SYS-CON MEDIA Authors: Xenia von Wedel, Peter Silva, Glenn Rossman, Ava Smith, Elizabeth White

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NeuLion Reports First Quarter Net Income of $1.1 Million

2nd Consecutive Quarter of Net Income; 6th Consecutive Quarter of Positive Adjusted EBITDA

PLAINVIEW, NY -- (Marketwired) -- 05/08/14 -- NeuLion, Inc. (TSX: NLN)

First Quarter Year-Over-Year Highlights

  • Revenue increased 13.4% to $13.5 million versus $11.9 million
  • Non-GAAP Adjusted Gross Margin expanded to 74% versus 71%
  • Non-GAAP Adjusted EBITDA doubled to $2.0 million versus $1.0 million
  • Consolidated Net Income was $1.1 million versus $(0.3) million

NeuLion, Inc. (TSX: NLN), a leading enabler and provider of live and on-demand content to Internet-connected devices, today reported financial results for the quarter ended March 31, 2014.

Management Commentary

"NeuLion's first quarter results demonstrate the significant leverage potential of our business model and continued success in winning new customers and driving usage of our interactive digital networks," said Nancy Li, chief executive officer. "On a 13% increase in revenue, we further expanded non-GAAP Adjusted Gross Margin and grew non-GAAP Adjusted EBITDA 100%. Of note, consolidated net income for the quarter matched the fourth quarter at $1.1 million even though revenue was slightly lower sequentially in this seasonally slower quarter."

Concluded Li, "Known in the marketplace for innovation, quality service, our proven technology platform and marquee customer base, NeuLion is in an excellent position to continue generating top-line growth and scaling our business as adoption of interactive digital networks rapidly expands."

First Quarter Operational Highlights

Professional Sports

  • Rolled out a brand new, subscription-based digital network for the UFC called "Fight Pass" that includes an expanded menu of live UFC Fight Nights from outside North America as well as live behind the scenes programming, original programs, in-depth interviews, and complete access to the biggest and best fights from the world's most extensive MMA library.
  • Rogers, a NeuLion customer, has entered into a 12-year agreement with the NHL, giving it national rights to all NHL games on every platform. This multi-platform deal takes advantage of the digital revolution with NHL Game Center Live, powered and delivered by NeuLion, while being exclusively sold and distributed by Rogers in Canada.

College Sports

  • Formed a strategic partnership with USA TODAY Sports Media Group for college sports content including shared sales of digital advertising sponsorships and joint production and syndication of content across NeuLion's sports network and Gannett's vast array of sports assets.
  • Added NeuLion's Total Ticketing solution to multiple athletic departments including Brown University and William and Mary to simplify their ticketing processes with easy-to-use tools to manage season tickets, seat obligations, seat requests and special offers, and grow school ticketing revenues.

TV Everywhere

  • Powered live streaming of the 2014 Winter Olympics for China Network Television (CNTV) and Portugal's Sport TV.
  • Partnered with Univision Communications Inc., the leading media company serving Hispanic America, to design and power the Univision Deportes app that will offer coverage and exclusive content of the 2014 FIFA World Cup Brazil™.
  • Expanded our relationship with Rogers Sportsnet, the leading source for in-depth sports coverage in Canada, to provide seven 24/7 linear channels for Sportsnet Now, creating access to original programming on web and mobile devices.
  • Signed a multi-year agreement with Microsoft to provide live sports content for the Xbox One. With this deal, Microsoft licenses the NeuLion Platform to develop, host and operate the delivery of specific live sports content at 6 mbps per stream and 60 frames per second, the highest quality of live video to be delivered on an Internet-enabled device.

First Quarter 2014 Financial Review

Total revenue was $13.5 million compared to $11.9 million for the first quarter of 2013, an increase of $1.6 million, or 13%, reflecting revenue growth in the College Sports and Pro Sports divisions.

Pro Sports revenue increased 13% to $6.3 million from $5.6 million for the three months ended March 31, 2013, primarily due to growth in fixed fees from new and existing customers. College Sports revenue increased 27% to $3.8 million compared to $3.0 million for the three months ended March 31, 2013. The increase was primarily driven by revenue generated from new agreements with additional colleges and conferences. TV Everywhere revenue increased 7% to $2.9 million from $2.7 million for the three months ended March 31, 2013 primarily due to activations of new customer relationships.

Cost of revenue was $3.5 million, or 26% of total revenue, compared to $3.4 million, or 29% of total revenue, for the same period last year. Selling, general and administrative expenses, including stock-based compensation, were $6.4 million, an increase of 8% from $5.9 million for the three months ended March 31, 2013. Research and development expenses increased to $2.0 million compared to $1.7 million for the three months ended March 31, 2013. Operating income was $0.9 million compared to an operating loss of $0.2 in the first quarter of 2013. Consolidated net income was $1.1 million, or $0.00 per diluted share, compared with a net loss of $0.3 million, or $0.00 per diluted share, for the three months ended March 31, 2013.

Non-GAAP Results

Adjusted Gross Margin was 74% compared with 71% for the three months ended March 31, 2013, reflecting improved leverage of both fixed and variable costs. Adjusted EBITDA doubled to $2.0 million from $1.0 million for the same period last year on higher revenue and improved adjusted gross margin. Please refer to the tables accompanying this release for the calculations of Adjusted Gross Margin and Adjusted EBITDA.

Use of Non-GAAP Financial Information

In addition to our GAAP results, this press release also includes certain non-GAAP financial measures as defined by the SEC. The Company defines Adjusted Gross Margin as consolidated operating income (loss) plus depreciation and amortization, research and development expenses and selling general administrative expenses divided by total revenue. It defines Adjusted EBITDA as consolidated net income (loss) before interest, income taxes, depreciation and amortization, investment income, stock-based compensation, discount on convertible note and foreign exchange loss. Adjusted Gross Margin and Adjusted EBITDA are key measures used by management to evaluate our results and make strategic decisions about the Company, including potential acquisitions. Management believes these measures are useful to investors because they are indicators of operational performance. Because not all companies use identical calculations, the Company's presentation of Adjusted Gross Margin and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. These measures do not have any standardized meaning prescribed by U.S. GAAP and therefore are unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as alternatives to measures of financial performance or changes in cash flows calculated in accordance with U.S. GAAP.

Pursuant to the requirements of Regulation G, we have provided reconciliations of Adjusted EBITDA to GAAP consolidated net income/(loss) and of Adjusted Gross Margin to GAAP consolidated operating income/(loss) as exhibits to this press release.

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 professional sports, college sports and other content rights holders. 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, 2013, 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)

                                                    March 31,  December 31,
                                                         2014          2013
                                                  (unaudited)
                                                            $             $
                                                  -----------  ------------

ASSETS
Current
Cash and cash equivalents                          18,321,672    19,644,270
Accounts receivable, net of allowance for
 doubtful accounts of $116,737 and $105,292         5,350,409     5,289,136
Other receivables                                     415,941       364,797
Inventory                                             383,288       481,012
Prepaid expenses and deposits                         979,536     1,135,949
Due from related parties                              383,500       243,842
                                                  -----------  ------------
Total current assets                               25,834,346    27,159,006
Property, plant and equipment, net                  3,130,866     3,357,626
Intangible assets, net                              1,295,851     1,649,959
Goodwill                                           11,327,626    11,327,626
Other assets                                           84,357        81,778
                                                  -----------  ------------
Total assets                                       41,673,046    43,575,995
                                                  ===========  ============

LIABILITIES AND EQUITY
Current
Accounts payable                                   11,265,169    13,002,104
Accrued liabilities                                 4,515,668     5,338,418
Due to related parties                                 12,817        16,743
Deferred revenue                                    7,445,151     8,856,629
                                                  -----------  ------------
Total current liabilities                          23,238,805    27,213,894
Long-term deferred revenue                            674,024       725,853
Other long-term liabilities                           252,150       270,892
Deferred tax liability                              1,435,824     1,180,978
                                                  -----------  ------------
Total liabilities                                  25,600,803    29,391,617
                                                  -----------  ------------

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)                         4,932,298     4,924,775
                                                  -----------  ------------
Total redeemable preferred stock                   14,932,298    14,924,775
                                                  -----------  ------------

Stockholders' equity (deficit)
Common stock (par value: $0.01; authorized:
 300,000,000; issued and outstanding: 172,179,750
 and 170,326,338, respectively)                     1,721,798     1,703,263
Additional paid-in capital                         86,230,257    85,437,337
Promissory notes receivable                          (209,250)     (209,250)
Accumulated deficit                               (86,602,860)  (87,671,747)
                                                  -----------  ------------
Total shareholders' equity (deficit)                1,139,945      (740,397)
                                                  -----------  ------------
Total liabilities and shareholders' equity
 (deficit)                                         41,673,046    43,575,995
                                                  ===========  ============



                                NEULION, INC.

             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
                         COMPREHENSIVE INCOME (LOSS)
                                 (unaudited)
             (Expressed in U.S. dollars, unless otherwise noted)

                                               Three months ended March 31,

                                                        2014           2013
                                                           $              $
                                               -------------  --------------

Revenue                                           13,469,582     11,899,948
                                               -------------  -------------

Costs and Expenses
  Cost of revenue, exclusive of depreciation
   and amortization shown separately below         3,510,674      3,415,787
  Selling, general and administrative,
   including stock-based compensation              6,354,050      5,929,039
  Research and development                         1,972,803      1,699,366
  Depreciation and amortization                      685,804      1,025,142
                                               -------------  --------------
                                                  12,523,331     12,069,334
                                               -------------  --------------
Operating income (loss)                              946,251       (169,386)
                                               -------------  --------------

Other income (expense)
  Loss on foreign exchange                           (45,362)       (13,810)
  Investment income (expense), net                   422,844         (4,304)
  Discount on convertible note                            --        (77,922)
                                               -------------  --------------
                                                     377,482        (96,036)
                                               -------------  --------------
Net and comprehensive income (loss) before
 income taxes                                      1,323,733       (265,422)
  Provision for income taxes                        (254,846)       (17,444)
                                               -------------  --------------
Net and comprehensive income (loss)                1,068,887       (282,866)
                                               =============  ==============


Net income per weighted average number of
 shares of common stockoutstanding - basic     $        0.01  $        0.00
                                               =============  ==============

Weighted average number of shares of common
 stockoutstanding - basic                        170,855,997    164,207,147
                                               =============  ==============

Net income per weighted average number of
 shares of common stock outstanding - diluted  $        0.00  $        0.00
                                               =============  =============

Weighted average number of shares of common
 stock outstanding - diluted                     214,405,854    164,207,147
                                               =============  =============



                                NEULION, INC.

               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (unaudited)
             (Expressed in U.S. dollars, unless otherwise noted)

                                               Three months ended March 31,

                                                        2014           2013
                                                           $              $
                                               -------------  -------------

OPERATING ACTIVITIES
Consolidated net income (loss)                     1,068,887       (282,866)
Adjustments to reconcile net income (loss) to
 cash provided by (used in) operating
 activities
  Depreciation and amortization                      685,804      1,025,142
  Discount on convertible note                            --         77,922
  Stock-based compensation                           334,818        121,626
  Income taxes                                       254,846         17,444

Changes in operating assets and liabilities
  Accounts receivable                                (61,273)      (248,698)
  Inventory                                           97,724       (133,799)
  Prepaid expenses, deposits and other assets        153,834        321,560
  Other receivables                                  (51,144)         2,328
  Due from related parties                          (139,658)       134,367
  Accounts payable                                (1,736,935)     3,242,543
  Accrued liabilities                               (822,750)        88,790
  Deferred revenue                                (1,463,307)        82,939
  Long-term liabilities                              (18,742)       (22,041)
  Due to related parties                              (3,926)           547
                                               -------------  -------------
Cash (used in) provided by operating
 activities                                       (1,701,822)     4,427,804
                                               -------------  -------------

INVESTING ACTIVITIES
Purchase of property, plant and equipment, net      (104,936)      (326,252)
                                               -------------  -------------
Cash used in investing activities                   (104,936)      (326,252)
                                               -------------  -------------

FINANCING ACTIVITIES
Exercise of stock options                            358,147             --
Exercise of broker units                             126,013             --
                                               -------------  -------------
Cash provided by financing activities                484,160             --
                                               -------------  -------------
Net (decrease) increase in cash and cash
 equivalents during the period                    (1,322,598)     4,101,552
Cash and cash equivalents, beginning of period    19,644,270     11,108,107
                                               -------------  -------------
Cash and cash equivalents, end of period          18,321,672     15,209,659
                                               =============  =============



                                NEULION, INC.

                     RECONCILIATION OF NON-GAAP MEASURES
                                 (unaudited)
             (Expressed in U.S. dollars, unless otherwise noted)

Consolidated Statement of Operations Reconciliations:

The reconciliation from consolidated operating income (loss) to Non-GAAP Adjusted Gross Margin % is as follows:


                                                       Three months ended
                                                            March 31,
                                                        2014        2013
                                                          $           $
                                                     ----------  ----------

Consolidated operating income (loss) on a GAAP basis    946,251    (169,386)

Amortization and depreciation                           685,804   1,025,142
Research and development                              1,972,803   1,699,366
Selling, general and administrative, including
 stock-based compensation                             6,354,050   5,929,039
                                                     ----------  ----------
Non-GAAP Adjusted Gross Margin                        9,958,908   8,484,161
                                                     ==========  ==========

Total Revenue                                        13,469,582  11,899,948
                                                     ==========  ==========

Non-GAAP Adjusted Gross Margin % (as a % of total
 revenue)                                                    74%         71%
                                                     ==========  ==========


The reconciliation from net income (loss) to Non-GAAP Adjusted EBITDA is as follows:


                                                        Three months ended
                                                             March 31,
                                                          2014       2013
                                                           $          $
                                                       ---------  ---------

Consolidated net income (loss) on a GAAP basis         1,068,887   (282,866)

Depreciation and amortization                            685,804  1,025,142
Stock-based compensation                                 334,818    121,626
Discount on convertible note                                   -     77,922
Income taxes                                             254,846     17,444
Investment (income) expense, net and foreign exchange
 loss                                                   (377,482)    18,114
                                                       ---------  ---------

Non-GAAP Adjusted EBITDA                               1,966,873    977,382
                                                       =========  =========


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