SOURCE: NeuLion, Inc.

NeuLion, Inc.

March 08, 2013 07:22 ET

NeuLion Reports First Positive Quarterly Results

NeuLion Reports $0.8M in Non-GAAP Adjusted EBITDA in Q4 2012

PLAINVIEW, NY--(Marketwire - Mar 8, 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 months and year ended December 31, 2012 (all amounts are in U.S. dollars). 

For the three months ended December 31, 2012:

  • Non-GAAP Adjusted EBITDA (as defined below) was $0.8 million, an improvement of $1.7 million, as compared to the same period a year ago, and Consolidated Net Loss improved by $2.0 million, or 69%, as compared to the same period a year ago.

  • Cost of revenue, exclusive of depreciation and amortization, as a percentage of total revenue, improved to 31% in the fourth quarter of 2012, as compared to 42% in the fourth quarter of 2011.

  • Revenue was $10.5 million in the fourth quarter of 2012, as compared to $10.7 million in the fourth quarter of 2011, a decrease of $0.2 million, or 2%.

For the year ended December 31, 2012:

  • Non-GAAP Adjusted EBITDA (as defined below) was $(3.3) million, an improvement of $3.6 million, or 52%, as compared to the same period a year ago, and Consolidated Net Loss improved by $4.3 million, or 30%, as compared to the same period a year ago.

  • Cost of revenue, exclusive of depreciation and amortization, as a percentage of total revenue, improved to 35% in fiscal 2012, as compared to 41% in fiscal 2011.

  • Revenue was $39.0 million in fiscal 2012, as compared to $39.7 million in fiscal 2011, a decrease of $0.7 million, or 2%.

"Management is extremely pleased with the positive results in the fourth quarter. The Company's substantial improvement in quarter-over-quarter Non-GAAP Adjusted EBITDA was a result of our continued emphasis on closely monitoring costs and de-emphasizing non-core business initiatives," said Nancy Li, Chief Executive Officer of the Company. "We continue to build on our unique strengths in the new and evolving IPTV marketplace. Our customers' recognition of NeuLion's technological leadership in this rapidly expanding field has put NeuLion at the forefront of online video delivery. We fully expect our customers' requirements, and NeuLion's role, to continue to grow as the adoption of TV over the Internet accelerates."

Fourth Quarter Operational Highlights:

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

  • Delivered live and on-demand streaming of select games throughout the 2013 International Ice Hockey Federation World Junior Championship Tournament from Russia.
  • Partnered with the Barclays Center to live stream the Brooklyn Hoops Holiday Invitational; the first ever live video of a sporting event at Barclays.
  • Launched the Portland Trailblazers live streaming experience for fans to watch all game broadcasts.
  • Extended partnership with the Professional Bowlers Association for additional multi-year terms to power PBA Xtra Frames.
  • The American Hockey League implemented NeuLion's Video Replay System into their officiating process for the start of the 2012-2013 season to allow referees to review goals during live games.

College Sports
Athletic portal and online destination for fans

  • Launched newly designed Official Athletics website for the Oregon Ducks, goducks.com, bringing video to the forefront.
  • Designed brand new CAA Gameday, a one stop digital destination for schedules, scores, videos, live stats and more across every school in the Colonial Athletic Association.
  • Partnered with Horizon Media to deliver Capital One's 2013 Mascot Challenge Campaign across NeuLion NCAA sites.
  • Addressed the Sports Business Journal Intercollegiate Athletics Forum audience on the topic of maximizing revenue through intellectual property.

TV Everywhere
Multi-device content delivery

  • Partnered with the WWE to deliver the Rolling Stones 50th Anniversary Concert on multiple devices worldwide.
  • Launched UVideos with Univision Communications, a bilingual digital network for Hispanic America offering one of the most fully integrated, comprehensive social experiences available in any language in the U.S.
  • Partnered with Shaw Communications to deliver Shaw Go NFL Sunday Ticket on iPad. 
  • Powered an enhanced V.2 release of BTN2Go with more HD video, live stats, dynamic ad insertion and social media integration on multiple devices.

Financial Results for the Three Months Ended December 31, 2012:

Revenue was $10.5 million, as compared to $10.7 million for the three months ended December 31, 2011, a decrease of $0.2 million, or 2%.

Cost of revenue, exclusive of depreciation and amortization, was $3.2 million (31% of revenue), as compared to $4.5 million (42% of revenue) for the three months ended December 31, 2011, marking a period-over-period improvement of 11%.

Consolidated net loss was $0.9 million, which includes $1.7 million of non-cash and/or non-operating charges, netting a Non-GAAP Adjusted EBITDA of $0.8 million, as compared to a consolidated net loss of $2.9 million, which includes $2.0 million of non-cash and/or non-operating charges, netting a Non-GAAP Adjusted EBITDA of $(0.9) million for the three months ended December 31, 2011, marking a period-over-period improvement in Non-GAAP Adjusted EBITDA of $1.7 million.

Financial Results for the Year Ended December 31, 2012:

Revenue was $39.0 million, as compared to $39.7 million for the year ended December 31, 2011, a decrease of $0.7 million, or 2%.

Cost of revenue, exclusive of depreciation and amortization, was $13.7 million (35% of revenue), as compared to $16.4 million (41% of revenue) for the year ended December 31, 2011, marking a year-over-year improvement of 6%.

Consolidated net loss was $10.1 million, which includes $6.8 million of non-cash and/or non-operating charges, netting a Non-GAAP Adjusted EBITDA of $(3.3) million, as compared to a consolidated net loss of $14.4 million, which includes $7.5 million of non-cash and/or non-operating charges, netting a Non-GAAP Adjusted EBITDA of $(6.9) million for the year ended December 31, 2011, marking a year-over-year improvement in Non-GAAP Adjusted EBITDA of $3.6 million, or 52%. 

As of December 31, 2012, we had $11.1 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, investment income, loss on dissolution of majority-owned subsidiary 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:                    
    Years ended     Three months ended  
    December 31,     December 31,  
    2012     2011     2012     2011  
    $     $     $     $  
                         
Consolidated net loss on a GAAP basis   (10,078,764 )   (14,373,030 )   (862,040 )   (2,934,194 )
                         
Depreciation and amortization   4,407,474     5,367,289     842,614     1,194,688  
Stock-based compensation   1,627,231     1,647,422     361,497     472,296  
Discount on convertible note   77,922     0     77,922     0  
Loss on dissolution of majority-owned subsidiary   0     227,402     0     130,197  
Deferred income taxes   612,884     299,094     333,884     299,094  
Investment income and foreign exchange gain (loss)   54,918     (44,883 )   16,992     (42,841 )
                         
Non-GAAP Adjusted EBITDA   (3,298,335 )   (6,876,706 )   770,869     (880,760 )
                         

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. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. 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. 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.  
   
CONSOLIDATED BALANCE SHEETS  
(Expressed in U.S. dollars, unless otherwise noted)  
             
    As of December 31,  
             
    2012     2011  
    $     $  
             
ASSETS            
Current            
Cash and cash equivalents   11,108,107     12,346,882  
Accounts receivable, net   4,193,949     3,494,077  
Other receivables   348,891     309,764  
Inventory   416,541     797,436  
Prepaid expenses and deposits   1,185,051     1,189,311  
Due from related parties   899,967     734,452  
Total current assets   18,152,506     18,871,922  
Property, plant and equipment, net   3,446,648     4,294,476  
Intangible assets, net   4,015,301     6,609,465  
Goodwill   11,327,626     11,327,626  
Other assets   161,913     226,266  
Total assets   37,103,994     41,329,755  
             
LIABILITIES AND EQUITY            
Current            
Accounts payable   9,813,237     9,597,359  
Accrued liabilities   4,766,668     5,314,308  
Due to related parties   12,282     13,298  
Deferred revenue   5,715,102     6,624,693  
Convertible note, net of discount   320,560     --  
Total current liabilities   20,627,849     21,549,658  
Long-term deferred revenue   1,134,075     1,050,495  
Other long-term liabilities   357,852     432,159  
Deferred tax liability   911,978     299,094  
Total liabilities   23,031,754     23,331,406  
             
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: 17,176,818; issued and outstanding: 17,176,818)   10,000,000     10,000,000  
  Class 4 Preference Shares (par value: $0.01; authorized; 10,912,265; issued and outstanding: 10,912,265)   4,894,683     4,864,591  
Total redeemable preferred stock   14,894,683     14,864,591  
             
Stockholders' equity (deficit)            
Common stock (par value: $0.01; authorized: 300,000,000; issued and outstanding: 164,207,147 and 140,012,310, respectively)   1,642,072     1,400,122  
Additional paid-in capital   83,138,137     77,257,524  
Promissory notes receivable   (209,250 )   (209,250 )
Accumulated deficit   (85,393,402 )   (75,314,638 )
Total shareholders' (deficit) equity   (822,443 )   3,133,758  
Total liabilities and shareholders' equity (deficit)   37,103,994     41,329,755  
             
             
             
NEULION, INC.  
   
CONSOLIDATED STATEMENTS OF OPERATIONS AND  
COMPREHENSIVE LOSS  
(Expressed in U.S. dollars, unless otherwise noted)  
             
    Years ended December 31,  
             
    2012     2011  
    $     $  
                 
Revenue                
  Services revenue     37,178,431       36,612,650  
  Equipment revenue     1,804,495       3,053,732  
      38,982,926       39,666,382  
                 
Costs and Expenses                
  Cost of services revenue, exclusive of depreciation and amortization shown separately below     12,280,658       13,985,258  
  Cost of equipment revenue     1,413,760       2,391,212  
  Selling, general and administrative, including stock-based compensation     23,541,296       25,612,668  
  Research and development     6,672,778       6,201,372  
  Depreciation and amortization     4,407,474       5,367,289  
      48,315,966       53,557,799  
Operating loss     (9,333,040 )     (13,891,417 )
                 
Other income (expense)                
  Gain (loss) on foreign exchange     (56,244 )     12,985  
  Investment income, net     1,326       31,898  
  Discount on convertible note     (77,922 )     --  
  Loss on dissolution of majority-owned subsidiary     --       (227,402 )
      (132,840 )     (182,519 )
Consolidated net and comprehensive loss before income taxes     (9,465,880 )     (14,073,936 )
  Deferred income taxes     (612,884 )     (299,094 )
Consolidated net and comprehensive loss     (10,078,764 )     (14,373,030 )
  Net loss attributable to non-controlling interest     --       21,485  
Net and comprehensive loss attributable to controlling interest     (10,078,764 )     (14,351,545 )
  Adjustment to the carrying amount of redeemable preferred stock     --       153,233  
Net and comprehensive loss attributable to NeuLion, Inc. common stockholders     (10,078,764 )     (14,198,312 )
                 
Net loss per weighted average number of shares of common stock outstanding - basic and diluted   $ (0.07 )   $ (0.10 )
                 
Weighted average number of shares of common stock outstanding - basic and diluted     146,899,685       139,610,112  
                 
                 
                 
NEULION, INC.  
   
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Expressed in U.S. dollars, unless otherwise noted)  
             
    Years ended December 31,  
             
    2012     2011  
    $     $  
             
OPERATING ACTIVITIES            
Consolidated net loss   (10,078,764 )   (14,373,030 )
Adjustments to reconcile net loss to cash used in operating activities            
  Depreciation and amortization   4,407,474     5,367,289  
  Discount on convertible note   77,922     --  
  Stock-based compensation   1,627,231     1,647,422  
  Loss on dissolution of majority-owned subsidiary   --     227,402  
  Deferred income taxes   612,884     299,094  
             
Changes in operating assets and liabilities            
  Accounts receivable   (699,872 )   (1,199,419 )
  Inventory   380,895     105,578  
  Prepaid expenses, deposits and other assets   68,613     (145,778 )
  Other receivables   (39,127 )   (13,610 )
  Due from related parties   (165,515 )   527,324  
  Accounts payable   215,878     3,449,839  
  Accrued liabilities   (524,327 )   (92,865 )
  Deferred revenue   (684,793 )   694,434  
  Long-term liabilities   (74,307 )   (63,116 )
  Due to related parties   (1,016 )   13,272  
Cash used in operating activities   (4,876,824 )   (3,556,164 )
             
INVESTING ACTIVITIES            
Purchase of property, plant and equipment, net   (1,106,700 )   (1,875,825 )
Cash used in investing activities   (1,106,700 )   (1,875,825 )
             
FINANCING ACTIVITIES            
Convertible note   545,628     --  
Private placement, net   4,199,121     4,849,546  
Cash provided by financing activities   4,744,749     4,849,546  
Net decrease in cash and cash equivalents during the year   (1,238,775 )   (582,443 )
Cash and cash equivalents, beginning of year   12,346,882     12,929,325  
Cash and cash equivalents, end of year   11,108,107     12,346,882