CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements reflect future events, results, performance, prospects and opportunities, including statements related to our strategic plans, capital expenditures, industry trends and financial position of NTN Buzztime, Inc. and its subsidiaries. Forward-looking statements are based on information currently available to us and our current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of management. Words such as "expects," "anticipates," "could," "targets," "projects," "intends," "plans," "believes," "seeks," "estimates," "may," "will," "would," variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements which refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that may be difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, under the section entitled "Risk Factors," and in Item 1A of Part II of this Quarterly Report on Form 10-Q, and in other reports we file with the Securities and Exchange Commission from time to time. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.

OVERVIEW

We historically have operated principally through two operating divisions:
Entertainment and Hospitality. The Entertainment division generates revenue primarily from the Buzztime iTV Network which distributes an interactive television promotional game network to restaurants, sports bars, taverns and pubs, primarily in North America. Additionally, we generate revenue by selling advertising for distribution via our interactive television network.

The Hospitality division has been discontinued. It was comprised of NTN Wireless Communications, Inc. ("NTN Wireless") and NTN Software Solutions, Inc. ("Software Solutions"). In 2006, we determined that the operation of the Hospitality division was not a strategic fit with our core business and committed to a divestiture plan. These operations have been reclassified as discontinued operations for all periods presented. NTN Wireless provided revenues from producing and distributing guest and server paging systems to restaurants and other markets. Software Solutions developed and distributed customer management software to manage reservations and table service in restaurants. Software Solutions also provided professional help desk services and outsourced software development and support and maintenance services.

On March 30, 2007, we completed the sale of substantially all of the assets of NTN Wireless. On October 25, 2007, we sold certain intellectual property assets of Software Solutions pursuant to an Asset Purchase Agreement, and in a separate agreement with a customer, we discontinued the outsourced software development. Additionally, the Company completed the wind down of its professional help desk and support and maintenance services during the third quarter of 2008. We do not expect to incur any additional expenses related to the help desk and support and maintenance function in subsequent periods.

Restructuring of Operations

During the third quarter of 2008, we ceased our operations in the United Kingdom. The closure of operations involved the termination of six employees, relocation of nearly all assets to the United States and disposal of certain other assets. As of the date we ceased operations, UK operations accounted for less than 1% of the total subscriber sites.

The Entertainment Division

The out-of-home Buzztime iTV Network has engaged in business in the hospitality industry for 25 years as a promotional platform providing interactive entertainment to patrons in restaurants and sports bars. The iTV Network distributes a wide variety of engaging interactive multi-player games, including trivia quiz shows, play-along sports programming, casino-style and casual games to our Network. Patrons use our wireless game controllers, or Playmakers, to play along with the Buzztime games which are displayed on television screens. Buzztime players can compete with other players within their hospitality venue and also against players in other Network venues.

We target national and regional hospitality chains as well as local independent hospitality venues that desire a competitive point-of-difference to attract and retain customers. As of March 31, 2009, we had 3,446 United States Network subscribers and 318 Canadian subscribers. Approximately 29% of our Network subscribers come from leading national chains in the casual-dining restaurant segment such as Buffalo Wild Wings, TGI Friday's, Old Chicago and Damon's Grill.

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

We also generate revenue from distributing and licensing our Buzztime-branded content and related technology to consumer platforms, with a focus on interactive networks such as cable TV, satellite TV and mobile phones. Our distribution efforts focus on licensing real-time, mass-participation games such as trivia, head-to-head multi-player games such as Texas Hold'em and single-player games such as solitaire.

Our games are available as a premium monthly subscription service to Echostar DISH and Bell ExpressVu satellite customers in the U.S. and Canada, respectively. Revenue from our distribution division is derived primarily from license fees and royalties from third-party licensees who distribute Buzztime content to end-users, as well as from third-party development and production fees.

The Hospitality Division (Discontinued Operations)

NTN Wireless earned revenue from the sale of on-site wireless paging products primarily to restaurants but also hospitals, church and synagogue nurseries, salons, business offices and retail establishments in North America. In restaurants, these products were provided to customers while waiting for a table and activated to let them know when their table was ready, as well as to restaurant staff to alert them to certain issues, such as when hot food is ready to be served.

Software Solutions generated revenue from the licensing of proprietary seating management and reservation management systems software to restaurants, casinos and other venues. Software Solutions also provided professional help desk services and outsourced software development and support and maintenance services to Domino's Pizza and their franchisees and other quick service restaurant locations.

On March 30, 2007, we completed the sale of substantially all of the assets of NTN Wireless for $2.4 million and recognized a gain, net of tax, of approximately $396,000. On October 25, 2007, we sold certain intellectual property assets of Software Solutions pursuant to an Asset Purchase Agreement, and in a separate agreement with a customer, we discontinued the outsourced software development it was providing. The intellectual property sold constituted substantially all of the remaining operating assets of our Hospitality division, which had originally consisted of our Software Solutions and Wireless. We have accounted for our Hospitality division as a reportable segment but we have presented its operations as discontinued operations since the fourth quarter of 2006. We have completed the dissolution and do not anticipate any further costs related to the dissolution of the professional help desk and support and maintenance services.

Web Site Access to SEC Filings

We maintain an Internet website at www.buzztime.com. We make available free of charge on our Internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act and certain other filings as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Materials we file with the SEC may be read and copied at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet website at www.sec.gov that contains reports, proxy and information statements, and other information regarding our Company that we file electronically with the SEC.

CRITICAL ACCOUNTING POLICIES

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

We believe that the estimates, assumptions and judgments involved in the accounting policies described in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our most recent Annual Report on Form 10-K have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies.

RESULTS OF OPERATIONS

Our Hospitality division is classified as discontinued operations in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The operating results for these businesses have been separately classified and reported as discontinued operations in the condensed consolidated financial statements.

Results of Continuing Operations

Three months ended March 31, 2009 compared to the three months ended March 31, 2008

Continuing operations, which consists of the Entertainment division, generated a net loss of $255,000 for the three months ended March 31, 2009, compared to net loss of $2,283,000 for the three months ended March 31, 2008.

Revenue

Revenue from continuing operations decreased $986,000 or 14%, to $6,196,000 for
the three months ended March 31, 2009 from $7,182,000 for the three months ended
March 31, 2008, primarily due to a strategic reduction in pricing combined with
a slight reduction in site count due primarily to the closure of our UK
operations in the third quarter of 2008, and the bankruptcy of the Bennigan's
restaurant chain. Comparative site count information for Buzztime iTV Network is
as follows:

                                         Network subscribers
                                           As of March 31,
                                          2009           2008
                      United States         3,446         3,415
                      Canada                  318           316
                      United Kingdom            -            46
                      Total                 3,764         3,777

Direct Costs and Gross Margin

The following table compares the direct costs and gross margin from continuing
operations for 2009 and 2008:


                                              Three months ended
                                                   March 31,
                                             2009            2008
                Revenue                   $ 6,196,000     $ 7,182,000
                Direct costs                1,502,000       2,096,000
                Gross margin              $ 4,694,000     $ 5,086,000

                Gross margin percentage           76%             71%

Gross margin as a percentage of revenue improved to 76% for the three months ended March 31, 2009 compared to 71% in the prior year period. The five point increase in the gross margin percentage is primarily the result of a reduction in depreciation expense as equipment became fully depreciated and a decrease in fees paid to service providers as the number of onsite visits dropped by approximately 22% in the first quarter of 2009 compared to the first quarter of 2008.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $2,433,000 or 34%, to $4,832,000 for the three months ended March 31, 2009 from $7,265,000 for the three months ended March 31, 2008. Selling, general and administrative expenses decreased due to several factors. Salary expenses decreased $707,000 due to a planned reduction in headcount. Marketing expenses decreased $386,000 due to a change in our marketing strategy, including reducing direct mail campaigns, and scheduling of promotions and trade shows. Consulting services decreased $381,000 as we decreased our overall utilization of external consulting services. Software disposal expenses decreased $258,000 as the first quarter of 2008 included a $292,000 impairment charge. Other taxes decreased $132,000 primarily due to the finalization of the sales settlement with the state of Texas. Bad debt expense decreased $147,000 in 2009 compared to 2008 predominately due to recoveries of certain accounts previously written off.

Cost cutting initiatives were taken to reduce overhead spending in numerous areas. Specifically, travel and entertainment expenses decreased $84,000. General spend related to seminars, supplies, telephone, professional tax services and payroll processing fees decreased approximately $211,000.

Interest Income and Expense

Interest income decreased $16,000, to $43,000 for the three months ended March 31, 2009 from $59,000 in the prior year. The Company's average cash balance invested in interest bearing securities decreased which resulted in less interest income. Interest expense in 2009 remained consistent with the prior year period.

Income Taxes

We expect to incur minimal federal and state tax liability in 2009. We also expect to pay income taxes in Canada due to the profitability of NTN Canada. As a result, we recorded a tax provision of $31,000 for the three months ended March 31, 2009. This was a $10,000 decrease compared to the $41,000 provision for income taxes recorded for the three months ended March 31, 2008. We continue to provide a 100% valuation allowance against our deferred tax assets related to certain net operating losses as realization of such tax benefits is not assessed as more likely than not.

Results of Discontinued Operations

Three months ended March 31, 2009 compared to the three months ended March 31,
2008

The wind down of our discontinued operations was completed in the third quarter
of 2008; therefore, we have no activity to report for the three months ended
March 31, 2009. The operating results of the discontinued operations are as
follows for the three months ended March 31, 2008:

                                                            March 31,
                                                               2008
            Operating revenues                              $   17,000
            Operating expenses                                 308,000
            Operating loss                                  $ (291,000 )
            Other                                                    -
            Loss from discontinued operations, net of tax   $ (291,000 )

EBITDA - Consolidated Operations

Earnings before interest, taxes, depreciation and amortization, or EBITDA, is not intended to represent a measure of performance in accordance with accounting principles generally accepted in the United States (GAAP). Nor should EBITDA be considered as an alternative to statements of cash flows as a measure of liquidity. EBITDA is included herein because we believe it is a measure of operating performance that financial analysts, lenders, investors and other interested parties find to be a useful tool for analyzing companies like us that carry significant levels of non-cash depreciation and amortization charges in comparison to their GAAP earnings or loss.

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

                                                 Three months ended
                                             March 31,       March 31,
                                                2009            2008
             Net loss per GAAP               $ (255,000 )   $ (2,574,000 )
             Interest income, net               (41,000 )        (59,000 )
             Depreciation and amortization      620,000          841,000
             Income taxes                        31,000           41,000
             EBITDA                          $  355,000     $ (1,751,000 )

Our operations generated EBITDA levels as presented below:

                                            Three months ended March 31, 2009
                                                         Discontinued
                                    Entertainment         operations          Total
    Net loss per GAAP               $     (255,000 )     $           -      $ (255,000 )
    Interest income, net                   (41,000 )                 -         (41,000 )
    Depreciation and amortization          620,000                   -         620,000
    Income taxes                            31,000                   -          31,000
    EBITDA                          $      355,000       $           -      $  355,000




                                            Three months ended March 31, 2008
                                                        Discontinued
                                    Entertainment        operations          Total
   Net loss per GAAP               $    (2,283,000 )   $     (291,000 )   $ (2,574,000 )
   Interest income, net                    (59,000 )                -          (59,000 )
   Depreciation and amortization           841,000                  -          841,000
   Income taxes                             41,000                  -           41,000
   EBITDA                          $    (1,460,000 )   $     (291,000 )   $ (1,751,000 )

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2009, we had cash and cash equivalents of $3,311,000 compared to cash and cash equivalents of $3,362,000 as of December 31, 2008. We used $51,000 in cash in the three months ended March 31, 2009 compared to cash used of $2,419,000 in the three months ended March 31, 2008. The $2,368,000 decrease of cash used in the three months ended March 31, 2009 was driven predominately by the $2,319,000 decrease of our net loss. We have taken strong measures to reduce our use of cash. Those measures included reducing headcount through strategic reductions in our work force, renegotiated pricing with numerous vendors, decrease in the use of consultants where practical and a revision of our marketing plan designed to reduce costs while continuing to support our business plan.

During 2009, we intend to continue to rely upon our cash on hand and cash flow from operations to meet our liquidity needs. While we believe that the actions taken in 2008 and the first quarter of 2009 to reduce our operating costs, improve our gross profit margin and manage working capital should benefit us in 2009 and beyond, there can be no assurance in these uncertain economic times that those actions will be sufficient.

On May 11, 2009, we entered into an agreement with certain investors in Instant Access Media, LLC whereby they purchased two million four hundred nineteen thousand three hundred fifty five (2,419,355) shares of our Common Stock in a private placement raising $750,000 in additional working capital. That cash will be used to fund general working capital requirements as well as certain capital expenditures.

We believe existing cash and cash equivalents, together with funds generated from operations, will be sufficient to meet our operating cash requirements for at least the next 12 months. We have no debt obligations other than capital leases and we do not expect to incur debt in 2009. In the event that net cash provided by operating activities and cash on hand are not sufficient to meet future cash requirements, we may be required to reduce planned capital expenses, further reduce operational cash uses, sell assets or seek financing. Any actions we may undertake to reduce planned capital purchases, further reduce expenses, or generate proceeds from the sale of assets may be insufficient to cover shortfalls in available funds. If we require additional capital, we may be unable to secure additional financing on terms that are acceptable to us, or at all.

Working Capital

As of March 31, 2009, we had working capital (current assets in excess of
current liabilities) of $888,000 compared to $874,000 as of December 31,
2008. The following table shows our change in working capital from December 31,
2008 to March 31, 2009.

                                            Working Capital
                                                Increase
                                               (Decrease)
                                             (In thousands)
Working capital as of December 31, 2008     $            874
Changes in current assets:
Cash and cash equivalents                                (51 )
Accounts receivable, net of allowances                   (22 )
Investment available-for-sale                             18
Prepaid expenses and other current assets                 84
Total current assets                                      29
Changes in current liabilities:
Accounts payable                                        (263 )
Accrued expenses                                         (63 )
Sales tax payable                                        282
Accrued salaries                                          58
Accrued vacation                                          45
Income tax payable                                        13
Obligations under capital lease                          (69 )
Deferred revenue                                         (18 )
Total current liabilities                                (15 )
Net change in working capital                             14
Working capital as of March 31, 2009        $            888

Cash and cash equivalents decreased $51,000 as a result of $578,000 of cash provided by operating activities, $538,000 used in investing activities, $9,000 used in financing activities and a $82,000 effect of changes in exchange rates, primarily from converting Canadian Dollars to US Dollars.

Accounts payable increased $263,000 from $219,000 as of December 31, 2008 to $482,000 as of March 31, 2009. That increase was primarily attributable to the timing of annual recurring invoices relating to services that we receive throughout the year.

Cash Flows

Cash flows from operating, investing and financing activities, as reflected in
the accompanying Consolidated Statements of Cash Flows, are summarized as
follows (in thousands):

                                                           (In thousands)
                                                         For the year ended
                                                     March 31,        March 31,
                                                        2009            2008
Cash provided by (used in):
Operating activities                                 $      578      $    (1,238 )
Investing activities                                       (538 )           (902 )
Financing activities                                         (9 )             (2 )
Effect of exchange rates                                    (82 )           (277 )
Net decrease increase in cash and cash equivalents   $      (51 )    $    (2,419 )

Net cash from operating activities. We are dependent on cash flows from operations to meet our cash requirements. Net cash provided by operating activities was $578,000 during the three months ended March 31, 2009 compared to net cash used in operating activities of $1,238,000 for the three months ended March 31, 2008. The $1,816,000 improvement in cash provided by operations was primarily due to a significant decrease in our net loss. Our primary source of cash is cash we generate from customers. Cash received from customers decreased $865,000 to $6,322,000 for the three months ended March 31, 2009 from $7,187,000 in 2008 for the same period. The principal changes in non-cash items that affected operating cash flow for the three months ended March 31, 2009 when compared to the same period in 2008 included a $221,000 decrease in depreciation and amortization and a $192,000 change from a $231,000 loss on disposition of assets recorded in the three months ended March 31, 2008 compared to a $39,000 loss recorded in 2009.

Our largest use of cash is payroll and related costs. Payroll and related costs were $3,190,000 for the three months ended March 31, 2009 compared to $3,925,000 for the same period in 2008. This is the result of our strategic reductions in work force in 2008 and the first quarter of 2009.

Cash used by discontinued operations was $360,000 for the three months ended March 31, 2008 compared to $0 cash used for discontinued operations for the same period in 2009. The reduction in cash used by discontinued operations was due to . . .