☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
31-1103425
|
|
(State of incorporation)
|
(I.R.S. Employer Identification No.)
|
140 58th Street, Suite 2100, Brooklyn, New York
|
11220
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading symbol
|
Name of each exchange on which registered
|
||
Common stock, $0.005 par value per share
|
BTX
|
NYSE American
|
Large accelerated filer
|
☐ |
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐ |
Smaller reporting company
|
☒
|
Emerging growth company
|
☐
|
Page
|
||
PART I – FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements (unaudited)
|
|
1
|
||
2
|
||
3
|
||
4
|
||
5 | ||
Item 2.
|
20 | |
Item 3.
|
32 | |
Item 4.
|
32 | |
PART II – OTHER INFORMATION
|
||
Item 1.
|
33 | |
Item 1A.
|
33 | |
Item 2.
|
34
|
|
Item 6.
|
35 | |
36 |
|
June 30,
2021
|
December 31,
2020
|
||||||
ASSETS
|
(unaudited)
|
|||||||
Current assets:
|
||||||||
Cash
|
$
|
50,164,673
|
$
|
1,630,455
|
||||
Tax receivable
|
23,303
|
-
|
||||||
Prepaid expenses and other current assets
|
1,753,197
|
102,322
|
||||||
Total current assets
|
51,941,173
|
1,732,777
|
||||||
Property and equipment, net
|
582,041
|
594,106
|
||||||
Right-of-use assets - operating leases
|
2,767,804
|
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
|
514,881
|
453,252
|
||||||
Total assets
|
$
|
64,709,646
|
$
|
13,776,760
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
3,679,311
|
$
|
1,275,223
|
||||
Accrued expenses
|
1,916,126
|
1,051,020
|
||||||
Loans payable
|
410,000
|
410,000
|
||||||
PPP loan, current
|
309,905
|
115,972
|
||||||
Operating lease liabilities, current
|
383,923
|
273,217
|
||||||
Other current liabilities |
985,233
|
-
|
||||||
Total current liabilities
|
7,684,498
|
3,125,432
|
||||||
Contingent consideration
|
19,290,000
|
20,110,000
|
||||||
Operating lease liabilities, non-current
|
2,529,422
|
1,905,395
|
||||||
PPP loan, non-current
|
-
|
193,933
|
||||||
Other liabilities
|
22,863
|
22,863
|
||||||
Total liabilities
|
29,526,783
|
25,357,623
|
||||||
Stockholders’ and members’ equity (deficit):
|
||||||||
Class A membership units
|
-
|
23,202,005
|
||||||
Class B membership units
|
-
|
1,400,000
|
||||||
Class C membership units
|
-
|
1,000,000
|
||||||
Common units
|
-
|
197,873
|
||||||
Common stock, $0.005 par value, 100,000,000 shares authorized, 44,707,382
issued and outstanding at June 30, 2021; no shares issued and outstanding at December 31, 2020.
|
223,537
|
-
|
||||||
Series A preferred stock |
781
|
-
|
||||||
Additional paid-in capital
|
100,134,743
|
-
|
||||||
Accumulated deficit
|
(65,176,198
|
)
|
(37,380,741
|
)
|
||||
Total stockholders’ and members’ equity (deficit)
|
35,182,863
|
(11,580,863
|
)
|
|||||
Total liabilities and stockholders’ and members’ equity (deficit)
|
$
|
64,709,646
|
$
|
13,776,760
|
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
5,392,777
|
985,081
|
6,912,410
|
1,376,140
|
||||||||||||
General and administrative
|
4,620,353
|
1,034,120
|
6,256,910
|
1,657,595
|
||||||||||||
Transaction costs
|
-
|
-
|
5,765,407
|
-
|
||||||||||||
Change in fair value of contingent consideration
|
-
|
-
|
(820,000
|
)
|
-
|
|||||||||||
Total operating expenses
|
10,013,130
|
2,019,201
|
18,114,727
|
3,033,735
|
||||||||||||
Loss from operations
|
(10,013,130
|
)
|
(2,019,201
|
)
|
(18,114,727
|
)
|
(3,033,735
|
)
|
||||||||
Other expenses:
|
||||||||||||||||
Loss on sale of NTN assets
|
(50,000
|
)
|
-
|
(9,648,173
|
)
|
-
|
||||||||||
Other expense, net
|
(22,187
|
)
|
(14,245
|
)
|
(24,751
|
)
|
(18,923
|
)
|
||||||||
Total other expenses
|
(72,187
|
)
|
(14,245
|
)
|
(9,672,924
|
)
|
(18,923
|
)
|
||||||||
Net loss
|
(10,085,317
|
)
|
(2,033,446
|
)
|
(27,787,651
|
)
|
(3,052,658
|
)
|
||||||||
Series A preferred stock dividend
|
(7,806
|
)
|
-
|
(7,806
|
)
|
-
|
||||||||||
Net loss attributable to common stockholders
|
$ |
(10,093,123
|
)
|
$
|
(2,033,446
|
)
|
$
|
(27,795,457
|
)
|
$ |
(3,052,658
|
)
|
||||
Net loss per common share - basic and diluted
|
$ |
(0.24
|
)
|
$ |
(0.12
|
)
|
$ |
(0.79
|
)
|
$ |
(0.17
|
)
|
||||
Weighted average shares outstanding - basic and diluted
|
42,448,188
|
17,583,489
|
35,187,292
|
17,542,750
|
|
|
Membership Equity
|
Common
Stock
|
Series A
Preferred Stock
|
Additional
Paid-in
|
Accumulated | |||||||||||||||||||||||||||||||||||||||
|
Class A
|
Class B
|
Class C
|
Common
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
|||||||||||||||||||||||||||||||||
Balances at April 1, 2021
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
41,505,998
|
$
|
207,530
|
156,112
|
$
|
781
|
$
|
50,453,489
|
$
|
(55,083,075
|
)
|
$
|
(4,421,275
|
)
|
||||||||||||||||||||||
Common stock to be retained by NTN stockholders
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(157
|
)
|
-
|
(157
|
)
|
|||||||||||||||||||||||||||||||
Issuance of common stock from the exercise of stock options
|
-
|
-
|
-
|
-
|
1,300
|
6
|
-
|
-
|
10,196
|
-
|
10,202
|
|||||||||||||||||||||||||||||||||
Issuance of common stock related to stock purchase agreement with Lincoln Park Capital Fund, LLC,
net
|
-
|
-
|
-
|
-
|
3,211,942
|
16,060
|
-
|
-
|
48,508,858
|
-
|
48,524,918
|
|||||||||||||||||||||||||||||||||
Issuance of common stock in lieu of cash dividend to Series A preferred stockholders
|
-
|
-
|
-
|
-
|
202
|
1
|
-
|
-
|
7,805
|
(7,806
|
)
|
-
|
||||||||||||||||||||||||||||||||
Forfeiture of unvested restricted stock
|
-
|
-
|
-
|
-
|
(12,060
|
)
|
(60
|
)
|
-
|
-
|
60
|
-
|
-
|
|||||||||||||||||||||||||||||||
Stock based compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,154,492
|
-
|
1,154,492
|
|||||||||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(10,085,317
|
)
|
(10,085,317
|
)
|
|||||||||||||||||||||||||||||||
Balances at June 30, 2021
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
44,707,382
|
$
|
223,537
|
156,112
|
$
|
781
|
$
|
100,134,743
|
$
|
(65,176,198
|
)
|
$
|
35,182,863
|
|||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Balances at January 1, 2021
|
$
|
23,202,005
|
$
|
1,400,000
|
$
|
1,000,000
|
$
|
197,873
|
-
|
$
|
-
|
-
|
$
|
-
|
$
|
-
|
$
|
(37,380,741
|
)
|
$
|
(11,580,863
|
)
|
||||||||||||||||||||||
Brooklyn rights offerings membership units
|
10,500,000
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
10,500,000
|
|||||||||||||||||||||||||||||||||
Elimination of Brooklyn’s historical members’ equity
|
(33,702,005
|
)
|
(1,400,000
|
)
|
(1,000,000
|
)
|
(197,873
|
)
|
-
|
-
|
-
|
-
|
36,299,878
|
-
|
-
|
|||||||||||||||||||||||||||||
Common stock to be retained by NTN stockholders
|
-
|
-
|
-
|
-
|
1,514,373
|
7,572
|
-
|
-
|
8,169,885
|
-
|
8,177,457
|
|||||||||||||||||||||||||||||||||
Issuance of Series A preferred stock retained by NTN stockholders
|
-
|
-
|
-
|
-
|
-
|
-
|
156,112
|
781
|
(781
|
)
|
-
|
-
|
||||||||||||||||||||||||||||||||
Issuance of common stock to Brooklyn members
|
-
|
-
|
-
|
-
|
38,923,957
|
194,620
|
-
|
-
|
(194,620
|
)
|
-
|
-
|
||||||||||||||||||||||||||||||||
Issuance of common stock to Financial Advisor upon consummation of merger
|
-
|
-
|
-
|
-
|
1,067,668
|
5,338
|
-
|
-
|
5,760,069
|
-
|
5,765,407
|
|||||||||||||||||||||||||||||||||
Issuance of common stock from the exercise of stock options
|
-
|
-
|
-
|
-
|
1,300
|
6
|
-
|
-
|
10,196
|
-
|
10,202
|
|||||||||||||||||||||||||||||||||
Issuance of common stock related to stock purchase agreement with Lincoln Park Capital Fund, LLC,
net
|
-
|
-
|
-
|
-
|
3,211,942
|
16,060
|
-
|
-
|
48,508,858
|
-
|
48,524,918
|
|||||||||||||||||||||||||||||||||
Issuance of common stock in lieu of cash dividend to Series A preferred stockholders
|
-
|
-
|
-
|
-
|
202
|
1
|
-
|
-
|
7,805
|
(7,806
|
)
|
-
|
||||||||||||||||||||||||||||||||
Forfeiture of unvested restricted stock
|
-
|
-
|
-
|
-
|
(12,060
|
)
|
(60
|
)
|
-
|
-
|
60
|
-
|
-
|
|||||||||||||||||||||||||||||||
Stock based compensation
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,573,393
|
-
|
1,573,393
|
|||||||||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(27,787,651 | ) |
(27,787,651
|
)
|
|||||||||||||||||||||||||||||||
Balances at June 30, 2021
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
44,707,382
|
$
|
223,537
|
156,112
|
$
|
781
|
$
|
100,134,743
|
$
|
(65,176,198
|
)
|
$
|
35,182,863
|
Membership Equity
|
Accumulated
|
|||||||||||||||||||||||
|
Class A | Class B |
Class C
|
Common
|
Deficit
|
Total | ||||||||||||||||||
Balances at April 1, 2020
|
$
|
18,490,192
|
$
|
1,400,000
|
$
|
1,000,000
|
$
|
129,671
|
$
|
(11,960,738
|
)
|
$
|
9,059,125
|
|||||||||||
Stock based compensation:
|
- | - | - | 22,734 | - | 22,734 | ||||||||||||||||||
Sale of members’ equity
|
4,711,813
|
-
|
-
|
-
|
-
|
4,711,813
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
(2,033,446
|
)
|
(2,033,446
|
)
|
||||||||||||||||
Balances at June 30, 2020
|
$
|
23,202,005
|
$
|
1,400,000
|
$
|
1,000,000
|
$
|
152,405
|
$
|
(13,994,184
|
)
|
$
|
11,760,226
|
|||||||||||
Balances at January 1, 2020
|
$
|
18,177,692 |
$
|
1,400,000 |
$
|
1,000,000 |
$
|
106,937 |
$
|
(10,941,526 | ) |
$
|
9,743,103 | |||||||||||
Stock based compensation
|
- | - | - | 45,468 | - | 45,468 | ||||||||||||||||||
Sale of members’ equity
|
5,024,313 | - | - | - | - | 5,024,313 | ||||||||||||||||||
Net loss
|
- | - | - | - | (3,052,658 | ) | (3,052,658 | ) | ||||||||||||||||
Balances at June 30, 2020
|
$
|
23,202,005 |
$
|
1,400,000 |
$
|
1,000,000 |
$
|
152,405 |
$
|
(13,994,184 | ) |
$
|
11,760,226 |
For the six months ended
June 30,
|
||||||||
2021
|
2020
|
|||||||
Cash flows used in operating activities:
|
||||||||
Net loss
|
$
|
(27,787,651
|
)
|
$
|
(3,052,658
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
63,485
|
47,638
|
||||||
Stock-based compensation
|
1,573,393
|
45,468
|
||||||
Amortization of right-to-use asset
|
148,702
|
-
|
||||||
Transaction costs - shares to Financial Advisor
|
5,765,407
|
-
|
||||||
Loss on sale of NTN assets
|
9,648,173
|
-
|
||||||
Change in fair value of contingent consideration
|
(820,000
|
)
|
-
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Account receivable
|
4,680
|
-
|
||||||
Prepaid expenses and other current assets
|
(1,509,284
|
)
|
(79,175
|
)
|
||||
Security deposits and other non-current assets
|
(26,909
|
)
|
(84,915
|
)
|
||||
Accounts payable and accrued expenses
|
2,844,135
|
(942,836
|
)
|
|||||
Operating lease liability
|
(138,895
|
)
|
(468
|
)
|
||||
Other liabilities
|
-
|
10,324
|
||||||
Net cash used in operating activities
|
(10,234,764
|
)
|
(4,056,622
|
)
|
||||
Cash flows provided by (used in) investing activities:
|
||||||||
Purchase of property and equipment
|
-
|
(26,177
|
)
|
|||||
Purchase of NTN, net of cash acquired
|
147,262
|
-
|
||||||
Proceeds from the sale of NTN assets, net of cash disposed
|
118,594
|
-
|
||||||
Net cash provided by (used in) investing activities
|
265,856
|
(26,177
|
)
|
|||||
Cash flows provided by financing activities:
|
||||||||
Net proceeds of common stock issued to Lincoln Park
|
48,524,918 | - | ||||||
Proceeds from the exercise of stock options
|
10,202 | - | ||||||
Proceeds from loans payable
|
- | 309,905 | ||||||
Repayment of NTN’s PPP Loan
|
(531,994
|
)
|
-
|
|||||
Proceeds from sale of members’ equity
|
10,500,000
|
3,858,750
|
||||||
Net cash provided by financing activities
|
58,503,126
|
4,168,655
|
||||||
Net increase in cash and cash equivalents
|
48,534,218
|
85,856
|
||||||
Cash and cash equivalents at beginning of period
|
1,630,455
|
5,100,819
|
||||||
Cash and cash equivalents at end of period
|
$
|
50,164,673
|
$
|
5,186,675
|
||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
-
|
$
|
-
|
||||
Income taxes
|
$
|
-
|
$
|
-
|
||||
Supplemental disclosure of non-cash investing and financing activities:
|
||||||||
Issuance of common stock for Series A preferred stock dividend
|
$ | 7,806 | $ | - | ||||
Issuance of Common Stock for business combination
|
$
|
8,177,457
|
$
|
-
|
||||
Forfeiture of unvested restricted stock
|
$
|
(60
|
)
|
$
|
-
|
|||
Preferred shares issued in connection with reverse merger
|
$
|
781
|
$
|
-
|
||||
Initial measurement of ROU assets and liabilities
|
$ | 873,629 | $ | - |
1) |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
|
2) |
LIQUIDITY AND CAPITAL RESOURCES
|
3)
|
MERGER AND DISPOSITION TRANSACTIONS
|
Number of shares of common stock owned by Brooklyn stockholders immediately before the Merger
|
1,514,373
|
|||
Multiplied by the fair value per share of common stock (i)
|
$
|
5.40
|
||
Total purchase price
|
$
|
8,177,614
|
|
(i) |
Based on the closing price per share (post
reverse stock split) of the common stock of Brooklyn as reported on the NYSE American stock exchange on March 25, 2021, immediately before the Merger.
|
Historical Balance
Sheet of
Brooklyn at
March 25, 2020
|
Pro Forma
Fair Value
Adjustment to
Brooklyn
|Pre-Merger
Assets
|
Preliminary
Purchase
Price
Allocation Pro
Forma
Adjustment
|
||||||||||
Cash and cash equivalents
|
$
|
147,728
|
$
|
-
|
$
|
147,728
|
||||||
Accounts receivable
|
102,517
|
-
|
102,517
|
|||||||||
Prepaid expense and other current assets
|
329,596
|
-
|
329,596
|
|||||||||
Property and equipment, net
|
1,015,370
|
-
|
1,015,370
|
|||||||||
Software development costs
|
1,296,460
|
(368,460
|
)
|
928,000
|
||||||||
Customers
|
-
|
548,000
|
548,000
|
|||||||||
Trade name
|
-
|
299,000
|
299,000
|
|||||||||
Accounts payable, accrued liabilities and other current liabilities
|
(3,781,173
|
)
|
-
|
(3,781,173
|
)
|
|||||||
Net assets acquired, excluding goodwill
|
$
|
(889,502
|
)
|
$
|
478,540
|
$
|
(410,962
|
)
|
||||
Total consideration
|
$
|
8,177,614
|
||||||||||
Net assets acquired, excluding goodwill
|
(410,962
|
)
|
||||||||||
Goodwill
|
$
|
8,588,576
|
Proceeds from sale:
|
||||
Cash
|
$
|
132,055
|
||
Escrow
|
50,000
|
|||
Assume advance/loans
|
1,700,000
|
|||
Interest on advance/loans
|
67,945
|
|||
Carrying value of assets sold:
|
||||
Cash and cash equivalents
|
(13,461
|
)
|
||
Accounts receivable
|
(75,153
|
)
|
||
Prepaids and other current assets
|
(123,769
|
)
|
||
Property and equipment, net
|
(1,013,950
|
)
|
||
Software development costs
|
(927,368
|
)
|
||
Customers
|
(548,000
|
)
|
||
Trade name
|
(299,000
|
)
|
||
Goodwill
|
(8,588,576
|
)
|
||
Other assets
|
(103,173
|
)
|
||
Liabilities transferred upon sale:
|
||||
Accounts payable and accrued expenses
|
113,156
|
|||
Obligations under finance leases
|
16,676
|
|||
Lease liability
|
25,655
|
|||
Deferred revenue
|
54,803
|
|||
Other current liabilities
|
148,987
|
|||
Transaction costs
|
(265,000
|
)
|
||
Total loss on sale of assets
|
$
|
(9,648,173
|
)
|
Six months ended June 30,
|
||||||||
2021
|
2020
|
|||||||
Net loss attributable to common stockholders
|
$
|
(27,795,457
|
)
|
$
|
(3,060,464
|
)
|
||
Basic and diluted net loss per share attributable to common stockholders
|
$
|
(0.79
|
)
|
$
|
(0.17
|
)
|
4)
|
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.
|
As of June 30, 2021
|
||||||||||||
Description
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Liabilities:
|
||||||||||||
Contingent consideration
|
-
|
-
|
$
|
19,290,000
|
||||||||
Total
|
$
|
-
|
$
|
-
|
$
|
19,290,000
|
As of December 31, 2020
|
||||||||||||
Description
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Liabilities:
|
||||||||||||
Contingent consideration
|
-
|
-
|
$
|
20,110,000
|
||||||||
Total
|
$
|
-
|
$
|
-
|
$
|
20,110,000
|
Other Liabilities:
Contingent
Consideration
|
||||
Balance as of December 31, 2020
|
$
|
20,110,000
|
||
Fair value adjustments included in operating expenses
|
(820,000
|
)
|
||
Balance as of June 30, 2021
|
$
|
19,290,000
|
5) |
LEASES
|
Three months ended
June 30, 2021
|
Six months ended
June 30, 2021
|
|||||||
Operating lease expense
|
$
|
163,752
|
$
|
314,617
|
||||
Sublease income
|
(21,045
|
)
|
(42,090
|
)
|
||||
Variable lease expense
|
1,350
|
10,352
|
||||||
Total lease expense
|
$
|
144,057
|
$
|
282,879
|
Operating Lease
ROU Assets
|
||||
Operating lease ROU assets at January 1, 2021
|
$
|
2,092,878
|
||
Amortization of operating lease ROU assets
|
(148,702
|
)
|
||
Addition of operating lease ROU assets
|
823,628
|
|||
Operating lease ROU assets at June 30, 2021
|
$
|
2,767,804
|
Operating Lease
Liabilities
|
||||
Operating lease liabilities at January 1, 2021
|
$
|
2,178,612
|
||
Principal payments on operating lease liabilities
|
(138,895
|
)
|
||
Addition of operating lease liabilities
|
873,628
|
|||
Operating lease liabilities at June 30, 2021
|
2,913,345
|
|||
Less non-current portion
|
2,529,422
|
|||
Current portion at June 30, 2021
|
$
|
383,923
|
As of
June 30, 2021
|
||||
2021
|
$
|
361,318
|
||
2022
|
751,861
|
|||
2023
|
769,864
|
|||
2024
|
787,275
|
|||
2025
|
805,192
|
|||
Thereafter
|
514,174
|
|||
Total payments |
|
3,989,684
|
||
Less imputed interest | (1,076,339 | ) | ||
Total operating lease liabilities | $ | 2,913,345 |
As of
June 30, 2021
|
||||
2021
|
$
|
40,628
|
||
2022
|
82,419
|
|||
2023
|
84,194
|
|||
2024
|
86,010
|
|||
2025
|
87,867
|
|||
Thereafter
|
74,590
|
|||
$
|
455,708
|
6)
|
GOODWILL AND IN-PROCESS RESEARCH & DEVELOPMENT
|
7)
|
ACCRUED EXPENSES
|
June 30,
2021
|
|
|
December 31,
2020
|
|||||
Accrued compensation
|
$
|
385,935
|
$
|
293,534
|
||||
Accrued research and development expenses
|
631,563
|
207,468
|
||||||
Accrued general and administrative expenses
|
719,023
|
399,893
|
||||||
Accrued interest
|
179,605
|
150,125
|
||||||
Total accrued expenses
|
$
|
1,916,126
|
$
|
1,051,020
|
8) |
DEBT
|
9)
|
COMMITMENTS AND CONTINGENCIES
|
10)
|
STOCK-BASED COMPENSATION
|
|
Three and six months ended
June 30, 2021
|
|
Weighted average risk-free rate
|
1.06%
|
|
Weighted average volatility
|
134.30%
|
|
Dividend yield
|
0%
|
|
Expected term
|
6.08 years
|
11) |
STOCKHOLDERS’ AND MEMBERS’ EQUITY (DEFICIT)
|
12)
|
RECENT ACCOUNTING PRONOUNCEMENTS
|
13) |
SUBSEQUENT EVENT
|
|
• |
Brooklyn acquired all of the
outstanding equity interests of Novellus, Inc. as the result of the merger of Brooklyn Acquisition Sub, Inc. with and into Novellus, Inc.,
following which, Novellus, Inc., as the surviving corporation, became Brooklyn’s wholly owned subsidiary and Novellus Ltd. became Brooklyn's
indirectly owned subsidiary.
|
|
• |
Brooklyn acquired 25.0% of the total outstanding equity interests of NoveCite, Inc., a corporation focused on bringing an allogeneic mesenchymal stem cell
(“MSC”) product to patients with acute respiratory distress syndrome, including from COVID-19.
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
|
|
• |
prior to the Merger, a reverse stock split of its common stock, par value $0.005 per share, at a ratio of one-for-two, which we refer to as the Reverse
Split; and
|
|
• |
following the Merger, a change in its corporate name from “NTN Buzztime, Inc.” to “Brooklyn ImmunoTherapeutics, Inc.”
|
|
• |
Advance our product candidate IRX-2 through clinical development. IRX-2 is a human blood-based IL 2 therapy being studied for multiple types of cancer, including squamous cell cancer of the head and neck. Treatment of patients in the INSPIRE
trial has been completed, and patients who participated in the trial are currently being monitored for event-free survival with top-line data estimated to be available in the first half of 2022.
|
|
• |
Advance combination trials with checkpoint inhibitors. Once INSPIRE trial data are released, we plan to use those results as a catalyst in addition to data from the other clinical trials in the program with multiple data read-outs
anticipated in 2022 and later.
|
|
• |
Pursue partnerships to advance the IRX-2 clinical program. We are pursuing partnering opportunities with leading biopharmaceutical companies for the development and commercialization of IRX-2.
|
|
• |
Regulatory strategy. We believe that our assets may be deemed to be unique and to represent potential breakthroughs in the treatment of cancer and other indications. We will endeavor to seek breakthrough therapy designation with regulatory
agencies for IRX-2 for one or more indications. We cannot, however, assure that we will receive breakthrough therapy designation for any future indications or that any breakthrough therapy designation we do receive will necessarily
lead to a faster approval time.
|
|
• |
Intellectual Property. We continue to pursue additional intellectual property based on data from IRX clinical studies.
|
|
• |
BR-101 - A study involving 16 patients with neoadjuvant breast cancer performed at the Providence Portland Medical Center. Details of this trial can be
found at clinicaltrials.gov (NCT02950259).
|
|
• |
CIN-201 - An open label single arm Phase 2 trial of the IRX‑2 regimen in women with cervical squamous intraepithelial neoplasia 3 or squamous vulvar
intraepithelial neoplasia 3. Details of this trial can be found at clinicaltrials.gov (NCT03267680).
|
|
• |
BAS-104 - A basket study originally intended to enroll 100 patients with metastatic bladder, renal, non-small cell lung cancer, or NSCLC, melanoma, and
head and neck cancer being held at the Moffitt Cancer Center, using IRX‑2 in conjunction with Opdivo (Nivolumab), an immunotherapy cancer treatment marketed by Bristol-Myers Squibb Company. This trial was discontinued after 11 subjects
were enrolled due to insurance reimbursement challenges. Details of this trial can be found on clinicaltrials.gov (NCT03758781).
|
|
• |
HCC-107 - A study involving 28 patients with metastatic hepatocellular carcinoma, or HCC, being held at City of Hope Medical Center, HonorHealth Research
Institute, and Texas Oncology at Baylor Charles A. Simmons Cancer Center using IRX‑2 in conjunction with Opdivo, a cancer treatment marketed by Bristol-Myers Squibb Company. Details of this trial can be found at clinicaltrials.gov (NCT03655002).
|
|
• |
GI-106 - A study involving 20 patients with metastatic gastric and gastroesophageal junction cancers (GI) being held at City of Hope Medical Center,
HonorHealth Research Institute, and Texas Oncology at Baylor Charles A. Simmons Cancer Center using IRX‑2 in conjunction with Keytruda (Pembrolizumab), an immunotherapy cancer treatment marketed by Merck. Details of this trial can be
found at clinicaltrials.gov (NCT03918499).
|
|
• |
MHN-102 - A study involving 15 patients with metastatic head and neck cancer being held at the H. Lee Moffitt Cancer Center and Research Institute and
University of Michigan Health System using IRX‑2 in conjunction with Imfinzi (Durvalumab), a cancer treatment marketed by AstraZeneca plc. Details of this trial can be found at clinicaltrials.gov
(NCT03381183).
|
|
• |
BR-202 - A study involving 30 patients with neoadjuvant triple negative breast cancer, held at the Providence Portland Medical Center using IRX‑2 in
conjunction with a programmed cell death protein 1, or PD1, and chemotherapy treatments. Details of this trial can be found at clinicaltrials.gov (NCT04373031).
|
|
• |
Brooklyn acquired all of the outstanding equity interests of Novellus, Inc. as the result of the merger of Brooklyn Acquisition Sub, Inc. with and into
Novellus, Inc., following which Novellus, Inc., as the surviving corporation, became Brooklyn’s wholly owned subsidiary and Novellus Ltd. became Brooklyn’s indirectly owned subsidiary.
|
|
• |
Brooklyn acquired 25.0% of the total outstanding equity interests of NoveCite, Inc., a corporation focused on bringing an allogeneic mesenchymal stem cell,
or MSC, product to patients with acute respiratory distress syndrome, including from COVID-19.
|
|
Three months ended June 30,
|
|||||||||||||||
|
2021
|
2020
|
Change
|
% Change
|
||||||||||||
|
||||||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
5,392,777
|
985,081
|
4,407,696
|
447
|
%
|
|||||||||||
General and administrative
|
4,620,353
|
1,034,120
|
3,586,233
|
347
|
%
|
|||||||||||
Total operating expenses
|
10,013,130
|
2,019,201
|
7,993,929
|
396
|
%
|
|||||||||||
Loss from operations
|
(10,013,130
|
)
|
(2,019,201
|
)
|
(7,993,929
|
)
|
396
|
%
|
||||||||
|
||||||||||||||||
Other expenses:
|
||||||||||||||||
Loss on sale of NTN assets
|
(50,000
|
)
|
-
|
(50,000
|
)
|
N/A
|
||||||||||
Other expense, net
|
(22,187
|
)
|
(14,245
|
)
|
(7,942
|
)
|
56
|
%
|
||||||||
Total other expenses
|
(72,187
|
)
|
(14,245
|
)
|
(57,942
|
)
|
407
|
%
|
||||||||
Net loss
|
(10,085,317
|
)
|
(2,033,446
|
)
|
(8,051,871
|
)
|
396
|
%
|
||||||||
Series A preferred stock dividend
|
(7,806
|
)
|
-
|
(7,806
|
)
|
N/A
|
||||||||||
Net loss attributable to common stockholders
|
$
|
(10,093,123
|
)
|
$
|
(2,033,446
|
)
|
$
|
(8,059,677
|
)
|
396
|
%
|
|
Six months ended June 30,
|
|||||||||||||||
|
2021
|
2020
|
Change
|
% Change
|
||||||||||||
|
||||||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
6,912,410
|
1,376,140
|
5,536,270
|
402
|
%
|
|||||||||||
General and administrative
|
6,256,910
|
1,657,595
|
4,599,315
|
277
|
%
|
|||||||||||
Transaction costs
|
5,765,407
|
-
|
5,765,407
|
N/A
|
||||||||||||
Change in fair value of contingent consideration
|
(820,000
|
)
|
-
|
(820,000
|
)
|
N/A
|
||||||||||
Total operating expenses
|
18,114,727
|
3,033,735
|
15,080,992
|
497
|
%
|
|||||||||||
Loss from operations
|
(18,114,727
|
)
|
(3,033,735
|
)
|
(15,080,992
|
)
|
497
|
%
|
||||||||
|
||||||||||||||||
Other expenses:
|
||||||||||||||||
Loss on sale of NTN assets
|
(9,648,173
|
)
|
-
|
(9,648,173
|
)
|
N/A
|
||||||||||
Other expense, net
|
(24,751
|
)
|
(18,923
|
)
|
(5,828
|
)
|
31
|
%
|
||||||||
Total other expenses
|
(9,672,924
|
)
|
(18,923
|
)
|
(9,654,001
|
)
|
51017
|
%
|
||||||||
Net loss
|
(27,787,651
|
)
|
(3,052,658
|
)
|
(24,734,993
|
)
|
810
|
%
|
||||||||
Series A preferred stock dividend
|
(7,806
|
)
|
-
|
(7,806
|
)
|
N/A
|
||||||||||
Net loss attributable to common stockholders
|
$
|
(27,795,457
|
)
|
$
|
(3,052,658
|
)
|
$
|
(24,742,799
|
)
|
811
|
%
|
|
• |
the scope, rate of progress and cost of our clinical trials and other product development activities;
|
|
• |
future clinical trial results;
|
|
• |
the terms and timing of any collaborative, licensing and other agreements that we may establish;
|
|
• |
the cost and timing of regulatory approvals;
|
|
• |
the cost and delays in product development as a result of any changes in regulatory oversight applicable to our products;
|
|
• |
the cost and timing of establishing sales, marketing and distribution capabilities;
|
|
• |
the effect of competition and market developments; and
|
|
• |
the cost of filing and potentially prosecuting, defending and enforcing any patent claims and other intellectual property rights.
|
|
• |
During the second quarter, we entered into the First Purchase Agreement and the Second Purchase Agreement with Lincoln Park, pursuant to which, subject to
specified terms and conditions, we have the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase up to an aggregate of $60.0 million in shares of our common stock. As of August 12, 2021, we
had issued and sold 3,211,942 shares of common stock for total gross proceeds of $50.5 million and net proceeds of $48.5 million. For further information, see “—Recent Developments—Purchase Agreements.”
|
|
• |
As a condition to the closing of the Merger, Brooklyn LLC was required to have at least $10.0 million in cash and cash equivalents at the effective time of
the Merger. In furtherance of, and prior to, the Merger, certain of its members entered into agreements pursuant to which those members purchased additional units of Brooklyn LLC for an aggregate purchase price of $10.5 million.
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4. |
Controls and Procedures.
|
● |
hiring and employing additional accounting personnel in a number, and with experience, to allow for proper segregation of duties; and
|
|
● |
developing and implementing, and then monitoring the effectiveness of, written policies and procedures required to achieve our financial reporting objectives in a
timely manner, including policies and procedures relating to internal control over financial reporting.
|
Item 1. |
Legal Proceedings.
|
Item 1A. |
Risk Factors.
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Item 6. |
Exhibits.
|
Exhibit
|
Description
|
|
Incorporated By Reference
|
Agreement and Plan of Acquisition, dated as of July 16, 2021, by and among Brooklyn ImmunoTherapeutics, Inc., Brooklyn Acquisition Sub, Inc., Novellus LLC,
Novellus, Inc., and the Sellers’ Representative.
|
|
Exhibit to Form 8-K filed on July 19, 2021
|
|
Registration Rights Agreement, dated as of July 16, 2021, by and among Brooklyn ImmunoTherapeutics, Inc. and the individuals and entities named therein.
|
|
Exhibit to Form 8-K filed on July 19, 2021
|
|
Executive Employment Agreement, dated as of April 1, 2021 and effective as of April 16, 2021, between Brooklyn ImmunoTherapeutics, Inc. and
Howard J. Federoff. |
|
Exhibit to Form 8-K filed on April 7, 2021
|
|
Form of Indemnification Agreement
|
|
Exhibit to Form 8-K filed on April 16, 2021
|
|
Schedule identifying agreements substantially identical to the form of indemnification agreement filed as Exhibit 10.2(a)
|
|
Exhibit to Form 8-K filed on June 21, 2021
|
|
Purchase Agreement, dates as of May 26, 2021, between Brooklyn ImmunoTherapeutics, Inc. and Lincoln Park Capital Fund, LLC
|
|
Exhibit to Form 8-K filed on May 26, 2021
|
|
Registration Rights Agreement, dated as of May 26, 2021, between Brooklyn ImmunoTherapeutics, Inc. and Lincoln Park Capital Fund, LLC
|
|
Exhibit to Form 8-K filed on May 26, 2021
|
|
Exclusive License Agreement, dated as of April 26, 2021, between Factor Bioscience Limited, Novellus Therapeutics Limited and Brooklyn ImmunoTherapeutics LLC
|
|
Exhibit to Form 8-K filed on April 30, 2021
|
|
Brooklyn ImmunoTherapeutics, Inc. 2021 Inducement Stock Incentive Plan
|
|
Exhibit to Form 8-K filed on May 26, 2021
|
|
Executive Employment Agreement, dated as of June 5, 2021 and effective as of June 28, 2021, between Brooklyn ImmunoTherapeutics, Inc. and Kevin D’Amour.
|
|
Exhibit to Form 8-K filed on June 10, 2021
|
|
Executive Employment Agreement, dated as of June 16, 2021 and effective as of June 21, 2021, between Brooklyn ImmunoTherapeutics, Inc. and Sandra Gurrola.
|
|
Exhibit to Form 8-K filed on June 21, 2021
|
|
Executive Employment Agreement, dated as of July 6, 2021 and effective as of July 15, 2021, between Brooklyn ImmunoTherapeutics, Inc. and Jay Sial.
|
|
Exhibit to Form 8-K filed on July 19, 2021
|
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Filed herewith
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Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Filed herewith
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Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Furnished herewith
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Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Furnished herewith
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101.INS
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Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within
the Inline XBRL document).
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Filed herewith
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101.SCH
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Inline XBRL Taxonomy Extension Schema Document
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Filed herewith
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101.CAL
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Inline XBRL Taxonomy Extension Calculation Linkbase Document
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Filed herewith
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101.DEF
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Inline XBRL Taxonomy Extension Definition Linkbase Document
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Filed herewith
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101.LAB
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Inline XBRL Taxonomy Extension Label Linkbase Document
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Filed herewith
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101.PRE
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Inline XBRL Taxonomy Extension Presentation Linkbase Document
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Filed herewith
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104
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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
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* |
Certain information redacted and replaced with “[***]”.
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+ |
Indicates management contract or compensatory plan.
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§ |
Certain addenda have been omitted pursuant to Item 601(a)(5) of Regulation S-K. We hereby undertake to furnish copies of the omitted addenda upon request
by the Securities and Exchange Commission, provided that we may request confidential treatment pursuant to Rule 24b‑2 of the Securities Exchange Act of 1934 for the addenda so furnished.
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† |
Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Brooklyn ImmunoTherapeutics, Inc. hereby undertakes to furnish
supplementally copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission
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BROOKLYN IMMUNOTHERAPEUTICS, INC.
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Date: August 13, 2021
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By:
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/s/ Howard J. Federoff
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Howard J. Federoff
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Chief Executive Officer and President
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Date: August 13, 2021
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/s/ Howard J. Federoff
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Howard J. Federoff
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Chief Executive Officer and President
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(Principal Executive Officer)
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Date: August 13, 2021
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/s/ Sandra Gurrola
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Sandra Gurrola
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Vice President of Finance
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(Principal Financial Officer)
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Date: August 13, 2021
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/s/ Howard J. Federoff
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Howard J. Federoff
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Chief Executive Officer and President
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(Principal Executive Officer)
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Date: August 13, 2021
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/s/ Sandra Gurrola
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Sandra Gurrola
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Vice President of Finance
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(Principal Financial Officer)
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