Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - NEULION, INC. | ex99_2.htm |
| EX-1.1 - EXHIBIT 1.1 - NEULION, INC. | ex1_1.htm |
| 8-K - NEULION, INC. | p12181718k.htm |
Exhibit 99.1
NeuLion, Inc.
Unaudited Pro Forma Condensed Consolidated Financial Statements
1
NEULION, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of September 30, 2017
(in thousands, except share data)
(Expressed in U.S. dollars)
|
Historical
|
Pro Forma
|
||||||||||||
|
September 30,
|
Pro Forma
|
September 30,
|
|||||||||||
|
2017
|
Adjustments
|
Notes
|
2017
|
||||||||||
|
ASSETS
|
|||||||||||||
|
Current
|
|||||||||||||
|
Cash and cash equivalents
|
$
|
53,908
|
$
|
40,500
|
(i)
|
$
|
94,408
|
||||||
|
Accounts receivable, net of allowance of doubtful accounts of $629
|
14,590
|
14,590
|
|||||||||||
|
Other receivables
|
395
|
395
|
|||||||||||
|
Inventory
|
179
|
179
|
|||||||||||
|
Assets held for sale
|
6,833
|
6,833
|
|||||||||||
|
Prepaid expenses and deposits
|
3,288
|
(865
|
)
|
(ii)
|
2,423
|
||||||||
|
Due from related parties
|
266
|
266
|
|||||||||||
|
Total current assets
|
79,459
|
39,635
|
119,094
|
||||||||||
|
Property, plant and equipment, net
|
8,662
|
8,662
|
|||||||||||
|
Intangible assets, net
|
19,296
|
(11,188
|
)
|
(iii)
|
8,108
|
||||||||
|
Goodwill
|
13,229
|
(6,541
|
)
|
(iii)
|
6,688
|
||||||||
|
Deferred tax assets
|
34,388
|
1,244
|
(iv)
|
35,632
|
|||||||||
|
Other assets
|
4,252
|
(3,778
|
)
|
(ii)
|
474
|
||||||||
|
Total assets
|
$
|
159,286
|
$
|
19,372
|
$
|
178,658
|
|||||||
|
LIABILITIES AND EQUITY
|
|||||||||||||
|
Current
|
|||||||||||||
|
Accounts payable
|
$
|
35,480
|
$
|
35,480
|
|||||||||
|
Accrued liabilities
|
10,016
|
10,016
|
|||||||||||
|
Due to related parties
|
40
|
40
|
|||||||||||
|
Deferred revenue
|
13,063
|
(410
|
)
|
(v)
|
12,653
|
||||||||
|
Total current liabilities
|
58,599
|
(410
|
)
|
58,189
|
|||||||||
|
Long-term deferred revenue
|
1,311
|
(78
|
)
|
(v)
|
1,233
|
||||||||
|
Deferred rent liabilities
|
1,488
|
1,488
|
|||||||||||
|
Deferred tax liabilities
|
844
|
844
|
|||||||||||
|
Other long-term liabilities
|
11
|
11
|
|||||||||||
|
Total liabilities
|
62,253
|
(488
|
)
|
61,765
|
|||||||||
|
Total stockholders’ equity
|
97,033
|
19,860
|
(vi)
|
116,893
|
|||||||||
|
Total liabilities and stockholders’ equity
|
$
|
159,286
|
$
|
19,372
|
$
|
178,658
|
|||||||
See accompanying notes
2
NEULION, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the nine months ended September 30, 2017
(in thousands, except for number of shares and per share data)
(expressed in U.S. dollars)
|
Nine Months Ended
|
|||||||||||||
|
September 30, 2017
|
Pro Forma
|
Pro Forma
|
|||||||||||
|
NeuLion
|
Adjustments
|
Notes
|
Total
|
||||||||||
|
$
|
$
|
$
|
|||||||||||
|
Revenue
|
$
|
69,792
|
$
|
(14,969
|
)
|
(1)
|
$
|
54,823
|
|||||
|
Other costs and expenses
|
|||||||||||||
|
Cost of revenue, exclusive of depreciation and
|
|||||||||||||
|
amortization shown separately below
|
13,333
|
(1,104
|
)
|
(2)
|
12,229
|
||||||||
|
Selling, general and administration, including
|
|||||||||||||
|
stock-based compensation
|
44,802
|
(5,585
|
)
|
(3)
|
39,217
|
||||||||
|
Research and development
|
13,787
|
(1,998
|
)
|
(4)
|
11,789
|
||||||||
|
Depreciation and amortization
|
7,483
|
(3,238
|
)
|
(5)
|
4,245
|
||||||||
|
Loss on assets held for sale
|
395
|
395
|
|||||||||||
|
$
|
79,800
|
$
|
(11,925
|
)
|
$
|
67,875
|
|||||||
|
Operating income (loss)
|
(10,008
|
)
|
(3,044
|
)
|
(13,052
|
)
|
|||||||
|
Other income (expense)
|
|||||||||||||
|
Gain on foreign exchange
|
$
|
534
|
$
|
(86
|
)
|
(6)
|
$
|
448
|
|||||
|
Investment income, net
|
26
|
26
|
|||||||||||
|
Other income (expense)
|
560
|
(86
|
)
|
474
|
|||||||||
|
Net income (loss) before income taxes
|
(9,448
|
)
|
(3,130
|
)
|
(12,578
|
)
|
|||||||
|
Income tax benefit
|
163
|
257
|
(7)
|
420
|
|||||||||
|
Net income (loss) after income taxes
|
$
|
(9,285
|
)
|
$
|
(2,873
|
)
|
$
|
(12,158
|
)
|
||||
|
Net income per weighted average number of shares outstanding – basic and diluted
|
$
|
(0.03
|
)
|
$
|
(0.04
|
)
|
|||||||
|
Weighted average number of shares outstanding – basic and diluted
|
278,072,525
|
278,072,525
|
|||||||||||
See accompanying notes
3
NEULION, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 2016
(in thousands, except for number of shares and per share data)
(expressed in U.S. dollars)
|
Year Ended
|
|||||||||||||
|
December 31, 2016
|
Pro Forma
|
Pro Forma
|
|||||||||||
|
NeuLion
|
Adjustments
|
Notes
|
Total
|
||||||||||
|
$
|
$
|
$
|
|||||||||||
|
Revenue
|
$
|
99,788
|
$
|
(20,707
|
)
|
(1)
|
$
|
79,081
|
|||||
|
Other costs and expenses
|
|||||||||||||
|
Cost of revenue, exclusive of depreciation and
|
|||||||||||||
|
amortization shown separately below
|
18,312
|
(2,316
|
)
|
(2)
|
15,996
|
||||||||
|
Selling, general and administration, including
|
|||||||||||||
|
stock-based compensation
|
52,922
|
(9,076
|
)
|
(3)
|
43,846
|
||||||||
|
Research and development
|
19,903
|
(5,594
|
)
|
(4)
|
14,309
|
||||||||
|
Depreciation and amortization
|
8,899
|
(4,317
|
)
|
(5)
|
4,582
|
||||||||
|
$
|
100,036
|
$
|
(21,303
|
)
|
$
|
78,733
|
|||||||
|
Operating income (loss)
|
(248
|
)
|
596
|
348
|
|||||||||
|
Other income (expense)
|
|||||||||||||
|
Loss on foreign exchange
|
$
|
(170
|
)
|
$
|
99
|
(6)
|
$
|
(71
|
)
|
||||
|
Investment income, net
|
76
|
76
|
|||||||||||
|
(94
|
)
|
99
|
5
|
||||||||||
|
Net income (loss) before income taxes
|
(342
|
)
|
695
|
353
|
|||||||||
|
Income tax expense
|
(1,411
|
)
|
(1,037
|
)
|
(7)
|
(2,448
|
)
|
||||||
|
Net income (loss) after income taxes
|
$
|
(1,753
|
)
|
$
|
(342
|
)
|
$
|
(2,095
|
)
|
||||
|
Net income per weighted average number of shares outstanding – basic and diluted
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
|||||||
|
Weighted average number of shares outstanding – basic and diluted
|
281,690,556
|
281,690,556
|
|||||||||||
See accompanying notes
4
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
(Expressed in U.S. dollars, unless otherwise noted)
1. Description of Transaction
On February 12, 2018, NeuLion, Inc. (“NeuLion” or the “Company”) completed the sale of certain assets of the DivX Corporation business for total consideration of approximately $41.5 million (the “Transaction”). The assets sold as part of the Transaction predominantly consisted of patents that the Company acquired as part of its purchase of DivX Corporation in January 2015.
2. Basis of Presentation
The accompanying unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2017 and the 12 months ended December 31, 2016 give effect to the Transaction as if it had occurred on January 1, 2016. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2017 gives effect to the transaction as if it had occurred on September 30, 2017.
The unaudited pro forma condensed consolidated financial statements (the “Pro Forma Statements”) have been prepared in accordance with accounting principles generally accepted in the United States. The accounting policies used in the preparation of the Pro Forma Statements are consistent with those used by the Company in the preparation of its consolidated financial statements for the year ended December 31, 2016 and the nine-month period ended September 30, 2017.
The Pro Forma Statements have been prepared and should be read in conjunction with the following information:
| (i) |
Audited consolidated financial statements of NeuLion for the fiscal year ended December 31, 2016; and
|
|
(ii)
|
Unaudited consolidated financial statements of NeuLion for the nine-month period ended September 30, 2017.
|
The Pro Forma Statements do not include any anticipated financial benefits from such items as cost savings arising from the Transaction. The Pro Forma Statements are not necessarily indicative of the results of operations or the financial position that would have resulted had the Transaction been effected on the dates indicated, or the results that may be obtained in the future.
3. Accounting for the Transaction
The net assets sold are as follows:
|
Prepaid expenses and deposits
|
$
|
865
|
||
|
Intangible assets, net
|
11,188
|
|||
|
Goodwill
|
6,541
|
|||
|
Other assets
|
3,778
|
|||
|
Deferred tax liabilities
|
(1,244
|
)
|
||
|
Deferred revenue
|
(410
|
)
|
||
|
Long-term deferred revenue
|
(78
|
)
|
||
|
Net Assets Sold
|
$
|
20,640
|
||
|
Gain on sale
|
19,860
|
|||
|
Proceeds from sale (net of transaction costs)
|
$
|
40,500
|
5
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
(Expressed in U.S. dollars, unless otherwise noted)
Allocation of goodwill to the business sold is preliminary and may be adjusted as a result of obtaining additional information regarding preliminary estimates of fair values made at the date of sale.
4. Pro Forma Condensed Consolidated Balance Sheet Adjustments
The unaudited pro forma condensed consolidated balance sheet adjustments at September 30, 2017 incorporates the following adjustments:
| (i) |
Cash and cash equivalents have been increased by $40,500, which represents $41,500 of total consideration net of $1,000 in transaction costs.
|
| (ii) |
Prepaid expenses and other assets have been decreased by $865 and $3,778, respectively, which principally represent assets that will no longer be used by the Company after the transaction.
|
| (iii) |
Intangible assets and goodwill have been decreased by $11,188 and $6,541, respectively, which represent the estimated amounts allocated to the business sold to the buyer.
|
| (iv) |
Deferred tax assets have been increased by $1,244, which represents the estimated deferred tax liability associated with the intangible assets sold to the buyer.
|
| (v) |
Short-term and long-term deferred revenue have been decreased by $410 and $78, respectively, which represent prepayments received on customer contracts sold to the buyer.
|
| (vi) |
Retained earnings has been increased by $19,860, which represents the difference between the sale price and the carrying value of assets sold. This estimated gain has not been reflected in the pro forma condensed consolidated statement of operations as it is considered to be nonrecurring in nature.
|
5. Pro Forma Condensed Consolidated Statement of Operations Adjustments
The unaudited pro forma condensed consolidated statement of operations adjustments for the nine-month period ended September 30, 2017 and the year ended December 31, 2016 incorporates the following adjustments:
| 1) |
Revenue has been decreased by $14,969 and $20,707 for the nine-month period ended September 30, 2017 and for the year ended December 31, 2016, respectively, to reflect the revenue lost due to the sale of the customer contracts sold in the Transaction.
|
| 2) |
Cost of revenue, exclusive of depreciation and amortization, has been decreased by $1,104 and $2,316 for the nine-month period ended September 30, 2017 and for the year ended December 31, 2016, respectively, to reflect the reduction in costs due to the sale of the customer contracts sold in the Transaction.
|
| 3) |
Selling, general and administrative, including stock-based compensation, has been decreased by $5,585 and $9,076 for the nine-month period ended September 30, 2017 and for the year ended December 31, 2016, respectively, to reflect the reduction in expenses due to the sale of the customer contracts sold in the Transaction.
|
| 4) |
Research and development has been decreased by $1,998 and $5,594 for the nine-month period ended September 30, 2017 and for the year ended December 31, 2016, respectively, to reflect the reduction in expenses due to the sale of the customer contracts sold in the Transaction.
|
6
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
(Expressed in U.S. dollars, unless otherwise noted)
| 5) |
Amortization and depreciation has been decreased by $3,238 and $4,317 for the nine-month period ended September 30, 2017 and for the year ended December 31, 2016, respectively, to eliminate amortization expense of intangible assets sold in the Transaction.
|
| 6) |
Gain (loss) on foreign exchange has been decreased by $86 for the nine-month period ended September 30, 2017 and increased by $99 for the year ended December 31, 2016, to eliminate foreign exposure due to the sale of the customer contracts sold in the Transaction.
|
| 7) |
Income tax benefit (expense) has been decreased by $257 for the nine-month period ended September 30, 2017 and increased by $1,037 for the year ended December 31, 2016, to reflect the income tax effect due to the sale of the customer contracts sold in the Transaction.
|
6. Loss Per Share
Basic loss per share is computed by dividing net loss for the period by the weighted average number of shares outstanding for the period. Diluted loss per share is computed by dividing net loss for the period by the weighted average number of shares outstanding and if dilutive, potential common shares using the treasury stock method. Potential common shares consist of stock options and warrants.
The basic and diluted loss per share for the nine-month period ended September 30, 2017 and for the fiscal year ended December 31, 2016 have been adjusted to reflect the revised net loss for the period.
7