Delaware
|
001-11460
|
31-1103425
|
(State or Other Jurisdiction of Incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
140 58th Street, Building A, Suite 2100
|
||
Brooklyn, New York
|
11220
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Title of each class
|
Trading symbol
|
Name of each exchange on which registered
|
||
Common Stock
|
BTX
|
NYSE American
|
Item 9.01 |
Financial Statements and Exhibits.
|
(a) |
Financial Statements of Business Acquired
|
|
• |
audited financial statements of Brooklyn LLC as of, and for the fiscal years ended, December 31, 2020 and 2019; and
|
|
• |
audited financial statements of Brooklyn LLC as of December 31, 2019 and 2018 and for the fiscal year ended December 31, 2019, the period from November 6, 2018 through December 31,
2018, and the period from January 1, 2018 through November 5, 2018.
|
(b) |
Pro Forma Financial Information
|
(d)
|
Exhibits
|
Exhibit
No.
|
Description
|
|
Consent of Marcum LLP
|
||
Audited financial statements of Brooklyn ImmunoTherapeutics LLC as of, and for the fiscal years ended, December 31, 2020
and 2019.
|
||
99.2
|
Audited financial statements of Brooklyn ImmunoTherapeutics LLC as of December 31, 2019 and 2018 and for the fiscal year ended December 31, 2019, the period from
November 6, 2018 through December 31, 2018, and the period from January 1, 2018 through November 5, 2018
|
|
Unaudited pro forma condensed combined financial statements of Brooklyn ImmunoTherapeutics, Inc. for the year ended December 31, 2020, including notes thereto
|
BROOKLYN IMMUNOTHERAPEUTICS, INC.
|
||
Dated: April 29, 2021
|
By:
|
/s/ Howard J. Federoff
|
Howard J. Federoff
|
||
Chief Executive Officer and President
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
1
|
|
|
Financial Statements
|
|
|
|
Balance Sheets
|
2 |
|
|
Statements of Operations
|
3
|
|
|
Statements of Changes in Members’ Equity
|
4
|
|
|
Statements of Cash Flows
|
5 |
|
|
Notes to Financial Statements
|
6
|
• |
We obtained an understanding of management’s process in regards to the methodology used and the factors considered around the inputs, sources of data used and assumptions and estimates made in determining the fair value of
contingent consideration, including those over management’s review of its third-party specialist valuation report.
|
• |
We tested the completeness and accuracy of the data used in the discounted cash flow model.
|
• |
We evaluated the appropriateness of the discounted cash flow model.
|
• |
We performed a sensitivity analysis on the discount rate used in the discounted cash flow model to determine the impact rate changes could have on the fair value.
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash
|
$
|
1,630,455
|
$
|
5,014,819
|
||||
Prepaid expenses and other current assets
|
102,322
|
86,668
|
||||||
Total Current Assets
|
1,732,777
|
5,101,487
|
||||||
|
||||||||
Long-Term Assets:
|
||||||||
Restricted cash
|
-
|
86,000
|
||||||
Property and equipment, net
|
594,106
|
653,763
|
||||||
Right of use assets - operating leases
|
2,092,878
|
-
|
||||||
Goodwill
|
2,043,747
|
2,043,747
|
||||||
In process research and development
|
6,860,000
|
6,860,000
|
||||||
Security deposits and other assets
|
453,252
|
363,621
|
||||||
Total Assets
|
$
|
13,776,760
|
$
|
15,108,618
|
||||
Liabilities and Members’ Equity
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$
|
1,275,223
|
$
|
1,735,610
|
||||
Accrued expenses
|
1,051,020
|
1,520,841
|
||||||
Investor deposits
|
-
|
665,563
|
||||||
Loans payable
|
410,000
|
410,000
|
||||||
Current portion of lease liability
|
273,217
|
4,026
|
||||||
Current portion of PPP loan
|
115,972
|
-
|
||||||
Total Current Liabilities
|
3,125,432
|
4,336,040
|
||||||
Long-Term Liabilities:
|
||||||||
Contingent consideration
|
20,110,000
|
870,000
|
||||||
Lease liability, non-current
|
1,905,395
|
99,030
|
||||||
PPP loan, non-current
|
193,933
|
-
|
||||||
Other liabilities
|
22,863
|
60,445
|
||||||
Total Liabilities
|
25,357,623
|
5,365,515
|
||||||
Commitments and contingencies
|
||||||||
Members’ Equity:
|
||||||||
Class A membership units
|
23,202,005
|
18,177,692
|
||||||
Class B membership units
|
1,400,000
|
1,400,000
|
||||||
Class C membership units
|
1,000,000
|
1,000,000
|
||||||
Common units
|
197,873
|
106,937
|
||||||
Accumulated deficit
|
(37,380,741
|
)
|
(10,941,526
|
)
|
||||
Total Members’ Equity
|
(11,580,863
|
)
|
9,743,103
|
|||||
Total Liabilities and Members’ Equity
|
$
|
13,776,760
|
$
|
15,108,618
|
|
Year ended December 31,
|
|||||||
2020
|
2019
|
|||||||
Operating Expenses
|
||||||||
General and administrative
|
$
|
3,296,851
|
$
|
3,721,490
|
||||
Research and development
|
3,951,253
|
5,156,266
|
||||||
Change in fair value of contingent consideration
|
19,240,000
|
-
|
||||||
Total operating expenses
|
26,488,104
|
8,877,756
|
||||||
Loss from operations
|
(26,488,104
|
)
|
(8,877,756
|
)
|
||||
Other Expenses
|
||||||||
Interest expense, net
|
(42,957
|
)
|
(59,298
|
)
|
||||
Total other expenses
|
(42,957
|
)
|
(59,298
|
)
|
||||
Net loss
|
$
|
(26,531,061
|
)
|
$
|
(8,937,054
|
)
|
Membership Equity
|
Accumulated Deficit
|
Total
Members’
Equity
|
||||||||||||||||||||||
Class A
|
Class B
|
Class C
|
Common
|
|||||||||||||||||||||
Balance - January 1, 2019
|
$
|
9,958,930
|
$
|
1,400,000
|
$
|
1,000,000
|
$
|
15,248
|
$
|
(2,004,472
|
)
|
$
|
10,369,706
|
|||||||||||
Stock based compensation:
|
||||||||||||||||||||||||
Amortization of restricted common units
|
-
|
-
|
-
|
91,689
|
-
|
91,689
|
||||||||||||||||||
Sale of members’ equity
|
8,218,762
|
-
|
-
|
-
|
-
|
8,218,762
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
(8,937,054
|
)
|
(8,937,054
|
)
|
||||||||||||||||
Balance - December 31, 2019
|
18,177,692
|
1,400,000
|
1,000,000
|
106,937
|
(10,941,526
|
)
|
9,743,103
|
|||||||||||||||||
Implementation of new accounting principle
|
-
|
-
|
-
|
-
|
91,846
|
91,846
|
||||||||||||||||||
Stock based compensation:
|
||||||||||||||||||||||||
Amortization of restricted common units
|
-
|
-
|
-
|
90,936
|
-
|
90,936
|
||||||||||||||||||
Sale of members’ equity
|
5,024,313
|
-
|
-
|
-
|
-
|
5,024,313
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
(26,531,061
|
)
|
(26,531,061
|
)
|
||||||||||||||||
Balance - December 31, 2020
|
$
|
23,202,005
|
$
|
1,400,000
|
$
|
1,000,000
|
$
|
197,873
|
$
|
(37,380,741
|
)
|
$
|
(11,580,863
|
)
|
Year ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net loss
|
$
|
(26,531,061
|
)
|
$
|
(8,937,054
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Change in fair value of contingent consideration
|
19,240,000
|
-
|
||||||
Depreciation and amortization
|
98,332
|
20,407
|
||||||
Equity compensation
|
90,936
|
91,689
|
||||||
Loss on operating sublease
|
-
|
103,350
|
||||||
Change in operating assets and liabilities:
|
||||||||
Prepaid expenses and other current assets
|
(15,654
|
)
|
(66,670
|
)
|
||||
Security deposits and other assets
|
(89,631
|
)
|
76,155
|
|||||
Accounts payable and accrued expenses
|
(930,207
|
)
|
(1,087,874
|
)
|
||||
Operating lease liability
|
11,580
|
(294
|
)
|
|||||
Other liabilities
|
25,361
|
-
|
||||||
Total adjustments
|
18,430,717
|
(863,237
|
)
|
|||||
Net Cash Used in Operating Activities
|
(8,100,344
|
)
|
(9,800,291
|
)
|
||||
Cash Flows from Investing Activities:
|
||||||||
Purchase of property and equipment
|
(38,675
|
)
|
(606,071
|
)
|
||||
Net Cash Used in Investing Activities
|
(38,675
|
)
|
(606,071
|
)
|
||||
Cash Flows from Financing Activities
|
||||||||
Proceeds from PPP loan
|
309,905
|
-
|
||||||
Proceeds from investor deposits
|
-
|
437,500
|
||||||
Proceeds from the collection of subscriptions receivable
|
-
|
850,000
|
||||||
Proceeds from sale of members’ equity
|
4,358,750
|
7,808,250
|
||||||
Net Cash Provided by Financing Activities
|
4,668,655
|
9,095,750
|
||||||
Net (Decrease) Increase in Cash
|
(3,470,364
|
)
|
(1,310,612
|
)
|
||||
Cash and Restricted Cash - Beginning of Period
|
5,100,819
|
6,411,431
|
||||||
Cash and Restricted Cash - End of Period
|
$
|
1,630,455
|
$
|
5,100,819
|
||||
Cash and Restricted Cash consisted of the following:
|
||||||||
Cash
|
1,630,455
|
5,014,819
|
||||||
Restricted Cash
|
-
|
86,000
|
||||||
$
|
1,630,455
|
$
|
5,100,819
|
|||||
Supplemental Disclosures of Cash Flow Information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
-
|
$
|
-
|
||||
Income taxes
|
$
|
-
|
$
|
-
|
||||
Non-cash investing and financing activities:
|
||||||||
Investor deposits for sale of members’ equity
|
$
|
665,563
|
$
|
410,512
|
||||
Right of use assets obtained in exchange for new operating lease liabilities
|
$
|
2,092,878
|
$
|
-
|
NOTE 1 |
ORGANIZATION AND DESCRIPTION OF BUSINESS OPERATIONS
|
NOTE 2 |
LIQUIDITY AND CAPITAL RESOURCES
|
NOTE 3 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
NOTE 3 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
NOTE 3 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
|
• |
Level 1 Inputs – Valued based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
|
NOTE 3
|
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
|
• |
Level 2 Inputs – Valued based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in
active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment
speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
|
|
• |
Level 3 Inputs – Valued based on inputs for which there is little or no market value, which require the reporting entity to develop its own assumptions.
|
NOTE 3 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
NOTE 4
|
NTN BUZZTIME, INC TRANSACTION
|
NOTE 4
|
NTN BUZZTIME, INC TRANSACTION (Continued)
|
NOTE 5 |
FAIR VALUE OF FINANCIAL INSTRUMENTS
|
|
• |
Level 1 Inputs – Valued based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
|
|
• |
Level 2 Inputs – Valued based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in
active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment
speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
|
|
• |
Level 3 Inputs – Valued based on inputs for which there is little or no market value, which require the reporting entity to develop its own assumptions.
|
NOTE 5
|
FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
|
December 31, 2020
|
||||||||||||
Description
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Liabilities:
|
||||||||||||
Contigent consideration
|
-
|
-
|
20,110,000
|
|||||||||
Total
|
$
|
-
|
$
|
-
|
$
|
20,110,000
|
December 31, 2019
|
||||||||||||
Description
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Liabilities:
|
||||||||||||
Contigent consideration
|
-
|
-
|
870,000
|
|||||||||
Total
|
$
|
-
|
$
|
-
|
$
|
870,000
|
Other Liabilities:
Contingent
Consideration
|
||||
Balance at December 31, 2019
|
$
|
870,000
|
||
Fair value adjustments included in operating expenses
|
19,240,000
|
|||
Balance at December 31, 2020
|
$
|
20,110,000
|
NOTE 5 |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
|
NOTE 6 |
PROPERTY AND EQUIPMENT
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Laboratory and manufacturing equipment
|
$
|
299,839
|
$
|
261,164
|
||||
Leasehold improvements
|
414,504
|
414,504
|
||||||
714,343
|
675,668
|
|||||||
Less: accumulated depreciation and amortization
|
(120,237
|
)
|
(21,905
|
)
|
||||
Property and equipment, net
|
$
|
594,106
|
$
|
653,763
|
NOTE 7 |
LEASES
|
NOTE 7 |
LEASES (Continued)
|
|
Year ended
December 31, 2020
|
|||
Operating lease expense
|
$
|
591,272
|
||
Sublease income
|
(77,164
|
)
|
||
Variable lease expense
|
20,945
|
|||
Total
|
$
|
535,053
|
|
Year ended
December 31, 2020
|
|||
Cash paid within operating cash flow
|
$
|
584,690
|
||
Weighted average remaining lease term (years)
|
5.5
|
|||
Weighted average discount rate
|
14.5
|
%
|
NOTE 7 |
LEASES (Continued)
|
For the years ending
December 31,
|
|
Amount
|
|
|
2021 |
$
|
80,682
|
||
2022 |
82,419
|
|||
2023 |
84,194
|
|||
2024 |
86,010
|
|||
2025 |
87,867
|
|||
Thereafter |
74,590
|
|||
Total
|
$
|
495,762
|
NOTE 8 |
GOODWILL AND IN PROCESS RESEARCH AND DEVELOPMENT
|
NOTE 9 |
SECURITY DEPOSITS AND OTHER ASSETS
|
NOTE 9 |
SECURITY DEPOSITS AND OTHER ASSETS (Continued)
|
NOTE 10 |
ACCRUED EXPENSES
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Compensation payable
|
$
|
293,535
|
$
|
540,513
|
||||
Accrued general and administrative expenses
|
207,468
|
94,265
|
||||||
Accrued research and development expenses
|
399,892
|
695,551
|
||||||
Accrued interest
|
150,125
|
90,512
|
||||||
Loss on legal settlement
|
-
|
100,000
|
||||||
Total accrued expenses
|
$
|
1,051,020
|
$
|
1,520,841
|
NOTE 11 |
INVESTOR DEPOSITS
|
NOTE 12 |
LOANS PAYABLE
|
NOTE 13 |
COMMITMENTS AND CONTINGENCIES
|
NOTE 13 |
COMMITMENTS AND CONTINGENCIES (Continued)
|
NOTE 13 |
COMMITMENTS AND CONTINGENCIES (Continued)
|
|
•
|
Brooklyn will pay an upfront payment of $4 million (inclusive of the $500,000 option fee) and receive an exclusive license (with right to
sublicense) to Novellus’ patents, including know-how and any improvements, for developing and commercializing certain cell-based therapies. As discussed above Brooklyn already paid an advance of $1 million of the license fee on April 13,
2021. In addition the Company paid $1,500,000 on April 29, 2021.
|
|
•
|
Upon payment of additional milestones of $5 million (within 6 months of signing) and $7 million (within 18 months of signing), Brooklyn will have
the ability to acquire additional cell lines for developing cell-based therapies in cancer and rare blood disorders.
|
NOTE 13 |
COMMITMENTS AND CONTINGENCIES (Continued)
|
NOTE 14 |
STOCK-BASED COMPENSATION
|
NOTE 14 |
STOCK-BASED COMPENSATION (Continued)
|
Number of Options
|
Weighted Average
Exercise Price ($)
|
Weighted Average
Remaining
Contractual Life
(in months)
|
||||||||||
Outstanding at January 1, 2020
|
2,932
|
88.75
|
35
|
|||||||||
Granted
|
-
|
-
|
-
|
|||||||||
Vested
|
(1,025
|
)
|
88.75
|
-
|
||||||||
Forfeited
|
-
|
-
|
-
|
|||||||||
Outstanding at December 31, 2020
|
1,907
|
88.75
|
23
|
|||||||||
Vested and exercisable as at December 31, 2020
|
2,230
|
88.75
|
|
Number of Options
|
Weighted Average
Exercise Price ($)
|
Weighted Average
Remaining
Contractual Life
(in months)
|
|||||||||
Outstanding at January 1, 2019
|
3,953
|
88.75
|
46
|
|||||||||
Granted
|
125
|
88.75
|
48
|
|||||||||
Vested
|
(1,033
|
)
|
88.75
|
-
|
||||||||
Forfeited
|
(113
|
)
|
88.75
|
-
|
||||||||
Outstanding at December 31, 2019
|
2,932
|
88.75
|
35
|
|||||||||
Vested and exercisable as at December 31, 2019
|
1,205
|
88.75
|
NOTE 15 |
MEMBERS’ EQUITY
|
NOTE 16 |
INCOME TAX
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Federal:
|
||||||||
Current
|
$
|
-
|
$
|
-
|
||||
Deferred
|
-
|
-
|
||||||
State:
|
||||||||
Current
|
-
|
-
|
||||||
Deferred
|
322,221
|
357,482
|
||||||
322,221
|
357,482
|
|||||||
Change in valuation allowance
|
(322,221
|
)
|
(357,482
|
)
|
||||
Income tax benefit (provision)
|
$
|
-
|
$
|
-
|
NOTE 16 |
INCOME TAX (Continued)
|
December 31,
|
||||||||
|
2020
|
2019
|
||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforward
|
$
|
747,021
|
$
|
424,800
|
||||
Less: Valuation allowance
|
(747,021
|
)
|
(424,800
|
)
|
||||
Total
|
$
|
-
|
$
|
-
|
NOTE 17 |
SUBSEQUENT EVENTS
|
NOTE 17 |
SUBSEQUENT EVENTS (Continued)
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
2
|
Balance Sheets
|
3
|
Statements of Operations
|
4
|
Statements of Changes in Stockholders’ Deficiency and Members’ Equity
|
5
|
Statements of Cash Flows
|
6
|
Notes to Financial Statements
|
7
|
December 31,
|
||||||||
2019
|
2018
|
|||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash
|
$
|
5,014,819
|
$
|
6,325,431
|
||||
Subscriptions receivable
|
-
|
850,000
|
||||||
Prepaid expenses and other current assets
|
86,668
|
19,998
|
||||||
Total Current Assets
|
5,101,487
|
7,195,429
|
||||||
Restricted cash
|
86,000
|
86,000
|
||||||
Property and equipment, net
|
653,763
|
68,099
|
||||||
Goodwill
|
2,043,747
|
2,043,747
|
||||||
In process research and development
|
6,860,000
|
6,860,000
|
||||||
Security deposits and other assets
|
363,621
|
379,331
|
||||||
Total Assets
|
$
|
15,108,618
|
$
|
16,632,606
|
||||
Liabilities and Members’ Equity
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$
|
1,735,610
|
$
|
2,647,532
|
||||
Accrued expenses
|
1,520,841
|
1,696,793
|
||||||
Investor deposits
|
665,563
|
638,575
|
||||||
Loans payable
|
410,000
|
410,000
|
||||||
Current portion of lease liability
|
4,026
|
-
|
||||||
Total Current Liabilities
|
4,336,040
|
5,392,900
|
||||||
Lease liability, non-current
|
99,030
|
-
|
||||||
Other liabilities
|
930,445
|
870,000
|
||||||
Total Liabilities
|
5,365,515
|
6,262,900
|
||||||
Commitments and Contingencies
|
||||||||
Members’ Equity:
|
||||||||
Class A membership units
|
18,177,692
|
9,958,930
|
||||||
Class B membership units
|
1,400,000
|
1,400,000
|
||||||
Class C membership units
|
1,000,000
|
1,000,000
|
||||||
Common units
|
106,937
|
15,248
|
||||||
Accumulated deficit
|
(10,941,526
|
)
|
(2,004,472
|
)
|
||||
Total Members’ Equity
|
9,743,103
|
10,369,706
|
||||||
Total Liabilities and Members’ Equity
|
$
|
15,108,618
|
$
|
16,632,606
|
Successor
|
Predecessor
|
|||||||||||
For the Year Ended
December 31, 2019
|
For the period from
November 6, 2018
through
December 31, 2018
|
For the period from
January 1, 2018
through
November 5, 2018
|
||||||||||
Operating Expenses
|
||||||||||||
General and administrative
|
$
|
3,721,490
|
$
|
374,267
|
$
|
5,351,698
|
||||||
Research and development
|
5,156,266
|
1,621,084
|
9,078,193
|
|||||||||
Total Operating Expenses
|
8,877,756
|
1,995,351
|
14,429,891
|
|||||||||
Loss From Operations
|
(8,877,756
|
)
|
(1,995,351
|
)
|
(14,429,891
|
)
|
||||||
Other Expenses
|
||||||||||||
Interest expense, net
|
(59,298
|
)
|
(9,121
|
)
|
(1,668,711
|
)
|
||||||
Total Expenses
|
(59,298
|
)
|
(9,121
|
)
|
(1,668,711
|
)
|
||||||
Net Loss
|
$
|
(8,937,054
|
)
|
$
|
(2,004,472
|
)
|
(16,098,602
|
)
|
||||
Deemed dividends on preferred stock
|
(685,892
|
)
|
||||||||||
Gain on extinguishment of preferred stock.
|
106,560,811
|
|||||||||||
Net income attributable to common stockholders
|
$
|
89,776,317
|
Predecessor
|
Preferred Stock
|
Additional
Paid-In
Capital
|
Subscriptions
Receivable,
Related
Parties
|
Accumulated
Deficit
|
Total
Stockholders’
Deficiency
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
Series D
|
Series C
|
Series B
|
Series A
|
Common Stock
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||||||||||||||||
Balance - January 1, 2018
|
35,400,669
|
$
|
35,400
|
40,460,713
|
$
|
40,461
|
35,016
|
$
|
35
|
140,639
|
$
|
141
|
7,968,224
|
$
|
7,968
|
$
|
179,148,961
|
$
|
(88,663
|
)
|
$
|
(187,130,857
|
)
|
$
|
(7,986,554
|
)
|
||||||||||||||||||||||||||||||
Issuance of common stock upon exchange of preferred stock
|
-
|
-
|
(40,460,713
|
)
|
(40,461
|
)
|
(35,016
|
)
|
(35
|
)
|
(140,639
|
)
|
(141
|
)
|
16,771,866
|
16,772
|
(106,536,946
|
)
|
-
|
106,560,811
|
-
|
|||||||||||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(16,098,602
|
)
|
(16,098,602
|
)
|
||||||||||||||||||||||||||||||||||||||||
Balance - November 5, 2018
|
35,400,669
|
$
|
35,400
|
-
|
$
|
-
|
-
|
$
|
-
|
-
|
$
|
-
|
24,740,090
|
$
|
24,740
|
$
|
72,612,015
|
$
|
(88,663
|
)
|
$
|
(96,668,648
|
)
|
$
|
(24,085,156
|
)
|
Successor
|
Membership Equity
|
Accumulated
Deficit
|
Total
Members’
Equity
|
|||||||||||||||||||||
|
Class A
|
Class B
|
Class C
|
Common
|
||||||||||||||||||||
Balance - November 6, 2018
|
$
|
6,482,005
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
6,482,005
|
||||||||||||
Stock based compensation:
|
||||||||||||||||||||||||
Amortization of restricted common units
|
-
|
-
|
-
|
15,248
|
-
|
15,248
|
||||||||||||||||||
Issuance of membership units for purchase of IRX
|
-
|
1,400,000
|
1,000,000
|
-
|
-
|
2,400,000
|
||||||||||||||||||
Membership units issued in exchange for services
|
5,000
|
-
|
-
|
-
|
-
|
5,000
|
||||||||||||||||||
Sale of members’ equity
|
1,955,579
|
-
|
-
|
-
|
-
|
1,955,579
|
||||||||||||||||||
Members’ equity exchanged for loans payable and interest
|
1,516,346
|
-
|
-
|
-
|
-
|
1,516,346
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
(2,004,472
|
)
|
(2,004,472
|
)
|
||||||||||||||||
Balance - January 1, 2019
|
9,958,930
|
1,400,000
|
1,000,000
|
15,248
|
(2,004,472
|
)
|
10,369,706
|
|||||||||||||||||
Stock based compensation:
|
||||||||||||||||||||||||
Amortization of restricted common units
|
-
|
-
|
-
|
91,689
|
-
|
91,689
|
||||||||||||||||||
Sale of members’ equity
|
8,218,762
|
-
|
-
|
-
|
-
|
8,218,762
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
(8,937,054
|
)
|
(8,937,054
|
)
|
||||||||||||||||
Balance - December 31, 2019
|
$
|
18,177,692
|
$
|
1,400,000
|
$
|
1,000,000
|
$
|
106,937
|
$
|
(10,941,526
|
)
|
$
|
9,743,103
|
Successor
|
Predecessor
|
|||||||||||
For the Year
Ended
December 31, 2019
|
For the Period
from November 6,
2018 through
December 31, 2018
|
For the Period
from January 1,
2018 through
November 5, 2018
|
||||||||||
Cash Flows from Operating Activities
|
||||||||||||
Net loss
|
$
|
(8,937,054
|
)
|
$
|
(2,004,472
|
)
|
$
|
(16,098,602
|
)
|
|||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||||||
Depreciation and amortization
|
20,407
|
1,498
|
136,314
|
|||||||||
Equity compensation
|
91,689
|
20,248
|
-
|
|||||||||
Loss on operating sublease
|
103,350
|
-
|
-
|
|||||||||
Change in operating assets and liabilities:
|
||||||||||||
Prepaid expenses and other current assets
|
(66,670
|
)
|
-
|
(69,099
|
)
|
|||||||
Security deposits
|
76,155
|
-
|
8,001
|
|||||||||
Accounts payable and accrued expenses
|
(1,087,874
|
)
|
(168,298
|
)
|
(300,034
|
)
|
||||||
Lease liability
|
(294
|
)
|
||||||||||
Other liabilities
|
-
|
-
|
37,727
|
|||||||||
Total adjustments
|
(863,237
|
)
|
(146,552
|
)
|
(187,091
|
)
|
||||||
Net Cash Used in Operating Activities
|
(9,800,291
|
)
|
(2,151,024
|
)
|
(16,285,693
|
)
|
||||||
Cash Flows from Investing Activities
|
||||||||||||
Patent costs
|
-
|
-
|
(172,196
|
)
|
||||||||
Purchase of property and equipment
|
(606,071
|
)
|
-
|
(76,485
|
)
|
|||||||
Purchase of IRX - cash and restricted cash acquired
|
-
|
336,296
|
-
|
|||||||||
Net Cash Provided by (Used in) Investing Activities
|
(606,071
|
)
|
336,296
|
(248,681
|
)
|
|||||||
Cash Flows from Financing Activities
|
||||||||||||
Proceeds from loans payable
|
-
|
-
|
3,394,226
|
|||||||||
Proceeds from loans payable, related parties
|
-
|
-
|
1,500,000
|
|||||||||
Proceeds from convertible debt
|
-
|
-
|
11,803,321
|
|||||||||
Proceeds from investor deposits
|
437,500
|
-
|
-
|
|||||||||
Proceeds from the collection of subscriptions receivable
|
850,000
|
-
|
-
|
|||||||||
Proceeds from sale of members’ equity
|
7,808,250
|
1,744,154
|
-
|
|||||||||
Net Cash Provided by Financing Activities
|
9,095,750
|
1,744,154
|
16,697,547
|
|||||||||
Net (Decrease) Increase in Cash
|
(1,310,612
|
)
|
(70,574
|
)
|
163,173
|
|||||||
Cash and Restricted Cash - Beginning of Period
|
6,411,431
|
6,482,005
|
173,123
|
|||||||||
Cash and Restricted Cash - End of Period
|
$
|
5,100,819
|
$
|
6,411,431
|
$
|
336,296
|
||||||
Cash and Restricted Cash consisted of the following:
|
||||||||||||
Cash
|
$
|
5,014,819
|
$
|
6,325,431
|
$
|
250,296
|
||||||
Restricted cash
|
86,000
|
86,000
|
86,000
|
|||||||||
$
|
5,100,819
|
$
|
6,411,431
|
$
|
336,296
|
|||||||
Supplemental Disclosures of Cash Flow Information:
|
||||||||||||
Cash paid during the period for:
|
||||||||||||
Interest
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Income taxes
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Non-cash investing and financing activities:
|
||||||||||||
Investor deposits for sale of members’ equity
|
$
|
410,512
|
$
|
-
|
$
|
-
|
||||||
Conversion of loans payable and interest into members’ equity
|
$
|
-
|
$
|
1,516,346
|
$
|
-
|
||||||
Exchange of Series A, B and C preferred stock for common stock
|
$
|
-
|
$
|
-
|
$
|
106,560,811
|
||||||
Purchase of the assets and liabilities of IRX:
|
||||||||||||
Assets acquired and liabilities assumed:
|
||||||||||||
Cash acquired
|
$
|
-
|
$
|
336,296
|
$
|
-
|
||||||
Prepaid expenses and other current assets
|
-
|
19,998
|
-
|
|||||||||
Security deposits and other assets
|
-
|
379,331
|
-
|
|||||||||
Goodwill
|
-
|
2,043,747
|
-
|
|||||||||
In-process R&D
|
-
|
6,860,000
|
-
|
|||||||||
Property and equipment
|
-
|
69,597
|
-
|
|||||||||
Accounts payable and accrued expenses
|
-
|
(4,528,969
|
)
|
-
|
||||||||
Loans payable, related parties
|
-
|
(1,500,000
|
)
|
-
|
||||||||
Loans payable
|
-
|
(410,000
|
)
|
-
|
||||||||
Total purchase price
|
$
|
-
|
$
|
3,270,000
|
$
|
-
|
||||||
Purchase price consisted of:
|
||||||||||||
Members’ equity issued to acquire the asset and liabilities of IRX
|
-
|
2,400,000
|
-
|
|||||||||
Contingent consideration
|
-
|
870,000
|
-
|
|||||||||
Total purchase price
|
$
|
-
|
$
|
3,270,000
|
$
|
-
|
|
●
|
Level 1 Inputs – Valued based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
|
●
|
Level 2 Inputs – Valued based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for
similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest
rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
|
●
|
Level 3 Inputs – Valued based on inputs for which there is little or no market value, which require the reporting entity to develop its own assumptions.
|
Cash
|
$
|
250,296
|
||
Restricted cash
|
86,000
|
|||
Prepaid expenses and other current assets
|
19,998
|
|||
Security deposits and other assets
|
379,331
|
|||
Laboratory equipment
|
69,597
|
|||
In process research and development
|
6,860,000
|
|||
Accounts payable and accrued expenses
|
(4,528,969
|
)
|
||
Loans payable
|
(410,000
|
)
|
||
Loans payable, related parties
|
(1,500,000
|
)
|
||
Net fair value assigned to assets acquired and liabilities assumed
|
1,226,253
|
|||
Goodwill
|
2,043,747
|
|||
Total
|
$
|
3,270,000
|
December 31,
|
||||||||
2019
|
2018
|
|||||||
Laboratory and manufacturing equipment
|
$
|
261,164
|
$
|
69,597
|
||||
Leasehold improvements
|
414,504
|
-
|
||||||
675,668
|
69,597
|
|||||||
Less: accumulated depreciation and amortization
|
(21,905
|
)
|
(1,498
|
)
|
||||
Property and equipment, net
|
$
|
653,763
|
$
|
68,099
|
December 31,
|
||||||||
2019
|
2018
|
|||||||
Compensation payable
|
$
|
540,513
|
$
|
214,327
|
||||
Deferred rent payable
|
-
|
6,169
|
||||||
Accrued general and administrative expenses
|
94,265
|
62,743
|
||||||
Accrued research and development expenses
|
695,551
|
1,380,440
|
||||||
Accrued interest
|
90,512
|
33,114
|
||||||
Loss on legal settlement
|
100,000
|
-
|
||||||
Total accrued expenses
|
$
|
1,520,841
|
$
|
1,696,793
|
For the Years Ending
December 31,
|
Amount
|
|||
2020 |
$
|
553,189
|
||
2021 |
571,470
|
|||
2022 |
588,918
|
|||
2023 |
606,864
|
|||
2024 |
624,172
|
|||
Thereafter
|
747,656
|
|||
|
$
|
3,692,269
|
Number of
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Life in Years
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Outstanding, January 1, 2018
|
1,165
|
$
|
208
|
1.5
|
$
|
-
|
||||||||||
Granted
|
-
|
-
|
-
|
-
|
||||||||||||
Exercised
|
||||||||||||||||
Forfeited
|
(80
|
)
|
$
|
300
|
-
|
-
|
||||||||||
Outstanding, November 5, 2018
|
1,085
|
$
|
201
|
0.7
|
$
|
-
|
||||||||||
Exercisable, November 5, 2018
|
1,085
|
$
|
201
|
0.7
|
$
|
-
|
Options Outstanding
|
Options Exercisable
|
|||||||||||||
Exercise Price
|
Outstanding Number
of Options
|
Weighted Average
Remaining Life In Years
|
Exercisable Number
of Options
|
|||||||||||
$
|
200
|
1,075
|
0.7
|
1,075
|
||||||||||
$
|
300
|
10
|
0.2
|
10
|
||||||||||
1,085
|
0.7
|
1,085
|
Successor
|
Predecessor
|
|||||||||||
For the Year
Ended December 31,
2019
|
For the period
from November 6,
2018 through
December 31,
2018
|
For the period
from January 1,
2018 through
November 5, 2018
|
||||||||||
Federal:
|
||||||||||||
Current
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Deferred
|
-
|
-
|
8,266,417
|
|||||||||
State and local:
|
||||||||||||
Current
|
-
|
|||||||||||
Deferred
|
357,482
|
80,179
|
5,438,948
|
|||||||||
357,482
|
80,179
|
13,705,365
|
||||||||||
Change in valuation allowance
|
(357,482
|
)
|
(80,179
|
)
|
(13,705,365
|
)
|
||||||
Income tax benefit (provision)
|
$
|
-
|
$
|
-
|
$
|
-
|
December 31,
|
||||||||
2019
|
2018
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforward
|
$
|
424,800
|
$
|
80,179
|
||||
Less: valuation allowance
|
(424,800
|
)
|
(80,179
|
)
|
||||
Total
|
$
|
-
|
$
|
-
|
Historical
|
||||||||||||||||||||||||||||||
Brooklyn Immunotherapeutics, LLC
|
NTN Buzztime, Inc.
|
Pro Forma
Adjustments –
Merger
|
Notes to Pro Forma Adjustments
|
Pro Forma
Adjustments –
Merger (Combined)
|
Pro Forma
Adjustments –
Sale of Assets
|
Notes to Pro Forma Adjustments
|
Pro Forma
Combined
|
|||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||||
Current Assets:
|
||||||||||||||||||||||||||||||
Cash and cash equivalents
|
$
|
1,630,455
|
$
|
777,383
|
$
|
10,500,000
|
A |
|
$
|
12,907,838
|
$
|
(213,566
|
)
|
E
|
|
$
|
12,694,272
|
|||||||||||||
Accounts receivable, net
|
-
|
115,680
|
-
|
115,680
|
836
|
E
|
|
116,516
|
||||||||||||||||||||||
Site equipment to be installed
|
-
|
654,602
|
(654,602
|
)
|
C
|
|
-
|
-
|
-
|
|||||||||||||||||||||
Prepaid expenses and other current assets
|
102,322
|
176,830
|
-
|
279,152
|
(75,435
|
)
|
E |
|
203,717
|
|||||||||||||||||||||
Total Current Assets
|
1,732,777
|
1,724,495
|
9,845,398
|
13,302,670
|
(288,165
|
)
|
13,014,505
|
|||||||||||||||||||||||
Long Term Assets:
|
||||||||||||||||||||||||||||||
Property and equipment, net
|
594,106
|
501,804
|
654,602
|
C
|
|
1,750,512
|
(1,156,405
|
)
|
E |
|
594,107
|
|||||||||||||||||||
Customers
|
-
|
-
|
548,000
|
C |
|
548,000
|
(548,000
|
)
|
E |
|
-
|
|||||||||||||||||||
Trade name
|
-
|
-
|
299,000
|
C |
|
299,000
|
(299,000
|
)
|
E |
|
-
|
|||||||||||||||||||
Right of use assets - operating leases
|
2,092,878
|
35,616
|
-
|
2,128,494
|
(35,616
|
)
|
E |
|
2,092,878
|
|||||||||||||||||||||
Software development costs, net of accumulated amortization
|
-
|
1,360,915
|
(432,915
|
)
|
C |
|
928,000
|
(928,000
|
)
|
E |
|
-
|
||||||||||||||||||
Goodwill
|
2,043,747
|
-
|
6,868,944
|
C |
|
8,912,691
|
(6,868,944
|
)
|
E |
|
2,043,747
|
|||||||||||||||||||
In process research and development
|
6,860,000
|
-
|
-
|
6,860,000
|
-
|
6,860,000
|
||||||||||||||||||||||||
Security deposits and other assets
|
453,252
|
-
|
-
|
453,252
|
-
|
453,252
|
||||||||||||||||||||||||
Other assets
|
-
|
122,291
|
-
|
122,291
|
(88,028
|
)
|
E |
|
34,263
|
|||||||||||||||||||||
Total Assets
|
$
|
13,776,760
|
$
|
3,745,121
|
$
|
17,783,029
|
$
|
35,304,910
|
$
|
(10,212,158
|
)
|
$
|
25,092,752
|
Historical
|
||||||||||||||||||||||||||||||
Brooklyn Immunotherapeutics, LLC
|
NTN Buzztime, Inc.
|
Pro Forma
Adjustments –
Merger
|
Notes to Pro Forma Adjustments
|
Pro Forma
Adjustments –
Merger (Combined)
|
Pro Forma
Adjustments –
Sale of Assets
|
Notes to Pro Forma Adjustments
|
Pro Forma
Combined
|
|||||||||||||||||||||||
Liabilities and Stockholders’ Equity
|
||||||||||||||||||||||||||||||
Current Liabilities:
|
||||||||||||||||||||||||||||||
Accounts payable and accrued expenses
|
$
|
2,326,243
|
$
|
571,763
|
$
|
1,048,915
|
B
|
|
$
|
3,946,921
|
$
|
165,314
|
E |
|
$
|
4,112,235
|
||||||||||||||
Loans payable
|
410,000
|
-
|
-
|
410,000
|
-
|
410,000
|
||||||||||||||||||||||||
PPP loan, current
|
115,972
|
-
|
-
|
115,972
|
-
|
115,972
|
||||||||||||||||||||||||
Taxes payable
|
-
|
15,366
|
-
|
15,366
|
(23,803
|
)
|
E |
|
(8,437
|
)
|
||||||||||||||||||||
Current portion of long-term debt, net
|
-
|
1,500,000
|
-
|
1,500,000
|
(1,500,000
|
)
|
E |
|
-
|
|||||||||||||||||||||
Current portion of lease liability
|
273,217
|
35,616
|
-
|
308,833
|
(35,616
|
)
|
E |
|
273,217
|
|||||||||||||||||||||
Current portion of obligations under finance leases
|
-
|
21,800
|
-
|
21,800
|
(21,800
|
)
|
E |
|
-
|
|||||||||||||||||||||
Current portion of deferred revenue
|
-
|
76,123
|
-
|
76,123
|
(76,123
|
)
|
E |
|
-
|
|||||||||||||||||||||
Other current liabilities
|
-
|
139,752
|
-
|
139,752
|
(121,692
|
)
|
E |
|
18,060
|
|||||||||||||||||||||
Total Current Liabilities
|
3,125,432
|
2,360,420
|
1,048,915
|
6,534,767
|
(1,613,720
|
)
|
4,921,047
|
|||||||||||||||||||||||
Long Term Liabilities:
|
||||||||||||||||||||||||||||||
Contingent consideration
|
20,110,000
|
-
|
-
|
20,110,000
|
-
|
20,110,000
|
||||||||||||||||||||||||
Lease liability, non-current
|
1,905,395
|
-
|
-
|
1,905,395
|
-
|
1,905,395
|
||||||||||||||||||||||||
PPP loan, non-current
|
193,933
|
531,979
|
-
|
725,912
|
(531,979
|
)
|
E |
|
193,933
|
|||||||||||||||||||||
Long-term obligations under finance leases
|
-
|
85
|
-
|
85
|
(85
|
)
|
E |
|
-
|
|||||||||||||||||||||
Long-term deferred revenue
|
-
|
1,803
|
-
|
1,803
|
(1,803
|
)
|
E |
|
-
|
|||||||||||||||||||||
Other liabilities
|
22,863
|
-
|
-
|
22,863
|
-
|
22,863
|
||||||||||||||||||||||||
Total Liabilities
|
25,357,623
|
2,894,287
|
1,048,915
|
29,300,825
|
(2,147,587
|
)
|
27,153,238
|
|||||||||||||||||||||||
Commitments and contingencies
|
||||||||||||||||||||||||||||||
Stockholders’ Equity:
|
||||||||||||||||||||||||||||||
Class A membership units
|
23,202,005
|
-
|
10,500,000
|
A
|
|
-
|
-
|
-
|
||||||||||||||||||||||
(33,702,005
|
)
|
D
|
|
|||||||||||||||||||||||||||
Class B membership units
|
1,400,000
|
-
|
(1,400,000
|
)
|
D |
|
-
|
-
|
-
|
|||||||||||||||||||||
Class C membership units
|
1,000,000
|
-
|
(1,000,000
|
)
|
D |
|
-
|
-
|
-
|
|||||||||||||||||||||
Common units
|
197,873
|
-
|
(197,873
|
)
|
D |
|
-
|
-
|
-
|
|||||||||||||||||||||
Series A preferred stock
|
-
|
781
|
-
|
D |
|
781
|
-
|
781
|
||||||||||||||||||||||
Common stock, $0.005 par value
|
-
|
14,832
|
5,339
|
B
|
|
207,529
|
-
|
207,529
|
||||||||||||||||||||||
187,358
|
D |
|
||||||||||||||||||||||||||||
Treasury stock
|
-
|
(456,450
|
)
|
456,450
|
D |
|
-
|
-
|
-
|
|||||||||||||||||||||
Additional paid-in capital
|
-
|
136,933,763
|
5,761,207
|
B |
|
49,991,977
|
-
|
49,991,977
|
||||||||||||||||||||||
(92,702,993
|
)
|
D
|
|
|||||||||||||||||||||||||||
Accumulated deficit
|
(37,380,741
|
)
|
(135,887,313
|
)
|
(6,815,461
|
)
|
B
|
|
(44,196,202
|
)
|
(8,064,571
|
)
|
E |
|
(52,260,773
|
)
|
||||||||||||||
135,887,313
|
D
|
|
|
|||||||||||||||||||||||||||
Accumulated other comprehensive income
|
-
|
245,221
|
(245,221
|
)
|
D
|
|
-
|
-
|
-
|
|||||||||||||||||||||
Total Stockholders’ Equity
|
(11,580,863
|
)
|
850,834
|
16,734,114
|
6,004,085
|
(8,064,571
|
)
|
(2,060,486
|
)
|
|||||||||||||||||||||
Total Liabilities and Stockholders’ Equity
|
$
|
13,776,760
|
$
|
3,745,121
|
$
|
17,783,029
|
$
|
35,304,910
|
$
|
(10,212,158
|
)
|
$
|
25,092,752
|
Historical
|
||||||||||||||||||||||||||||
Brooklyn Immunotherapeutics, LLC
|
NTN Buzztime, Inc.
|
Pro Forma
Adjustments –
Merger
|
Notes to Pro Forma Adjustments
|
Pro Forma
Adjustments –
Merger (Combined)
|
Pro Forma
Adjustments –
Sale of Assets
|
Notes to Pro Forma Adjustments
|
Pro Forma
Combined
|
|||||||||||||||||||||
Revenue:
|
||||||||||||||||||||||||||||
Subscription revenue
|
$
|
-
|
$
|
4,881,615
|
$
|
-
|
$
|
4,881,615
|
$
|
(4,881,615
|
)
|
E |
|
$
|
-
|
|||||||||||||
Hardware revenue
|
-
|
426,046
|
-
|
426,046
|
(426,046
|
)
|
E |
|
-
|
|||||||||||||||||||
Other revenue
|
-
|
492,723
|
-
|
492,723
|
(492,723
|
)
|
E |
|
-
|
|||||||||||||||||||
Total revenue
|
-
|
5,800,384
|
-
|
5,800,384
|
(5,800,384
|
)
|
|
-
|
||||||||||||||||||||
|
||||||||||||||||||||||||||||
Operating Expenses:
|
|
|||||||||||||||||||||||||||
General and administrative
|
3,296,851
|
-
|
-
|
3,296,851
|
-
|
|
3,296,851
|
|||||||||||||||||||||
Selling, general and administrative
|
-
|
8,091,385
|
-
|
8,091,385
|
(8,091,385
|
)
|
E |
|
-
|
|||||||||||||||||||
Research and development
|
3,951,253
|
-
|
-
|
3,951,253
|
-
|
|
3,951,253
|
|||||||||||||||||||||
Direct operating costs
|
-
|
2,907,058
|
-
|
2,907,058
|
(2,907,058
|
)
|
E |
|
-
|
|||||||||||||||||||
Impairment of capitalized software
|
-
|
247,733
|
-
|
247,733
|
(247,733
|
)
|
E |
|
-
|
|||||||||||||||||||
Impairment of goodwill
|
-
|
661,620
|
-
|
661,620
|
(661,620
|
)
|
E |
|
-
|
|||||||||||||||||||
Depreciation and amortization (excluding depreciation and amortization included in direct operating costs)
|
-
|
201,128
|
-
|
201,128
|
(201,128
|
)
|
E |
|
-
|
|||||||||||||||||||
Change in fair value of contingent consideration
|
19,240,000
|
-
|
-
|
19,240,000
|
-
|
|
19,240,000
|
|||||||||||||||||||||
Total operating expenses
|
26,488,104
|
12,108,924
|
-
|
38,597,028
|
(12,108,924
|
)
|
|
26,488,104
|
||||||||||||||||||||
Loss from operations
|
(26,488,104
|
)
|
(6,308,540
|
)
|
-
|
(32,796,644
|
)
|
6,308,540
|
|
(26,488,104
|
)
|
|||||||||||||||||
Other Expenses:
|
|
|||||||||||||||||||||||||||
Interest expense, net
|
(42,957
|
)
|
(138,528
|
)
|
-
|
(181,485
|
)
|
138,528
|
E |
|
(42,957
|
)
|
||||||||||||||||
Other income, net
|
-
|
2,025,178
|
-
|
2,025,178
|
(2,025,178
|
)
|
E |
|
-
|
|||||||||||||||||||
Total other (expense) income, net
|
(42,957
|
)
|
1,886,650
|
-
|
1,843,693
|
(1,886,650
|
)
|
|
(42,957
|
)
|
||||||||||||||||||
Loss before income taxes
|
(26,531,061
|
)
|
(4,421,890
|
)
|
-
|
(30,952,951
|
)
|
4,421,890
|
|
(26,531,061
|
)
|
|||||||||||||||||
Benefit for income taxes
|
-
|
6,407
|
-
|
6,407
|
(6,407
|
)
|
E |
|
-
|
|||||||||||||||||||
Loss from continuing operations
|
(26,531,061
|
)
|
(4,415,483
|
)
|
-
|
(30,946,544
|
)
|
4,415,483
|
|
(26,531,061
|
)
|
|||||||||||||||||
Series A preferred stock dividend
|
-
|
(15,612
|
)
|
-
|
(15,612
|
)
|
-
|
|
(15,612
|
)
|
||||||||||||||||||
Net loss attributable to common stockholders
|
$
|
(26,531,061
|
)
|
$
|
(4,431,095
|
)
|
$
|
-
|
$
|
(30,962,156
|
)
|
$
|
4,415,483
|
|
$
|
(26,546,673
|
)
|
|||||||||||
|
||||||||||||||||||||||||||||
Net loss per common share - basic and diluted
|
$
|
(1.51
|
)
|
$
|
(0.75
|
)
|
|
$
|
(0.64
|
)
|
||||||||||||||||||
Weighted average shares outstanding - basic and diluted
|
2,928,160
|
F
|
|
41,463,840
|
|
41,463,840
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Comprehensive loss:
|
|
|
|
|
||||||||||||||||||||||||
Foreign currency translation adjustment
|
-
|
(22,675
|
)
|
-
|
(22,675
|
)
|
22,675
|
E |
|
-
|
||||||||||||||||||
Total comprehensive loss
|
$
|
(26,531,061
|
)
|
$
|
(4,438,158
|
)
|
$
|
-
|
$
|
(30,969,219
|
)
|
$
|
4,438,158
|
$
|
(26,531,061
|
)
|
• |
41,506,031 shares of Common Stock, of which 96.37% were held by the former members of Brooklyn LLC and the Financial Adviser, as the result of its compensation in connection with the Merger, and 3.63% were held by holders of Common
Stock as of immediately prior to the Merger;
|
• |
156,112 shares of NTN’s Series A 10% convertible preferred stock, which were convertible into approximately 42,027 shares of Common Stock and which continued to be owned by their holders as of immediately before the Merger; and
|
• |
stock options to purchase an aggregate of 13,020 shares of Common Stock.
|
Number of shares of the Common Stock owned by NTN stockholders (i)
|
1,506,271
|
|||
Multiplied by the fair value per share of Common Stock (ii)
|
5.40
|
|||
Total purchase price
|
$
|
8,133,863
|
(i)
|
The purchase price was determined based on the number of shares of Common Stock of the combined company that NTN’s stockholders owned immediately prior to the Merger.
|
(ii)
|
The fair value per share is based on the closing price of $5.40 (post Reverse Stock Split) per share of the Common Stock as reported on the NYSE American on March 25, 2021, the date of the Merger.
|
Historical Balance Sheet of NTN at December 31, 2020
|
Pro Forma Fair Value Adjustment to NTN Assets
|
Preliminary Purchase Price
Allocation Pro Forma Adjustment
|
||||||||||
Cash and cash equivalents
|
$
|
777,383
|
$
|
-
|
$
|
777,383
|
||||||
Accounts receivable
|
115,680
|
-
|
115,680
|
|||||||||
Prepaid expense and other current assets
|
299,121
|
-
|
299,121
|
|||||||||
Right of use assets - operating leases
|
35,616
|
-
|
35,616
|
|||||||||
Property and equipment, net
|
1,156,406
|
-
|
1,156,406
|
|||||||||
Software development costs
|
1,360,915
|
(432,915
|
)
|
928,000
|
||||||||
Customers
|
-
|
548,000
|
548,000
|
|||||||||
Trade name
|
-
|
299,000
|
299,000
|
|||||||||
Accounts payable, accrued liabilities and other current liabilities
|
(2,894,287
|
)
|
-
|
(2,894,287
|
)
|
|||||||
Net assets acquired, excluding goodwill
|
$
|
850,834
|
$
|
414,085
|
$
|
1,264,919
|
||||||
Total consideration
|
$
|
8,133,863
|
||||||||||
Net assets acquired, excluding goodwill
|
1,264,919
|
|||||||||||
Goodwill
|
$
|
6,868,944
|
Proceeds from sale:
|
||||
Cash
|
$
|
132,055
|
||
Escrow
|
100,000
|
|||
Assume advance/loans
|
1,700,000
|
|||
Interest on advance/loans
|
67,945
|
|||
Carrying value of assets sold:
|
||||
Cash and cash equivalents
|
(13,642
|
)
|
||
Accounts receivable
|
(99,164
|
)
|
||
Prepaids and other current assets
|
(75,435
|
)
|
||
Property and equipment, net
|
(1,156,405
|
)
|
||
Software development costs
|
(928,000
|
)
|
||
Customers
|
(548,000
|
)
|
||
Trade name
|
(299,000
|
)
|
||
Right of use assets - operating leases
|
(35,616
|
)
|
||
Goodwill
|
(6,868,944
|
)
|
||
Other assets
|
(88,028
|
)
|
||
Liabilities transferred upon sale:
|
||||
Accounts payable and accrued expenses
|
94,519
|
|||
Obligations under finance leases
|
21,885
|
|||
Lease liability
|
35,616
|
|||
Deferred revenue
|
77,925
|
|||
Other current liabilities
|
121,691
|
|||
Transaction costs
|
(265,000
|
)
|
||
Total loss on sale of assets
|
$
|
(8,025,598
|
)
|
A.
|
To reflect gross proceeds of $10,500,000 received by Brooklyn LLC prior to the Merger from the Brooklyn LLC Rights Offering.
|
B.
|
To reflect Brooklyn LLC’s estimate of acquisition-related transaction costs not included in accrued liabilities as of December 31, 2020, as calculated below:
|
Total transaction costs
|
$
|
6,815,461
|
||
Issuance of Common Stock to the Financial Adviser upon consummation of Merger
|
(5,766,546
|
)
|
||
Accrued transaction costs
|
$
|
1,048,915
|
C.
|
To reflect adjusting fair values of the net assets acquired through the Merger, as reflected in Note 2.
|
D.
|
To record the (i) elimination of NTN’s historical equity, (ii) the elimination of Brooklyn LLC’s historical members’ equity, (iii) an adjustment for the transaction price, including the fair value of Common Stock retained by NTN’s stockholders, (iv) Series A 10% convertible preferred stock retained by NTN stockholders (v) issuance of Common Stock to the members of Brooklyn LLC in connection with the Merger, and (vi) transaction costs associated with the Merger. |
|
Common stock
|
Series A preferred stock
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
Membership units |
Shares
|
Amount
|
Shares
|
Amount
|
Treasury stock |
Additional paid-in capital
|
Accumulated deficit | Accumulated other comprehensive income | Total stockholders’ equity | |||||||||||||||||||||||||||||||
Elimination of NTN’s historical equity carrying value(1)
|
$
|
-
|
(2,962,866
|
)
|
$
|
(14,832
|
)
|
(156,112
|
)
|
$
|
(781
|
)
|
$
|
456,450
|
$
|
(136,933,763
|
)
|
$
|
135,887,313
|
$
|
(245,221
|
)
|
$
|
(850,834
|
)
|
|||||||||||||||
Brooklyn rights offerings membership units
|
10,500,000
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
10,500,000
|
||||||||||||||||||||||||||||||
Elimination of Brooklyn’s historical members’ equity
|
(36,299,878
|
)
|
-
|
-
|
-
|
-
|
-
|
36,299,878
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||
Common Stock to be retained by NTN stockholders
|
-
|
1,506,271
|
7,531
|
-
|
-
|
-
|
8,126,332
|
-
|
-
|
8,133,863
|
||||||||||||||||||||||||||||||
Issuance of Series A preferred stock retained by NTN stockholders
|
-
|
-
|
-
|
156,112
|
781
|
-
|
(781
|
)
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||
Issuance of Common Stock to Brooklyn members
|
-
|
38,931,881
|
194,659
|
-
|
-
|
-
|
(194,659
|
)
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||
Issuance of Common Stock to Financial Adviser upon consummation of Merger
|
-
|
1,067,879
|
5,339
|
-
|
-
|
-
|
5,761,207
|
(5,766,546
|
)
|
-
|
-
|
|||||||||||||||||||||||||||||
Transaction costs (to be paid in cash)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,048,915
|
)
|
-
|
(1,048,915
|
)
|
||||||||||||||||||||||||||||
Pro forma adjustment
|
$
|
(25,799,878
|
)
|
38,543,165
|
$
|
192,697
|
-
|
$
|
-
|
$
|
456,450
|
$
|
(86,941,786
|
)
|
$
|
129,071,852
|
$
|
(245,221
|
)
|
$
|
16,734,114
|
(1)
|
Not reflecting the effect of the 1-for-2 Reverse Stock Split.
|
E.
|
To eliminate the NTN business as a result of the Disposition.
|
F.
|
The pro forma combined basic and diluted net loss per share of Common Stock have been adjusted to reflect the pro forma net loss for the year ended December 31, 2020, and the number of
shares of Common Stock used in calculating the pro forma combined basic and diluted net loss per share of Common Stock has been adjusted to reflect the total number of shares of Common Stock of the giving effect to Reverse Stock Split
effective on the date of the Merger.
|
Year Ended
December 31, 2020
|
||||
Effect of applying the 1-for-2 Reverse Stock Split exchange ratio to historical NTN weighted average Common Stock outstanding, 2,928,160
|
1,464,080
|
|||
Shares of Common Stock issued to Brooklyn LLC members in the Merger
|
38,931,881
|
|||
Shares of Common Stock issued to the Financial Adviser upon consummation of Merger
|
1,067,879
|
|||
Pro forma weighted average number of shares of Common Stock outstanding
|
41,463,840
|