BUZZTIME, INC.

2010 PERFORMANCE INCENTIVE PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

The Plan and Other Agreements		The text of the Plan is incorporated in this Agreement by reference. Certain capitalized terms used in this Agreement are defined in the Plan.
		This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments or negotiations concerning this Option are superseded.

Nonstatutory Stock Option		This Option is not intended to be an Incentive Stock Option under section 422 of the Code and will be interpreted accordingly.
		This Option is not intended to be deferred compensation under section 409A of the Code and will be interpreted accordingly.

Vesting		This Option is only exercisable before it expires and then only with respect to the vested portion of the Option. This Option will vest according to the Vesting Schedule on the attached cover sheet.

Term		Your Option will expire in any event no later than the Expiration Date, as shown on the cover sheet. Your Option will expire earlier if your Service terminates, as described below.
		If the Expiration Date specified in the attached cover sheet falls on a day on which the NYSE Amex (“AMEX”) is open for trading, then any unexercised portion of this Option that is outstanding shall be forfeited without consideration as of 3:45 P.M. New York time on the Expiration Date.
		However, if the Expiration Date specified in the attached cover sheet falls on any day on which the AMEX is not open for trading, then your ability to exercise this Option will terminate as of 3:45 P.M. New York time on the last day in which the AMEX is open for trading that occurs immediately prior to the Expiration Date.

Termination of Service – General		If your Service terminates for any reason other than (i) being terminated by the Company for Cause or (ii) due to your death or Disability, then your Option will expire at the close of business at Company headquarters on the date that is ninety (90) days after your Termination Date.

Termination of Service - Death or Disability		If your Service terminates because of your death or Disability, then your Option will expire at the close of business at Company headquarters on the date that is twelve (12) months after your Termination Date. If your Service terminates because of your death, then your estate or heirs may exercise the vested portion of your Option during this twelve (12) month period.

Termination of Service – by the Company for Cause		If your Service is terminated by the Company for Cause or if you commit an act(s) of Cause while this Option is outstanding, as determined by the Committee in its sole discretion, then you shall immediately forfeit all rights to your Option and the Option shall immediately expire.

Leaves of Absence		For purposes of this Option, your Service does not terminate when you go on a bona fide leave of absence that was approved by the Company in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. Your Service terminates in any event when the approved leave ends unless you immediately return to active work. The Company determines which leaves count for this purpose, and when your Service terminates for all purposes under the Plan.

Notice of Exercise		When you wish to exercise this Option, you must notify the Company by filing a “Notice of Exercise” form at the address given on the form. Your notice must specify how many Shares you wish to purchase. Your notice must also specify how your Shares should be registered (in your name only or in your and your spouse’s names as community property or as joint tenants with right of survivorship). The notice will be effective when it is received by the Company. If someone else wants to exercise this Option after your death, that person must prove to the Company’s satisfaction that he or she is entitled to do so.

Form of Payment		When you submit your notice of exercise, you must include payment of the Exercise Price for the Shares you are purchasing. Payment may be made in one (or a combination) of the following forms: · Cash, your personal check, a cashier’s check or a money order. · Shares which have already been owned by you for more than six (6) months and which are surrendered to the Company. The Fair Market Value of the Shares, determined as of the effective date of the Option exercise, will be applied to the Exercise Price.

		· To the extent a public market for the Shares exists as determined by the Company, by Cashless Exercise through delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price.

Withholding Taxes		You will be solely responsible for payment of any and all applicable taxes associated with this Option. You will not be allowed to exercise this Option unless you make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the Option exercise or sale of Shares acquired under this Option.

Restrictions on Exercise and Resale		By signing this Agreement, you agree not to (i) exercise this Option (“Exercise Prohibition”), or (ii) sell, transfer, dispose of, pledge, hypothecate, make any short sale of, or otherwise effect a similar transaction of any Shares acquired under this Option (each a “Sale Prohibition”) at a time when applicable laws, regulations or Company or underwriter trading policies prohibit the exercise or disposition of Shares. The Company will not permit you to exercise this Option if the issuance of Shares at that time would violate any law or regulation. Notwithstanding anything to the contrary, this Option is granted on the condition that the Company’s stockholders approve the Plan prior to February 3, 2011. You understand and agree that this Option may not be exercised unless the Company's stockholders timely approve the Plan. If the Company’s stockholders do not approve the Plan prior to February 3, 2011, then this Option shall be immediately forfeited without consideration . The Company shall have the right to designate one or more periods of time, each of which generally will not exceed one hundred eighty (180) days in length (provided however, that such period may be extended in connection with the Company’s release (or announcement of release) of earnings results or other material news or events), and to impose an Exercise Prohibition and/or Sale Prohibition, if the Company determines (in its sole discretion) that such limitation(s) is needed in connection with a public offering of Shares or to comply with an underwriter’s request or trading policy, or could in any way facilitate a lessening of any restriction on transfer pursuant to the Securities Act or any state securities laws with respect to any issuance of securities by the Company, facilitate the registration or qualification of any securities by the Company under the Securities Act or any state securities laws, or facilitate the perfection of any exemption from the registration or qualification requirements of the Securities Act or any applicable state securities laws for the issuance or transfer of any securities. The Company may issue stop/transfer instructions and/or appropriately legend any stock certificates issued pursuant to this Option in order to ensure compliance with the foregoing. Any such Exercise Prohibition shall not alter the vesting schedule set forth in this Agreement other than to limit the periods during which this Option shall be exercisable.

		If the sale of Shares under the Plan is not registered under the Securities Act, but an exemption is available which requires an investment or other representation, you shall represent and agree at the time of exercise that the Shares being acquired upon exercise of this Option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel. You may also be required, as a condition of exercise of this Option, to enter into any Company stockholder agreement or other agreements that are applicable to stockholders.

Transfer of Option		Prior to your death, only you may exercise this Option. You cannot transfer, assign, alienate, pledge, attach, sell, or encumber this Option. If you attempt to do any of these things, this Option will immediately become invalid. You may, however, dispose of this Option in your will or it may be transferred by the laws of descent and distribution. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your spouse, nor is the Company obligated to recognize your spouse’s interest in your Option in any other way.

Retention Rights		Your Option or this Agreement does not give you the right to be retained by the Company (or any Parent or any Subsidiaries or Affiliates) in any capacity. The Company (or any Parent and any Subsidiaries or Affiliates) reserves the right to terminate your Service at any time and for any reason. This Option and the Shares subject to the Option are not intended to constitute or replace any pension rights or compensation and are not to be considered compensation of a continuing or recurring nature, or part of Optionee’s normal or expected compensation, and in no way represent any portion of Optionee’s salary, compensation or other remuneration for any purpose, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

Stockholder Rights		You, or your estate or heirs, have no rights as a stockholder of the Company until a certificate for your Option’s Shares has been issued. No adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued, except as described in the Plan.

Adjustments		In the event of a stock split, a stock dividend or a similar change in the Company stock, the number of Shares covered by this Option (rounded down to the nearest whole number) and the Exercise Price per Share may be adjusted pursuant to the Plan. Your Option shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity.

Legends		All certificates representing the Shares issued upon exercise of this Option shall, if applicable, have endorsed thereon the following legends:

		“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE.”

		“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

Applicable Law		This Agreement will be interpreted and enforced under the laws of the State of Delaware.

Voluntary Participant		Optionee acknowledges that Optionee is voluntarily participating in the Plan.

No Rights to Future Awards		Optionee’s rights, if any, in respect of or in connection with this Option or any other Award are derived solely from the discretionary decision of the Company to permit Optionee to participate in the Plan and to benefit from a discretionary Award. By accepting this Option, Optionee expressly acknowledges that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards to Optionee or benefits in lieu of Options or any other Awards even if Options have been granted repeatedly in the past. All decisions with respect to future Option grants, if any, will be at the sole discretion of the Committee.

Future Value		The future value of the underlying Shares is unknown and cannot be predicted with certainty. If the underlying Shares do not increase in value after the Date of Option Grant, the Option will have little or no value. If Optionee exercises the Option and obtains Shares, the value of the Shares acquired upon exercise may increase or decrease in value, even below the Exercise Price.

No Advice Regarding Grant		The Company has not provided any tax, legal or financial advice, nor has the Company made any recommendations regarding Optionee’s participation in the Plan, or Optionee’s acquisition or sale of the underlying Shares. Optionee is hereby advised to consult with Optionee’s own personal tax, legal and financial advisors regarding Optionee’s participation in the Plan before taking any action related to the Plan.

By signing the cover sheet of this Agreement, you agree to all of the terms and conditions described above, and in the Plan and Plan prospectus.

NTN BUZZTIME, INC.

NOTICE OF EXERCISE OF NONSTATUTORY STOCK OPTION BY OPTIONEE

NTN Buzztime, Inc.

5966 La Place Court

Carlsbad, California 92008

Attention: Secretary

Re:	Exercise of Nonstatutory Stock Option to Purchase Shares of Company Stock


	[PRINT NAME OF OPTIONEE]

Pursuant to the Nonstatutory Stock Option Agreement dated , between NTN Buzztime, Inc., a Delaware corporation, (the “Company”) and me, made pursuant to the 2010 Performance Incentive Plan (the “Plan”), I hereby request to purchase Shares (whole number only and must be not less than 100 Shares or the remaining number of vested Shares under this Option) of common stock of the Company (the “Shares”), at the exercise price of $ per Share. I am hereby making full payment of the aggregate exercise price by one or more of the following forms of payment in accordance with the whole number percentages that I have provided below. I further understand and agree that I will timely satisfy any and all applicable tax withholding obligations as a condition of this Option exercise.

Percentage of Payment		Form of Payment As Provided In the Nonstatutory Stock Option Agreement

%		Cash/My Personal Check/Cashier’s Check/Money Order (payable to “NTN Buzztime, Inc.”)

%		Cashless Exercise as provided in the Nonstatutory Stock Option Agreement

% 100%		Surrender of Vested Shares (Valued At Their Fair Market Value) Owned 100% By Me For More Than Six (6) Months

Check one:	¨	The Shares certificate is to be issued and registered in my name only.

	¨	The Shares certificate is to be issued and registered in my name and my spouse’s name.

		[PRINT SPOUSE’S NAME, IF CHECKING SECOND BOX]

		Check one (if checked second box above):
		¨ Community Property or ¨ Joint Tenants With Right of Survivorship

I acknowledge that I have received, understand and continue to be bound by all of the terms and conditions set forth in the Plan, Plan prospectus and in the Nonstatutory Stock Option Agreement.

Dated:


(Optionee’s Signature)		(Spouse’s Signature)**
		**Spouse must sign this Notice of Exercise if listed above.




(Full Address)		(Full Address)

* THIS NOTICE OF EXERCISE MAY BE REVISED BY THE COMPANY AT ANY TIME WITHOUT NOTICE.

Exhibit 10.4

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

Fiscal Year 2010

Section

Description

1	Approval	This Plan has been approved by the Nominating and Corporate Governance Compensation Committee (“the Committee”). This Plan may be changed or modified at any time at the discretion of the Committee. The Committee also has discretion on the impact of merger and acquisition activity and/or investments made beyond the core business as it relates to the integration to this Plan.
2	Effective Dates	The Plan Period is January 1, 2010 – December 31, 2010.
3	Eligibility	To be an eligible participant in the Plan, Executives must be employed by Buzztime on or before October 1, 2010, on active, full-time, paid status and not be a participant in any other Buzztime incentive compensation program. (All eligible employees are referred to in this Plan as “Participant(s)”). Only Participants may earn incentive compensation under this Plan. Additionally, plan Participants must confirm they have read, understood, and agree to abide by the term and conditions in the Personal Incentive Memo and this incentive plan. Any newly hired Executive who becomes eligible for the Plan during the year may be eligible to receive a prorated incentive amount. This Plan supersedes any previous contractual agreements or prior incentive plans.
4	Plan Design	(1) Prerequisites to Earning Incentive Compensation
		To earn incentive compensation under this Plan, subject to provisions of Section 6, the following criteria must be satisfied : (a) The Plan must be funded, based on the achievement of the Corporate Goal during the Plan Period which is to meet target EBITDA; and (b) the Participant must be employed by Buzztime on the Payout Date. (2) Corporate Goal – Our 2010 Corporate Goal is the 2010 EBITDA target as approved by the Board of Directors. EBITDA is defined as earnings before interest, tax, depreciation and amortization (“EBITDA”) as defined in Buzztime’s financial reports. The payout pool is determined and funded based on meeting the Corporate Goal . If the Company meets the Corporate Goal , there is a 100% payout pool generated. If the Corporate Goal is exceeded the Committee, at its discretion may choose to payout a larger pool amount. If the Corporate Goal is met at 90%, there is a 40% payout pool generated on a sliding scale to 100%. (3) Target Payout Each Participant will have a Target Payout , assigned by his/her position and job level, and comprised of two components, cash and equity. The cash component is expressed as a percentage of their “annual base salary” excluding benefits as of December 31, 2010. The equity component is expressed as a “ performance grant ” subject to the approval, terms and conditions of the “2010 Performance Incentive Plan” by the company Shareholders and Board of Directors. The performance grant will be in the form of restricted stock units where 100% vesting will occur on the achievement of the specified performance goals and level. The number of restricted stock units will be determined based on the achievement level and using a value of $.6250 per restricted stock unit. In the event the Corporate Goal is not met at least at 90% the restricted stock units will not be awarded and no cash will be awarded. The Target Payout amount will be adjusted when warranted pursuant to Sections 5 and 6.

		(4) Plan Terms The Incentive Payout amount is based on the following terms: % of Corporate Goal Achievement - Overall percent achieved of the Corporate Goal. Participant’s Target Payout Amount - Participant’s annual base salary x the Target Payout and a specific equity amount . Please refer to your personal incentive memo. Individual Incentive Payout – The incentive payout amount an individual is awarded after the payout formula is completed subject to all sections of this Plan. Executive – Executive is defined as the titles of Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and EVP of Technology & Programming. These titles are considered Participants under this Plan. Performance Grant – Subject to the terms and conditions of the 2010 Performance Incentive Plan, an equity grant type that vests upon certain performance criteria. (5) Performance Determination Buzztime’s actual performance against the Corporate Goal for the Plan Period will be determined and approved by the Committee as soon as practicable after the Plan Period ends, subject to the completion and approval by Buzztime of the relevant financial or other Buzztime reports upon which the Corporate Goal is measured. (6) Payout Formula Please refer to your personal incentive memo for formula payout examples.
5	Payout Details	Payout Date(s): Subject to Section 8, and provided all the of prerequisites to earning incentive compensation are met pursuant to Section 4, a cash payout will occur within 30 days after receipt of the independent auditor’s report on Buzztime’s annual financial statements for 2010, but no later than March 15, 2011. Similarly the performance grant will be awarded within 30 days after receipt of the independent auditor’s report on Buzztime’s annual financial statements for 2010, but no later than March 15, 2011 subject to the 2010 Performance Incentive Plan provisions. Prorated Payouts: The Individual Incentive Payout that otherwise would have been earned in the Plan Period will be prorated when the provisions of Section 6 apply. Plan Administration and Interpretation: This Plan shall be administered and interpreted by the Committee at its sole discretion. The Committee must approve any exceptions to the term and conditions of this Plan.

		401k deferrals: In accordance with the NTN Buzztime, Inc. 401k Plan, no 401k deductions will be withheld from incentive (“bonus”) wages. Taxes: Incentive payments are in addition to the Participant’s base salary and are included as total cash compensation and, as such, recorded on the Participant’s W-2 (or applicable country statement) statement of wages. Individual Incentive Payouts are considered taxable income and are reported as Gross Income (not “after taxes”). Participants will have all appropriate payroll taxes and withholdings deducted from these incentive payments at the IRS supplemental tax rate.

6	Prorated Participation	Late Entry into the Plan: An Executive who enters into an eligible position and, therefore, becomes a Participant after the beginning of the Plan Period (either through new hire, promotion or transfer) will be assigned a Target Payout and will be able to earn prorated incentive payment on that basis. Effect of Termination: A Participant must be employed on the Payout Date(s) to earn an incentive payment. If a Participant voluntarily resigns from employment prior to the Payout Date) , no incentive payment is earned. If Buzztime terminates a Participant’s employment prior to the Payout Date(s) , no incentive payment is earned. Effect of Disciplinary Action: Any Participant under disciplinary action (any level of performance counseling, warning and/or performance improvement plan) will be ineligible to participate in the Plan. If the employee upon reevaluation, however, is released from disciplinary action, he/she will at that same time resume eligibility under the Plan and may be eligible to receive a prorated incentive amount that excludes the period of time he/she was under disciplinary action. Internal Promotions and Transfers: Employees who transfer within Buzztime and/or are promoted into new positions that are not eligible to participate in this Plan will be paid a prorated Individual Incentive Payout. Participants who transfer within and/or promoted into new positions will be re-evaluated to ensure they are at the appropriate incentive level based on their position and job level. The incentive payment during the time in the Plan Period he or she was a Participant is subject to the prerequisites to earning incentive compensation. Approved Time Off: The Individual Incentive Payout will not be prorated to account for time off due to personal time off not associated with a leave of absence. Leave of Absence: The Individual Incentive Payout for Participants who are on an approved leave of absence from Buzztime will be prorated based on the length of the approved leave during the Pl an Period . During the time an employee is on an approved leave of absence, he or she will not be considered a Participant .
7	At Will Employment	Employment with Buzztime is at-will. This means that just as a Participant is free to resign at any time, Buzztime reserves the right to discharge a Participant at any time, with or without cause or advance notice. In connection with the “at-will” employment relationship, Buzztime also reserves the right to exercise its managerial discretion in reassigning, transferring, promoting or demoting an employee, at any time. Participation in the Plan does not guarantee continued employment for any particular period of time or otherwise change Buzztime’s policy of employment at-will.

8	Company Management Rights	Buzztime reserves the right to amend or terminate this Plan, at any time, at the Board’s discretion, with or without advance notice. Any amendments to the Plan will be in writing and approved by the Committee. If this Plan is amended or terminated prior to the end of the Plan Period , Participants will be paid, according to any amending or terminating documents. This Plan will automatically terminate at the end of the Plan Period , except that the Payout provisions will continue in effect until satisfied. However, Buzztime, at its discretion, may elect to re-issue the Plan, in writing, with new Effective Dates.

Acknowledgement

Your signature below indicates that you have read, understood, and agreed to the entire NTN Buzztime, Inc. Executive Incentive Plan for Eligible Employees of NTN Buzztime, Inc. Fiscal Year 2010, which includes the preceding four (4) pages and the Personal Incentive Memo for your position. Different positions are eligible for different incentives and not all positions are eligible for the same level of incentive. Information contained in these documents is strictly confidential and shall under no circumstances be shared with other employees of NTN Buzztime or with anyone outside the Company without the express consent of the Chief Financial Officer or Vice President of Human Resources of the Company unless required to do so under Sarbanes Oxley Act or the Securities Exchange Commission.

________________________________________

Plan Participant Name (Please Print)

__ ______________________________________

Plan Participant Signature

________________________________________

Date

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

AND RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

I, Michael Bush, President and Chief Executive Officer of NTN Buzztime, Inc. (the “Company”), certify that:

1. I have reviewed this report on Form 10-Q of the Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Dated: May 14, 2010	/s/ MICHAEL BUSH
	Michael Bush,
	President and Chief Executive Officer
	NTN Buzztime, Inc.

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

AND RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

I, Kendra Berger, Chief Financial Officer of NTN Buzztime, Inc. (the “Company”), certify that:

1. I have reviewed this report on Form 10-Q of the Company;

(a)

(b)

(c)

(d)

(a)

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Dated: May 14, 2010	/s/ KENDRA BERGER
	Kendra Berger
	Chief Financial Officer
	NTN Buzztime, Inc.

Exhibit 32.1

Certification pursuant to Rule 13a-14(b) / Section 1350

In connection with the Quarterly Report of NTN Buzztime, Inc. (the “Registrant”) on Form 10-Q for the period ended March 31, 2010, I, Michael Bush, President and Chief Executive Officer, do hereby certify that:

(1)	the Quarterly Report on Form 10-Q of the Registrant for the period ended March 31, 2010, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


Dated: May 14, 2010	/s/ MICHAEL BUSH
	Michael Bush
	President and Chief Executive Officer
	NTN Buzztime, Inc.

Exhibit 32.2

Certification pursuant to Rule 13a-14(b) / Section 1350

In connection with the Quarterly Report of NTN Buzztime, Inc. (the “Registrant”) on Form 10-Q for the period ended March 31, 2010, I, Kendra Berger, Chief Financial Officer, do hereby certify that:

(1)	the Quarterly Report on Form 10-Q of the Registrant for the period ended March 31, 2010, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


Dated: May 14, 2010	/s/ KENDRA BERGER
	Kendra Berger
	Chief Financial Officer
	NTN Buzztime, Inc.