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NeuLion Reports Record Fourth Quarter and Year-End Financial Results

Record Breaking Revenue, Non-GAAP Adjusted EBITDA and Net Income

PLAINVIEW, NY -- (Marketwired) -- 03/13/14 -- NeuLion, Inc. (TSX: NLN), a leading enabler and provider of live and on-demand content to Internet-connected devices, today announced record financial results for both the three months and year ended December 31, 2013 (all amounts are in U.S. dollars).

NeuLion posted its best-ever quarterly revenue of $14.1 million -- an increase of 34% over the previous year period. This boosted NeuLion's 2013 revenue to $47.1 million -- an increase of 21% over the previous year. Quarterly Non-GAAP Adjusted EBITDA was $2.2 million -- an improvement of $1.4 million over the previous year period. Annual Non-GAAP Adjusted EBITDA was $3.5 million -- an improvement of $6.8 million over the previous year. Quarterly Consolidated Net Income was $1.1 million -- an improvement of $1.9 million over the previous year period. Annual Consolidated Net Loss was $2.3 million -- an improvement of $7.8 million over the previous year.

"We are extremely pleased with the improvements in both our fourth quarter and year-end financial results," said Nancy Li, Chief Executive Officer of the Company. "Our financial success directly correlates to our ability to capitalize on the worldwide adoption of digital media as the means for consuming content. This is underscored by the fact that live video delivered by NeuLion increased by 88% to 154 petabytes in 2013. We expect to see continued growth in the breadth and scope of digital media adoption over the next year and beyond."

Fourth Quarter Operational Highlights:

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

  • Deployed new NHL iOS and Android mobile applications for 14 teams, individually branded to offer exclusive team content and interactive features.
  • Launched new digital service for the NBA's Portland Trailblazers, giving fans the ability to watch the Trailblazer's live games inside the NBA-approved territories.
  • Added Watch NFL Network to the Windows Store allowing fans to watch NFL Network programming and NFL RedZone live on their Windows 8 devices.

College Sports
Athletic portal and online destination for college fans

  • Extended multi-year partnership with the Big 12 Conference to host and deliver big12sports.com as well as mobile applications, live streaming of events and affiliate video portals throughout the conferences' footprints.
  • College subscription business substantially increased from the prior year and added adaptive streaming capabilities for over 15 colleges and universities on PCs, smartphones and tablets.
  • Grew mobile traffic by 43% across the NeuLion college network year-over-year.

TV Everywhere
Multi-device content delivery

  • Launched new multi-screen apps for Sport TV, Portugal's number one sports network, which enables subscribers of the network access to a multitude of live HD content on multiple devices.
  • Signed agreements with Shaw Communications and Bell Canada to create iOS and Android applications authenticated for Shaw Cable and Bell Canada subscribers.
  • Expanded the use of the NeuLion Platform to deliver high-quality, interactive live and on-demand high school sports games through MSG Varsity online.

Financial Results for the Three Months Ended December 31, 2013:

Revenue was $14.1 million, as compared to $10.5 million for the three months ended December 31, 2012, an increase of $3.6 million, or 34%.

Non-GAAP Adjusted Gross Margin % was 72%, as compared to 69% for the three months ended December 31, 2012, marking a period-over-period improvement of 3%.

Consolidated operating income was $1.1 million, as compared to a consolidated operating loss of $0.4 million for the three months ended December 31, 2012, an improvement of $1.5 million.

Consolidated net income was $1.1 million, which includes $1.1 million of non-cash and/or non-operating charges, netting a Non-GAAP Adjusted EBITDA of $2.2 million, as compared to a consolidated net loss of $(0.8) million, which includes $1.6 million of non-cash and/or non-operating charges, netting a Non-GAAP Adjusted EBITDA of $0.8 million for the three months ended December 31, 2012, marking a period-over-period improvement in Non-GAAP Adjusted EBITDA of $1.4 million, or 175%.

Financial Results for the Year Ended December 31, 2013:

Revenue was $47.1 million, as compared to $39.0 million for the year ended December 31, 2012, an increase of $8.1 million, or 21%.

Non-GAAP Adjusted Gross Margin % was 72%, as compared to 65% for the year ended December 31, 2012, marking a period-over-period improvement of 7%.

Consolidated operating loss was $1.6 million, as compared to $9.3 million for the year ended December 31, 2012, an improvement of $7.7 million.

Consolidated net loss was $2.3 million, which includes $5.8 million of non-cash and/or non-operating charges, netting a Non-GAAP Adjusted EBITDA of $3.5 million, as compared to a consolidated net loss of $10.1 million, which includes $6.8 million of non-cash and/or non-operating charges, netting a Non-GAAP Adjusted EBITDA of $(3.3) million for the year ended December 31, 2012, marking a year-over-year improvement in Non-GAAP Adjusted EBITDA of $6.8 million.

NeuLion Financial Highlights

NeuLion Financial Highlights

Three months ended December 31, 2013 vs December 31, 2012

                                     Q4 2013    Q4 2012   $ change     %
                                    (million)  (million) (million)   change

Total Revenue                         $14.1      $10.5      $3.6      34%

  Professional Sports (1)             $6.8       $3.9       $2.9      74%
  College Sports (1)                  $3.8       $3.1       $0.7      23%
  TV Everywhere (1)                   $3.0       $2.9       $0.1       3%

Non-GAAP Adjusted Gross Margin %
 (defined below)                       72%        69%        --        --

Consolidated Operating Income
 (Loss)                               $1.1      $(0.4)      $1.5       --

Non-GAAP Adjusted EBITDA (defined
 below)                               $2.2       $0.8       $1.4      175%

Consolidated Net Income (Loss)        $1.1      $(0.8)      $1.9       --



Year ended December 31, 2013 vs December 31, 2012

                                     2013 YE    2012 YE   $ change     %
                                    (million)  (million) (million)   change

Total Revenue                         $47.1      $39.0      $8.1      21%

  Professional Sports (1)             $20.9      $13.5      $7.4      55%
  College Sports (1)                  $12.6      $10.9      $1.7      16%
  TV Everywhere (1)                   $11.3      $10.6      $0.7       7%

Non-GAAP Adjusted Gross Margin %
 (defined below)                       72%        65%        --        --

Consolidated Operating Income
 (Loss)                              $(1.6)     $(9.3)      $7.7       --

Non-GAAP Adjusted EBITDA (defined
 below)                               $3.5      $(3.3)      $6.8       --

Consolidated Net Income (Loss)       $(2.3)     $(10.1)     $7.8       --


(1) Excludes equipment revenue

Use of Non-GAAP Measures

Non-GAAP Adjusted Gross Margin %

We report non-GAAP Adjusted Gross Margin % because it is a key measure used by management to evaluate our results and make strategic decisions about the Company, including potential acquisitions. Non-GAAP Adjusted Gross Margin % represents consolidated operating income (loss) plus depreciation and amortization, research and development expenses and selling general administrative expenses divided by total revenue. This measure does not have any standardized meaning prescribed by U.S. GAAP and therefore is unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with U.S. GAAP.

The below table reconciles our Non-GAAP Adjusted Gross Margin % to its most directly comparable U.S. GAAP measure, consolidated operating income (loss):

                               Three months ended          Year ended
                                  December 31,            December 31,
                                2013        2012        2013        2012

Consolidated operating
 income (loss) on a GAAP
 basis                        1,117,379    (433,242) (1,639,586) (9,333,040)
Amortization and
 depreciation                   767,782     842,614   3,755,054   4,407,474
Research and development      1,962,676   1,663,510   7,422,802   6,672,778
Selling, general and
 administrative, including
 stock-based compensation     6,300,462   5,244,689  24,289,845  23,541,296
                            -----------  ----------  ----------  ----------
Non-GAAP Adjusted Gross
 Margin                      10,148,299   7,317,571  33,828,115  25,288,508
                            ===========  ==========  ==========  ==========

Non-GAAP Adjusted Gross
 Margin % (as a % of total
 revenue)                       72%          69%         72%         65%
                            ===========  ==========  ==========  ==========


Non-GAAP Adjusted EBITDA

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

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

                              Three months ended           Year ended
                                 December 31,             December 31,
                               2013        2012        2013         2012

Consolidated net income
 (loss) on a GAAP basis      1,071,979    (862,040) (2,278,345) (10,078,764)
Depreciation and
 amortization                  767,782     842,614   3,755,054    4,407,474
Stock-based compensation       344,291     361,497   1,416,892    1,627,231
Discount on convertible
 note                               --      77,922     233,769       77,922
Deferred income taxes           11,556     333,884     276,846      612,884
Interest and foreign
 exchange loss                  33,844      16,992     128,144       54,918
                            ----------  ----------  ----------  -----------
Non-GAAP Adjusted EBITDA     2,229,452     770,869   3,532,360   (3,298,335)
                            ==========  ==========  ==========  ===========


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

Forward-Looking Statements
Certain statements herein are forward-looking statements and represent NeuLion's current intentions in respect of future activities. Forward-looking statements can be identified by the use of the words "will," "expect," "seek," "anticipate," "believe," "plan," "estimate," "expect," and "intend" and statements that an event or result "may," "will," "can,""should," "could," or "might" occur or be achieved and other similar expressions. These statements, in addressing future events and conditions, involve inherent risks and uncertainties. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this release are based upon what management believes to be reasonable assumptions, NeuLion cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and NeuLion assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law. Many factors could cause NeuLion's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including: our ability to realize some or all of the anticipated benefits of our partnerships; general economic and market segment conditions; our customers' subscriber levels and financial health; our ability to pursue and consummate acquisitions in a timely manner; our continued relationships with our customers; our ability to negotiate favorable terms for contract renewals; competitor activity; product capability and acceptance rates; technology changes; regulatory changes; foreign exchange risk; interest rate risk; and credit risk. A more detailed assessment of the risks that could cause actual results to materially differ from current expectations is contained in the "Risk Factors" section of NeuLion's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, which is available on www.sec.gov and filed on www.sedar.com.

                               NEULION, INC.

                        CONSOLIDATED BALANCE SHEETS
            (Expressed in U.S. dollars, unless otherwise noted)

                                                         As of December 31,
                                                 --------------------------

                                                         2013          2012
                                                            $             $
                                                 ------------  ------------

ASSETS
Current
Cash and cash equivalents                          19,644,270    11,108,107
Accounts receivable, net                            5,289,136     4,193,949
Other receivables                                     364,797       348,891
Inventory                                             481,012       416,541
Prepaid expenses and deposits                       1,135,949     1,185,051
Due from related parties                              243,842       899,967
                                                 ------------  ------------
Total current assets                               27,159,006    18,152,506
Property, plant and equipment, net                  3,357,626     3,446,648
Intangible assets, net                              1,649,959     4,015,301
Goodwill                                           11,327,626    11,327,626
Other assets                                           81,778       161,913
                                                 ------------  ------------
Total assets                                       43,575,995    37,103,994
                                                 ============  ============

LIABILITIES AND EQUITY
Current
Accounts payable                                   13,002,104     9,813,237
Accrued liabilities                                 5,338,418     4,766,668
Due to related parties                                 16,743        12,282
Deferred revenue                                    8,856,629     5,715,102
Convertible note, net of discount                           -       320,560
                                                 ------------  ------------
Total current liabilities                          27,213,894    20,627,849
Long-term deferred revenue                            725,853     1,134,075
Other long-term liabilities                           270,892       357,852
Deferred tax liability                              1,180,978       911,978
                                                 ------------  ------------
Total liabilities                                  29,391,617    23,031,754
                                                 ------------  ------------

Redeemable preferred stock, net (par value:
 $0.01; authorized: 50,000,000; issued and
 outstanding: 28,089,083)
  Class 3 Preference Shares (par value: $0.01;
   authorized: 17,176,818; issued and
   outstanding: 17,176,818)                        10,000,000    10,000,000
  Class 4 Preference Shares (par value: $0.01;
   authorized; 10,912,265; issued and
   outstanding: 10,912,265)                         4,924,775     4,894,683
                                                 ------------  ------------
Total redeemable preferred stock                   14,924,775    14,894,683
                                                 ------------  ------------

Stockholders' deficit
Common stock (par value: $0.01; authorized:
 300,000,000; issued and outstanding:
 170,326,338 and 164,207,147, respectively)         1,703,263     1,642,072
Additional paid-in capital                         85,437,337    83,138,137
Promissory notes receivable                          (209,250)     (209,250)
Accumulated deficit                               (87,671,747)  (85,393,402)
                                                 ------------  ------------
Total shareholders' deficit                          (740,397)     (822,443)
                                                 ------------  ------------
Total liabilities and shareholders' deficit        43,575,995    37,103,994
                                                 ============  ============



                               NEULION, INC.

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

                                                   Years ended December 31,
                                               ----------------------------

                                                        2013           2012
                                                           $              $
                                               -------------  -------------

Revenue
  Services revenue                                46,257,712     37,178,431
  Equipment revenue                                  849,466      1,804,495
                                               -------------  -------------
                                                  47,107,178     38,982,926
                                               -------------  -------------

Costs and Expenses
  Cost of services revenue, exclusive of
   depreciation and amortization shown
   separately below                               12,697,104     12,280,658
  Cost of equipment revenue                          581,959      1,413,760
  Selling, general and administrative,
   including stock-based compensation             24,289,845     23,541,296
  Research and development                         7,422,802      6,672,778
  Depreciation and amortization                    3,755,054      4,407,474
                                               -------------  -------------
                                                  48,746,764     48,315,966
                                               -------------  -------------
Operating loss                                    (1,639,586)    (9,333,040)
                                               -------------  -------------

Other income (expense)
  Loss on foreign exchange                          (125,657)       (56,244)
  Interest, net                                       (2,487)         1,326
  Discount on convertible note                      (233,769)       (77,922)
                                               -------------  -------------
                                                    (361,913)      (132,840)
                                               -------------  -------------
Net and comprehensive loss before income taxes    (2,001,499)    (9,465,880)
  Provision for income taxes                        (276,846)      (612,884)
                                               -------------  -------------
Net and comprehensive loss                        (2,278,345)   (10,078,764)
                                               =============  =============


Net loss per weighted average number of shares
 of common stock outstanding - basic and
 diluted                                       $       (0.01) $       (0.07)
                                               =============  =============

Weighted average number of shares of common
 stock outstanding - basic and diluted           166,663,448    146,899,685
                                               =============  =============



                               NEULION, INC.

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

                                                   Years ended December 31,
                                                 --------------------------

                                                         2013          2012
                                                            $             $
                                                 ------------  ------------

OPERATING ACTIVITIES
Consolidated net loss                              (2,278,345)  (10,078,764)
Adjustments to reconcile net loss to cash
 provided by (used in) operating activities
  Depreciation and amortization                     3,755,054     4,407,474
  Discount on convertible note                        233,769        77,922
  Stock-based compensation                          1,416,892     1,627,231
  Income taxes                                        269,000       612,884

Changes in operating assets and liabilities
  Accounts receivable                              (1,095,187)     (699,872)
  Inventory                                           (64,471)      380,895
  Prepaid expenses, deposits and other assets         129,237        68,613
  Other receivables                                   (15,906)      (39,127)
  Due from related parties                            656,125      (165,515)
  Accounts payable                                  3,188,867       215,878
  Accrued liabilities                                 635,341      (524,327)
  Deferred revenue                                  2,733,305      (684,793)
  Long-term liabilities                               (86,960)      (74,307)
  Due to related parties                                4,461        (1,016)
                                                 ------------  ------------
Cash provided by (used in) operating activities     9,481,182    (4,876,824)
                                                 ------------  ------------

INVESTING ACTIVITIES
Purchase of property, plant and equipment, net     (1,300,690)   (1,106,700)
                                                 ------------  ------------
Cash used in investing activities                  (1,300,690)   (1,106,700)
                                                 ------------  ------------

FINANCING ACTIVITIES
Exercise of stock options                             353,991            --
Exercise of broker warrants                             1,680            --
Convertible note                                           --       545,628
Private placement, net                                     --     4,199,121
                                                 ------------  ------------
Cash provided by financing activities                 355,671     4,744,749
                                                 ------------  ------------
Net increase (decrease) in cash and cash
 equivalents during the year                        8,536,163    (1,238,775)
Cash and cash equivalents, beginning of year       11,108,107    12,346,882
                                                 ------------  ------------
Cash and cash equivalents, end of year             19,644,270    11,108,107
                                                 ============  ============


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