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FORM 10-Q
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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RealNetworks, Inc.
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||
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(Exact name of registrant as specified in its charter)
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Washington
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91-1628146
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(State of incorporation)
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(I.R.S. Employer
Identification Number)
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1501 First Avenue South, Suite 600
Seattle, Washington
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98134
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(Address of principal executive offices)
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(Zip Code)
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(206) 674-2700
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(Registrant’s telephone number, including area code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, Par Value $0.001 per share
|
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RNWK
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The NASDAQ Stock Market
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Preferred Share Purchase Rights
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RNWK
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The NASDAQ Stock Market
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Page
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Item 1.
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Financial Statements
|
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March 31,
2019 |
|
December 31,
2018 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
36,897
|
|
|
$
|
35,561
|
|
Short-term investments
|
—
|
|
|
24
|
|
||
Trade accounts receivable, net of allowances of $646 and $560
|
32,427
|
|
|
11,751
|
|
||
Deferred costs, current portion
|
299
|
|
|
331
|
|
||
Prepaid expenses and other current assets
|
21,210
|
|
|
5,911
|
|
||
Total current assets
|
90,833
|
|
|
53,578
|
|
||
Equipment, software, and leasehold improvements, at cost:
|
|
|
|
||||
Equipment and software
|
35,779
|
|
|
37,458
|
|
||
Leasehold improvements
|
3,207
|
|
|
3,292
|
|
||
Total equipment, software, and leasehold improvements, at cost
|
38,986
|
|
|
40,750
|
|
||
Less accumulated depreciation and amortization
|
35,923
|
|
|
37,996
|
|
||
Net equipment, software, and leasehold improvements
|
3,063
|
|
|
2,754
|
|
||
Operating lease assets
|
13,943
|
|
|
—
|
|
||
Restricted cash equivalents
|
4,045
|
|
|
1,630
|
|
||
Other assets
|
2,687
|
|
|
3,997
|
|
||
Deferred costs, non-current portion
|
372
|
|
|
528
|
|
||
Deferred tax assets, net
|
846
|
|
|
851
|
|
||
Other intangible assets, net
|
22,692
|
|
|
26
|
|
||
Goodwill
|
65,368
|
|
|
16,955
|
|
||
Total assets
|
$
|
203,849
|
|
|
$
|
80,319
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
4,564
|
|
|
$
|
3,910
|
|
Accrued royalties, fulfillment and other current liabilities
|
97,890
|
|
|
11,312
|
|
||
Commitment to Napster
|
—
|
|
|
2,750
|
|
||
Deferred revenue, current portion
|
6,031
|
|
|
2,125
|
|
||
Notes payable
|
13,313
|
|
|
—
|
|
||
Total current liabilities
|
121,798
|
|
|
20,097
|
|
||
Deferred revenue, non-current portion
|
225
|
|
|
268
|
|
||
Deferred rent
|
—
|
|
|
986
|
|
||
Deferred tax liabilities, net
|
1,268
|
|
|
1,168
|
|
||
Long-term lease liabilities
|
10,929
|
|
|
—
|
|
||
Other long-term liabilities
|
10,875
|
|
|
960
|
|
||
Total liabilities
|
145,095
|
|
|
23,479
|
|
||
Commitments and contingencies
|
|
|
|
|
|||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value, no shares issued and outstanding:
|
|
|
|
||||
Series A: authorized 200 shares
|
—
|
|
|
—
|
|
||
Undesignated series: authorized 59,800 shares
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value authorized 250,000 shares; issued and outstanding 37,918 shares in 2019 and 37,728 shares in 2018
|
37
|
|
|
37
|
|
||
Additional paid-in capital
|
642,059
|
|
|
641,930
|
|
||
Accumulated other comprehensive loss
|
(61,205
|
)
|
|
(61,118
|
)
|
||
Retained deficit
|
(522,476
|
)
|
|
(524,009
|
)
|
||
Total shareholders’ equity
|
58,415
|
|
|
56,840
|
|
||
Noncontrolling interests
|
339
|
|
|
—
|
|
||
Total equity
|
58,754
|
|
|
56,840
|
|
||
Total liabilities and equity
|
$
|
203,849
|
|
|
$
|
80,319
|
|
|
Quarter Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Net revenue (A)
|
$
|
39,472
|
|
|
$
|
19,650
|
|
Cost of revenue (B)
|
24,870
|
|
|
5,136
|
|
||
Gross profit
|
14,602
|
|
|
14,514
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development
|
8,833
|
|
|
7,694
|
|
||
Sales and marketing
|
8,142
|
|
|
5,997
|
|
||
General and administrative
|
8,364
|
|
|
5,601
|
|
||
Restructuring and other charges
|
167
|
|
|
501
|
|
||
Lease exit and related benefit
|
—
|
|
|
(325
|
)
|
||
Total operating expenses
|
25,506
|
|
|
19,468
|
|
||
Operating loss
|
(10,904
|
)
|
|
(4,954
|
)
|
||
Other income (expenses):
|
|
|
|
||||
Interest expense
|
(166
|
)
|
|
—
|
|
||
Interest income
|
77
|
|
|
87
|
|
||
Gain (loss) on equity investment, net
|
12,338
|
|
|
—
|
|
||
Other income (expenses), net
|
127
|
|
|
(41
|
)
|
||
Total other income (expenses), net
|
12,376
|
|
|
46
|
|
||
Income (loss) before income taxes
|
1,472
|
|
|
(4,908
|
)
|
||
Income tax expense
|
258
|
|
|
270
|
|
||
Net income (loss) including noncontrolling interests
|
1,214
|
|
|
(5,178
|
)
|
||
Net income (loss) attributable to noncontrolling interests
|
(319
|
)
|
|
—
|
|
||
Net income (loss) attributable to RealNetworks
|
$
|
1,533
|
|
|
$
|
(5,178
|
)
|
|
|
|
|
||||
Net income (loss) per share attributable to RealNetworks- Basic
|
$
|
0.04
|
|
|
$
|
(0.14
|
)
|
Net income (loss) per share attributable to RealNetworks- Diluted
|
$
|
0.04
|
|
|
$
|
(0.14
|
)
|
Shares used to compute basic net income (loss) per share
|
37,820
|
|
|
37,449
|
|
||
Shares used to compute diluted net income (loss) per share
|
37,912
|
|
|
37,449
|
|
||
|
|
|
|
||||
Comprehensive income (loss):
|
|
|
|
||||
Unrealized investment holding gains (losses), net of reclassification adjustments
|
$
|
—
|
|
|
$
|
1
|
|
Foreign currency translation adjustments, net of reclassification adjustments
|
(87
|
)
|
|
396
|
|
||
Total other comprehensive income (loss)
|
(87
|
)
|
|
397
|
|
||
Net income (loss) including noncontrolling interests
|
1,214
|
|
|
(5,178
|
)
|
||
Comprehensive income (loss) including noncontrolling interests
|
1,127
|
|
|
(4,781
|
)
|
||
Comprehensive income (loss) attributable to noncontrolling interests
|
(319
|
)
|
|
—
|
|
||
Comprehensive income (loss) attributable to RealNetworks
|
$
|
1,446
|
|
|
$
|
(4,781
|
)
|
|
|
|
|
||||
(A) Components of net revenue:
|
|
|
|
||||
License and product revenue
|
$
|
3,541
|
|
|
$
|
7,414
|
|
Service revenue
|
35,931
|
|
|
12,236
|
|
||
|
$
|
39,472
|
|
|
$
|
19,650
|
|
(B) Components of cost of revenue:
|
|
|
|
||||
License and product revenue
|
$
|
1,369
|
|
|
$
|
1,755
|
|
Service revenue
|
23,501
|
|
|
3,381
|
|
||
|
$
|
24,870
|
|
|
$
|
5,136
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss) including noncontrolling interests
|
$
|
1,214
|
|
|
$
|
(5,178
|
)
|
Adjustments to reconcile net income (loss) including noncontrolling interests to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
1,482
|
|
|
620
|
|
||
Stock-based compensation
|
1,384
|
|
|
1,157
|
|
||
Deferred income taxes, net
|
—
|
|
|
(40
|
)
|
||
(Gain) loss on equity investment, net
|
(12,338
|
)
|
|
—
|
|
||
Foreign currency (gain) loss
|
(151
|
)
|
|
—
|
|
||
Mark to market adjustment of warrants
|
—
|
|
|
21
|
|
||
Net change in certain operating assets and liabilities:
|
|
|
|
||||
Trade accounts receivable
|
(143
|
)
|
|
11,188
|
|
||
Prepaid expenses, operating lease and other assets
|
(1,063
|
)
|
|
(917
|
)
|
||
Accounts payable
|
(259
|
)
|
|
(10,622
|
)
|
||
Accrued, lease and other liabilities
|
555
|
|
|
(1,654
|
)
|
||
Net cash used in operating activities
|
(9,319
|
)
|
|
(5,425
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of equipment, software, and leasehold improvements
|
(482
|
)
|
|
(316
|
)
|
||
Proceeds from sales and maturities of short-term investments
|
24
|
|
|
4,231
|
|
||
Acquisition, net of cash acquired
|
12,260
|
|
|
—
|
|
||
Net cash provided by investing activities
|
11,802
|
|
|
3,915
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Tax payments from shares withheld upon vesting of restricted stock
|
(271
|
)
|
|
(232
|
)
|
||
Proceeds from notes payable
|
9,733
|
|
|
—
|
|
||
Repayments of notes payable
|
(8,437
|
)
|
|
—
|
|
||
Other financing activities
|
450
|
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
1,475
|
|
|
(232
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(207
|
)
|
|
331
|
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
3,751
|
|
|
(1,411
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
37,191
|
|
|
53,596
|
|
||
Cash, cash equivalents, and restricted cash end of period
|
$
|
40,942
|
|
|
$
|
52,185
|
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained
Earnings
(Deficit)
|
|
Total
Shareholders’
Equity
|
|
Non-controlling Interests
|
|
Total Equity
|
|||||||||||||||||
Shares
|
|
Amount
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balances, January 1, 2018
|
|
37,341
|
|
|
$
|
37
|
|
|
$
|
638,727
|
|
|
$
|
(59,547
|
)
|
|
$
|
(500,044
|
)
|
|
$
|
79,173
|
|
|
$
|
—
|
|
|
$
|
79,173
|
|
Cumulative effect of revenue recognition accounting change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,024
|
|
|
1,024
|
|
|
—
|
|
|
1,024
|
|
|||||||
Common stock issued for exercise of stock options, employee stock purchase plan, and vesting of restricted shares, net of tax payments from shares withheld upon vesting of restricted stock
|
|
223
|
|
|
—
|
|
|
(232
|
)
|
|
—
|
|
|
—
|
|
|
(232
|
)
|
|
—
|
|
|
(232
|
)
|
|||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
1,157
|
|
|
—
|
|
|
—
|
|
|
1,157
|
|
|
—
|
|
|
1,157
|
|
|||||||
Investments unrealized gains (losses), net of tax effects of $0
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
396
|
|
|
—
|
|
|
396
|
|
|
—
|
|
|
396
|
|
|||||||
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,178
|
)
|
|
(5,178
|
)
|
|
—
|
|
|
(5,178
|
)
|
|||||||
Balances, March 31, 2018
|
|
37,564
|
|
|
$
|
37
|
|
|
$
|
639,652
|
|
|
$
|
(59,150
|
)
|
|
$
|
(504,197
|
)
|
|
$
|
76,342
|
|
|
$
|
—
|
|
|
$
|
76,342
|
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained
Earnings
(Deficit)
|
|
Total
Shareholders’
Equity
|
|
Non-controlling Interests
|
|
Total Equity
|
|||||||||||||||||
Shares
|
|
Amount
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balances, January 1, 2019
|
|
37,728
|
|
|
$
|
37
|
|
|
$
|
641,930
|
|
|
$
|
(61,118
|
)
|
|
$
|
(524,009
|
)
|
|
$
|
56,840
|
|
|
$
|
—
|
|
|
$
|
56,840
|
|
Common stock issued for exercise of stock options, employee stock purchase plan, and vesting of restricted shares, net of tax payments from shares withheld upon vesting of restricted stock
|
|
190
|
|
|
—
|
|
|
(271
|
)
|
|
—
|
|
|
—
|
|
|
(271
|
)
|
|
—
|
|
|
(271
|
)
|
|||||||
Napster acquisition
|
|
—
|
|
|
—
|
|
|
(1,346
|
)
|
|
—
|
|
|
—
|
|
|
(1,346
|
)
|
|
570
|
|
|
(776
|
)
|
|||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
1,384
|
|
|
—
|
|
|
—
|
|
|
1,384
|
|
|
—
|
|
|
1,384
|
|
|||||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(87
|
)
|
|
—
|
|
|
(87
|
)
|
|
—
|
|
|
(87
|
)
|
|||||||
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,533
|
|
|
1,533
|
|
|
(319
|
)
|
|
1,214
|
|
|||||||
Other equity transactions
|
|
—
|
|
|
—
|
|
|
362
|
|
|
—
|
|
|
—
|
|
|
362
|
|
|
88
|
|
|
450
|
|
|||||||
Balances, March 31, 2019
|
|
37,918
|
|
|
$
|
37
|
|
|
$
|
642,059
|
|
|
$
|
(61,205
|
)
|
|
$
|
(522,476
|
)
|
|
$
|
58,415
|
|
|
$
|
339
|
|
|
$
|
58,754
|
|
Note 1
|
Description of Business and Summary of Significant Accounting Policies
|
Note 2
|
Recent Accounting Pronouncements
|
Note 3
|
Revenue Recognition
|
|
|
Quarter Ended March 31, 2019
|
||||||||||||||
|
|
Consumer Media
|
|
Mobile Services
|
|
Games
|
|
Napster
|
||||||||
Business Line
|
|
|
|
|
|
|
|
|
||||||||
Software License
|
|
$
|
735
|
|
|
$
|
599
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Subscription Services
|
|
1,088
|
|
|
6,340
|
|
|
2,985
|
|
|
24,337
|
|
||||
Product Sales
|
|
219
|
|
|
—
|
|
|
1,988
|
|
|
—
|
|
||||
Advertising and Other
|
|
444
|
|
|
—
|
|
|
737
|
|
|
—
|
|
||||
Total
|
|
$
|
2,486
|
|
|
$
|
6,939
|
|
|
$
|
5,710
|
|
|
$
|
24,337
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Quarter Ended March 31, 2018
|
||||||||||||||
|
|
Consumer Media
|
|
Mobile Services
|
|
Games
|
|
Napster
|
||||||||
Business Line
|
|
|
|
|
|
|
|
|
||||||||
Software License
|
|
$
|
3,337
|
|
|
$
|
1,335
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Subscription Services
|
|
1,285
|
|
|
7,369
|
|
|
2,693
|
|
|
—
|
|
||||
Product Sales
|
|
340
|
|
|
—
|
|
|
2,402
|
|
|
—
|
|
||||
Advertising and Other
|
|
521
|
|
|
—
|
|
|
368
|
|
|
—
|
|
||||
Total
|
|
$
|
5,483
|
|
|
$
|
8,704
|
|
|
$
|
5,463
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2019
|
||||||||||||||
|
|
Consumer Media
|
|
Mobile Services
|
|
Games
|
|
Napster
|
||||||||
Sales Channel
|
|
|
|
|
|
|
|
|
||||||||
Business to Business
|
|
$
|
1,178
|
|
|
$
|
6,817
|
|
|
$
|
1,036
|
|
|
$
|
12,095
|
|
Direct to Consumer
|
|
1,308
|
|
|
122
|
|
|
4,674
|
|
|
12,242
|
|
||||
Total
|
|
$
|
2,486
|
|
|
$
|
6,939
|
|
|
$
|
5,710
|
|
|
$
|
24,337
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Quarter Ended March 31, 2018
|
||||||||||||||
|
|
Consumer Media
|
|
Mobile Services
|
|
Games
|
|
Napster
|
||||||||
Sales Channel
|
|
|
|
|
|
|
|
|
||||||||
Business to Business
|
|
$
|
3,858
|
|
|
$
|
8,530
|
|
|
$
|
751
|
|
|
$
|
—
|
|
Direct to Consumer
|
|
1,625
|
|
|
174
|
|
|
4,712
|
|
|
—
|
|
||||
Total
|
|
$
|
5,483
|
|
|
$
|
8,704
|
|
|
$
|
5,463
|
|
|
$
|
—
|
|
Note 4
|
Stock-Based Compensation
|
|
Quarter Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Total stock-based compensation expense
|
$
|
1,384
|
|
|
$
|
1,157
|
|
|
Quarter Ended
March 31, |
||||
|
2019
|
|
2018
|
||
Expected dividend yield
|
0
|
%
|
|
0
|
%
|
Risk-free interest rate
|
2.51
|
%
|
|
2.48
|
%
|
Expected life (years)
|
3.8
|
|
|
4.1
|
|
Volatility
|
41
|
%
|
|
35
|
%
|
Note 5
|
Acquisitions
|
Consideration, at estimated fair value:
|
|
|
||
Cash
|
|
$
|
1,000
|
|
Contingent consideration
|
|
11,600
|
|
|
RealNetworks' preexisting 42% equity interest in Napster
|
|
2,700
|
|
|
Effective settlement of Napster debt and warrants, held by RealNetworks
|
|
6,408
|
|
|
Total consideration
|
|
$
|
21,708
|
|
|
|
|
||
|
|
|
||
Assets acquired and liabilities assumed, at estimated fair value:
|
|
|
||
Cash and cash equivalents
|
|
$
|
10,138
|
|
Accounts receivable
|
|
20,838
|
|
|
Prepaid expenses and other current assets
|
|
12,879
|
|
|
Restricted cash
|
|
2,322
|
|
|
Equipment, software and leasehold improvements
|
|
474
|
|
|
Operating lease assets
|
|
2,314
|
|
|
Other long-term assets
|
|
77
|
|
|
Deferred tax assets, net
|
|
5,942
|
|
|
Intangible assets
|
|
23,700
|
|
|
Goodwill
|
|
48,474
|
|
|
Total assets acquired
|
|
127,158
|
|
|
|
|
|
||
Accounts payable
|
|
937
|
|
|
Accrued royalties and fulfillment
|
|
71,980
|
|
|
Accrued and other current liabilities
|
|
7,475
|
|
|
Deferred revenue, current portion
|
|
3,600
|
|
|
Notes payable
|
|
12,115
|
|
|
Deferred tax liabilities, net
|
|
6,061
|
|
|
Long-term lease liabilities
|
|
1,197
|
|
|
Other long-term liabilities
|
|
1,515
|
|
|
Total liabilities assumed
|
|
104,880
|
|
|
Total net assets acquired
|
|
22,278
|
|
|
Noncontrolling interests
|
|
570
|
|
|
Net assets acquired
|
|
$
|
21,708
|
|
Intangible category
|
|
Estimated fair value
|
|
Method used to calculate fair value
|
|
Estimated remaining useful life
|
||
Trade name and trademarks
|
|
$
|
6,800
|
|
|
Relief-from-royalty
|
|
15 years
|
Developed technology
|
|
5,900
|
|
|
Excess earnings
|
|
4 years
|
|
Customer relationships
|
|
5,900
|
|
|
Cost-to-replace
|
|
3 years
|
|
Partner relationships
|
|
5,100
|
|
|
Distributor method
|
|
8 years
|
|
Total
|
|
$
|
23,700
|
|
|
|
|
|
|
Quarter Ended - Pro Forma (Unaudited)
March 31, |
||||||
|
2019
|
|
2018
|
||||
Net revenue
|
$
|
45,838
|
|
|
$
|
59,849
|
|
Net income (loss) attributable to RealNetworks
(1)
|
(9,517
|
)
|
|
6,989
|
|
Note 6
|
Fair Value Measurements
|
|
Fair Value Measurements as of
|
|
Amortized Cost as of
|
||||||||||||||||
|
March 31, 2019
|
|
March 31, 2019
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
$
|
29,530
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,530
|
|
|
$
|
29,530
|
|
Money market funds
|
7,367
|
|
|
—
|
|
|
—
|
|
|
7,367
|
|
|
7,367
|
|
|||||
Total cash and cash equivalents
|
36,897
|
|
|
—
|
|
|
—
|
|
|
36,897
|
|
|
36,897
|
|
|||||
Restricted cash equivalents
|
1,921
|
|
|
2,124
|
|
|
—
|
|
|
4,045
|
|
|
4,045
|
|
|||||
Total assets
|
$
|
38,818
|
|
|
$
|
2,124
|
|
|
$
|
—
|
|
|
$
|
40,942
|
|
|
$
|
40,942
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued royalties, fulfillment and other current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Napster acquisition contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,586
|
|
|
$
|
2,586
|
|
|
N/A
|
|
|
Other long-term liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Napster acquisition contingent consideration
|
—
|
|
|
—
|
|
|
9,014
|
|
|
9,014
|
|
|
N/A
|
|
|||||
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,600
|
|
|
$
|
11,600
|
|
|
N/A
|
|
|
Fair Value Measurements as of
|
|
Amortized Cost as of
|
||||||||||||||||
|
December 31, 2018
|
|
December 31, 2018
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
$
|
22,853
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,853
|
|
|
$
|
22,853
|
|
Money market funds
|
12,708
|
|
|
—
|
|
|
—
|
|
|
12,708
|
|
|
12,708
|
|
|||||
Total cash and cash equivalents
|
35,561
|
|
|
—
|
|
|
—
|
|
|
35,561
|
|
|
35,561
|
|
|||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate notes and bonds
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
|
24
|
|
|||||
Total short-term investments
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
|
24
|
|
|||||
Restricted cash equivalents
|
—
|
|
|
1,630
|
|
|
—
|
|
|
1,630
|
|
|
1,630
|
|
|||||
Warrants issued by Napster (included in Other assets)
|
—
|
|
|
—
|
|
|
865
|
|
|
865
|
|
|
—
|
|
|||||
Total assets
|
$
|
35,561
|
|
|
$
|
1,654
|
|
|
$
|
865
|
|
|
$
|
38,080
|
|
|
$
|
37,215
|
|
Note 7
|
Other Intangible Assets
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Amortizing intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Customer relationships
|
|
$
|
41,507
|
|
|
$
|
31,117
|
|
|
$
|
10,390
|
|
|
$
|
30,993
|
|
|
$
|
30,993
|
|
|
$
|
—
|
|
|
Developed technology
|
|
30,164
|
|
|
24,571
|
|
|
5,593
|
|
|
24,446
|
|
|
24,446
|
|
|
—
|
|
||||||
|
Patents, trademarks and tradenames
|
|
10,506
|
|
|
3,801
|
|
|
6,705
|
|
|
3,765
|
|
|
3,765
|
|
|
—
|
|
||||||
|
Service contracts
|
|
5,474
|
|
|
5,470
|
|
|
4
|
|
|
5,538
|
|
|
5,512
|
|
|
26
|
|
||||||
|
Total
|
|
$
|
87,651
|
|
|
$
|
64,959
|
|
|
$
|
22,692
|
|
|
$
|
64,742
|
|
|
$
|
64,716
|
|
|
$
|
26
|
|
|
|
Future Amortization
|
||
2019 (Excluding the three months ended March 31, 2019)
|
|
$
|
3,392
|
|
2020
|
|
4,518
|
|
|
2021
|
|
4,518
|
|
|
2022
|
|
2,634
|
|
|
2023
|
|
1,138
|
|
|
Thereafter
|
|
6,492
|
|
|
|
|
$
|
22,692
|
|
Note 8
|
Goodwill
|
Balance, December 31, 2018
|
$
|
16,955
|
|
Increases due to current year acquisitions
|
48,474
|
|
|
Effects of foreign currency translation
|
(61
|
)
|
|
Balance, March 31, 2019
|
$
|
65,368
|
|
|
March 31,
2019 |
||
Consumer Media
|
$
|
580
|
|
Mobile Services
|
2,059
|
|
|
Games
|
14,255
|
|
|
Napster
|
48,474
|
|
|
Total goodwill
|
$
|
65,368
|
|
Note 9
|
Accrued royalties, fulfillment and other current liabilities
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Royalties and other fulfillment costs
|
$
|
75,731
|
|
|
$
|
1,989
|
|
Employee compensation, commissions and benefits
|
6,242
|
|
|
4,444
|
|
||
Sales, VAT and other taxes payable
|
3,706
|
|
|
785
|
|
||
Operating Lease Liabilities - Current
|
4,890
|
|
|
—
|
|
||
Other
|
7,321
|
|
|
4,094
|
|
||
Total accrued royalties, fulfillment and other current liabilities
|
$
|
97,890
|
|
|
$
|
11,312
|
|
Note 10
|
Notes Payable - Napster
|
Note 11
|
Restructuring Charges
|
|
Employee Separation Costs
|
||
Costs incurred and charged to expense for the three months ended March 31, 2019
|
$
|
167
|
|
Costs incurred and charged to expense for the three months ended March 31, 2018
|
$
|
501
|
|
|
Employee Separation Costs
|
||
Accrued liability at December 31, 2018
|
$
|
755
|
|
Costs incurred and charged to expense for the three months ended March 31, 2019
|
167
|
|
|
Cash payments
|
(590
|
)
|
|
Accrued liability at March 31, 2019
|
$
|
332
|
|
Note 12
|
Income Taxes
|
Note 13
|
Income (Loss) Per Share
|
|
Quarter Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Net income (loss) attributable to RealNetworks
|
$
|
1,533
|
|
|
$
|
(5,178
|
)
|
Weighted average common shares outstanding used to compute basic EPS
|
37,820
|
|
|
37,449
|
|
||
Dilutive effect of stock based awards
|
92
|
|
|
—
|
|
||
Weighted average common shares outstanding used to compute diluted EPS
|
37,912
|
|
|
37,449
|
|
||
|
|
|
|
||||
Basic EPS attributable to RealNetworks
|
$
|
0.04
|
|
|
$
|
(0.14
|
)
|
Diluted EPS attributable to RealNetworks
|
$
|
0.04
|
|
|
$
|
(0.14
|
)
|
Note 14
|
Leases
|
|
|
Quarter Ended
March 31, |
||
|
|
2019
|
||
Operating lease expense
|
|
$
|
1,340
|
|
Variable lease expense
|
|
153
|
|
|
Sublease income
|
|
(475
|
)
|
|
Net lease expense
|
|
$
|
1,018
|
|
|
|
|
||
Operating cash outflows for lease liabilities
|
|
$
|
1,461
|
|
|
|
|
||
Weighted-average remaining lease term
|
|
4 Years
|
|
|
Weighted-average discount rate
|
|
5.11
|
%
|
|
|
Operating
Leases
|
||
2019 (Excluding the three months ended March 31, 2019)
|
|
$
|
3,919
|
|
2020
|
|
4,445
|
|
|
2021
|
|
3,065
|
|
|
2022
|
|
2,430
|
|
|
2023
|
|
2,348
|
|
|
Thereafter
|
|
1,634
|
|
|
Total minimum payments
(a)
|
|
17,841
|
|
|
Less: Imputed interest
|
|
2,022
|
|
|
Present value of total minimum payments
(b)
|
|
$
|
15,819
|
|
Note 15
|
Commitments and Contingencies
|
Note 16
|
Guarantees
|
Note 17
|
Segment Information
|
Consumer Media
|
Quarter Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Revenue
|
$
|
2,486
|
|
|
$
|
5,483
|
|
Cost of revenue
|
833
|
|
|
993
|
|
||
Gross profit
|
1,653
|
|
|
4,490
|
|
||
Operating expenses
|
3,119
|
|
|
3,918
|
|
||
Operating income (loss)
|
$
|
(1,466
|
)
|
|
$
|
572
|
|
Mobile Services
|
Quarter Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Revenue
|
$
|
6,939
|
|
|
$
|
8,704
|
|
Cost of revenue
|
2,048
|
|
|
2,316
|
|
||
Gross profit
|
4,891
|
|
|
6,388
|
|
||
Operating expenses
|
7,561
|
|
|
7,366
|
|
||
Operating income (loss)
|
$
|
(2,670
|
)
|
|
$
|
(978
|
)
|
Games
|
Quarter Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Revenue
|
$
|
5,710
|
|
|
$
|
5,463
|
|
Cost of revenue
|
1,670
|
|
|
1,817
|
|
||
Gross profit
|
4,040
|
|
|
3,646
|
|
||
Operating expenses
|
5,037
|
|
|
4,917
|
|
||
Operating income (loss)
|
$
|
(997
|
)
|
|
$
|
(1,271
|
)
|
Napster
|
Quarter Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Revenue
|
$
|
24,337
|
|
|
$
|
—
|
|
Cost of revenue
|
20,396
|
|
|
—
|
|
||
Gross profit
|
3,941
|
|
|
—
|
|
||
Operating expenses
|
5,532
|
|
|
—
|
|
||
Operating income (loss)
|
$
|
(1,591
|
)
|
|
$
|
—
|
|
Corporate
|
Quarter Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Cost of revenue
|
$
|
(77
|
)
|
|
$
|
10
|
|
Operating expenses
|
4,257
|
|
|
3,267
|
|
||
Operating income (loss)
|
$
|
(4,180
|
)
|
|
$
|
(3,277
|
)
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
United States
|
$
|
91,750
|
|
|
$
|
11,823
|
|
Europe
|
11,146
|
|
|
6,761
|
|
||
Rest of the World
|
2,170
|
|
|
1,151
|
|
||
Total long-lived assets
|
$
|
105,066
|
|
|
$
|
19,735
|
|
Note 18
|
Related Party Transactions
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
the expected benefits and other consequences of our growth plans, strategic initiatives, and restructurings;
|
•
|
our expected introduction, and related monetization, of new and enhanced products, services and technologies across our businesses;
|
•
|
future revenues, operating expenses, income and other taxes, tax benefits, net income (loss) per diluted share available to common shareholders, acquisition costs and related amortization, and other measures of results of operations;
|
•
|
the effects of our past acquisitions, including our January 18, 2019 acquisition of a controlling interest in Napster, and expectations for future acquisitions and divestitures;
|
•
|
plans, strategies and expected opportunities for future growth, increased profitability and innovation;
|
•
|
the expected financial position, performance, growth and profitability of, and investment in, our businesses and the availability of funding or other resources;
|
•
|
the effects of legislation, regulations, administrative proceedings, court rulings, settlement negotiations and other factors that may impact our businesses;
|
•
|
the continuation and expected nature of certain customer relationships;
|
•
|
impacts of competition and certain customer relationships on the future financial performance and growth of our businesses;
|
•
|
our involvement in potential claims, legal proceedings and government investigations, and the potential outcomes and effects of such potential claims, legal proceedings and governmental investigations on our business, prospects, financial condition or results of operations;
|
•
|
the effects of U.S. and foreign income and other taxes on our business, prospects, financial condition or results of operations; and
|
•
|
the effect of economic and market conditions on our business, prospects, financial condition or results of operations.
|
|
Quarter Ended March 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Revenue
|
$
|
2,486
|
|
|
$
|
5,483
|
|
|
$
|
(2,997
|
)
|
|
(55
|
)%
|
Cost of revenue
|
833
|
|
|
993
|
|
|
(160
|
)
|
|
(16
|
)%
|
|||
Gross profit
|
1,653
|
|
|
4,490
|
|
|
(2,837
|
)
|
|
(63
|
)%
|
|||
Gross margin
|
66
|
%
|
|
82
|
%
|
|
|
|
|
|||||
Operating expenses
|
3,119
|
|
|
3,918
|
|
|
(799
|
)
|
|
(20
|
)%
|
|||
Operating income (loss)
|
$
|
(1,466
|
)
|
|
$
|
572
|
|
|
$
|
(2,038
|
)
|
|
NM
|
|
|
Quarter Ended March 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Revenue
|
$
|
6,939
|
|
|
$
|
8,704
|
|
|
$
|
(1,765
|
)
|
|
(20
|
)%
|
Cost of revenue
|
2,048
|
|
|
2,316
|
|
|
(268
|
)
|
|
(12
|
)%
|
|||
Gross profit
|
4,891
|
|
|
6,388
|
|
|
(1,497
|
)
|
|
(23
|
)%
|
|||
Gross margin
|
70
|
%
|
|
73
|
%
|
|
|
|
|
|||||
Operating expenses
|
7,561
|
|
|
7,366
|
|
|
195
|
|
|
3
|
%
|
|||
Operating loss
|
$
|
(2,670
|
)
|
|
$
|
(978
|
)
|
|
$
|
(1,692
|
)
|
|
(173
|
)%
|
|
Quarter Ended March 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Revenue
|
$
|
5,710
|
|
|
$
|
5,463
|
|
|
$
|
247
|
|
|
5
|
%
|
Cost of revenue
|
1,670
|
|
|
1,817
|
|
|
(147
|
)
|
|
(8
|
)%
|
|||
Gross profit
|
4,040
|
|
|
3,646
|
|
|
394
|
|
|
11
|
%
|
|||
Gross margin
|
71
|
%
|
|
67
|
%
|
|
|
|
|
|||||
Operating expenses
|
5,037
|
|
|
4,917
|
|
|
120
|
|
|
2
|
%
|
|||
Operating loss
|
$
|
(997
|
)
|
|
$
|
(1,271
|
)
|
|
$
|
274
|
|
|
22
|
%
|
|
Quarter Ended March 31,
|
||||||||||
|
2019
|
|
2018
|
|
$ Change
|
||||||
Revenue
|
$
|
24,337
|
|
|
$
|
—
|
|
|
$
|
24,337
|
|
Cost of revenue
|
20,396
|
|
|
—
|
|
|
20,396
|
|
|||
Gross profit
|
3,941
|
|
|
—
|
|
|
3,941
|
|
|||
Gross margin
|
16
|
%
|
|
—
|
%
|
|
|
||||
Operating expenses
|
5,532
|
|
|
—
|
|
|
5,532
|
|
|||
Operating loss
|
$
|
(1,591
|
)
|
|
$
|
—
|
|
|
$
|
(1,591
|
)
|
|
Quarter Ended March 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Cost of revenue
|
$
|
(77
|
)
|
|
$
|
10
|
|
|
$
|
(87
|
)
|
|
NM
|
|
Operating expenses
|
4,257
|
|
|
3,267
|
|
|
990
|
|
|
30
|
%
|
|||
Operating loss
|
$
|
(4,180
|
)
|
|
$
|
(3,277
|
)
|
|
$
|
(903
|
)
|
|
(28
|
)%
|
|
Quarter Ended March 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Research and development
|
$
|
8,833
|
|
|
$
|
7,694
|
|
|
$
|
1,139
|
|
|
15
|
%
|
Sales and marketing
|
8,142
|
|
|
5,997
|
|
|
2,145
|
|
|
36
|
%
|
|||
General and administrative
|
8,364
|
|
|
5,601
|
|
|
2,763
|
|
|
49
|
%
|
|||
Restructuring and other charges
|
167
|
|
|
501
|
|
|
(334
|
)
|
|
(67
|
)%
|
|||
Lease exit and related charges
|
—
|
|
|
(325
|
)
|
|
325
|
|
|
(100
|
)%
|
|||
Total consolidated operating expenses
|
$
|
25,506
|
|
|
$
|
19,468
|
|
|
$
|
6,038
|
|
|
31
|
%
|
|
Quarter Ended March 31,
|
||||||||||
|
2019
|
|
2018
|
|
$ Change
|
||||||
Interest expense
|
$
|
(166
|
)
|
|
$
|
—
|
|
|
$
|
(166
|
)
|
Interest income
|
77
|
|
|
87
|
|
|
(10
|
)
|
|||
Gain (loss) on equity investment, net
|
12,338
|
|
|
—
|
|
|
12,338
|
|
|||
Other income (expense), net
|
127
|
|
|
(41
|
)
|
|
168
|
|
|||
Total other income (expense), net
|
$
|
12,376
|
|
|
$
|
46
|
|
|
$
|
12,330
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Working capital
|
$
|
(30,965
|
)
|
|
$
|
33,481
|
|
Cash, cash equivalents, and short-term investments
|
36,897
|
|
|
35,585
|
|
||
Restricted cash equivalents
|
4,045
|
|
|
1,630
|
|
|
Three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash used in operating activities
|
$
|
(9,319
|
)
|
|
$
|
(5,425
|
)
|
Cash provided by investing activities
|
11,802
|
|
|
3,915
|
|
||
Cash provided by (used in) financing activities
|
1,475
|
|
|
(232
|
)
|
•
|
Revenue recognition;
|
•
|
Music Royalties;
|
•
|
Valuation of definite-lived assets and goodwill; and
|
•
|
Accounting for income taxes.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
reduced prices or margins;
|
•
|
loss of current and potential customers, or partners and potential partners who distribute our products and services or who provide content that we distribute to our customers;
|
•
|
changes to our products, services, technologies, licenses or business practices or strategies;
|
•
|
lengthened sales cycles;
|
•
|
inability to meet demands for more rapid sales or development cycles;
|
•
|
industry-wide changes in content distribution to customers or in trends in consumer consumption of digital media products and services;
|
•
|
pressure to prematurely release products or product enhancements; or
|
•
|
degradation in our stature or reputation in the market.
|
•
|
periodic local or geographic economic downturns and unstable political conditions;
|
•
|
price and currency exchange controls;
|
•
|
fluctuation in the relative values of currencies;
|
•
|
difficulty in repatriating money, whether as a result of tax laws or otherwise;
|
•
|
compliance with current and changing tax laws, and the coordination of compliance with U.S. tax laws and the laws of any of the jurisdictions in which we do business;
|
•
|
difficulties protecting intellectual property;
|
•
|
compliance with labor laws and other laws governing employees;
|
•
|
local labor disputes;
|
•
|
changes in trading policies, regulatory requirements, tariffs and other barriers, or the termination or renegotiation of existing trade agreements;
|
•
|
impact of changes in immigration or other policies impacting our ability to attract, hire, and retain key talent; and
|
•
|
difficulties in managing a global enterprise, including staffing, collecting accounts receivable, and managing suppliers, distributors and representatives.
|
•
|
difficulties and expenses in assimilating the operations, products, technology, information systems, and/or personnel of the acquired company;
|
•
|
retaining key management or employees of the acquired company;
|
•
|
entrance into unfamiliar markets, industry segments, or types of businesses;
|
•
|
operating, managing and integrating acquired businesses in remote locations or in countries in which we have little or no prior experience;
|
•
|
diversion of management time and other resources from existing operations;
|
•
|
impairment of relationships with employees, affiliates, advertisers or content providers of our business or acquired business;
|
•
|
assumption of known and unknown liabilities of the acquired company, including intellectual property claims; and
|
•
|
potential impacts to our system of internal controls and disclosure controls and procedures.
|
•
|
elect or defeat the election of our directors;
|
•
|
amend or prevent amendment of our articles of incorporation or bylaws;
|
•
|
effect or prevent a merger, sale of assets or other corporate transaction; and
|
•
|
control the outcome of any other matter submitted to the shareholders for vote.
|
•
|
adopt a plan of merger;
|
•
|
authorize the sale, lease, exchange or mortgage of assets representing more than 50% of the book value of our assets prior to the transaction or on which our long-term business strategy is substantially dependent;
|
•
|
authorize our voluntary dissolution; or
|
•
|
take any action that has the effect of any of the above.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Default Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
|
REALNETWORKS, INC.
|
||
|
|
|
|
|
By:
|
|
/s/ Cary Baker
|
|
|
|
Cary Baker
|
|
Title:
|
|
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
|
Exhibit
Number
|
Description
|
|
|
2.1
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
If to Seller:
|
Rhapsody Applebee, LLC
c/o Columbus Nova Technology Partners 900 Third Avenue, 19 th Floor New York, NY 10022 Email: aintrater@columbusnova.com Attention: Andrew Intrater, CEO |
If to Buyer:
|
RealNetworks Digital Music of California, Inc.
c/o RealNetworks, Inc. 1501 1st Avenue S. Suite 600 Seattle, WA 98134 Email: mparham@realnetworks.com Attention: Michael Parham, General Counsel |
|
RHAPSODY APPLEBEE, LLC
|
|
By:
/s/ Andrew Intrater
Name:
Andrew Intrater
Title:
Authorized Person
|
|
REALNETWORKS DIGITAL MUSIC OF CALIFORNIA, INC.
|
|
By:
/s/ Michael Parham
Name:
Michael Parham
Title:
CEO
|
1.
|
I have reviewed this report on Form 10-Q of RealNetworks, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
May 8, 2019
|
||
|
|||
/s/ Robert Glaser
|
|||
Robert Glaser
|
|||
Title:
|
Chairman and Chief Executive Officer
|
||
|
(Principal Executive Officer)
|
1.
|
I have reviewed this report on Form 10-Q of RealNetworks, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
May 8, 2019
|
||
|
|||
/s/ Cary Baker
|
|||
Cary Baker
|
|||
Title:
|
Senior Vice President, Chief Financial Officer and Treasurer
|
||
|
(Principal Financial and Accounting Officer)
|
Date:
|
May 8, 2019
|
||
|
|
||
By:
|
/s/ Robert Glaser
|
||
|
Name:
|
Robert Glaser
|
|
|
Title:
|
Chairman and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
Date:
|
May 8, 2019
|
||
|
|
||
By:
|
/s/ Cary Baker
|
||
|
Name:
|
Cary Baker
|
|
|
Title:
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
|
|
(Principal Financial and Accounting Officer)
|