Item 1.01 Entry into a Material Definitive Agreement.
As previously announced, NTN Buzztime, Inc. ("NTN"), and eGames.com Holdings LLC
("eGames.com") entered into an asset purchase agreement on September 18, 2020
(as amended, the "Asset Purchase Agreement"), pursuant to which, subject to the
terms and conditions thereof, NTN agreed to sell and assign all of its right,
title and interest in and to the assets relating to its current business to
eGames.com (the "Asset Sale"). At the closing of the Asset Sale, in addition to
assuming the liabilities of NTN specified in the Asset Purchase Agreement,
eGames.com will pay $2.0 million to NTN. Also as previously announced, in
connection with entering into the asset purchase agreement, Fertilemind
Management, LLC ("Fertilemind"), an affiliate of eGames.com, made a $1.0 million
loan on behalf of eGames.com to NTN, and in connection with entering into an
amendment to the asset purchase agreement, Fertilemind made an additional
$500,000 loan on behalf of eGames.com to NTN. The outstanding principal amount
of each of those loans, and all accrued and unpaid interest thereon, will be
applied against the $2.0 million purchase price payable by eGames.com under the
Asset Purchase Agreement at the closing of the Asset Sale. NTN issued unsecured
promissory notes evidencing each of the loans described above to Fertilemind.
On January 12, 2021, NTN, eGames.com and Fertilemind entered into a second
omnibus amendment and agreement pursuant to which, among other things,
eGames.com agreed to loan, or cause Fertilemind to loan on behalf of eGames.com,
an additional $200,000 to NTN (the "Third Bridge Loan") and the parties agreed
to extend the maturity date of each of the $1.0 million and $500,000 loans
described above to April 30, 2021. On January 12, 2021, Fertilemind made the
Third Bridge Loan to NTN and NTN issued an unsecured promissory note evidencing
such loan (the "Third Note") to Fertilemind.
The material terms of the Third Note are substantially similar to the terms of
the promissory notes evidencing the $1.0 million and $500,000 loans described
above. The principal amount of the Third Bridge Loan accrues interest at the
rate of 10% per annum (increasing to 15% per annum upon the occurrence of an
event of default), compounded annually. The principal amount of the Third Bridge
Loan and accrued interest thereon is due and payable upon the earlier of (i) the
termination of the Asset Purchase Agreement, (ii) the closing of a Business
Combination (as defined in the Third Note), and (iii) April 30, 2021. Upon the
closing of the Asset Sale, the outstanding principal amount of the Third Bridge
Loan and all accrued and unpaid interest thereon will be applied against the
$2.0 million purchase price under the Asset Purchase Agreement, and the Third
Note will be extinguished. NTN may use the proceeds under the Third Note for,
among other things, the payment of obligations related to the transactions
contemplated by the Asset Purchase Agreement and other general working capital
purposes. The Third Note includes customary events of default, including if any
portion of the Third Note is not paid when due; if NTN defaults in the
performance of any other material term, agreement, covenant or condition of
either of the Third Note, subject to a cure period; if any final judgment for
the payment of money is rendered against NTN and NTN does not discharge the same
or cause it to be discharged or vacated within 90 days; if NTN makes an
assignment for the benefit of creditors, if NTN generally does not pay its debts
as they become due; if a receiver, liquidator or trustee of NTN is appointed, or
if NTN is adjudicated bankrupt or insolvent. In the event of an event of
default, the Third Note will accelerate and become immediately due and payable
at the option of the holder.
The foregoing descriptions of the second omnibus amendment and agreement and the
Third Note do not purport to be complete and are qualified in their entirety by
the full text of the second omnibus amendment and agreement and the Third Note,
copies of which are filed as exhibits to this report and are incorporated by
reference herein.
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
On January 14, 2021, NTN received a letter from NYSE Regulation stating that it
was not in compliance with NYSE American LLC continued listing standards.
Specifically, NTN is not in compliance with Section 704 of the NYSE American
Company Guide (the "Company Guide") because it did not hold an annual meeting
during its fiscal year ended December 31, 2020.
NTN continues to not be in compliance with Sections 1003(a)(i), (ii) and (iii)
of the Company Guide because it reported stockholders equity of less than $2
million, $4 million and $6 million as of June 30, 2020, March 31, 2020 and
December 31, 2019, respectively. As a result, NTN became subject to the
procedures and requirements of Section 1009 of the Company Guide, which included
submitting a plan to NYSE Regulation advising of actions NTN has taken or will
take to regain compliance with Sections 1003(a)(i), (ii) and (iii) of the
Company Guide by September 27, 2021. As previously reported, NYSE Regulation
notified NTN that it accepted NTN's plan to regain compliance and granted NTN a
plan period that extends through September 27, 2021.
The listing of NTN's common stock on the NYSE American is being continued during
the plan period pursuant to an extension. The NYSE Regulation staff will review
NTN periodically for compliance with initiatives outlined in its plan. If NTN is
not in compliance with Sections 1003(a)(i), (ii) and (iii) by September 27, 2021
or if NTN does not make progress consistent with its plan during the plan
period, NYSE Regulation staff will initiate delisting proceedings as
appropriate.
NTN can give no assurances that it will be able to maintain the listing of its
common stock on the NYSE American. NTN's common stock could be delisted because
it does not make progress consistent with its plan during the plan period,
because it does not regain compliance with Sections 1003(a)(i), (ii) and (iii)
by September 27, 2021, because it does not regain compliance with Section 704,
or because its falls below compliance with other NYSE American listing
standards.
On January 15, 2021, NTN issued a press release announcing the receipt of the
letter described above. A copy of the press release is attached hereto as
Exhibit 99.1 and is incorporated by reference herein.
* * * * * * * * * * * * * *
No Offer or Solicitation
This report is not intended to and shall not constitute an offer to sell or the
solicitation of an offer to buy any securities or the solicitation of any vote
or approval, nor shall there be any sale of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such jurisdiction. No offer of
securities in connection with the proposed merger contemplated by the agreement
and plan of merger and reorganization (the "Merger Agreement") between NTN and
Brooklyn Immunotherapeutics LLC ("Brooklyn") dated August 12, 2020 (the
"Merger") shall be made except by means of a prospectus meeting the requirements
of Section 10 of the Securities Act of 1933, as amended.
Additional Information and Where to Find It
In connection with the proposed Merger and Asset Sale, NTN filed relevant
materials with the SEC, including a registration statement on Form S-4, that
will serve as a proxy statement and prospectus of NTN and a consent solicitation
statement for the beneficial holders of Brooklyn's Class A membership units, and
will be mailed or otherwise disseminated to NTN stockholders and to the
beneficial holders of Brooklyn's Class A membership units if and when it becomes
available. INVESTORS AND SECURITY HOLDERS OF NTN AND BROOKLYN ARE URGED TO READ
THESE MATERIALS CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT NTN, BROOKLYN,
THE PROPOSED MERGER AND ASSET SALE, AND RELATED MATTERS. The proxy
statement/prospectus/consent solicitation statement and other relevant materials
(when they become available) and any other documents filed by NTN with the SEC,
may be obtained free of charge at the SEC website at www.sec.gov. In addition,
investors and security holders may obtain free copies of the documents filed
with the SEC by NTN by directing a written request to: NTN Buzztime, Inc, 6965
El Camino Real, Suite 105-Box 517, Carlsbad, California 92009. Investors and
security holders are urged to read the proxy statement/prospectus/consent
solicitation statement and the other relevant materials when they become
available before making any voting or investment decision with respect to the
proposed merger and asset sale.
Participants in the Solicitation
NTN and its directors, executive officers and certain other members of
management and employees, Brooklyn and its managers and officers, and eGames.com
and its managers and officers may, under SEC rules, be deemed to be participants
in the solicitation of proxies from the stockholders of NTN with respect to the
proposed Merger and Asset Sale and related matters. Information about the
directors and executive officers of NTN, including their ownership of shares of
common stock is set forth in NTN's Annual Report on Form 10-K for the year ended
December 31, 2019 and Amendment No. 1 thereto, which were filed with the SEC on
March 19, 2020 and April 27, 2020, respectively (the "2019 Annual Report").
Additional information regarding the persons or entities who may be deemed
participants in the solicitation of proxies from NTN stockholders, including a
description of their interests in the proposed Merger and Asset Sale, by
security holdings or otherwise, are included in the proxy
statement/prospectus/consent solicitation statement referred to above and other
relevant documents to be filed with the SEC when they become available. As
described above, these documents will be available free of charge at the SEC's
website or by directing a written request to NTN. Neither the managers or
officers of Brooklyn nor the managers or officers of eGames.com currently hold
any interests, by security holdings or otherwise, in NTN.
Forward-Looking Statements
This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, which are intended to be covered by the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are any statements that are not statements of
historical fact and may be identified by terminology such as "expect," "intend,"
"plan," "believe," "anticipate," "may," "will," "would," "should," "could,"
"contemplate," "estimate," "predict," "potential" or "continue," or the negative
of these terms or other similar words. Forward-looking statements are based on
current beliefs and assumptions that are subject to risks and uncertainties and
are not guarantees of future performance. Actual results could differ materially
from those stated or implied in any forward-looking statement as a result of
various factors, including, but not limited to: (i) risks that the conditions to
the closing of the proposed Merger and/or Asset Sale are not satisfied,
including the failure of NTN and Brooklyn to timely obtain the requisite
stockholder and member approvals for the Merger and/or Asset Sale and related
matters or to meet the net cash and capitalization requirements under the Merger
Agreement, as applicable; (ii) uncertainties as to the timing of the
consummation of the proposed Merger and Asset Sale and the ability of each party
to consummate the proposed Merger and Asset Sale; (iii) risks related to NTN's
and Brooklyn's ability to manage their respective operating expenses and
expenses associated with the proposed Merger and Asset Sale, as applicable,
pending closing of the Merger; (iv) the risk that, as a result of adjustments to
the exchange ratio, NTN stockholders and Brooklyn members could own more or less
of the combined company than is currently anticipated; (v) NTN's continued
listing on the NYSE American; (vi) uncertainties related to the impact of the
COVID-19 pandemic on the business and financial condition of NTN, Brooklyn and
the combined company and the ability of NTN and Brooklyn to consummate the
Merger and NTN and eGames.com to consummate the Asset Sale; (vii) NTN's ability
to continue to operate as a going concern if the proposed Merger or Asset Sale
is not consummated in a timely manner, or at all; (viii) Brooklyn's need for,
and the availability of, substantial capital in the future to fund its
operations and research and development activities; (ix) Brooklyn's ability to
successfully progress research and development efforts after the Merger,
including its manufacturing development efforts, and to create effective,
commercially-viable products; (x) the success of Brooklyn's product candidates
in completing pre-clinical or clinical testing and being granted regulatory
approval to be sold and marketed in the United States or elsewhere; (xi) the
outcome of any legal proceedings that may be instituted against NTN, Brooklyn,
eGames.com or others related to the Merger Agreement or the Asset Purchase
Agreement, as applicable; (xii) the occurrence of any event, change or other
circumstance or condition that could give rise to the termination of either or
both of those agreements; (xiii) potential adverse reactions or changes to
business relationships resulting from the announcement or completion of the
proposed Merger or Asset Sale; and (xiv) those risks and uncertainties discussed
in NTN's reports filed with the SEC, including its 2019 Annual Report, its
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as other
documents that may be filed by NTN from time to time with the SEC available at
www.sec.gov.
You should not rely upon forward-looking statements as predictions of future
events. NTN cannot assure you that the events and circumstances reflected in the
forward-looking statements will be achieved or occur, and actual results could
differ materially from those projected in the forward-looking statements. The
forward-looking statements made in this communication speak only as of the date
on which they were made. NTN does not undertake any obligation to update the
forward-looking statements contained herein to reflect events that occur or
circumstances that exist after the date hereof, except as may be required by
applicable law or regulation.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
10.1 Second Omnibus Amendment and Agreement dated January 12, 2021 by and
between NTN Buzztime, Inc., eGames.com Holdings LLC and Fertilemind
Management, LLC
10.2 10% Promissory Note issued by NTN Buzztime, Inc. on January 12, 2021
99.1 Press release of NTN Buzztime, Inc. dated January 15, 2021
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