NeuLion Reports Increased Revenue and Fourth Consecutive Positive Quarter

T.NLN

NeuLion Reports $10.0M in Revenue and $0.2M in Non-GAAP Adjusted EBITDA in Q3 2013

NeuLion Reports $10.0M in Revenue and $0.2M in Non-GAAP Adjusted EBITDA in Q3 2013

PLAINVIEW, NY--(Marketwired - November 07, 2013) -  NeuLion, Inc. (TSX: NLN), a leading enabler and provider of live and on-demand content to Internet-connected devices, today announced financial results for the three and nine months ended September 30, 2013 (all amounts are in U.S. dollars). 

For the Three Months Ended September 30, 2013:

  • Revenue was $10.0 million for the three months ended September 30, 2013, as compared to $9.3 million for the three months ended September 30, 2012, an increase of $0.7 million, or 7%.
  • Cost of revenue, as a percentage of revenue, exclusive of depreciation and amortization, improved to 26% for the three months ended September 30, 2013, as compared to 31% for the three months ended September 30, 2012.
  • Operating loss was $(1.5) million for the three months ended September 30, 2013, as compared to $(2.1) million for the three months ended September 30, 2012, an improvement of $0.6 million.
  • Non-GAAP Adjusted EBITDA (as defined below) was $0.2 million for the three months ended September 30, 2013, an improvement of $0.8 million, as compared to $(0.6) million in the same period a year ago, and Consolidated Net Loss improved by $0.4 million as compared to the same period a year ago.

For the Nine Months Ended September 30, 2013:

  • Revenue was $33.0 million for the nine months ended September 30, 2013, as compared to $28.5 million for the nine months ended September 30, 2012, an increase of $4.5 million, or 16%.
  • Cost of revenue, as a percentage of revenue, exclusive of depreciation and amortization, improved to 28% for the nine months ended September 30, 2013, as compared to 37% for the nine months ended September 30, 2012.
  • Operating loss was $(2.8) million for the nine months ended September 30, 2013, as compared to $(8.9) million for the nine months ended September 30, 2012, an improvement of $6.1 million.
  • Non-GAAP Adjusted EBITDA (as defined below) was $1.3 million for the nine months ended September 30, 2013, an improvement of $5.4 million, as compared to $(4.1) million in the same period a year ago, and Consolidated Net Loss improved by $5.8 million as compared to the same period a year ago.

"NeuLion delivered strong financial results for the third quarter of 2013, which was especially impressive given the current seasonality of the business," said Nancy Li, Chief Executive Officer of the Company. "We are very excited to see increased demand across a wide variety of industries as consumption of digital content through Internet-connected devices continues to increase. We strive to drive innovation and continue to be a leader in this industry."

Third Quarter Operational Highlights:

Professional Sports
Interactive video experience delivering live and on-demand video

  • Launched new versions of NFL Game Pass, NFL Game Rewind and NFL Audio Pass with enhanced features for the start of the 2013 - 2014 football season. 
  • Streamed the Rogers Cup in Canada live to give fans unlimited access to every serve, volley and smash throughout the tennis tournament.
  • Extended partnership with the American Hockey League and delivered all new AHL Live website for all 1,200 live games for fans on multiple devices, including iPad, iPhone and Android. 
  • Reached another technology milestone with the delivery of the NeuLion Sports Platform Version 5.0.

College Sports
Athletic portal and online destination for college fans

  • Created and launched all-new, conference-wide digital networks for America East and the Atlantic 10 Conferences. Both designed to expand the content and its reach with live and on-demand streaming of events, interviews, featured stories and highlights; available on multiple devices.
  • Launched and redesigned over 20 NeuLion partners' official college athletic and conference websites for the start of the fall 2013 sports season.
  • Started the 2013-2014 NCAA college season with over 175 schools, which we expect collectively to stream over 18,000 live collegiate events.

TV Everywhere
Multi-device content delivery

  • Launched version 3.0 of BTN2Go, featuring the ability to choose among live game, archived games and individual highlight packages, enhanced social media sharing on Facebook and Twitter, and an enhanced fan experience on mobile and tablet devices.
  • Partnered with Rogers to deliver NFL Sunday Ticket Online in Canada as part of the Rogers Anyplace TV service that includes access to all 206 NFL games live online for Rogers Cable customers who have subscribed to the NFL Sunday Ticket Package.
  • Extended partnership with Canadian Broadcasting Corporation to clip highlights and deliver them to mobile and Xbox devices during Hockey Night in Canada.

Financial Results for the Three Months Ended September 30, 2013:

Revenue was $10.0 million, as compared to $9.3 million for the three months ended September 30, 2012, an increase of $0.7 million, or 7%.

Cost of revenue, exclusive of depreciation and amortization, was $2.6 million (26% of revenue), as compared to $2.9 million (31% of revenue) for the three months ended September 30, 2012, marking a period-over-period improvement of $0.3 million, or 10%.

Operating loss was $(1.5) million, as compared to $(2.1) million for the three months ended September 30, 2012, an improvement of $0.6 million.

Consolidated net loss was $1.7 million, which includes $1.5 million of non-cash and/or non-operating charges, resulting in Non-GAAP Adjusted EBITDA of $0.2 million, as compared to a consolidated net loss of $2.1 million, which includes $2.8 million of non-cash and/or non-operating charges, resulting in Non-GAAP Adjusted EBITDA of $(0.6) million for the three months ended September 30, 2012, marking a period-over-period improvement in Non-GAAP Adjusted EBITDA of $0.8 million.

Financial Results for the Nine Months Ended September 30, 2013:

Revenue was $33.0 million, as compared to $28.5 million for the nine months ended September 30, 2012, an increase of $4.5 million, or 16%.

Cost of revenue, exclusive of depreciation and amortization, was $9.3 million (28% of revenue), as compared to $10.5 million (37% of revenue) for the nine months ended September 30, 2012, marking a period-over-period improvement of $1.2 million, or 11%.

Operating loss was $(2.8) million, as compared to $(8.9) million for the nine months ended September 30, 2012, an improvement of $6.1 million.

Consolidated net loss was $3.3 million, which includes $2.1 million of non-cash and/or non-operating charges, resulting in Non-GAAP Adjusted EBITDA of $1.3 million, as compared to a consolidated net loss of $9.2 million, which includes $5.1 million of non-cash and/or non-operating charges, resulting in Non-GAAP Adjusted EBITDA of $(4.1) million for the nine months ended September 30, 2012, marking a period-over-period improvement in Non-GAAP Adjusted EBITDA of $5.4 million.

As of September 30, 2013, we had $21.3 million in cash and cash equivalents.

Use of Non-GAAP Measures

We report Non-GAAP Adjusted EBITDA because it is a key measure used by management to evaluate our results and make strategic decisions about our Company, including potential acquisitions. Non-GAAP Adjusted EBITDA represents consolidated net loss before interest, income taxes, depreciation and amortization, stock-based compensation, discounts on convertible note and foreign exchange gain/loss. This measure does not have any standardized meaning prescribed by U.S. generally accepted accounting principles (U.S. GAAP) and therefore is unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with U.S. GAAP.

The below table reconciles our Non-GAAP Adjusted EBITDA to its most directly comparable U.S. GAAP measure, consolidated net loss:

                         
Consolidated Statement of Operations Reconciliation:  
                         
    Three months ended     Nine months ended  
    September 30,     September 30,  
    2013     2012     2013     2012  
    $     $     $     $  
                         
Consolidated net loss on a GAAP basis   (1,749,864 )   (2,186,704 )   (3,350,325 )   (9,216,723 )
                         
Depreciation and amortization   990,083     1,144,043     2,987,272     3,564,861  
Stock-based compensation   717,765     350,865     1,072,601     1,265,734  
Discount on convertible note   0     0     233,769     0  
Income taxes   160,000     62,000     265,290     279,000  
Interest and foreign exchange   40,650     11,563     94,300     37,924  
                         
Non-GAAP Adjusted EBITDA   158,634     (618,233 )   1,302,907     (4,069,204 )
                         

About NeuLion

NeuLion, Inc. (TSX: NLN) offers the true end-to-end solution for delivering live and on-demand content to Internet-enabled devices. NeuLion enables content owners and distributors, cable operators and telecommunications companies to capitalize on the massive consumer demand for viewing video content on PCs, smartphones, iPads and other similar devices. NeuLion's customers include major entertainment, sports, global content and news companies. NeuLion is based in Plainview, NY. For more information about NeuLion, visit www.neulion.com.

Forward-Looking Statements
Certain statements herein are forward-looking statements and represent NeuLion's current intentions in respect of future activities. Forward-looking statements can be identified by the use of the words "will," "expect," "seek," "anticipate," "believe," "plan," "estimate," "expect," and "intend" and statements that an event or result "may," "will," "can,""should," "could," or "might" occur or be achieved and other similar expressions. These statements, in addressing future events and conditions, involve inherent risks and uncertainties. Although the forward-looking statements contained in this release are based upon what management believes to be reasonable assumptions, NeuLion cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and NeuLion assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law. Many factors could cause NeuLion's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including: our ability to realize some or all of the anticipated benefits of our partnerships; general economic and market segment conditions; our customers' subscriber levels and financial health; our ability to pursue and consummate acquisitions in a timely manner; our continued relationships with our customers; our ability to negotiate favorable terms for contract renewals; competitor activity; product capability and acceptance rates; technology changes; regulatory changes; foreign exchange risk; interest rate risk; and credit risk. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. A more detailed assessment of the risks that could cause actual results to materially differ from current expectations is contained in the "Risk Factors" section of NeuLion's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which is available on www.sec.gov and filed on www.sedar.com.

   
   
NEULION, INC.  
   
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Expressed in U.S. dollars, unless otherwise noted)  
   
    September 30,     December 31,  
    2013     2012  
    (unaudited)        
    $     $  
             
ASSETS            
Current            
Cash and cash equivalents   21,293,816     11,108,107  
Accounts receivable, net of allowance for doubtful accounts of $118,358 and $85,882   3,789,115     4,193,949  
Other receivables   282,738     348,891  
Inventory   356,729     416,541  
Prepaid expenses and deposits   1,375,192     1,185,051  
Due from related parties   271,439     899,967  
Total current assets   27,369,029     18,152,506  
Property, plant and equipment, net   3,446,623     3,446,648  
Intangible assets, net   2,067,975     4,015,301  
Goodwill   11,327,626     11,327,626  
Other assets   98,326     161,913  
Total assets   44,309,579     37,103,994  
             
LIABILITIES AND EQUITY            
Current            
Accounts payable   16,591,677     9,813,237  
Accrued liabilities   5,528,629     4,766,668  
Due to related parties   -     12,282  
Deferred revenue   7,621,129     5,715,102  
Convertible note, net of discount   -     320,560  
Total current liabilities   29,741,435     20,627,849  
Long-term deferred revenue   691,164     1,134,075  
Other long-term liabilities   293,442     357,852  
Deferred tax liability   1,169,422     911,978  
Total liabilities   31,895,463     23,031,754  
             
Redeemable preferred stock, net (par value: $0.01; authorized: 50,000,000; issued and outstanding: 28,089,083)            
  Class 3 Preference Shares (par value: $0.01; authorized, issued and outstanding: 17,176,818)   10,000,000     10,000,000  
  Class 4 Preference Shares (par value: $0.01; authorized, issued and outstanding: 10,912,265)   4,917,252     4,894,683  
Total redeemable preferred stock   14,917,252     14,894,683  
             
Stockholders' deficit            
Common stock (par value: $0.01; authorized: 300,000,000; issued and outstanding: 168,321,684 and 164,207,147, respectively)   1,683,217     1,642,072  
Additional paid-in capital   84,766,624     83,138,137  
Promissory notes receivable   (209,250 )   (209,250 )
Accumulated deficit   (88,743,727 )   (85,393,402 )
Total stockholders' deficit   (2,503,136 )   (822,443 )
Total liabilities and stockholders' deficit   44,309,579     37,103,994  
             
             
             
NEULION, INC.  
   
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND  
COMPREHENSIVE LOSS  
(unaudited)  
(Expressed in U.S. dollars, unless otherwise noted)  
   
    Three months     Nine months  
    ended     ended  
    September 30,     September 30,  
    2013     2012     2013     2012  
    $     $     $     $  
                                 
Revenue                                
  Services revenue     9,867,846       8,806,275       32,299,003       26,839,762  
  Equipment revenue     159,020       552,444       664,042       1,604,399  
      10,026,866       9,358,719       32,963,045       28,444,161  
Costs and expenses                                
  Cost of services revenue, exclusive of depreciation and amortization shown separately below     2,556,131       2,439,307       8,844,715       9,163,829  
  Cost of equipment revenue     91,296       452,475       438,515       1,309,394  
  Selling, general and administrative, including stock-based compensation     6,051,191       5,826,413       17,989,383       18,335,942  
  Research and development     1,887,379       1,609,622       5,460,126       4,969,934  
  Depreciation and amortization     990,083       1,144,043       2,987,272       3,564,861  
      11,576,080       11,471,860       35,720,011       37,343,960  
Operating loss     (1,549,214 )     (2,113,141 )     (2,756,966 )     (8,899,799 )
                                 
Other income (expense)                                
  Loss on foreign exchange     (42,744 )     (13,312 )     (89,949 )     (43,750 )
  Interest, net     2,094       1,749       (4,351 )     5,826  
  Amortization of discount on convertible note     -       -       (233,769 )     -  
      (40,650 )     (11,563 )     (328,069 )     (37,924 )
Net and comprehensive loss before income taxes     (1,589,864 )     (2,124,704 )     (3,085,035 )     (8,937,723 )
  Income taxes     (160,000 )     (62,000 )     (265,290 )     (279,000 )
Net and comprehensive loss     (1,749,864 )     (2,186,704 )     (3,350,325 )     (9,216,723 )
                                 
Net loss per weighted average number of shares outstanding - basic and diluted   $ (0.01 )   $ (0.02 )   $ (0.02 )   $ (0.07 )
                                 
Weighted average number of shares outstanding - basic and diluted     167,842,903       142,423,319       165,698,517       141,159,175  
                                 
                                 
                                 
NEULION, INC.  
   
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(unaudited)  
(Expressed in U.S. dollars, unless otherwise noted)  
   
    Three months     Nine months  
    ended     ended  
    September 30,     September 30,  
    2013     2012     2013     2012  
    $     $     $     $  
                         
OPERATING ACTIVITIES                        
                         
Net loss   (1,749,864 )   (2,186,704 )   (3,350,325 )   (9,216,723 )
Adjustments to reconcile net loss to net cash provided by operating activities                        
  Depreciation and amortization   990,083     1,144,043     2,987,272     3,564,861  
  Amortization of discount on convertible note   -     -     233,769     -  
  Stock-based compensation   717,765     350,865     1,072,601     1,265,734  
  Income taxes   160,000     62,000     257,444     279,000  
                         
Changes in operating assets and liabilities                        
  Accounts receivable   (987,453 )   (684,258 )   404,834     639,524  
  Inventory   (49,114 )   109,330     59,812     152,542  
  Prepaid expenses, deposits and other assets   (386,742 )   (129,452 )   (126,554 )   21,930  
  Other receivables   67,666     (123,102 )   66,153     (128,795 )
  Due from related parties   474,003     255,230     628,528     (405,192 )
  Accounts payable   10,064,504     6,778,547     6,778,448     5,062,273  
  Accrued liabilities   444,788     351,431     825,552     (296,497 )
  Deferred revenue   2,814,583     1,838,064     1,463,116     8,011  
  Long-term liabilities   (20,450 )   (12,948 )   (64,410 )   (55,354 )
  Due to related parties   (13,467 )   4,829     (12,282 )   1,752  
Cash provided by operating activities   12,526,302     7,757,875     11,223,958     893,066  
                         
INVESTING ACTIVITIES                        
Purchase of property, plant and equipment   (640,998 )   (422,483 )   (1,039,929 )   (830,718 )
Cash used in investing activities   (640,998 )   (422,483 )   (1,039,929 )   (830,718 )
                         
FINANCING ACTIVITIES                        
Exercise of broker warrants   840     -     1,680     -  
Convertible note   -     545,628     -     545,628  
Private placement, net   -     4,299,932     -     4,299,932  
Cash provided by financing activities   840     4,845,560     1,680     4,845,560  
                         
Net increase in cash and cash equivalents, during the period   11,886,144     12,180,952     10,185,709     4,907,908  
Cash and cash equivalents, beginning of period   9,407,672     5,073,838     11,108,107     12,346,882  
Cash and cash equivalents, end of period   21,293,816     17,254,790     21,293,816     17,254,790  

Press Contact:
Chelsea Nunn
516-622-8381
chelsea.nunn@neulion.com

Investor Relations Contact:
Art McCarthy
516-622-8346
art.mccarthy@neulion.com

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