☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
|
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98-0469479
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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|
|
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1600 Old Country Road, Plainview, NY
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|
11803
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
|
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Name of exchange on which registered
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None
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Common Stock
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(Title of Class)
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Large accelerated filer
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☐
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Accelerated filer
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☒
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Non-accelerated filer (Do not check if a smaller reporting company)
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☐
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Smaller reporting company
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☐
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F-1
|
· |
Reduced enhancement, integration and innovation complexities;
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· |
Time to market;
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· |
Ability to drive new revenue opportunities;
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· |
Provision of a combination of proprietary technology and operational services;
|
· |
Creation of meaningful experiences that engage, retain and grow viewers;
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· |
Breadth and depth of product functionality;
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· |
Superior customer service;
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· |
Scope of solutions that address the entire media technology ecosystem;
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· |
Innovation and responsiveness to new market trends; and
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· |
Integration with third-party applications and technologies.
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· |
whether they offer, market and distribute high-quality programming consistent with subscribers’ preferences;
|
· |
the marketing and pricing strategies that they employ relative to those of their competitors; and
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· |
subscribers’ willingness to pay subscription or pay-per-view fees to access our customers’ content.
|
· |
Network neutrality –Any weakening of network neutrality laws in the jurisdictions in which we deliver content may make our services less attractive to our customers, raise our costs or otherwise impede our business plans and could adversely impact our results of operations.
|
· |
Non-broadcaster status – Broadcasters are generally subject to numerous requirements regarding ownership, licensing, the timing and content of programming and commercial advertising and, in some jurisdictions, the amount of foreign versus domestically produced programming. If regulatory changes were to subject us to these types of broadcaster requirements in a given jurisdiction, we could be subject to burdensome licensing requirements and have compliance obligations that would expose us to risks and expenses that may adversely impact our results of operations.
|
· |
Content and advertising distributed over the Internet – With a very limited exception, we are not subject to requirements regarding the content, format or advertising contained in our clients’ video programming that we distribute. However, if regulatory requirements similar to those imposed on on-air broadcasters (such as obligations to provide captioning, scramble signals, or regulate the volume of commercials) were to be imposed on us or our clients, we might have to change our services or acquire equipment to meet these requirements, and we might incur expenses in order to provide such services.
|
· |
Privacy/data protection – We are subject to evolving regulations related to our customers’ and their viewers’ data. For example, new E.U. laws set to come into force in May 2018 under the E.U. General Data Protection Regulation and e-Privacy Regulation will extend data protection obligations to online platforms such as ours. Compliance with these regulations may be complex, and could expose us to risks and expenses that may adversely impact our results of operations.
|
· |
political and economic instability;
|
· |
whether the U.K will pass into law the June 2016 referendum in which voters approved an exit from the E.U., commonly referred to as “Brexit,” and the future terms of the U.K.’s relationship with the E.U., including the terms of trade between those two entities;
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· |
less developed infrastructures in newly industrializing countries;
|
· |
susceptibility to interruption of feeds in foreign areas due to war, terrorist attacks, medical epidemics, changes in political regimes and general interest rate and currency instability;
|
· |
exposure to possible litigation or claims in foreign jurisdictions; and
|
· |
competition from foreign-based technology service providers, and the existence of protectionist laws and business practices that favor such entities.
|
· |
government policies concerning the import and export of goods and services;
|
· |
government-imposed sanctions policies prohibiting commerce and transactions with certain persons, countries or regions;
|
· |
potentially adverse tax consequences;
|
· |
limits on repatriation of earnings;
|
· |
the burdens of complying with a wide variety of foreign laws;
|
· |
nationalization;
|
· |
potential social, labor, political and economic instability; and
|
· |
local laws and practices that favor local companies, including business practices that we are prohibited from engaging in by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations.
|
· |
variations in our anticipated or actual operating results;
|
· |
loss of a large customer or our inability to increase sales to existing customers or attract new customers;
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· |
announcement of new or enhanced solutions or products by us or our competitors;
|
· |
litigation and other developments relating to our patents or other proprietary rights or those of our competitors;
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· |
variations in our competitors’ results of operations and changes in the competitive landscape generally;
|
· |
changes and conditions in the digital video content market and related industries;
|
· |
governmental regulation and legislation;
|
· |
sales or potential sales of substantial amounts of our common stock;
|
· |
change in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations; and
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· |
unusual events such as significant acquisitions, divestitures, litigation, general socio-economic, regulatory, political or market conditions and other factors, including factors unrelated to our operating performance.
|
· |
the inability of stockholders to call special meetings; and
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· |
the ability of our Board of Directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could include the right to approve an acquisition or other change in our control or could be used to institute a rights plan, also known as a poison pill, that would work to dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our Board of Directors.
|
Description
|
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Location
|
|
Expiration of Lease
|
|
Use of Property
|
Lease
|
|
Sanford, Florida
|
|
November 2020
|
|
Business office
|
Lease
|
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New York, New York
|
|
October 2018
|
|
Business office
|
Lease
|
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Toronto, Ontario, Canada
|
|
February 2018
|
|
Business office
|
Lease
|
|
Burnaby, British Columbia, Canada
|
|
March 2019
|
|
Business office
|
Lease
|
|
London, England
|
|
December 2017
|
|
Business office
|
Lease
|
|
London, England
|
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October 2027
|
|
Business office
|
Lease
|
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Beijing, China
|
|
July 2018
|
|
Business office
|
Lease
|
|
Shanghai, China
|
|
June 2019
|
|
Business office
|
Lease
|
|
Toronto, Ontario, Canada
|
|
January 2018
|
|
Colocation/equipment
|
Lease
|
|
Slough, England
|
|
January 2018
|
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Colocation/equipment
|
Lease
|
|
Palo Alto, California
|
|
January 2018
|
|
Colocation/equipment
|
Lease
|
|
Savage, Maryland
|
|
October 2017
|
|
Colocation/equipment
|
Lease
|
|
Bellevue, Nebraska
|
|
June 2017
|
|
Colocation/equipment
|
Lease
|
|
North Bergen, New Jersey
|
|
January 2018
|
|
Colocation/equipment
|
Lease
|
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Hauppauge, New York
|
|
October 2017
|
|
Colocation/equipment
|
Lease
|
|
New York, New York
|
|
January 2018
|
|
Colocation/equipment
|
Lease
|
|
Dallas, Texas
|
|
January 2018
|
|
Colocation/equipment
|
Lease
|
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San Diego, California
|
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September 2019
|
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Business office
|
Lease
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Tomsk, Russia
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November 2017
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Business office
|
Lease
|
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Aachen, Germany
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March 2019
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Business office
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Lease
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Seoul, Korea
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June 2017
|
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Business office
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Lease
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Tokyo, Japan
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June 2017
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Business office
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Lease
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Osaka, Japan
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July 2017
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Business office
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Lease
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Shenzhen, China
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June 2018
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Business office
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Lease
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Taipei, Taiwan
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October 2017
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Business office
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ITEM 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
Fiscal Year
|
High
|
Low
|
||||
|
||||||
2016
|
||||||
First Quarter
|
CDN$
|
1.16
|
CDN$
|
0.60
|
||
Second Quarter
|
CDN$
|
1.45
|
CDN$
|
0.82
|
||
Third Quarter
|
CDN$
|
1.27
|
CDN$
|
0.90
|
||
Fourth Quarter
|
CDN$
|
1.20
|
CDN$
|
0.82
|
||
|
||||||
Fiscal Year
|
High
|
Low
|
||||
|
||||||
2015
|
||||||
First Quarter
|
CDN$
|
1.47
|
CDN$
|
0.99
|
||
Second Quarter
|
CDN$
|
1.72
|
CDN$
|
1.03
|
||
Third Quarter
|
CDN$
|
1.69
|
CDN$
|
0.56
|
||
Fourth Quarter
|
CDN$
|
0.87
|
CDN$
|
0.53
|
Period
|
Total
Number
of Shares Purchased |
Weighted
Average Price Paid Per Share (1) |
Total
Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Approximate
Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs |
||||||||||||
October 1, 2016 - October 31, 2016
|
699,100
|
$
|
0.91
|
699,100
|
$
|
5,916,509
|
||||||||||
November 1, 2016 - November 30, 2016
|
562,300
|
$
|
0.73
|
562,300
|
$
|
5,505,850
|
||||||||||
December 1, 2016 - December 31, 2016
|
841,100
|
$
|
0.74
|
841,100
|
$
|
4,833,335
|
||||||||||
Total
|
2,102,500
|
2,102,500
|
|
NeuLion, Inc.
|
|||||||||||||||||||
|
Year ended December 31,
|
|||||||||||||||||||
|
2016
(1)
|
2015
(2)
|
2014
|
2013
|
2012
(3)
|
|||||||||||||||
|
(in thousands, except per share data)
|
|||||||||||||||||||
Consolidated Statements of Operations Data:
|
||||||||||||||||||||
Revenue
|
$
|
99,788
|
$
|
94,043
|
$
|
55,520
|
$
|
47,107
|
$
|
38,983
|
||||||||||
|
||||||||||||||||||||
Costs and expenses
|
||||||||||||||||||||
Cost of revenue, exclusive of depreciation and amortization
|
18,312
|
17,775
|
13,897
|
13,279
|
13,695
|
|||||||||||||||
Selling, general and administrative, including stock-based compensation
|
52,922
|
45,672
|
27,073
|
24,290
|
23,541
|
|||||||||||||||
Research and development
|
19,903
|
24,912
|
8,381
|
7,423
|
6,673
|
|||||||||||||||
Depreciation and amortization
|
8,899
|
7,544
|
2,621
|
3,755
|
4,407
|
|||||||||||||||
|
100,036
|
95,903
|
51,972
|
48,747
|
48,316
|
|||||||||||||||
Operating income (loss)
|
(248
|
)
|
(1,860
|
)
|
3,548
|
(1,640
|
)
|
(9,333
|
)
|
|||||||||||
Other income (expense)
|
(94
|
)
|
(71
|
)
|
290
|
(361
|
)
|
(133
|
)
|
|||||||||||
Net and comprehensive income (loss) before income taxes
|
(342
|
)
|
(1,931
|
)
|
3,838
|
(2,001
|
)
|
(9,466
|
)
|
|||||||||||
Income tax (benefit) expense
|
(1,411
|
)
|
27,847
|
(271
|
)
|
(277
|
)
|
(613
|
)
|
|||||||||||
Net and comprehensive income (loss)
|
$
|
(1,753
|
)
|
$
|
25,916
|
$
|
3,567
|
$
|
(2,278
|
)
|
$
|
(10,079
|
)
|
|||||||
|
||||||||||||||||||||
Net income (loss) per common share:
|
||||||||||||||||||||
Basic
|
$
|
(0.01
|
)
|
$
|
0.11
|
$
|
0.02
|
$
|
(0.01
|
)
|
$
|
(0.07
|
)
|
|||||||
Diluted
|
$
|
(0.01
|
)
|
$
|
0.11
|
$
|
0.02
|
$
|
(0.01
|
)
|
$
|
(0.07
|
)
|
|||||||
Weighted average common shares outstanding:
|
||||||||||||||||||||
Basic
|
281,690,556
|
233,489,798
|
174,645,803
|
166,663,448
|
146,899,685
|
|||||||||||||||
Diluted
|
281,690,556
|
245,346,681
|
214,711,362
|
166,663,448
|
146,899,685
|
|||||||||||||||
|
||||||||||||||||||||
Other Financial Data:
|
||||||||||||||||||||
Non-GAAP Revenue
(4)
|
$
|
100,845
|
$
|
109,351
|
$
|
55,520
|
$
|
47,107
|
$
|
38,983
|
||||||||||
Adjusted EBITDA
(4)
|
14,390
|
24,716
|
8,413
|
3,532
|
(3,298
|
)
|
||||||||||||||
Capital expenditures (excluding acquisitions)
|
10,195
|
1,428
|
1,850
|
1,301
|
1,107
|
|||||||||||||||
Cash flow provided by (used in):
|
||||||||||||||||||||
Operating activities
|
12,546
|
18,359
|
7,239
|
9,481
|
(4,787
|
)
|
||||||||||||||
Investing activities
|
(19,195
|
)
|
8,290
|
(1,850
|
)
|
(1,301
|
)
|
(1,107
|
)
|
|||||||||||
Financing activities
|
(4,859
|
)
|
866
|
865
|
356
|
4,745
|
||||||||||||||
|
||||||||||||||||||||
Consolidated Balance Sheet Data
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
41,905
|
$
|
53,413
|
$
|
25,898
|
$
|
19,644
|
$
|
11,108
|
||||||||||
Current assets
|
61,163
|
70,415
|
36,287
|
27,159
|
18,153
|
|||||||||||||||
Current liabilities
|
38,468
|
31,824
|
29,212
|
27,214
|
20,628
|
|||||||||||||||
Working capital
|
22,695
|
38,591
|
7,075
|
(55
|
)
|
(2,475
|
)
|
|||||||||||||
Total assets
|
148,374
|
144,150
|
51,938
|
43,576
|
37,104
|
|||||||||||||||
Total liabilities
|
42,975
|
36,092
|
31,884
|
29,392
|
23,032
|
|||||||||||||||
Redeemable preferred stock
|
-
|
-
|
14,955
|
14,925
|
14,895
|
|||||||||||||||
Stockholders' equity (deficit)
|
$
|
105,399
|
$
|
108,058
|
$
|
5,099
|
$
|
(740
|
)
|
$
|
(822
|
)
|
Reconciliation of GAAP Total Revenue to Non-GAAP Total Revenue:
|
||||||||||||||||||||
GAAP Total Revenue
|
$
|
99,788
|
$
|
94,043
|
$
|
55,520
|
$
|
47,107
|
$
|
38,983
|
||||||||||
Revenue excluded due to purchase accounting
|
1,057
|
15,308
|
-
|
-
|
-
|
|||||||||||||||
Non-GAAP Total Revenue
|
$
|
100,845
|
$
|
109,351
|
$
|
55,520
|
$
|
47,107
|
$
|
38,983
|
||||||||||
|
||||||||||||||||||||
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
|
||||||||||||||||||||
Consolidated net income (loss)
|
$
|
(1,753
|
)
|
$
|
25,916
|
$
|
3,567
|
$
|
(2,278
|
)
|
$
|
(10,079
|
)
|
|||||||
Purchase price accounting adjustments - revenue
|
1,057
|
15,308
|
-
|
-
|
-
|
|||||||||||||||
Depreciation and amortization
|
8,899
|
7,544
|
2,621
|
3,755
|
4,407
|
|||||||||||||||
Stock-based compensation
|
4,573
|
2,702
|
1,438
|
1,417
|
1,627
|
|||||||||||||||
Acquisition-related expenses
|
109
|
359
|
806
|
-
|
-
|
|||||||||||||||
Listing-related expenses
|
-
|
663
|
-
|
-
|
-
|
|||||||||||||||
Discount on convertible note
|
-
|
-
|
-
|
233
|
78
|
|||||||||||||||
Interest on convertible note, including amortization of debt discount
|
-
|
123
|
-
|
-
|
-
|
|||||||||||||||
Loss (gain) on revaluation of convertible note derivative
|
-
|
(507
|
)
|
-
|
-
|
-
|
||||||||||||||
Income tax (benefit) expense
|
1,411
|
(27,847
|
)
|
271
|
277
|
613
|
||||||||||||||
Investment income and foreign exchange gain (loss)
|
94
|
455
|
(290
|
)
|
128
|
56
|
||||||||||||||
Adjusted EBITDA
|
$
|
14,390
|
$
|
24,716
|
$
|
8,413
|
$
|
3,532
|
$
|
(3,298
|
)
|
|
3 months ended December 31,
|
12 months ended December 31,
|
||||||||||||||||||||||
|
2016
|
2015
|
% change
|
2016
|
2015
|
% change
|
||||||||||||||||||
1. Revenue - Pro Forma
(amounts in millions)
|
$
|
25.5
|
$
|
27.8
|
-8% |
|
$
|
99.8
|
$
|
96.3
|
4% |
|
||||||||||||
Revenue (GAAP) as reported
|
$
|
25.5
|
$
|
27.8
|
$
|
99.8
|
$
|
94.1
|
||||||||||||||||
Revenue (GAAP) DivX (prior to acquisition)
|
$
|
0.0
|
$
|
0.0
|
$
|
0.0
|
$
|
2.2
|
|
3 months ended December 31,
|
12 months ended December 31,
|
||||||||||||||||||||||
|
2016
|
2015
|
% change
|
2016
|
2015
|
% change
|
||||||||||||||||||
2. Pro Forma Revenue - non-GAAP
(amounts in millions)
|
$
|
25.6
|
$
|
31.4
|
-18 % |
|
$
|
100.8
|
$
|
112.8
|
-11% |
|
||||||||||||
Revenue (GAAP) as reported
|
$
|
25.5
|
$
|
27.8
|
$
|
99.8
|
$
|
94.1
|
||||||||||||||||
Revenue (GAAP) DivX (prior to acquisition)
|
$
|
0.0
|
$
|
0.0
|
$
|
0.0
|
$
|
2.2
|
||||||||||||||||
Revenue due to purchase accounting adjustment
|
$
|
0.1
|
$
|
3.6
|
$
|
1.0
|
$
|
16.5
|
|
3 months ended December 31,
|
12 months ended December 31,
|
||||||||||||||||||||||
|
2016
|
2015
|
% change
|
2016
|
2015
|
% change
|
||||||||||||||||||
3. Revenue - NeuLion Digital Platform
(amounts in millions)
|
$
|
17.5
|
$
|
19.8
|
-12%
|
|
$
|
67.9
|
$
|
66.1
|
3%
|
|
3 months ended December 31,
|
12 months ended December 31,
|
||||||||||||||
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
4. Pro Forma Cost of Revenue as a % of Pro Forma non-
GAAP Revenue
(1)
|
20%
|
17%
|
|
18%
|
|
16%
|
|
(1) |
Figures for the three months ended December 31, 2015 and 2016 and for the year ended December 31, 2016 are actual results.
|
|
3 months ended December 31,
|
12 months ended December 31,
|
||||||||||||||||||||||
|
2016
|
2015
|
% change
|
2016
|
2015
|
% change
|
||||||||||||||||||
5. Pro Forma Adjusted EBITDA
(1)
(amounts in millions)
|
$
|
1.7
|
$
|
8.8
|
-81%
|
|
$
|
14.4
|
$
|
24.8
|
-42%
|
(1) |
Figures for the three months ended December 31, 2015 and 2016 and for the year ended December 31, 2016 are actual results.
|
|
Year ended December 31,
|
|||||||||||
2016
|
2015
|
2014
|
||||||||||
6. Petabytes Streamed
|
333
|
307
|
227
|
Reconciliation of GAAP Revenue to Pro Forma Non-GAAP Revenue
(in thousands)
:
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
|
Organic
|
DivX
|
Consolidated
|
|||||||||||||||||||||
Three months ended December 31,
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
||||||||||||||||||
|
||||||||||||||||||||||||
GAAP Revenue
|
$
|
17,481
|
$
|
19,774
|
$
|
8,047
|
$
|
8,010
|
$
|
25,528
|
$
|
27,784
|
||||||||||||
|
||||||||||||||||||||||||
Revenue excluded due to purchase accounting
|
-
|
-
|
42
|
3,572
|
42
|
3,572
|
||||||||||||||||||
|
||||||||||||||||||||||||
Pro Forma Non-GAAP Revenue
|
$
|
17,481
|
$
|
19,774
|
$
|
8,089
|
$
|
11,582
|
$
|
25,570
|
$
|
31,356
|
||||||||||||
|
||||||||||||||||||||||||
|
Organic
|
DivX
|
Consolidated
|
|||||||||||||||||||||
Year ended December 31,
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
||||||||||||||||||
|
||||||||||||||||||||||||
GAAP Revenue
|
$
|
67,875
|
$
|
66,088
|
$
|
31,914
|
$
|
27,955
|
$
|
99,789
|
$
|
94,043
|
||||||||||||
|
||||||||||||||||||||||||
Pro forma adjustment
|
-
|
-
|
-
|
2,239
|
-
|
2,239
|
||||||||||||||||||
|
||||||||||||||||||||||||
Pro Forma GAAP Revenue
|
$
|
67,875
|
$
|
66,088
|
$
|
31,914
|
$
|
30,194
|
$
|
99,789
|
$
|
96,282
|
||||||||||||
|
||||||||||||||||||||||||
Revenue excluded due to purchase accounting
|
-
|
-
|
1,057
|
16,509
|
1,057
|
16,509
|
||||||||||||||||||
|
||||||||||||||||||||||||
Pro Forma Non-GAAP Revenue
|
$
|
67,875
|
$
|
66,088
|
$
|
32,971
|
$
|
46,703
|
$
|
100,846
|
$
|
112,791
|
· |
Market acceptance of our services. We compete in markets where the value of certain aspects of our services is still in the process of market acceptance. We believe that our future growth depends in part on the continued and increasing acceptance and realization of the value of our service offerings.
|
· |
Technological change. Our success depends in part on our ability to keep pace with technological changes and evolving industry standards in our service offerings and to successfully develop, launch, and drive demand for new and enhanced, innovative, high-quality solutions that meet or exceed customer needs.
|
· |
Technology spending. Our growth and results depend in part on general economic conditions and the pace and level of technology spending by potential customers to take their content digital.
|
|
3 months ended December 31,
|
|||||||
|
2016
|
2015
|
||||||
|
||||||||
Revenue
|
$
|
25,528
|
$
|
27,784
|
||||
|
||||||||
Costs and expenses
|
||||||||
Cost of revenue, exclusive of depreciation and
|
||||||||
amortization shown separately below
|
5,204
|
5,371
|
||||||
Selling, general and administrative, including
|
||||||||
stock-based compensation
|
14,671
|
13,218
|
||||||
Research and development
|
5,052
|
5,528
|
||||||
Depreciation and amortization
|
2,400
|
1,910
|
||||||
|
27,327
|
26,027
|
||||||
Operating income (loss)
|
(1,799
|
)
|
1,757
|
|||||
Other expense
|
(167
|
)
|
(166
|
)
|
||||
Net and comprehensive income (loss) before income taxes
|
(1,966
|
)
|
1,591
|
|||||
Income tax benefit
|
1,622
|
31,176
|
||||||
Net and comprehensive income (loss)
|
$
|
(344
|
)
|
$
|
32,767
|
|
Year ended December 31,
|
|||||||
|
2016
|
2015
|
||||||
|
||||||||
Revenue
|
$
|
99,788
|
$
|
94,043
|
||||
|
||||||||
Costs and expenses
|
||||||||
Cost of revenue, exclusive of depreciation and
|
||||||||
amortization shown separately below
|
18,312
|
17,775
|
||||||
Selling, general and administrative, including
|
||||||||
stock-based compensation
|
52,922
|
45,672
|
||||||
Research and development
|
19,903
|
24,912
|
||||||
Depreciation and amortization
|
8,899
|
7,544
|
||||||
|
100,036
|
95,903
|
||||||
Operating loss
|
(248
|
)
|
(1,860
|
)
|
||||
Other expense
|
(94
|
)
|
(71
|
)
|
||||
Net and comprehensive loss before income taxes
|
(342
|
)
|
(1,931
|
)
|
||||
Income taxes
|
(1,411
|
)
|
27,847
|
|||||
Net and comprehensive income (loss)
|
$
|
(1,753
|
)
|
$
|
25,916
|
|
Year ended December 31,
|
|||||||
|
2015
(1)
|
2014
|
||||||
|
||||||||
Revenue
|
$
|
94,043
|
$
|
55,520
|
||||
|
||||||||
Costs and expenses
|
||||||||
Cost of revenue, exclusive of depreciation and
|
||||||||
amortization shown separately below
|
17,775
|
13,897
|
||||||
Selling, general and administrative, including
|
||||||||
stock-based compensation
|
45,672
|
27,073
|
||||||
Research and development
|
24,912
|
8,381
|
||||||
Depreciation and amortization
|
7,544
|
2,621
|
||||||
|
95,903
|
51,972
|
||||||
Operating income (loss)
|
(1,860
|
)
|
3,548
|
|||||
Other income (expense)
|
(71
|
)
|
290
|
|||||
Net and comprehensive income (loss) before income taxes
|
(1,931
|
)
|
3,838
|
|||||
Income tax benefit (expense)
|
27,847
|
(271
|
)
|
|||||
Net and comprehensive income (loss)
|
$
|
25,916
|
$
|
3,567
|
||||
|
||||||||
(1) Results for DivX are for the period from February 1, 2015 to December 31, 2015.
|
Operating Leases
|
Minimum
|
|||||||||||||||||||
Gross
|
Recovery
|
Net
|
Guarantees
|
Total
|
||||||||||||||||
2017
|
$
|
3,788
|
$
|
(931
|
)
|
$
|
2,857
|
$
|
5,542
|
$
|
8,399
|
|||||||||
2018
|
2,966
|
(1
|
)
|
2,965
|
694
|
3,659
|
||||||||||||||
2019
|
3,117
|
-
|
3,117
|
203
|
3,320
|
|||||||||||||||
2020
|
1,873
|
-
|
1,873
|
-
|
1,873
|
|||||||||||||||
2021
|
1,310
|
-
|
1,310
|
-
|
1,310
|
|||||||||||||||
$
|
13,054
|
$
|
(932
|
)
|
$
|
12,122
|
$
|
6,439
|
$
|
18,561
|
(a) |
Setup fees are charged to customers for design, setup and implementation services. Setup fees are deferred at the beginning of the service period and recognized over the term of the arrangement, which is generally three to five years.
|
(b) |
Annual and/or monthly fees are charged to customers for ongoing hosting, support and maintenance. Annual hosting fees are deferred at the beginning of the service period and recognized evenly over the service period.
|
(c) |
Subscription revenue consists of recurring revenue based on the number of subscribers. The subscriber revenue is typically generated on a monthly, quarterly or annual basis and can be a fixed fee per user, a variable fee per user or a variable fee based on a percentage of the subscription price. We defer the appropriate portion of cash received for the services that have not yet been rendered and recognize the revenue over the term of the subscription, which is generally between 30 days and one year. Pay-per-view revenues are deferred and recognized in the period when the content is viewed. Subscription revenues are recorded on either a gross or net basis depending on the transaction arrangement with the customer. Where subscription revenues are recorded on a gross basis, the total amount of the subscription is deferred and recognized over the subscription term. Where subscription revenues are recorded on a net basis, only our share of revenue from the subscription is deferred and recognized over the term of the subscription. Under U.S. GAAP guidance related to reporting revenue gross as a principal versus net as an agent, the indicators used to determine whether an entity is a principal or an agent to a transaction are subject to judgment. When our assessment of the indicators leads us to conclude that we are the principal in the subscription transaction, revenue is recorded on a gross basis, the total amount of the subscription is deferred and recognized over the subscription term and the share of revenue to our customer is deferred and recognized as a cost of revenue over the term of the subscription. When our assessment of the indicators leads us to conclude that we are the agent in the subscription transaction, only our share of revenue from the subscription is deferred and recognized over the term of the subscription.
|
(d) |
Usage fees are charged to customers for bandwidth and storage. Usage fees are billed on a monthly or quarterly basis and are recognized as the service is being provided.
|
(e) |
Licensing revenue is primarily derived from royalties paid to us by licensees of our intellectual property rights. Revenue in such transactions is recognized during the period in which such customers report to us the number of royalty-eligible units that they have shipped. Revenue from guaranteed minimum-royalty licenses is recognizable upon delivery of the technology license when we have no further obligations. In certain guaranteed minimum-royalty licenses, we enter into extended payment programs with customers. Revenue related to such extended payment programs is recognized at the earlier of when cash is received or when periodic payments become due to us. If we receive non-refundable advance payments from licensees that are allocable to a future contract period or could be creditable against other obligations of the licensee to it, the recognition of the related revenue is deferred until such future period or creditable obligation lapses. Royalties and other license fees are recorded net of reserves for estimated losses, and are recognized when all revenue recognition criteria have been met. We make judgments as to whether collectability can be reasonably assured based on the licensee’s recent payment history unless significant and persuasive evidence exists that the customer is creditworthy. In the absence of a favorable collection history or significant and persuasive evidence that the customer is creditworthy, we recognizes revenue upon receipt of cash, provided that all other revenue recognition criteria have been met.
|
(g) |
Advertising revenues are earned through the insertion of advertising impressions on websites and in streaming video at a cost per thousand impressions. Advertising revenue is recognized based on the number of impressions displayed, or served, during the period. Deferred revenue for advertising represents the timing difference between collection of advertising revenue and when the advertisements are served, which is typically between 30 and 90 days. Advertising revenues are recorded on a gross basis, whereby the total amount billed to the advertiser is recorded as revenue and the share of revenue to our customer is recorded as a cost of revenue.
|
(h) |
Support revenues are earned for providing customer support to our customers’ end users. Support fees are recognized evenly over the service period.
|
(i) |
Equipment revenue consists of the sale and rental of set-top boxes (“STBs”) to content partners and/or end users to enable the end user to receive content over the Internet and display the signal on a standard television. Shipping charges are included in total equipment revenue. Revenue is recognized generally upon shipment to the customer. The customer does not have any right of return on STBs. Revenue is recognized when persuasive evidence of an arrangement exists, prices are determinable, collectability is reasonably assured and the goods or services have been delivered. If any of these criteria are not met, revenue is deferred until such time as all of the criteria are met.
|
ITEM 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
(a)
|
(1)
|
Financial Statements
|
|
|
Consolidated Balance Sheets
|
|
|
Consolidated Statements of Operations and Comprehensive Income (Loss)
|
|
|
Consolidated Statements of Stockholders’ Equity
|
|
|
Consolidated Statements of Cash Flows
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
(2)
|
Financial Statement Schedules
|
|
|
None.
|
(b)
|
Exhibits
|
10.2 #
|
Amended and Restated Directors’ Compensation Plan, as amended (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 5, 2012)
|
|
|
10.3 #
|
Employee Share Purchase Plan (incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement on Form 10, filed April 9, 2009)
|
|
|
10.4
|
Contract for Services, dated as of June 1, 2008, between KyLin TV, Inc. and NeuLion, Inc. (portions of this exhibit have been omitted pursuant to a request for confidential treatment on file with the Securities and Exchange Commission) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed August 3, 2012)
|
|
|
10.5
|
License Agreement, dated as of June 1, 2006, between NeuLion, Inc. and ABS-CBN Global Limited (portions of this exhibit have been omitted pursuant to a request for confidential treatment on file with the Securities and Exchange Commission) (incorporated by reference to Exhibit 10.22 to Amendment No. 3 to the Company’s Registration Statement on Form 10, filed June 23, 2009)
|
|
|
10.6
|
Digital Media and Technology Agreement, effective as of October 1, 2010, between NHL Interactive CyberEnterprises, LLC and NeuLion, Inc. (portions of this exhibit have been omitted pursuant to a request for confidential treatment on file with the Securities and Exchange Commission) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed July 21, 2011)
|
|
|
10.7
|
Amendment 3 to Digital Media and Technology Agreement, effective as of October 20, 2015, by NHL Interactive CyberEnterprises, LLC and NeuLion, Inc. (portions of this exhibit have been omitted pursuant to a request for confidential treatment on file with the Securities and Exchange Commission) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed January 4, 2016)
|
|
|
10.8*#
|
Amended and Restated NeuLion, Inc. 2012 Omnibus Securities and Incentive Plan
|
10.9
|
Amendment 1 to Contract for Services dated as of July 13, 2012, by and between NeuLion, Inc. and KyLin TV, Inc. (portions of this exhibit have been omitted pursuant to a request for confidential treatment on file with the Securities and Exchange Commission) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed October 10, 2012)
|
10.10*#
|
Form of Stock Option Agreement
|
10.11*#
|
Form of Restricted Stock Unit Award Agreement
|
|
|
21*
|
Subsidiaries
|
|
|
31.1*
|
Certification of the Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a-14(a) of the Exchange Act
|
|
|
31.2*
|
Certification of the Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a-14(a) of the Exchange Act
|
|
|
32*
|
Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
NEULION, INC.
|
||
|
|
||
|
|
||
March 1, 2017
|
By:
|
/s/ Roy E. Reichbach
|
|
|
|
Name:
|
Roy E. Reichbach
|
|
|
Title:
|
President and Chief Executive Officer
|
(Principal Executive Officer)
|
Signature
|
|
Capacity
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
/s/ Nancy Li
|
|
Executive Chair and Director
|
|
March 1, 2017
|
Nancy Li
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Roy E. Reichbach
|
|
President, Chief Executive Officer and Director
|
|
March 1, 2017
|
Roy E. Reichbach
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Tim Alavathil
|
|
Chief Financial Officer
|
|
March 1, 2017
|
Tim Alavathil
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Gabriel A. Battista
|
|
Director
|
|
March 1, 2017
|
Gabriel A. Battista
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Robert E. Bostrom
|
|
Director
|
|
March 1, 2017
|
Robert E. Bostrom
|
|
|
|
|
/s/ John A. Coelho
|
|
Director
|
|
March 1, 2017
|
John A. Coelho
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ James R. Hale
|
|
Director
|
|
March 1, 2017
|
James R. Hale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Shirley Strum Kenny
|
|
Director
|
|
March 1, 2017
|
Shirley Strum Kenny
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ David Kronfeld
|
|
Director
|
|
March 1, 2017
|
David Kronfeld
|
|
|
|
|
/s/ Charles B. Wang
|
|
Director
|
|
March 1, 2017
|
Charles B. Wang
|
|
|
|
|
|
Page
|
|
|
F-2
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-8
|
|
As of December 31,
|
|||||||
|
2016
|
2015
|
||||||
|
||||||||
ASSETS
|
||||||||
Current
|
||||||||
Cash and cash equivalents
|
$
|
41,905
|
$
|
53,413
|
||||
Accounts receivable, net
|
14,073
|
12,967
|
||||||
Other receivables
|
791
|
604
|
||||||
Inventory
|
186
|
199
|
||||||
Prepaid expenses and deposits
|
3,657
|
2,928
|
||||||
Due from related parties
|
551
|
304
|
||||||
Total current assets
|
61,163
|
70,415
|
||||||
Property, plant and equipment, net
|
14,227
|
6,585
|
||||||
Intangible assets, net
|
24,495
|
23,627
|
||||||
Goodwill
|
13,229
|
11,496
|
||||||
Deferred tax assets
|
32,574
|
30,614
|
||||||
Other assets
|
2,686
|
1,413
|
||||||
Total assets
|
$
|
148,374
|
$
|
144,150
|
||||
|
||||||||
LIABILITIES AND EQUITY
|
||||||||
Current
|
||||||||
Accounts payable
|
$
|
11,802
|
$
|
10,006
|
||||
Accrued liabilities
|
12,630
|
10,230
|
||||||
Due to related parties
|
-
|
18
|
||||||
Deferred revenue
|
14,036
|
11,570
|
||||||
Total current liabilities
|
38,468
|
31,824
|
||||||
Long-term deferred revenue
|
2,037
|
1,067
|
||||||
Deferred rent liabilities
|
1,265
|
1,649
|
||||||
Deferred tax liabilities
|
1,093
|
1,425
|
||||||
Other long-term liabilities
|
112
|
127
|
||||||
Total liabilities
|
42,975
|
36,092
|
||||||
|
||||||||
Stockholders' equity
|
||||||||
Common stock (par value: $0.01; shares authorized: 2016: 500,000,000 and 2015: 300,000,000; shares issued:
|
||||||||
2016: 279,050,968 and 2015: 280,903,667)
|
2,791
|
2,809
|
||||||
Treasury stock
|
(621
|
)
|
-
|
|||||
Additional paid-in capital
|
167,418
|
167,705
|
||||||
Promissory notes receivable
|
(189
|
)
|
(209
|
)
|
||||
Accumulated deficit
|
(64,000
|
)
|
(62,247
|
)
|
||||
Total stockholders’ equity
|
105,399
|
108,058
|
||||||
Total liabilities and stockholders’ equity
|
$
|
148,374
|
$
|
144,150
|
|
Year ended December 31,
|
|||||||||||
|
2016
|
2015
|
2014
|
|||||||||
|
||||||||||||
Revenue
|
$
|
99,788
|
$
|
94,043
|
$
|
55,520
|
||||||
|
||||||||||||
Costs and expenses
|
||||||||||||
Cost of revenue, exclusive of depreciation and amortization shown separately below
|
18,312
|
17,775
|
13,897
|
|||||||||
Selling, general and administrative, including stock-based compensation
|
52,922
|
45,672
|
27,073
|
|||||||||
Research and development
|
19,903
|
24,912
|
8,381
|
|||||||||
Depreciation and amortization
|
8,899
|
7,544
|
2,621
|
|||||||||
|
100,036
|
95,903
|
51,972
|
|||||||||
Operating income (loss)
|
(248
|
)
|
(1,860
|
)
|
3,548
|
|||||||
|
||||||||||||
Other income (expense)
|
||||||||||||
Loss on foreign exchange
|
(170
|
)
|
(818
|
)
|
(138
|
)
|
||||||
Investment income, net
|
76
|
363
|
428
|
|||||||||
Interest on convertible note, including amortization of debt discount
|
-
|
(123
|
)
|
-
|
||||||||
Gain on conversion of convertible note and revaluation of related derivative, net
|
-
|
507
|
-
|
|||||||||
|
(94
|
)
|
(71
|
)
|
290
|
|||||||
Net and comprehensive income (loss) before income taxes
|
(342
|
)
|
(1,931
|
)
|
3,838
|
|||||||
Income tax benefit (expense)
|
(1,411
|
)
|
27,847
|
(271
|
)
|
|||||||
Net and comprehensive income (loss)
|
$
|
(1,753
|
)
|
$
|
25,916
|
$
|
3,567
|
|||||
|
||||||||||||
Net income (loss) per weighted average number of shares
|
||||||||||||
of common stock outstanding - basic
|
$
|
(0.01
|
)
|
$
|
0.11
|
$
|
0.02
|
|||||
|
||||||||||||
Weighted average number of shares
|
||||||||||||
of common stock outstanding - basic
|
281,690,556
|
233,489,798
|
174,645,803
|
|||||||||
|
||||||||||||
Net income (loss) per weighted average number of shares
|
||||||||||||
of common stock outstanding - diluted
|
$
|
(0.01
|
)
|
$
|
0.11
|
$
|
0.02
|
|||||
|
||||||||||||
Weighted average number of shares
|
||||||||||||
of common stock outstanding - diluted
|
281,690,556
|
245,346,681
|
214,711,362
|
|
Common stock
|
Treasury Stock
|
Additional
|
Promissory
|
Accumulated
|
Total
|
||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
paid-in capital
|
notes
|
deficit
|
equity
|
||||||||||||||||||||||||
Balance, December 31, 2013
|
170,326,338
|
$
|
1,703
|
-
|
$
|
-
|
$
|
85,438
|
$
|
(209
|
)
|
$
|
(87,672
|
)
|
$
|
(740
|
)
|
|||||||||||||||
Accretion of issuance costs
|
||||||||||||||||||||||||||||||||
on Class 4 Preference Shares
|
-
|
-
|
-
|
-
|
(30
|
)
|
-
|
-
|
(30
|
)
|
||||||||||||||||||||||
Exercise of broker warrants
|
627,063
|
6
|
-
|
-
|
125
|
-
|
-
|
131
|
||||||||||||||||||||||||
Exercise of subscriber warrants
|
5,241,544
|
52
|
-
|
-
|
(52
|
)
|
-
|
-
|
-
|
|||||||||||||||||||||||
Exercise of stock options
|
1,858,835
|
19
|
-
|
-
|
714
|
-
|
-
|
733
|
||||||||||||||||||||||||
Stock-based compensation:
|
||||||||||||||||||||||||||||||||
Stock options
|
-
|
-
|
-
|
-
|
1,259
|
-
|
-
|
1,259
|
||||||||||||||||||||||||
Directors’ compensation
|
156,226
|
2
|
-
|
-
|
177
|
-
|
-
|
179
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
-
|
3,567
|
3,567
|
||||||||||||||||||||||||
Balance, December 31, 2014
|
178,210,006
|
1,782
|
-
|
-
|
87,631
|
(209
|
)
|
(84,105
|
)
|
5,099
|
||||||||||||||||||||||
Acquisition of DivX Corporation
|
61,731,172
|
617
|
-
|
-
|
57,904
|
-
|
-
|
58,521
|
||||||||||||||||||||||||
Accretion of issuance costs
|
||||||||||||||||||||||||||||||||
on Class 4 Preference Shares
|
-
|
-
|
-
|
-
|
(46
|
)
|
-
|
-
|
(46
|
)
|
||||||||||||||||||||||
Conversion of Preference Shares
|
28,089,083
|
281
|
-
|
-
|
14,719
|
-
|
-
|
15,000
|
||||||||||||||||||||||||
Dividend on Preference Shares
|
8,176,210
|
82
|
-
|
-
|
3,976
|
-
|
(4,058
|
)
|
-
|
|||||||||||||||||||||||
Exercise of broker units
|
88,064
|
1
|
-
|
-
|
18
|
-
|
-
|
19
|
||||||||||||||||||||||||
Exercise of broker warrants
|
228,749
|
2
|
-
|
-
|
(2
|
)
|
-
|
-
|
-
|
|||||||||||||||||||||||
Exercise of subscriber warrants
|
1,694,768
|
17
|
-
|
-
|
(17
|
)
|
-
|
-
|
-
|
|||||||||||||||||||||||
Exercise of stock options
|
2,395,040
|
24
|
-
|
-
|
823
|
-
|
-
|
847
|
||||||||||||||||||||||||
Stock-based compensation:
|
||||||||||||||||||||||||||||||||
Stock options
|
-
|
-
|
-
|
-
|
1,519
|
-
|
-
|
1,519
|
||||||||||||||||||||||||
Restricted stock units
|
-
|
-
|
-
|
-
|
985
|
-
|
-
|
985
|
||||||||||||||||||||||||
Directors’ compensation
|
290,575
|
3
|
-
|
-
|
195
|
-
|
-
|
198
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
-
|
25,916
|
25,916
|
||||||||||||||||||||||||
Balance, December 31, 2015
|
280,903,667
|
2,809
|
-
|
-
|
167,705
|
(209
|
)
|
(62,247
|
)
|
108,058
|
||||||||||||||||||||||
Exercise of stock options
|
2,302,460
|
23
|
-
|
-
|
446
|
-
|
-
|
469
|
||||||||||||||||||||||||
Stock-based compensation:
|
||||||||||||||||||||||||||||||||
Stock options
|
-
|
-
|
-
|
-
|
2,663
|
-
|
-
|
2,663
|
||||||||||||||||||||||||
Restricted stock units
|
1,653,106
|
17
|
-
|
-
|
1,453
|
-
|
-
|
1,470
|
||||||||||||||||||||||||
Directors’ compensation
|
268,239
|
2
|
-
|
-
|
208
|
-
|
-
|
210
|
||||||||||||||||||||||||
Repurchase and cancellation of
|
||||||||||||||||||||||||||||||||
common stock
|
(6,076,504
|
)
|
(60
|
)
|
(768,800
|
)
|
(621
|
)
|
(5,057
|
)
|
-
|
-
|
(5,738
|
)
|
||||||||||||||||||
Repayment of promissory note
|
20
|
20
|
||||||||||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,753
|
)
|
(1,753
|
)
|
||||||||||||||||||||||
Balance, December 31, 2016
|
279,050,968
|
$
|
2,791
|
(768,800
|
)
|
$
|
(621
|
)
|
$
|
167,418
|
$
|
(189
|
)
|
$
|
(64,000
|
)
|
$
|
105,399
|
|
Year ended December 31,
|
|||||||||||
|
2016
|
2015
|
2014
|
|||||||||
OPERATING ACTIVITIES
|
||||||||||||
|
||||||||||||
Net income (loss)
|
$
|
(1,753
|
)
|
$
|
25,916
|
$
|
3,567
|
|||||
Adjustments to reconcile net income (loss) to net cash
|
||||||||||||
provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
8,899
|
7,544
|
2,621
|
|||||||||
Stock-based compensation
|
4,573
|
2,702
|
1,438
|
|||||||||
Amortization of debt discount
|
-
|
123
|
-
|
|||||||||
Gain on revaluation of convertible note derivative
|
-
|
(507
|
)
|
-
|
||||||||
Deferred income taxes
|
(2,292
|
)
|
(32,402
|
)
|
271
|
|||||||
|
||||||||||||
Changes in operating assets and liabilities, net of acquisitions
|
||||||||||||
Accounts receivable
|
(1,106
|
)
|
18,851
|
(2,767
|
)
|
|||||||
Income tax receivable
|
-
|
4,318
|
-
|
|||||||||
Other receivables
|
(187
|
)
|
246
|
(238
|
)
|
|||||||
Inventory
|
13
|
105
|
177
|
|||||||||
Prepaid expenses, deposits and other assets
|
(1,949
|
)
|
(1,262
|
)
|
(185
|
)
|
||||||
Due from related parties
|
(247
|
)
|
(193
|
)
|
133
|
|||||||
Accounts payable
|
1,797
|
(5,191
|
)
|
1,360
|
||||||||
Accrued liabilities
|
1,779
|
(587
|
)
|
(91
|
)
|
|||||||
Deferred revenue
|
3,436
|
(984
|
)
|
1,038
|
||||||||
Deferred rent liability
|
(384
|
)
|
(263
|
)
|
-
|
|||||||
Long-term liabilities
|
(15
|
)
|
(75
|
)
|
(68
|
)
|
||||||
Due to related parties
|
(18
|
)
|
18
|
(17
|
)
|
|||||||
Cash provided by operating activities
|
12,546
|
18,359
|
7,239
|
|||||||||
|
||||||||||||
INVESTING ACTIVITIES
|
||||||||||||
Acquisition of Saffron Digital Limited
|
(9,000
|
)
|
-
|
-
|
||||||||
Cash acquired from acquisition of DivX Corporation
|
-
|
9,718
|
-
|
|||||||||
Purchase of property, plant and equipment
|
(10,195
|
)
|
(1,428
|
)
|
(1,850
|
)
|
||||||
Cash (used in) provided by investing activities
|
(19,195
|
)
|
8,290
|
(1,850
|
)
|
|||||||
|
||||||||||||
FINANCING ACTIVITIES
|
||||||||||||
Repurchases of common stock
|
(5,117
|
)
|
-
|
-
|
||||||||
Cancellation of restricted stock units for taxes
|
(231
|
)
|
-
|
-
|
||||||||
Repayment of promissory note
|
20
|
-
|
-
|
|||||||||
Proceeds from exercise of stock options
|
469
|
847
|
733
|
|||||||||
Proceeds from exercise of broker units
|
-
|
19
|
132
|
|||||||||
Cash (used in) provided by financing activities
|
(4,859
|
)
|
866
|
865
|
||||||||
|
||||||||||||
Net (decrease) increase in cash and cash equivalents, during the year
|
(11,508
|
)
|
27,515
|
6,254
|
||||||||
Cash and cash equivalents, beginning of year
|
53,413
|
25,898
|
19,644
|
|||||||||
Cash and cash equivalents, end of year
|
$
|
41,905
|
$
|
53,413
|
$
|
25,898
|
||||||
|
||||||||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid for income taxes
|
$
|
3,530
|
$
|
3,961
|
$
|
-
|
||||||
|
||||||||||||
Supplemental disclosure of non-cash activities:
|
||||||||||||
Par value of shares of common stock issued upon exercise of cashless warrants
|
$
|
-
|
$
|
19
|
$
|
52
|
||||||
|
||||||||||||
Accretion of issuance costs on Class 4 Preference Shares
|
$
|
-
|
$
|
46
|
$
|
30
|
||||||
Issuance of shares of common stock upon acquisition of DivX Corporation
|
$
|
-
|
$
|
58,521
|
$
|
-
|
||||||
|
||||||||||||
Issuance of shares of common stock upon conversion of Preference Shares
|
$
|
-
|
$
|
15,000
|
$
|
-
|
||||||
|
||||||||||||
Issuance of shares of common stock upon declaration of dividend on Preference Shares
|
$
|
-
|
$
|
4,058
|
$
|
-
|
(a) |
Setup fees are charged to customers for design, setup and implementation services. Setup fees are deferred at the beginning of the service period and recognized over the term of the arrangement, which is generally three to five years.
|
(b) |
Annual and/or monthly fees are charged to customers for ongoing hosting, support and maintenance. Annual and/or monthly fees are deferred at the beginning of the service period and recognized evenly over the service period.
|
(c)
|
Subscription revenues, which consist of recurring revenues based on the number of subscribers, are typically generated on a monthly, quarterly or annual basis and can be a fixed fee per user, a variable fee per user or a variable fee based on a percentage of the subscription price. The Company defers the appropriate portion of cash received for the services that have not yet been rendered and recognizes the revenue over the term of the subscription, which are generally between 30 days and one year. Pay-per-view revenues are deferred and recognized in the period when the content is viewed. Subscription revenues are recorded on either a gross or net basis depending on the transaction arrangement with the customer. Where subscription revenues are recorded on a gross basis, the total amount of the subscription is deferred and recognized over the subscription term and the share of revenue owing to our customer is deferred and recognized as a cost of revenue over the term of the subscription. Where subscription revenues are recorded on a net basis, only the Company’s share of revenue from the subscription is deferred and recognized over the term of the subscription. Under U.S. GAAP guidance related to reporting revenue gross as a principal versus net as an agent, the indicators used to determine whether an entity is a principal or an agent to a transaction are subject to judgment. When our assessment of the indicators leads us to conclude that we are the principal in the subscription transaction, revenue is recorded on a gross basis, the total amount of the subscription is deferred and recognized over the subscription term. When our assessment of the indicators leads us to conclude that we are the agent in the subscription transaction, only the Company’s share of revenue from the subscription is deferred and recognized over the term of the subscription.
|
(d) |
Usage fees are charged to customers for bandwidth and storage. Usage fees are billed on a monthly or quarterly basis and are recognized as the service is being provided.
|
(e)
|
Licensing revenue is primarily derived from royalties paid to the Company by licensees of the Company’s intellectual property rights. Revenue in such transactions is recognized during the period in which such customers report to the Company the number of royalty-eligible units that they have shipped. Revenue from guaranteed minimum-royalty licenses is recognizable upon delivery of the technology license when no further obligations of the Company exist. In certain guaranteed minimum-royalty licenses, the Company enters into extended payment programs with customers. Revenue related to such extended payment programs is recognized at the earlier of when cash is received or when periodic payments become due to the Company. If the Company receives non-refundable advance payments from licensees that are allocable to a future contract period or could be creditable against other obligations of the licensee to it, the recognition of the related revenue is deferred until such future period or creditable obligation lapses. Royalties and other license fees are recorded net of reserves for estimated losses, and are recognized when all revenue recognition criteria have been met. The Company makes judgments as to whether collectability can be reasonably assured based on the licensee’s recent payment history unless significant and persuasive evidence exists that the customer is creditworthy. In the absence of a favorable collection history or significant and persuasive evidence that the customer is creditworthy, the Company recognizes revenue upon receipt of cash, provided that all other revenue recognition criteria have been met.
|
(f) |
eCommerce revenues are earned through providing customers with ticketing and retail merchandising web solutions. eCommerce revenues are recorded on a net basis when the service has been provided. The Company records as revenue the portion of the fees to which it is entitled as opposed to the amount billed for tickets or retail merchandise sold.
|
(g) |
Advertising revenues are earned through the insertion of advertising impressions on websites and in streaming video at a cost per thousand impressions. Advertising revenue is recognized based on the number of impressions displayed (“served”) during the period. Deferred revenue for advertising represents the timing difference between collection of advertising revenue and when the advertisements are served, which is typically between 30 and 90 days. Advertising revenues are recorded on a gross basis, whereby the total amount billed to the advertiser is recorded as revenue and the share of revenue to our customer is recorded as a cost of revenue.
|
(h) |
Support revenues are earned for providing customer support to our customers’ end users. Support fees are recognized evenly over the service period.
|
(i)
|
Equipment revenue is generated by the sale and rental of set-top boxes (“STBs”) to content partners and/or end users to enable the end user to receive content over the Internet and display the signal on a standard television. Shipping charges are included in total equipment revenue. Revenue is recognized generally upon shipment to the customer. The customer does not have any right of return on STBs. Revenue is recognized when persuasive evidence of an arrangement exists, prices are determinable, collectability is reasonably assured and the goods or services have been delivered. If any of these criteria are not met, revenue is deferred until such time as all of the criteria are met.
|
Computer hardware
|
5 years
|
Computer software
|
3 years
|
Furniture and fixtures
|
7 years
|
Vehicles
|
5 years
|
Building
|
25 years
|
Leasehold improvements
|
Shorter of useful life and lease term
|
Customer relationships
|
5-7 years
|
Developed technology
|
5 years
|
Trademarks
|
7 years
|
Prepaid expenses and deposits
|
$
|
53
|
||
Property, plant and equipment
|
14
|
|||
Intangible assets
|
7,200
|
|||
Goodwill
|
1,733
|
|||
Net assets acquired
|
$
|
9,000
|
Useful Life
|
||||||||
Amount
|
(years)
|
|||||||
Developed technology
|
$
|
3,900
|
5 | |||||
Customer relationships
|
3,300
|
5 | ||||||
$
|
7,200
|
Cash
|
$
|
9,718
|
||
Accounts receivable
|
7,094
|
|||
Contracts receivable
|
16,668
|
|||
Income tax receivable
|
4,317
|
|||
Other receivables
|
247
|
|||
Prepaid expenses
|
1,342
|
|||
Deferred tax asset
|
384
|
|||
Other assets
|
334
|
|||
Property and equipment, net
|
3,592
|
|||
Intangible assets
|
28,500
|
|||
Goodwill
|
169
|
|||
Accounts payable
|
(721
|
)
|
||
Accrued liabilities
|
(5,560
|
)
|
||
Deferred revenue
|
(3,000
|
)
|
||
Deferred tax liability
|
(2,154
|
)
|
||
Deferred rent liability
|
(1,912
|
)
|
||
Net assets acquired
|
$
|
59,018
|
Useful Life
|
||||||||
Amount
|
(years)
|
|||||||
Developed technology
|
$
|
14,400
|
5 | |||||
Customer relationships
|
9,400
|
5 | ||||||
Trademarks
|
4,700
|
7 | ||||||
$
|
28,500
|
Year ended December 31,
|
||||||||
|
2015
|
2014
|
||||||
Total revenue
|
$
|
96,282
|
$
|
81,751
|
||||
Net income (loss)
|
$
|
23,691
|
$
|
(21,878
|
)
|
|||
Income (loss) per share – basic and diluted
|
$
|
0.10
|
$
|
(0.10
|
)
|
As of December 31, 2016
|
||||||||||||
Accumulated
|
Net book
|
|||||||||||
|
Cost
|
depreciation
|
value
|
|||||||||
Land
|
$
|
2,628
|
$
|
-
|
$
|
2,628
|
||||||
Building
|
4,700
|
31
|
4,669
|
|||||||||
Computer hardware
|
16,526
|
12,655
|
3,871
|
|||||||||
Computer software
|
5,248
|
4,769
|
479
|
|||||||||
Vehicles
|
61
|
40
|
21
|
|||||||||
Furniture and fixtures
|
897
|
582
|
315
|
|||||||||
Leasehold improvements
|
2,976
|
1,192
|
1,784
|
|||||||||
Construction in progress
|
460
|
-
|
460
|
|||||||||
|
$
|
33,496
|
$
|
19,269
|
$
|
14,227
|
As of December 31, 2015
|
||||||||||||
Accumulated
|
Net book
|
|||||||||||
|
Cost
|
depreciation
|
value
|
|||||||||
Computer hardware
|
$
|
15,036
|
$
|
11,317
|
$
|
3,719
|
||||||
Computer software
|
4,721
|
4,513
|
208
|
|||||||||
Vehicles
|
61
|
36
|
25
|
|||||||||
Furniture and fixtures
|
839
|
430
|
409
|
|||||||||
Leasehold improvements
|
2,827
|
603
|
2,224
|
|||||||||
|
$
|
23,484
|
$
|
16,899
|
$
|
6,585
|
Balance – December 31, 2013 and 2014
|
$
|
11,327
|
||
Acquisition of DivX
|
169
|
|||
Balance – December 31, 2015
|
$
|
11,496
|
||
Acquisition of Saffron Digital
|
1,733
|
|||
Balance – December 31, 2016
|
$
|
13,229
|
As of December 31, 2016
|
||||||||||||
Accumulated
|
Net book
|
|||||||||||
|
Cost
|
amortization
|
value
|
|||||||||
Customer relationships
|
$
|
24,203
|
$
|
15,446
|
$
|
8,757
|
||||||
Developed technology
|
19,900
|
7,575
|
12,325
|
|||||||||
Trademarks
|
4,995
|
1,582
|
3,413
|
|||||||||
|
$
|
49,098
|
$
|
24,603
|
$
|
24,495
|
As of December 31, 2015
|
||||||||||||
Accumulated
|
Net book
|
|||||||||||
|
Cost
|
amortization
|
value
|
|||||||||
Customer relationships
|
$
|
20,903
|
$
|
13,121
|
$
|
7,782
|
||||||
Developed technology
|
16,000
|
4,240
|
11,760
|
|||||||||
Trademarks
|
4,995
|
910
|
4,085
|
|||||||||
|
$
|
41,898
|
$
|
18,271
|
$
|
23,627
|
2017
|
$
|
6,917
|
||
2018
|
6,871
|
|||
2019
|
6,871
|
|||
2020
|
2,508
|
|||
2021
|
1,272
|
|||
Thereafter
|
56
|
|||
|
$
|
24,495
|
|
Year ended December 31,
|
|||||||||||
|
2016
|
2015
|
2014
|
|||||||||
|
||||||||||||
New York Islanders
|
$
|
280
|
$
|
292
|
$
|
311
|
||||||
Renaissance
|
120
|
120
|
120
|
|||||||||
Smile Train
|
96
|
96
|
90
|
|||||||||
KyLinTV
|
363
|
553
|
847
|
|||||||||
|
$
|
859
|
$
|
1,061
|
$
|
1,368
|
As of December 31,
|
||||||||
|
2016
|
2015
|
||||||
New York Islanders
|
$
|
103
|
$
|
(18
|
)
|
|||
Renaissance
|
26
|
-
|
||||||
KyLin TV
|
422
|
304
|
||||||
|
$
|
551
|
$
|
286
|
|
# |
Weighted average
|
||||||
|
of options
|
exercise price
|
||||||
Outstanding, December 31, 2013
|
14,193,000
|
0.44
|
||||||
Granted
|
3,979,500
|
0.95
|
||||||
Exercised
|
(193,255
|
)
|
0.43
|
|||||
Forfeited
|
(714,750
|
)
|
0.47
|
|||||
Outstanding, December 31, 2014
|
17,264,495
|
0.56
|
||||||
Granted
|
5,283,750
|
1.01
|
||||||
Exercised
|
(310,000
|
)
|
0.51
|
|||||
Forfeited
|
(749,150
|
)
|
0.92
|
|||||
Outstanding, December 31, 2015
|
21,489,095
|
0.66
|
||||||
Granted
|
4,133,200
|
0.64
|
||||||
Exercised
|
(785,245
|
)
|
0.41
|
|||||
Forfeited
|
(1,623,600
|
)
|
0.93
|
|||||
Outstanding, December 31, 2016
|
23,213,450
|
0.65
|
Weighted average
|
Aggregate
|
||||||||||||||||||
Exercise
|
Number
|
remaining
|
Number
|
intrinsic
|
|||||||||||||||
price
|
outstanding
|
contractual life
|
exercisable
|
value
|
|||||||||||||||
$
|
0.39
|
349,000
|
6.2
|
261,750
|
$
|
164
|
|||||||||||||
$
|
0.44
|
10,768,500
|
6.6
|
8,076,375
|
4,523
|
||||||||||||||
$
|
0.48
|
900,000
|
1.6
|
675,000
|
342
|
||||||||||||||
$
|
0.59
|
2,920,950
|
8.9
|
730,238
|
789
|
||||||||||||||
$
|
0.69
|
160,000
|
9.9
|
-
|
27
|
||||||||||||||
$
|
0.78
|
100,000
|
9.6
|
-
|
8
|
||||||||||||||
$
|
0.80
|
10,000
|
9.9
|
-
|
1
|
||||||||||||||
$
|
0.85
|
645,000
|
9.6
|
-
|
6
|
||||||||||||||
$
|
0.94
|
5,554,500
|
8.4
|
2,121,500
|
-
|
||||||||||||||
$
|
1.02
|
350,000
|
8.4
|
87,500
|
-
|
||||||||||||||
$
|
1.03
|
400,000
|
2.4
|
200,000
|
-
|
||||||||||||||
$
|
1.16
|
1,055,500
|
2.8
|
263,875
|
-
|
||||||||||||||
23,213,450
|
7.0
|
12,416,238
|
$
|
5,860
|
|
Year ended December 31,
|
|||||||||||
|
2016
|
2015
|
2014
|
|||||||||
|
||||||||||||
Weighted average
|
||||||||||||
Exercise price of stock options granted
|
$
|
0.64
|
$
|
1.01
|
$
|
0.95
|
||||||
Fair value of stock options granted
|
$
|
0.55
|
$
|
0.85
|
$
|
0.64
|
||||||
Expected volatility
|
96
|
%
|
98
|
%
|
87
|
%
|
||||||
Risk-free interest rate
|
1.01
|
%
|
1.4
|
%
|
2.16
|
%
|
||||||
Expected life (years)
|
7
|
7
|
7
|
|||||||||
Dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
|
# |
Weighted average
|
||||||
|
of options
|
exercise price
|
||||||
Outstanding, December 31, 2013
|
10,074,500
|
0.40
|
||||||
Exercised
|
(2,026,262
|
)
|
0.51
|
|||||
Forfeited
|
(156,063
|
)
|
0.10
|
|||||
Outstanding, December 31, 2014
|
7,892,175
|
0.38
|
||||||
Exercised
|
(2,981,875
|
)
|
0.49
|
|||||
Forfeited
|
(47,000
|
)
|
0.56
|
|||||
Outstanding, December 31, 2015
|
4,863,300
|
0.31
|
||||||
Exercised
|
(2,495,050
|
)
|
0.41
|
|||||
Forfeited
|
(329,500
|
)
|
0.36
|
|||||
Outstanding, December 31, 2016
|
2,038,750
|
0.18
|
Weighted average
|
Aggregate
|
||||||||||||||||||
Exercise
|
Number
|
remaining
|
Number
|
intrinsic
|
|||||||||||||||
|
price
|
outstanding
|
contractual life
|
exercisable
|
value
|
||||||||||||||
$
|
0.18
|
2,038,750
|
0.4
|
2,038,750
|
$
|
1,386
|
|
# |
Weighted average
|
||||||
|
of warrants
|
exercise price
|
||||||
Outstanding, December 31, 2013
|
11,952,269
|
$
|
0.28
|
|||||
Exercised
|
(6,993,063
|
)
|
0.29
|
|||||
Outstanding, December 31, 2014
|
4,959,206
|
$
|
0.27
|
|||||
Exercised
|
(2,967,465
|
)
|
0.3
|
|||||
Forfeited
|
(67,000
|
)
|
0.51
|
|||||
Outstanding, December 31, 2015 and 2016
|
1,924,741
|
$
|
0.25
|
Weighted average
|
Aggregate
|
||||||||||||||||||
Exercise
|
Number
|
remaining
|
Number
|
intrinsic
|
|||||||||||||||
|
price
|
|
outstanding
|
contractual life
|
exercisable
|
value
|
|||||||||||||
$
|
0.22
|
1,894,741
|
5.4
|
1,894,741
|
$
|
1,213
|
|||||||||||||
$
|
2.20
|
30,000
|
0.8
|
30,000
|
-
|
||||||||||||||
1,924,741
|
5.3
|
1,924,741
|
$
|
1,213
|
Year ended
|
||||||||||||
December 31,
|
||||||||||||
|
2016
|
2015
|
2014
|
|||||||||
Net income (loss)
|
$
|
(1,753
|
)
|
$
|
25,916
|
$
|
3,567
|
|||||
Weighted average shares of common stock outstanding
|
||||||||||||
used in calculating basic EPS
|
281,690,556
|
233,489,798
|
174,645,803
|
|||||||||
Effect of dilutive preferred stock, restricted stock units,
|
||||||||||||
stock options and warrants
|
-
|
11,856,883
|
40,065,559
|
|||||||||
Weighted average shares of common stock outstanding
|
||||||||||||
used in calculating diluted EPS
|
281,690,556
|
245,346,681
|
214,711,362
|
|||||||||
Basic EPS
|
$
|
(0.01
|
)
|
$
|
0.11
|
$
|
0.02
|
|||||
Diluted EPS
|
$
|
(0.01
|
)
|
$
|
0.11
|
$
|
0.02
|
Year ended
|
|||
December 31,
|
|||
|
2016
|
||
Class 3 Preference Shares
|
-
|
||
Class 4 Preference Shares
|
-
|
||
Options – Amended and Restated NeuLion, Inc. 2012 Omnibus Securities and Incentive Plan
|
23,213,450
|
||
Restricted Stock Units – Amended and Restated NeuLion, Inc. 2012 Omnibus Securities and Incentive Plan
|
8,815,000
|
||
Options – Fourth Amended and Restated Stock Option Plan
|
2,038,750
|
||
Warrants
|
1,924,741
|
Operating Leases
|
||||||||||||
Gross
|
Recovery
|
Net
|
||||||||||
2017
|
$
|
3,788
|
$
|
(931
|
)
|
$
|
2,857 | |||||
2018
|
2,966
|
(1
|
)
|
2,965
|
||||||||
2019
|
3,117
|
-
|
3,117
|
|||||||||
2020
|
1,873
|
-
|
1,873
|
|||||||||
2021
|
1,310
|
-
|
1,310
|
|||||||||
$
|
13,054
|
$
|
(932
|
)
|
$
|
12,122
|
Year ended December 31,
|
||||||||||||||||||||||||
|
2016
|
2015
|
2014
|
|||||||||||||||||||||
North America
|
$
|
65,395
|
66
|
%
|
$
|
64,146
|
68
|
%
|
$
|
51,418
|
93
|
%
|
||||||||||||
Asia
|
21,502
|
22
|
%
|
20,100
|
21
|
%
|
436
|
0
|
%
|
|||||||||||||||
Europe
|
10,358
|
10
|
%
|
6,249
|
7
|
%
|
2,568
|
5
|
%
|
|||||||||||||||
Australia
|
2,533
|
2
|
%
|
3,548
|
4
|
%
|
1,098
|
2
|
%
|
|||||||||||||||
|
$
|
99,788
|
100
|
%
|
$
|
94,043
|
100
|
%
|
$
|
55,520
|
100
|
%
|
Year ended
|
||||||||||||
December 31,
|
||||||||||||
|
2016
|
2015
|
2014
|
|||||||||
Domestic
|
$
|
2,890
|
$
|
(2,475
|
)
|
$
|
4,405
|
|||||
Foreign
|
(3,232
|
)
|
544
|
(567
|
)
|
|||||||
Total income (loss) before income taxes
|
$
|
(342
|
)
|
$
|
(1,931
|
)
|
$
|
3,838
|
Year ended
|
||||||||||||
December 31,
|
||||||||||||
|
2016
|
2015
|
2014
|
|||||||||
Current:
|
||||||||||||
Federal
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
State
|
324
|
67
|
-
|
|||||||||
Foreign
|
3,379
|
4,457
|
-
|
|||||||||
Total current
|
$
|
3,703
|
$
|
4,524
|
$
|
-
|
||||||
Deferred:
|
||||||||||||
Federal
|
(1,244
|
)
|
(32,534
|
)
|
254
|
|||||||
State
|
(716
|
)
|
468
|
17
|
||||||||
Foreign
|
(332
|
)
|
(305
|
)
|
-
|
|||||||
Total deferred
|
(2,292
|
)
|
(32,371
|
)
|
271
|
|||||||
Income tax expense (benefit)
|
$
|
1,411
|
$
|
(27,847
|
)
|
$
|
271
|
Year ended
|
||||||||||||
December 31,
|
||||||||||||
|
2016
|
2015
|
2014
|
|||||||||
Combined basic federal rate
|
35
|
%
|
35
|
%
|
35
|
%
|
||||||
Income tax (benefit) based on statutory income tax rate
|
$
|
(119
|
)
|
$
|
(676
|
)
|
$
|
1,343
|
|
|||
Increase in income taxes resulting from:
|
||||||||||||
Non-deductible expenses, state and foreign taxes
|
2,033
|
496
|
(49
|
)
|
||||||||
Change in valuation allowance
|
(503
|
)
|
(27,667
|
)
|
(1,023
|
)
|
||||||
Income tax expense (benefit)
|
$
|
1,411
|
$
|
(27,847
|
)
|
$
|
271
|
As of,
|
||||||||
December 31,
|
||||||||
|
2016
|
2015
|
||||||
Non-current deferred tax assets
|
||||||||
Accrued expenses and deferred revenue
|
$
|
3,345
|
$
|
3,430
|
||||
Intangible assets and goodwill
|
-
|
-
|
||||||
Stock options
|
510
|
385
|
||||||
Net operating losses
|
26,149
|
28,543
|
||||||
Credits
|
11,034
|
8,097
|
||||||
Other
|
1,093
|
1,466
|
||||||
Valuation allowance
|
(5,826
|
)
|
(6,330
|
)
|
||||
Total non-current deferred tax assets
|
$
|
36,305
|
$
|
35,591
|
||||
Non-current deferred tax liabilties
|
||||||||
Property, plant and equipment
|
$
|
(2,154
|
)
|
$
|
(2,078
|
)
|
||
Intangible assets and goodwill
|
(2,469
|
)
|
(4,312
|
)
|
||||
Foreign earnings
|
(201
|
)
|
(12
|
)
|
||||
Total non-current deferred tax liabilities
|
$
|
(4,824
|
)
|
$
|
(6,402
|
)
|
||
Total net deferred tax asset
|
$
|
31,481
|
$
|
29,189
|
||||
Net deferred tax liability attributable to foreign jurisdictions
|
1,093
|
1,425
|
||||||
Amount attributable to US domestic
|
$
|
32,574
|
$
|
30,614
|
Page
|
|||
ARTICLE I
|
PURPOSE
|
6
|
|
ARTICLE II
|
DEFINITIONS
|
6
|
|
ARTICLE III
|
EFFECTIVE DATE OF PLAN
|
12
|
|
ARTICLE IV
|
ADMINISTRATION
|
12
|
|
Section 4.1
|
Composition of Committee
|
12
|
|
Section 4.2
|
Powers
|
13
|
|
Section 4.3
|
Additional Powers
|
13
|
|
Section 4.4
|
Committee Action
|
13
|
|
ARTICLE V
|
STOCK SUBJECT TO PLAN AND LIMITATIONS THEREON
|
14
|
|
Section 5.1
|
Stock Grant and Award Limits
|
14
|
|
Section 5.2
|
Stock Offered
|
14
|
|
ARTICLE VI
|
ELIGIBILITY FOR AWARDS; TERMINATION OF EMPLOYMENT,
DIRECTOR STATUS OR CONSULTANT STATUS
|
15
|
|
Section 6.1
|
Eligibility
|
15
|
|
Section 6.2
|
Termination of Employment or Director Status
|
16
|
|
Section 6.3
|
Termination of Consultant Status
|
17
|
|
Section 6.4
|
Special Termination Rule
|
18
|
|
Section 6.5
|
Termination for Cause
|
18
|
|
ARTICLE VII
|
OPTIONS
|
18
|
|
Section 7.1
|
Option Period
|
18
|
|
Section 7.2
|
Limitations on Exercise of Option
|
18
|
|
Section 7.3
|
Special Limitations on Incentive Stock Options
|
19
|
|
Section 7.4
|
Option Agreement
|
19
|
|
Section 7.5
|
Option Price and Payment
|
20
|
|
Section 7.6
|
Stockholder Rights and Privileges
|
20
|
|
Section 7.7
|
Options and Rights in Substitution for Stock Options Granted by Other Corporations
|
20
|
|
Section 7.8
|
Prohibition Against Repricing
|
20
|
|
ARTICLE VIII
|
RESTRICTED STOCK AWARDS
|
20
|
|
Section 8.1
|
Restriction Period to be Established by Committee
|
20
|
|
Section 8.2
|
Other Terms and Conditions
|
21
|
|
Section 8.3
|
Payment for Restricted Stock
|
21
|
|
Section 8.4
|
Restricted Stock Award Agreements
|
21
|
|
ARTICLE IX
|
UNRESTRICTED STOCK AWARDS
|
21
|
|
ARTICLE X
|
RESTRICTED STOCK UNIT AWARDS
|
22
|
Page
|
|||
Section 10.1
|
Terms and Conditions
|
22
|
|
Section 10.2
|
Payments
|
22
|
|
ARTICLE XI
|
PERFORMANCE UNIT AWARDS
|
22
|
|
Section 11.1
|
Terms and Conditions
|
22
|
|
Section 11.2
|
Payments
|
22
|
|
ARTICLE XII
|
PERFORMANCE SHARE AWARDS
|
23
|
|
Section 12.1
|
Terms and Conditions
|
23
|
|
Section 12.2
|
Stockholder Rights and Privileges
|
23
|
|
ARTICLE XIII
|
DISTRIBUTION EQUIVALENT RIGHTS
|
23
|
|
Section 13.1
|
Terms and Conditions
|
23
|
|
Section 13.2
|
Interest Equivalents
|
23
|
|
ARTICLE XIV
|
STOCK APPRECIATION RIGHTS
|
23
|
|
Section 14.1
|
Terms and Conditions
|
23
|
|
Section 14.2
|
Tandem Stock Appreciation Rights
|
24
|
|
ARTICLE XV
|
RECAPITALIZATION OR REORGANIZATION
|
25
|
|
Section 15.1
|
Adjustments to Common Stock
|
25
|
|
Section 15.2
|
Recapitalization
|
25
|
|
Section 15.3
|
Other Events
|
25
|
|
Section 15.4
|
Powers Not Affected
|
25
|
|
Section 15.5
|
No Adjustment for Certain Awards
|
25
|
|
ARTICLE XVI
|
AMENDMENT AND TERMINATION OF PLAN
|
26
|
|
ARTICLE XVII
|
MISCELLANEOUS
|
26
|
|
Section 17.1
|
No Right to Award
|
26
|
|
Section 17.2
|
No Rights Conferred
|
27
|
|
Section 17.3
|
Other Laws; No Fractional Shares; Withholding
|
27
|
|
Section 17.4
|
No Restriction on Corporate Action
|
27
|
|
Section 17.5
|
Restrictions on Transfer
|
27
|
|
Section 17.6
|
Beneficiary Designations
|
28
|
|
Section 17.7
|
Rule 16b-3
|
28
|
Section 17.8
|
Section 162(m)
|
28
|
|
Section 17.9
|
Section 409A
|
29
|
|
Section 17.10
|
Indemnification
|
29
|
|
Section 17.11
|
Other Plans
|
29
|
|
Section 17.12
|
Limits of Liability
|
29
|
|
Section 17.13
|
Governing Law
|
29
|
|
Section 17.14
|
Severability of Provisions
|
29
|
Page
|
|||
Section 17.15
|
No Funding
|
30
|
|
Section 17.16
|
Headings
|
30
|
|
Section 17.17
|
Terms of Award Agreements
|
30
|
|
Section 17.18
|
Effect of a Change of Control
|
30
|
|
APPENDIX A - PROVISION APPLICABLE TO CANADIAN PERSONS
|
31
|
|
(i)
|
modify the limits with respect to the maximum number of shares of Common Stock reserved for grant under this Plan;
|
|
(ii)
|
amend this Article XVI;
|
|
(iii)
|
amend, modify or suspend Section 7.8 (repricing prohibitions), including reducing the exercise price of an Option benefiting an Insider;
|
|
(iv)
|
extend the term of an Option benefiting an Insider;
|
|
(v)
|
disproportionately increase the benefits accruing to Insiders; or
|
|
(vi)
|
amend the limits with respect to Insiders set forth in Section 5.1.
|
NEULION, INC.
|
|||
By:
|
|||
Title:
|
AWARDEE
|
||
|
Jurisdiction of
|
Name Under Which
|
|
Incorporation or
|
Subsidiary Does
|
%
|
|
Name of Subsidiary
|
Organization
|
Business
|
Ownership
|
|
|
|
|
NeuLion USA, Inc.
|
Delaware
|
NeuLion USA
|
100%
|
NeuLion Real Estate, Inc.
|
Delaware
|
NeuLion Real Estate
|
100%
|
|
|
|
|
JumpTV USA Inc.
|
Delaware
|
JumpTV USA Inc.
|
100%
|
|
|
|
|
JumpTV USA Holdco, Inc.
|
Delaware
|
NeuLion
|
100%
|
|
|
|
|
TV-Desi, Inc.
|
Delaware
|
TV-Desi
|
100%
|
|
|
|
|
Interactive Netcasting Systems Inc.
|
Canada
|
NeuLion
|
100%
|
|
|
|
|
NeuLion China Co., Ltd.
|
Shanghai, China
|
NeuLion China
|
100%
|
|
|
|
|
NeuLion, Limited
|
United Kingdom
|
NeuLion, Cycling Television, Cycling TV
|
100%
|
|
|
|
|
TransVideo International Ltd.
|
British Virgin Islands
|
TransVideo
|
100%
|
|
|
|
|
Beijing Digital TransVideo
|
Beijing, China
|
TransVideo
|
100%
|
Technology Co., Ltd. (WOFE)
|
|
|
|
|
|
|
|
DivX Corporation
|
Delaware
|
DivX
|
100%
|
|
|
|
|
DivX, LLC
|
Delaware
|
DivX
|
100%
|
|
|
|
|
DivX Holdings, Inc.
|
Delaware
|
DivX
|
100%
|
|
|
|
|
DivX International, Inc.
|
Delaware
|
DivX
|
100%
|
|
|
|
|
MainConcept GmbH
|
Germany
|
MainConcept
|
100%
|
|
|
|
|
DivX - Tecnologia Ltda.
|
Brazil
|
DivX
|
99%
|
|
|
|
|
DivX International (Hong Kong) Limited
|
Hong Kong
|
DivX
|
100%
|
|
|
|
|
DivX Software Technology (Shenzhen)
|
Shenzhen, China
|
DivX
|
100%
|
Co., Ltd.
|
|
|
|
|
|
|
|
Sonic IP, Inc.
|
California
|
Sonic IP
|
100%
|
|
|
|
|
MainConcept-DivX, OOO
|
Russia
|
MainConcept
|
100%
|
|
|
|
|
MainConcept LLC
|
California
|
MainConcept
|
100%
|
|
|
|
|
NeuLion Japan LLC
|
Japan
|
DivX
|
100%
|
|
|
|
|
DivX Korea GK
|
South Korea
|
DivX
|
100%
|
|
|
|
|
DivX Taiwan Ltd.
|
Taiwan
|
DivX
|
100%
|
(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
|
(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.
|
/s/ Roy E. Reichbach
|
|
|
Name:
|
Roy E. Reichbach
|
|
Title:
|
Chief Executive Officer
(Principal Executive Officer)
|
|
(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
|
(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.
|
/s/ Tim Alavathil
|
|
|
Name:
|
Tim Alavathil
|
|
Title:
|
Chief Financial Officer
(Principal Financial Officer)
|
|
/s/ Roy E. Reichbach
|
|
|
Name:
|
Roy E. Reichbach
|
|
Title:
|
Chief Executive Officer
(Principal Executive Officer)
|
|
/s/ Tim Alavathil
|
|
|
Name:
|
Tim Alavathil
|
|
Title:
|
Chief Financial Officer
(Principal Financial Officer)
|
|