This Annual Report on Form 10-K contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"),
Section 27A of the Securities Act of 1933, as amended, (the "Securities Act"),
and Section 21E of the Exchange Act, about our expectations, beliefs, or
intentions regarding our product development efforts, business, financial
condition, results of operations, strategies and prospects. You can identify
forward-looking statements by the fact that these statements do not relate to
historical or current matters. Rather, forward-looking statements relate to
anticipated or expected events, activities, trends or results as of the date
they are made. Because forward-looking statements relate to matters that have
not yet occurred, these statements are inherently subject to risks and
uncertainties that could cause our actual results to differ materially from any
future results expressed or implied by the forward-looking statements. Many
factors could cause our actual activities or results to differ materially from
the activities and results anticipated in forward-looking statements. These
factors include those contained in "Item 1A - Risk Factors" of this Annual
Report on Form 10-K. We do not undertake any obligation to update
forward-looking statements except as required by applicable law. We intend that
all forward-looking statements be subject to the safe harbor provisions of
PSLRA. These forward-looking statements reflect our views only as of the date
they are made.

Overview

We are a clinical-stage biopharmaceutical company focused on exploring the role
that cytokine-based therapy can have on the immune system in treating patients
with cancer, both as a single agent and in combination with other anti-cancer
therapies. We are seeking to develop IRX-2, a novel cytokine-based therapy, to
treat patients with cancer. We also are exploring opportunities to advance
oncology, blood disorder, and monogenic disease therapies using gene-editing and
cell therapy technology through a license with Factor Bioscience Limited, or
Factor, and through our acquisition of Novellus, Inc. and Novellus, Ltd. in July
2021, or the Acquisition.

Recent Developments

Acquisition of Novellus

On July 16, 2021, we acquired Novellus, Inc. and Novellus, Inc.'s wholly owned
subsidiary, Novellus, Ltd. Brooklyn also acquired 25.0% of the total outstanding
equity interests of NoveCite, Inc.  Total consideration was $124.0 million,
which consisted of (a) $22.8 million in cash and approximately and (b)
approximately 7,022,000 shares of common stock, which under the terms of the
Acquisition Agreement were valued at a total of $102.0 million, based on a price
of $14.5253 per share.

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Merger with NTN Buzztime, Inc.

On March 25, 2021, we completed the Merger with NTN Buzztime, Inc. In accordance with the Merger Agreement, on March 25, 2021, Brooklyn amended its restated certificate of incorporation in order to effect:

• 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; and

• following the Merger, a change in its corporate name from "NTN Buzztime, Inc."

to "Brooklyn ImmunoTherapeutics, Inc."





On March 26, 2021, we sold the rights, title and interest in and to the assets
relating to the business operated under the name "NTN Buzztime, Inc." prior to
the Merger to eGames.com Holdings LLC, or eGames.com, in exchange for
eGames.com's payment of a purchase price of $2.0 million and assumption of
specified liabilities relating to such pre-Merger business. This transaction,
which we refer to as the Disposition, was completed in accordance with the terms
of an asset purchase agreement dated September 18, 2020, as amended, between us
and eGames.com.

The Merger has been accounted for as a reverse acquisition in accordance with
U.S. generally accepted accounting principles, or GAAP. Under this method of
accounting, Brooklyn LLC was deemed the "acquiring" company and Brooklyn (then
known as NTN Buzztime, Inc.) was treated as the "acquired" company for financial
reporting purposes. Operations prior to the Merger are those of Brooklyn LLC,
and the historical financial statements of Brooklyn LLC became the historical
financial statements of Brooklyn with respect to periods prior to the completion
of the Merger.

Impact of COVID-19 Pandemic

The development of our product candidates has been, and could continue to be,
disrupted and materially adversely affected by past and continuing impacts of
the COVID-19 pandemic. This is largely a result of measures imposed by the
governments and hospitals in affected regions, businesses and schools were
suspended due to quarantines intended to contain this outbreak. The spread of
COVID-19 from China to other countries resulted in the Director General of the
World Health Organization declaring COVID-19 a pandemic in March 2020. While the
constraints of the pandemic are being lifted, we are still assessing the
longer-term impact of the COVID-19 pandemic on our development plans, and on the
ability to conduct our clinical trials. COVID-19 could continue to disrupt
production and cause delays in the supply and delivery of products used in our
operations, may affect our operations, including the conduct of clinical
studies, or the ability of regulatory bodies to grant approvals or supervise our
candidates and products, may further divert the attention and efforts of the
medical community to coping with the COVID-19 and disrupt the marketplace in
which we operate and may have a material adverse effects on our operations.
COVID-19 may also affect our employees and employees and operations at suppliers
that may result in delays or disruptions in supply. In addition, a recession or
market correction resulting from the spread of COVID-19 could materially affect
our business and the value of our common stock. Additionally, if the COVID-19
pandemic has a significant impact on our business and financial results for an
extended period of time, our liquidity and cash resources could be negatively
impacted. The extent to which the COVID-19 pandemic and ongoing global efforts
to contain its spread will impact our operations will depend on future
developments, which are highly uncertain, and include the duration, severity and
scope of the pandemic and the actions taken to contain or treat the COVID-19
pandemic. Further, the specific clinical outcomes, or future pandemic related
impacts of emerging COVID-19 variants cannot be reliably predicted.

The patients in our clinical trials have conditions that make them especially
vulnerable to COVID-19, and as a result we have seen slowdowns in enrollment in
our clinical trials. While our INSPIRE trial in patients with squamous cell
carcinoma of the oral cavity  is fully populated, our other clinical studies are
likely to continue to encounter delays in enrollment as a result of the
pandemic.

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Basis of Presentation

Revenues

We are a development stage company and have had no revenues from product sales
to date. We will not have revenues from product sales until such time as we
receive regulatory approval of our product candidates, successfully
commercialize our products or enter into a licensing agreement which may include
up-front licensing fees, of which there can be no assurance.

Research and Development Expenses



We expense our research and development costs as incurred. Our research and
development expenses consist of costs incurred for company-sponsored research
and development activities, as well as support for selected
investigator-sponsored research. Upfront payments and milestone payments for the
licensing of technology are expensed as research and development in the period
in which they are incurred if the technology is not expected to have any
alternative future uses other than the specific research and development project
for which it was intended. In-Process Research and Development ("IPR&D") that is
acquired through an asset acquisition and has no alternative future uses and,
therefore, no separate economic values, is expensed to research and development
costs at the time the costs are incurred.

The major components of research and development costs include preclinical study
costs, clinical manufacturing costs, clinical study and trial expenses,
insurance coverage for clinical trials, expensed licensed technology,
consulting, scientific advisors and other third-party costs, salaries and
employee benefits, stock-based compensation expense, supplies and materials and
allocations of various overhead costs related to our product development
efforts.

In the normal course of our business, we contract with third parties to perform
various clinical study and trial activities in the on-going development and
testing of potential products. The financial terms of these agreements are
subject to negotiation and vary from contract to contract and may result in
uneven payment flows. Payments under the contracts depend on factors such as the
achievement of certain events or milestones, the successful enrollment of
patients, the allocation of responsibilities among the parties to the agreement,
and the completion of portions of the clinical study or trial or similar
conditions. Preclinical and clinical study and trial associated activities such
as production and testing of clinical material require significant up-front
expenditures. We anticipate paying significant portions of a study's or trial's
cost before such begins and incurring additional expenditures as the study or
trial progresses and reaches certain milestones.

General and Administrative Expenses



Our general and administrative expenses consist primarily of salaries, benefits
and other costs, including equity-based compensation, for our executive and
administrative personnel, legal and other professional fees, travel, insurance,
and other corporate costs.

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Comparison of the Years Ended December 31, 2021 and 2020



                                                       Years Ended December 31,
                                                        2021              2020             Change          % Change
Operating expenses:
Research and development                           $   12,705,000     $   3,951,000     $   8,754,000     $      222 %
Acquired in-process research and development           80,538,000                 -        80,538,000            N/A
General and administrative                             14,724,000         3,297,000        11,427,000            347 %
Transaction costs                                       5,765,000                 -         5,765,000            N/A

Change in fair value of contingent consideration (180,000 ) 19,240,000 (19,420,000 ) -101 % Total operating expenses

                              113,552,000        26,488,000        87,064,000            329 %

Loss from operations                                 (113,552,000 )

(26,488,000 ) (87,064,000 ) 329 %



Other expenses:
Loss on sale of NTN assets                             (9,648,000 )               -        (9,648,000 )          N/A
Other income (expense), net                               899,000           (43,000 )         942,000          -2191 %
Total other expense                                    (8,749,000 )         (43,000 )      (8,706,000 )        20247 %
Loss before income taxes                             (122,301,000 )     (26,531,000 )     (95,770,000 )          361 %
Provision for income taxes                                 (5,000 )               -            (5,000 )          N/A

Net loss                                             (122,306,000 )     (26,531,000 )     (95,775,000 )          361 %

Series A preferred stock dividend                         (16,000 )               -           (16,000 )          N/A

Net loss attributable to common stockholders $ (122,322,000 ) $ (26,531,000 ) $ (95,791,000 ) 361 %

Research and Development Expenses



                                                           Years Ended December 31
                                              2021            2020           Change        % Change
License fees                              $  6,500,000     $         -     $ 6,500,000           N/A
Stock-based compensation                     1,597,000               -       1,597,000           N/A
Clinical trials                              1,292,000         412,000         880,000           214 %
Payroll-related                              2,342,000       1,985,000         357,000            18 %
Other expenses, net                            974,000       1,554,000

(580,000 ) -37 % Total research and development expenses $ 12,705,000 $ 3,951,000 $ 8,754,000

           222 %



For the year ended December 31, 2021, our research and development expenses
increased by approximately $8.75 million from the year ended December 31, 2020
due to upfront payments associated with licensed technology, which were expensed
because there is no future alternative use for the licensed technology other
than for the intended purpose, increased clinical trial expenses, increased
headcount and increased stock-based compensation when compared to 2020.

Acquired IPR&D



During the year ended December 31, 2021, we expensed the approximately $80.5
million fair value of the IPR&D acquired in the Acquisition because there is no
future alternative use for the IPR&D other than for its intended purpose.

General and Administrative Expenses



                                                              Years Ended December 31
                                                2021            2020            Change         % Change
Professional fees                           $  7,351,000     $ 2,352,000     $  4,999,000            213 %
Stock-based compensation                       3,638,000          91,000        3,547,000           3898 %
Payroll-related                                1,299,000         (98,000 )      1,397,000          -1426 %
Insurance                                      1,134,000         122,000        1,012,000            830 %
Other expenses, net                            1,302,000         830,000          472,000             57 %

Total general and administrative expenses $ 14,724,000 $ 3,297,000

 $ 11,427,000            347 %



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The $11.42 million increase in general and administrative expense for the year
ended December 31, 2021 from the year ended December 31, 2020 was primarily
related to increased professional fees such as legal, accounting and consulting
fees associated with merger and acquisition activity, including the Merger and
the Acquisition, as well as costs associated with becoming a publicly traded
company, increased stock-based compensation resulting from the issuance of
equity awards, increased payroll-related expense due to an increase in our
headcount and increased insurance expenses when compared to 2020.

Transaction Costs



For the year ended December 31, 2021, we incurred approximately $5.8 million in
transaction costs related to the issuance of common stock to Brooklyn LLC's
financial advisor upon consummation of the Merger, and there were no comparable
transaction costs for the year ended December 31, 2020.

Change in Fair Value of Contingent Consideration



As of December 31, 2020, our contingent consideration liability was
approximately $20.1 million and  related to royalties we would be obligated to
pay under certain IRX-2 license agreements based on future revenues from any
future IRX-2 product sales. During the year ended December 31, 2021, the change
in fair value of the contingent consideration was a decrease to the liability of
$180,000, based on our third-party valuation analysis.

Loss on Sales of NTN Assets



The approximately $9.6 million loss on the sale of NTN assets during the year
ended December 31, 2021 was incurred upon completion of the Disposition, and
there was no comparable loss on sale for the year ended December 31, 2020.

Other Income (Expense), Net



                                                          Years Ended

December 31


                                              2021          2020         Change        % Change
Employer retention tax credit               $ 664,000                   $ 664,000            N/A
Income from Brooklyn PPP loan forgiveness     310,000             -       310,000            N/A
Other expenses, net                            (1,000 )           -        (1,000 )          N/A
Interest expense, net                         (74,000 )     (43,000 )     (31,000 )           72 %
Total other income (expense), net           $ 899,000     $ (43,000 )   $

942,000 -2191 %





During the year ended December 31, 2021, we recognized an increase in other
income, net of expense of $899,000, as compared to other expense of $43,000 for
the year ended December 31, 2020, primarily as a result of a withholding tax
refund related to the employer retention tax credit under the Coronavirus Aid,
Relief, and Economic Security Act administered by the U.S. Small Business
Administration, or the CARES Act, and the forgiveness of Brooklyn LLC's Paycheck
Protection Program loan, or the PPP Loan, which was primarily offset by interest
accrued on notes payable that we assumed as part of the acquisition of the
assets of IRX Therapeutics, LLC in 2018. Such notes bore interest at the rate of
14% and matured on December 31, 2021, on which date the Company repaid such
notes in full, including all accrued and unpaid interest thereon.

Provision for Income Taxes



Our income tax provision is for state income tax related to our U.S.
operations.  At December 31, 2021 and 2020 we had available net operating loss
("NOL") carryforwards of approximately $20,679,000 and $0 for federal income tax
purposes, respectively, of which $20,679,000 can be carried forward
indefinitely. We have available $1,397,000 and $747,000 state NOLs for the years
ended December 31, 2021 and 2020, respectively.  We also have foreign NOL
carryforwards of $4,759,000 and $0 for the years ended December 31, 2021 and
2020, respectively, which carry forward indefinitely. Section 382 of the
Internal Revenue Code ("IRC") imposes limits on the ability to use NOL
carryforwards that existed prior to a change in control to offset future taxable
income. Such limitations would reduce, potentially significantly, the gross
deferred tax assets disclosed in the table above related to the NOL
carryforwards.  We continue to disclose the NOL carryforwards at their original
amount in the table above as no potential limitation has been quantified. We
have also established a full valuation allowance for all deferred tax assets,
including the NOL carryforwards, since we could not conclude that we were more
likely than not able to generate future taxable income to realize these assets.


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Liquidity and Capital Resources



At December 31, 2021, we had cash and cash equivalents of approximately $17.0
million. During the second quarter of 2021, we entered into Purchase Agreements
with Lincoln Park, pursuant to which 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. Future sales of common
stock by us, if any, are subject to certain limitations, and may occur from time
to time, at our sole discretion. As of April 12, 2022, we had issued and sold
approximately 3,552,000 shares of common stock for total gross proceeds of $54.1
million and net proceeds of $52.0 million. For further information, see "-Recent
Developments-Purchase Agreements." On March 9, 2022, we consummated the PIPE
Transaction, resulting in net proceeds of approximately $11 million. see
"-Recent Developments-PIPE Transaction."  Pursuant to the purchase agreement
entered into in respect of the PIPE Transaction, we are prohibited from issuing
equity under the Purchase Agreements for a period of one-year following
consummation of the PIPE Transaction.

We have to date incurred operating losses, and we expect these losses to
increase in the future as we expand our product development programs and operate
as a publicly traded company.  Developing product candidates, conducting
clinical trials and commercializing products are expensive, and we will need to
raise substantial additional funds to achieve our strategic objectives. It will
likely be some years before we obtain the necessary regulatory approvals to
commercialize one or more of our product candidates. Based on our current
financial condition and forecasts of available cash, including as mentioned
above, we believe we do not have sufficient funds to fund our operations for the
next twelve months from the filing of the financial statements contained in this
Annual Report on Form 10-K. There can be no assurance that we will ever be in a
position to commercialize IRX-2 or any other product candidate we may acquire,
or that we will obtain any additional financing that we require in the future
or, even if such financing is available, that it will be obtainable on terms
acceptable to us.

In that regard, our future funding requirements will depend on many factors, including:

• 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.





We plan to raise additional funds to support our product development activities
and working capital requirements through the remaining availability under the
Second Purchase Agreement (to the extent we are permitted to use such
agreement), public or private equity offerings, debt financings, corporate
collaborations or other means. We may also seek governmental grants to support
our clinical trials and preclinical trials. Further, we may seek to raise
capital to fund additional product development efforts even if we have
sufficient funds for our planned operations. Any sale by us of additional equity
or convertible debt securities could result in dilution to our stockholders.
There can be no assurance that any such required additional funding will be
available to us at all or available on terms acceptable to us.

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Further, to the extent that we raise additional funds through collaborative
arrangements, it may be necessary to relinquish some rights to our technologies
or grant sublicenses on terms that are not favorable to us. If we are not able
to secure additional funding when needed, we may have to delay the commercialize
of our products, reduce the scope of or eliminate one or more research and
development programs, which could have an adverse effect on our business.

Sources of Funds

Equity Securities



On March 6, 2022, we entered into a Securities Purchase Agreement with the PIPE
Investor providing for the private placement (the "PIPE Transaction") to the
PIPE Investor of approximately 6,857,000 Units, each of which consisted of (i)
one share of our common stock (or, in lieu thereof, one Pre-Funded Warrant) and
(ii) one Common Warrant, resulting in net proceeds of approximately $11 million.
The PIPE Transaction closed on March 9, 2022. see "-Recent Developments-PIPE
Transaction."

On April 26, 2021, we and Lincoln Park Capital Fund, LLC, or Lincoln Park,
executed the First Purchase Agreement, pursuant to which we had the right, but
not the obligation, to sell to Lincoln Park, and Lincoln Park would be obligated
to purchase, up to $20.0 million of shares of Brooklyn's common stock, subject
to certain limitations. In consideration for Lincoln Park's entry into the First
Purchase Agreement, we issued Lincoln Park approximately 56,000 shares of common
stock. As of December 31, 2021, we issued and sold to Lincoln Park approximately
1,128,000 shares of common stock under the First Purchase Agreement for gross
proceeds of $20.0 million, and no further shares may be sold to Lincoln Park
under the First Purchase Agreement.

On May 26, 2021, we and Lincoln Park executed the Second Purchase Agreement,
pursuant to which we have the right from time to time, but not the obligation,
to sell to Lincoln Park, and Lincoln Park would be obligated to purchase, up to
$40.0 million of shares of Brooklyn's common stock, subject to certain
limitations. In consideration of Lincoln Park's entry into the Second Purchase
Agreement, we issued to Lincoln Park 50,000 shares of common stock. As of
December 31, 2021, Brooklyn had issued and sold approximately 2,424,000 shares
of common stock under the Second Purchase Agreement for total gross proceeds of
$34.1 million.  Pursuant to the Securities Purchase Agreement in respect of the
PIPE Transaction, we may not effect transactions under the Second Purchase
Agreement for a period of one year immediately following closing of the PIPE
Transaction.

For further information on the Purchase Agreements, 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.

Disposition.



On March 26, 2021, we completed the Disposition, in which we sold to eGames.com
our rights, title and interest in and to the assets relating to the business we
operated prior to the Merger under the name "NTN Buzztime, Inc." in exchange for
eGames.com's payment of a purchase price of $2.0 million and assumption of
specified liabilities relating to such pre-Merger business.

Brooklyn LLC PPP Loan.

On May 4, 2020, Brooklyn LLC issued a note in the principal amount of approximately $310,000 to Silicon Valley Bank evidencing the loan, or the Brooklyn LLC PPP Loan, Brooklyn LLC received under the Paycheck Protection Program, or PPP, of the CARES Act administered by the U.S. Small Business Administration. Brooklyn LLC PPP Loan had an interest rate of 1.0% per annum.


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Under the terms of the CARES Act, certain amounts of the Brooklyn LLC PPP Loan
could be forgiven if they were used for qualifying expenses as described in the
CARES Act. In June 2021, Brooklyn LLC submitted its loan forgiveness application
for the Brooklyn LLC PPP Loan, and in September 2021, the lender informed
Brooklyn LLC that the U.S Small Business Administration had approved the
forgiveness of 100% of the outstanding principal and interest of the Brooklyn
LLC PPP Loan. As of December 31, 2021, there was no outstanding principal
balance under the Brooklyn LLC PPP Loan.

Uses of Funds

Net Cash Used in Operating Activities.



Our operations used $23.5 million during the year ended December 31, 2021. Our
cash use for operating activities is influenced by the level of our net loss and
the amount of cash we invest in personnel and technology development to support
anticipated growth in our business.

License Obligations.



We are obligated to pay certain amounts to Factor pursuant to the license
agreement we entered into in April 2021, including $2.5 million in October 2021,
which was paid, and $3.5 million in October 2022.  The license agreement also
provides for milestone payments and royalties on the net sale of product
developed under the license agreement.

Lease Obligations.



We are obligated to pay approximately $750,000 per year for our facilities
leases, subject to annual increases and to a sharing of common area expenses
with other tenants in the building. The leases expire at varying times between
December 2026 and June 2028.

Acquisition.

On July 16, 2021, we used approximately $22,882,000 of cash as partial
consideration for the Acquisition, and we issued common stock valued at a total
of $102.0 million, based on a price of $14.5253 per share, for the remaining
portion of the Acquisition's purchase price.

Brooklyn PPP Loan.



On April 18, 2020, Brooklyn (then known as NTN Buzztime, Inc.) was granted a
loan, which we refer to as the Brooklyn PPP Loan, in the aggregate amount of
$1,625,000, pursuant to the PPP under the CARES Act. Under the terms of the PPP,
certain amounts of the Brooklyn PPP Loan could be forgiven if they were used for
qualifying expenses as described in the CARES Act. In October 2020 the U.S.
Small Business Administration approved the forgiveness of $1,093,000 of the
$1,625,000 principal amount of the Brooklyn PPP Loan, leaving a principal
balance of approximately $532,000, all of which, plus accrued and unpaid
interest, was due and, in accordance with the terms of the Merger Agreement,
paid by Brooklyn upon the closing of the Merger.

Critical Accounting Estimates



Our discussion and analysis of our financial condition and results of operations
are based on our consolidated financial statements, which have been prepared in
accordance with U.S. GAAP. The preparation of these consolidated financial
statements requires us to make judgments, estimates, and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the consolidated financial statements, as
well as the reported revenue and expenses during the reporting periods. We
continually evaluate our judgments, estimates and assumptions. We base our
estimates on the terms of underlying agreements, our expected course of
development, historical experience and other factors we believe are reasonable
based on the circumstances, the results of which form our management's basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates. We believe the following critical accounting estimates affect our
more significant judgments and estimates used in the preparation of our
consolidated financial statements.

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Use of Estimates



The preparation of consolidated financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect (a) the
reported amounts of assets and liabilities; (b) disclosure of contingent assets
and liabilities at the date of the consolidated financial statements; (c) the
reported amounts of revenues and expenses during the reporting period and (d)
the reported amount of the fair value of assets acquired in connection with
business combinations. Actual results could differ from those estimates. Our
significant estimates and assumptions include the recoverability and useful
lives of long-lived assets and the contingent consideration liability.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of
identifiable net assets acquired in the acquisition of IRX Therapeutics, Inc. in
November 2018 (the "IRX Acquisition"), which was accounted for as a business
combination. Goodwill is not amortized but is tested for impairment annually, or
if events occur or circumstances change that would reduce the fair value of a
reporting unit below its carrying value. Since management evaluates Brooklyn as
a single reporting unit, goodwill is tested for impairment at the entity level
by first performing a qualitative assessment to determine whether it is more
likely than not that the fair value of the entity is less than its carrying
value. Such qualitative factors include macroeconomic conditions, industry and
market considerations, cost factors, overall financial performance and other
relevant events.  If the entity does not pass the qualitative assessment, then
the entity's carrying value is compared to its fair value. Goodwill is
considered impaired if the carrying value of the entity exceeds its fair value.

Impairment of Long-Lived Assets



We review long-lived assets and certain identifiable assets for impairment
whenever circumstances and situations change such that there is an indication
that the carrying amounts may not be recovered. An impairment exists when the
carrying value of the long-lived asset is not recoverable and exceeds its fair
value.

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Fair Value of Financial Instruments



Fair value is defined as the price that would be received to sell an asset, or
paid to transfer a liability, in an orderly transaction between willing market
participants. A fair value hierarchy has been established for valuation inputs
that gives the highest priority to quoted prices in active markets for identical
assets or liabilities and the lowest priority to unobservable inputs. The fair
value hierarchy is as follows:

• 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.





The carrying amounts reported on the balance sheet for cash and cash
equivalents, accounts receivable, prepaid assets and other current assets,
accounts payable and accrued expenses, other current liabilities and other
liabilities approximate fair value based due to their short maturities. The
carrying value of loans payable approximates its fair market value because the
effective yield on this debt, which includes contractual interest rates as well
as other finance charges, is comparable to rates of returns for instruments of
similar credit risk.

Commitment and Contingencies

We follow ASC No.450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

Stock-Based Compensation



The Company recognizes stock-based compensation expense for equity awards
granted to employees, directors and certain consultants. The Company estimates
the fair value of stock options using the Black-Scholes option pricing model.
The fair value of stock options granted is recognized as expense over the
requisite service period. Stock-based compensation expense for share-based
payment awards is recognized using the straight-line single-option method.

Recent Accounting Pronouncements



In May 2021, the Financial Accounting Standards Board (the "FASB") issued
Accounting Standards Update ("ASU") 2021-04, Earnings Per Share (Topic 260),
Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock
Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity's Own
Equity (Subtopic 815-40): Issuer's Accounting for Certain Modifications or
Exchanges of Freestanding Equity-Classified Written Call Options. ASU 2021-04
addresses the accounting for certain modifications or exchanges of freestanding
equity-classified written call options. ASU 2021-04 is effective for fiscal
years beginning after December 15, 2021 (January 1, 2022 for us) and interim
periods within those fiscal years, with early adoption permitted. We do not
expect the adoption of this update to have a significant impact on our financial
statements.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842) - Lessors -
Certain Leases with Variable Lease Payments, which amends the lessor
classification guidance to introduce additional criteria when classifying leases
with variable lease payments that do not depend on a reference index or a rate.
This guidance is effective for annual periods beginning after December 15, 2021
(January 1, 2022 for us), with early adoption permitted. We do not expect the
adoption of this update to have a significant impact on its financial
statements.

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