----

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| x      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934  |
|--------|-------------------------------------------------------------------------------------------|
|   |                                                                                      |
|   | For the quarterly period ended June 30, 2011                                              |
|   |                                                                                      |
| or     |
|   |                                                                                      |
| o      | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|   |                                                                                      |
|   | For the transition period from _____ to _____                                             |

| Delaware                                                      |   | 98-0469479                          |
|---------------------------------------------------------------|--------|-------------------------------------|
| (State or Other Jurisdiction ofIncorporation or Organization) |   | (I.R.S. EmployerIdentification No.) |

| 1600 Old Country Road, Plainview, New York | 11803      |
|--------------------------------------------|------------|
| (Address of principal executive offices)   | (Zip Code) |

| (516) 622-8300                                             |
|------------------------------------------------------------|
| (Registrant’s Telephone Number, Including Area Code) |

| Large accelerated filer                                            | o | Accelerated filer         | o |
|--------------------------------------------------------------------|---|---------------------------|---|
| Non-accelerated filer(Do not check if a smaller reporting company) | o | Smaller reporting company | x |

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NEULION, INC.

|                                      |                                                                 |  Page No. |
|-------------------------------------------|----------------------------------------------------------------------|----------------|
| Part I.  Financial Information  |
|                                      |                                                                 |           |
| Item 1.                              | Financial Statements                                                 | 1              |
|                                      |                                                                 |           |
|                                      | Consolidated Balance Sheets as at                                    |           |
|                                      | June 30, 2011 (unaudited) and December 31, 2010                      | 1              |
|                                      |                                                                 |           |
|                                      | Consolidated Statements of Operations and Comprehensive Loss for the |           |
|                                      | Three and Six Months Ended June 30, 2011 and 2010 (unaudited)        | 2              |
|                                      |                                                                 |           |
|                                      | Consolidated Statements of Equity for the                            |           |
|                                      | Six Months Ended June 30, 2011 (unaudited)                           | 3              |
|                                      |                                                                 |           |
|                                      | Consolidated Statements of Cash Flows for the                        |           |
|                                      | Three and Six Months Ended June 30, 2011 and 2010 (unaudited)        | 4              |
|                                      |                                                                 |           |
|                                      | Notes to Consolidated Financial Statements                           | 5              |
|                                      |                                                                 |           |
| Item 2.                              | Management’s Discussion and Analysis of Financial         |           |
|                                      | Condition and Results of Operations                                  | 14             |
|                                      |                                                                 |           |
| Item 3.                              | Quantitative and Qualitative Disclosures about Market Risk           | 27             |
|                                      |                                                                 |           |
| Item 4.                              | Controls and Procedures                                              | 27             |
|                                      |
| Part II. Other Information           |
|                                      |
| Item 2.                                   | Unregistered Sales of Equity Securities and Use of Proceeds          | 28             |
|                                      |                                                                 |
| Item 6.                              | Exhibits                                                             | 28             |
|                                      |                                                                 |
| SIGNATURES                                | 29                                                                   |

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Table of Contents

Item 1.      Financial Statements

NEULION, INC.

|                                                                                     |   | June 30,    |        |   | December 31, |   |
|------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------------|--------|
|                                                                                     |   | 2011        |        |   | 2010         |   |
|                                                                                     |   | (unaudited) |        |   |         |   |
|                                                                                     |   | $           |        |   | $            |   |
|                                                                                     |   |        |        |   |         |   |   |   |
| ASSETS                                                                                   |   |        |        |   |         |   |   |   |
| Current                                                                                  |   |        |        |   |         |   |   |   |
| Cash and cash equivalents                                                                |   |        | 9,338,782   |   |         |   | 12,929,325 |   |
| Accounts receivable, net of allowance for doubtful accounts of $57,631 and $60,555, |   |        |        |   |         |   |   |   |
|    respectively                                                           |   |        | 3,566,272   |   |         |   | 2,356,843 |   |
| Other receivables                                                                        |   |        | 184,120     |   |         |   | 296,154 |   |
| Inventory (note 4)                                                                       |   |        | 1,059,862   |   |         |   | 946,780 |   |
| Prepaid expenses and deposits                                                            |   |        | 1,112,498   |   |         |   | 1,014,703 |   |
| Due from related parties (note 6)                                                        |   |        | 295,619     |   |         |   | 1,261,776 |   |
| Total current assets                                                                     |   |        | 15,557,153  |   |         |   | 18,805,581 |   |
| Property, plant and equipment, net                                                       |   |        | 4,129,403   |   |         |   | 5,119,422 |   |
| Intangible assets, net                                                                   |   |        | 7,936,910   |   |         |   | 9,283,151 |   |
| Goodwill                                                                                 |   |        | 11,240,432  |   |         |   | 11,240,432 |   |
| Other assets                                                                             |   |        | 277,731     |   |         |   | 259,497 |   |
| Total assets                                                                             |   |        | 39,141,629  |   |         |   | 44,708,083 |   |
|                                                                                     |   |        |        |   |         |   |   |   |
| LIABILITIES AND EQUITY                                                                   |   |        |        |   |         |   |   |   |
| Current                                                                                  |   |        |        |   |         |   |   |   |
| Accounts payable                                                                         |   |        | 3,691,809   |   |         |   | 5,504,489 |   |
| Accrued liabilities                                                                      |   |        | 5,150,781   |   |         |   | 5,431,217 |   |
| Due to related parties (note 6)                                                          |   |        | —     |   |         |   | 26 |   |
| Deferred revenue                                                                         |   |        | 4,527,985   |   |         |   | 6,432,445 |   |
| Total current liabilities                                                                |   |        | 13,370,575  |   |         |   | 17,368,177 |   |
| Long-term deferred revenue                                                               |   |        | 541,000     |   |         |   | 548,309 |   |
| Other long-term liabilities                                                              |   |        | 473,915     |   |         |   | 495,275 |   |
| Total liabilities                                                                        |   |        | 14,385,490  |   |         |   | 18,411,761 |   |
|                                                                                     |   |        |        |   |         |   |   |   |
| Redeemable preferred stock, net (note 12)                                                |   |        |        |   |         |   |   |   |
| Class 3 Preference Shares (par value: $0.01; authorized: 17,176,818; issued and          |   |        |        |   |         |   |   |   |
|     outstanding: 17,176,818)                                         |   |        | 10,000,000  |   |         |   | 10,128,667 |   |
| Class 4 Preference Shares (par value: $0.01; authorized: 10,912,265; issued and          |   |        |        |   |         |   |   |   |
|     outstanding: 10,912,265)                                         |   |        | 4,903,906   |   |         |   | — |   |
| Total redeemable preferred stock                                                         |   |        | 14,903,906  |   |         |   | 10,128,667 |   |
|                                                                                     |   |        |        |   |         |   |   |   |
| NeuLion, Inc. stockholders' equity                                                       |   |        |        |   |         |   |   |   |
| Common stock (par value: $0.01; authorized: 300,000,000; issued and outstanding:         |   |        |        |   |         |   |   |   |
|    139,868,063 and 139,180,279, respectively)                             |   |        | 1,398,680   |   |         |   | 1,391,802 |   |
| Additional paid-in capital                                                               |   |        | 76,384,706  |   |         |   | 75,480,756 |   |
| Promissory notes receivable                                                              |   |        | (209,250    | )      |         |   | (209,250 | ) |
| Accumulated deficit                                                                      |   |        | (68,167,858 | )      |         |   | (60,963,093 | ) |
| Total NeuLion, Inc. stockholders’ equity                                           |   |        | 9,406,278   |   |         |   | 15,700,215 |   |
| Non-controlling interest                                                                 |   |        | 445,955     |   |         |   | 467,440 |   |
| Total equity                                                                             |   |        | 9,852,233   |   |         |   | 16,167,655 |   |
| Total liabilities and equity                                                             |   |        | 39,141,629  |   |         |   | 44,708,083 |   |

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Table of Contents

NEULION, INC.

|                                                            |   | Three months |        |   |        Six months           |   |
|-----------------------------------------------------------------|--------|--------------|-------------|--------|-----------------------------------------------------------|--------|
|                                                            |   | ended        |        |   |       ended                      |   |
|                                                            |   | June 30,     |        |   |          June 30, |   |
|                                                            |   | 2011         |        |   | 2010                                                      |   |   | 2011 |   |   | 2010 |   |
|                                                            |   | $            |        |   | $                                                         |   |   | $ |   |   | $ |   |
|                                                            |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Revenue                                                         |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Services revenue                                                |   |         | 8,813,595   |   |                                                      |   | 6,692,792 |   |   |   | 18,377,525 |   |   |   | 14,155,691 |   |
| Equipment revenue                                               |   |         | 1,144,529   |   |                                                      |   | 565,943 |   |   |   | 1,526,597 |   |   |   | 947,539 |   |
|                                                            |   |         | 9,958,124   |   |                                                      |   | 7,258,735 |   |   |   | 19,904,122 |   |   |   | 15,103,230 |   |
|                                                            |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Costs and expenses                                              |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Cost of services revenue, exclusive of depreciation and         |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| amortization shown separately below                             |   |         | 3,150,377   |   |                                                      |   | 2,650,266 |   |   |   | 6,819,188 |   |   |   | 6,014,674 |   |
| Cost of equipment revenue                                       |   |         | 826,326     |   |                                                      |   | 540,192 |   |   |   | 1,137,888 |   |   |   | 894,881 |   |
| Selling, general and administrative, including                  |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| stock-based compensation (note 9)                               |   |         | 7,929,138   |   |                                                      |   | 8,862,335 |   |   |   | 16,328,212 |   |   |   | 16,195,247 |   |
| Depreciation and amortization                                   |   |         | 1,378,592   |   |                                                      |   | 1,285,325 |   |   |   | 2,824,011 |   |   |   | 2,562,290 |   |
|                                                            |   |         | 13,284,433  |   |                                                      |   | 13,338,118 |   |   |   | 27,109,299 |   |   |   | 25,667,092 |   |
| Operating loss                                                  |   |         | (3,326,309  | )      |                                                      |   | (6,079,383 | ) |   |   | (7,205,177 | ) |   |   | (10,563,862 | ) |
|                                                            |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense)                                          |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized gain on derivative (note 13)                         |   |         | —     |   |                                                      |   | 319,000 |   |   |   | — |   |   |   | 1,318,900 |   |
| Gain (loss) on foreign exchange                                 |   |         | (3,796      | )      |                                                      |   | 20,176 |   |   |   | (41,892 | ) |   |   | (28,952 | ) |
| Investment income                                               |   |         | 6,909       |   |                                                      |   | 9,106 |   |   |   | 20,819 |   |   |   | 31,011 |   |
|                                                            |   |         | 3,113       |   |                                                      |   | 348,282 |   |   |   | (21,073 | ) |   |   | 1,320,959 |   |
| Net and comprehensive loss                                      |   |         | (3,323,196  | )      |                                                      |   | (5,731,101 | ) |   |   | (7,226,250 | ) |   |   | (9,242,903 | ) |
| Net loss attributable to non-controlling interest               |   |         | 11,731      |   |                                                      |   | — |   |   |   | 21,485 |   |   |   | — |   |
| Net and comprehensive loss attributable to controlling interest |   |         | (3,311,465  | )      |                                                      |   | (5,731,101 | ) |   |   | (7,204,765 | ) |   |   | (9,242,903 | ) |
| Adjustment to the carrying amount of redeemable preferred stock |   |         | 420,889     |   |                                                      |   | — |   |   |   | 153,233 |   |   |   | — |   |
| Net and comprehensive loss attributable to NeuLion, Inc.        |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| common stockholders                                             |   |         | (2,890,576  | )      |                                                      |   | (5,731,101 | ) |   |   | (7,051,532 | ) |   |   | (9,242,903 | ) |
|                                                            |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per weighted average number of shares                  |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| outstanding - basic and diluted (note 7)                        |   |         | $(0.02      | )      |                                                      |   | $(0.05 | ) |   |   | $(0.05 | ) |   |   | $(0.08 | ) |
|                                                            |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of shares                               |   |         |        |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| outstanding - basic and diluted (note 7)                        |   |         | 139,389,376 |   |                                                      |   | 116,786,463 |   |   |   | 139,293,692 |   |   |   | 116,764,569 |   |

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Table of Contents

NEULION, INC.

|                         |   |                                                                                                                                                                                             |        |   |            |   |      |       |   |   |       |   |   |        |     |   | Non-        |   |        |   |   |
|------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|--------|-----------------|--------|-----------|------------|--------|--------|------------|--------|--------|-------------|----------|--------|-------------|--------|-------------|--------|--------|
|                         |   |                                                                                                                                                                                             |        |   |            |   |      | Additional |   |   | Promissory |   |   | Accumulated |     |   | controlling |   |        | Total  |   |
|                         |   |                               Common stock |        |   | paid-in capital |   |      | notes      |   |   | deficit    |   |   | interest    |     |   | equity      |   |
|                         |   |                                                                                                                                                                                             | #           |   |            | $      |      |       | $      |   |       | $      |   |        | $        |   |        | $      |        |   | $      |   |
|                         |   |                                                                                                                                                                                             |        |   |            |   |      |       |   |   |       |   |   |        |     |   |        |   |        |   |   |   |   |   |   |   |   |   |
|                         |   |                                                                                                                                                                                             |        |   |            |   |      |       |   |   |       |   |   |        |     |   |        |   |        |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2010   |   |                                                                                                                                                                                             | 139,180,279 |   |            |   | 1,391,802 |       |   |   | 75,480,756 |   |   |        | (209,250 | )      |        |   | (60,963,093 | )      |   |   | 467,440 |   |   |   | 16,167,655 |   |
|                         |   |                                                                                                                                                                                             |        |   |            |   |      |       |   |   |       |   |   |        |     |   |        |   |        |   |   |   |   |   |   |   |   |   |
| Accretion of issuance costs  |   |                                                                                                                                                                                             |        |   |            |   |      |       |   |   |       |   |   |        |     |   |        |   |        |   |   |   |   |   |   |   |   |   |
| on Class 3 Preference Shares |   |                                                                                                                                                                                             | —     |   |            |   | —   |       |   |   | (24,566    | )      |   |        | —  |   |        |   | —     |   |   |   | — |   |   |   | (24,566 | ) |
| Adjustment to the carrying   |   |                                                                                                                                                                                             |        |   |            |   |      |       |   |   |       |   |   |        |     |   |        |   |        |   |   |   |   |   |   |   |   |   |
| amount of Class 3            |   |                                                                                                                                                                                             |        |   |            |   |      |       |   |   |       |   |   |        |     |   |        |   |        |   |   |   |   |   |   |   |   |   |
| Preference Shares            |   |                                                                                                                                                                                             | —     |   |            |   | —   |       |   |   | 153,233    |   |   |        | —  |   |        |   | —     |   |   |   | — |   |   |   | 153,233 |   |
| Stock-based compensation:    |   |                                                                                                                                                                                             |        |   |            |   |      |       |   |   |       |   |   |        |     |   |        |   |        |   |   |   |   |   |   |   |   |   |
| Issuance of common stock     |   |                                                                                                                                                                                             |        |   |            |   |      |       |   |   |       |   |   |        |     |   |        |   |        |   |   |   |   |   |   |   |   |   |
| under Directors’       |   |                                                                                                                                                                                             |        |   |            |   |      |       |   |   |       |   |   |        |     |   |        |   |        |   |   |   |   |   |   |   |   |   |
| Compensation Plan            |   |                                                                                                                                                                                             | 382,031     |   |            |   | 3,820     |       |   |   | —    |   |   |        | —  |   |        |   | —     |   |   |   | — |   |   |   | 3,820 |   |
| Issuance of common stock     |   |                                                                                                                                                                                             |        |   |            |   |      |       |   |   |       |   |   |        |     |   |        |   |        |   |   |   |   |   |   |   |   |   |
| to consultant for services   |   |                                                                                                                                                                                             | 305,753     |   |            |   | 3,058     |       |   |   | —    |   |   |        | —  |   |        |   | —     |   |   |   | — |   |   |   | 3,058 |   |
| Stock options, warrants      |   |                                                                                                                                                                                             |        |   |            |   |      |       |   |   |       |   |   |        |     |   |        |   |        |   |   |   |   |   |   |   |   |   |
| and other compensation       |   |                                                                                                                                                                                             | —     |   |            |   | —   |       |   |   | 775,283    |   |   |        | —  |   |        |   | —     |   |   |   | — |   |   |   | 775,283 |   |
| Net loss                     |   |                                                                                                                                                                                             | —     |   |            |   | —   |       |   |   | —    |   |   |        | —  |   |        |   | (7,204,765  | )      |   |   | (21,485 | ) |   |   | (7,226,250 | ) |
| Balance, June 30, 2011       |   |                                                                                                                                                                                             | 139,868,063 |   |            |   | 1,398,680 |       |   |   | 76,384,706 |   |   |        | (209,250 | )      |        |   | (68,167,858 | )      |   |   | 445,955 |   |   |   | 9,852,233 |   |

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Table of Contents

NEULION, INC.

|   |   | Three months |   |   | Six months |   |
|--------|--------|--------------|--------|--------|------------|--------|
|   |   | ended        |   |   | ended      |   |
|   |   | June 30,     |   |   | June 30,   |   |
|   |   | 2011         |   |   | 2010       |   |   | 2011 |   |   | 2010 |   |
|   |   | $            |   |   | $          |   |   | $ |   |   | $ |   |

| OPERATING ACTIVITIES                                  |   |   |       |   |   |   |       |   |   |   |       |   |
|-------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|------------|--------|
|                                                  |   |   |       |   |   |   |       |   |   |   |       |   |
| Net loss                                              |   |   | (3,323,196 | )      |   |   | (5,731,101 | )      |   |   | (7,226,250 | )      |   |   | (9,242,903 | ) |
| Adjustments to reconcile net loss to net cash used in |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
|     operating activities          |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Depreciation and amortization                         |   |   | 1,378,592  |   |   |   | 1,285,325  |   |   |   | 2,824,011  |   |   |   | 2,562,290 |   |
| Stock-based compensation                              |   |   | 334,183    |   |   |   | 1,345,359  |   |   |   | 729,397    |   |   |   | 1,552,616 |   |
| Unrealized gain on derivative                         |   |   | —    |   |   |   | (319,000   | )      |   |   | —    |   |   |   | (1,318,900 | ) |
|                                                  |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Changes in operating assets and liabilities           |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Accounts receivable                                   |   |   | (1,111,861 | )      |   |   | (123,728   | )      |   |   | (1,209,429 | )      |   |   | (244,638 | ) |
| Inventory                                             |   |   | 34,220     |   |   |   | 111,814    |   |   |   | (113,082   | )      |   |   | 488,163 |   |
| Prepaid expenses, deposits and other assets           |   |   | 210,308    |   |   |   | 421,706    |   |   |   | (116,029   | )      |   |   | 184,314 |   |
| Other receivables                                     |   |   | 17,669     |   |   |   | 91,801     |   |   |   | 112,034    |   |   |   | 154,742 |   |
| Due from related parties                              |   |   | 1,053,472  |   |   |   | 109,306    |   |   |   | 966,157    |   |   |   | 148,248 |   |
| Accounts payable                                      |   |   | (1,105,163 | )      |   |   | (735,616   | )      |   |   | (1,719,345 | )      |   |   | (2,149,182 | ) |
| Accrued liabilities                                   |   |   | (613,148   | )      |   |   | 214,361    |   |   |   | (329,882   | )      |   |   | 7,515 |   |
| Deferred revenue                                      |   |   | (315,061   | )      |   |   | (428,371   | )      |   |   | (1,911,769 | )      |   |   | (513,554 | ) |
| Long-term liabilities                                 |   |   | (18,681    | )      |   |   | (74,672    | )      |   |   | (21,360    | )      |   |   | (148,726 | ) |
| Due to related parties                                |   |   | (500       | )      |   |   | 114,425    |   |   |   | 8,849      |   |   |   | (74,484 | ) |
| Cash used in operating activities                     |   |   | (3,459,166 | )      |   |   | (3,718,391 | )      |   |   | (8,006,698 | )      |   |   | (8,594,499 | ) |
|                                                  |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| INVESTING ACTIVITIES                                  |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Purchase of property, plant and equipment             |   |   | (188,465   | )      |   |   | (525,847   | )      |   |   | (487,751   | )      |   |   | (824,132 | ) |
| Cash used in investing activities                     |   |   | (188,465   | )      |   |   | (525,847   | )      |   |   | (487,751   | )      |   |   | (824,132 | ) |
|                                                  |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| FINANCING ACTIVITIES                                  |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Private placement, net                                |   |   | 4,903,906  |   |   |   | —    |   |   |   | 4,903,906  |   |   |   | — |   |
| Proceeds from exercise of stock options               |   |   | —    |   |   |   | 24,958     |   |   |   | —    |   |   |   | 32,155 |   |
| Cash provided by financing activities                 |   |   | 4,903,906  |   |   |   | 24,958     |   |   |   | 4,903,906  |   |   |   | 32,155 |   |
|                                                  |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents  |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
|     during the period             |   |   | 1,256,275  |   |   |   | (4,219,280 | )      |   |   | (3,590,543 | )      |   |   | (9,386,476 | ) |
| Cash and cash equivalents, beginning of period        |   |   | 8,082,507  |   |   |   | 7,790,483  |   |   |   | 12,929,325 |   |   |   | 12,957,679 |   |
| Cash and cash equivalents, end of period              |   |   | 9,338,782  |   |   |   | 3,571,203  |   |   |   | 9,338,782  |   |   |   | 3,571,203 |   |

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NEULION, INC.

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|                          |   | As at October 1, 2010 |       |
|-------------------------------|--------|-----------------------|------------|
|                          |   |                  |       |
| Cash                          |   | $                     | 243,226    |   |
| Other current assets          |   |                  | 2,936,608  |   |
| Property, plant and equipment |   |                  | 209,018    |   |
| Intangible assets             |   |                  | 2,123,000  |   |
| Goodwill                      |   |                  | 4,701,076  |   |
| Total assets                  |   |                  | 10,212,928 |   |
| Current liabilities           |   |                  | (1,221,076 | ) |
| Non-controlling interest      |   |                  | (476,211   | ) |
| Net assets acquired           |   | $                     | 8,515,641  |   |

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|                                                                  |   | Three months |       |   |        Six months |   |
|-----------------------------------------------------------------------|--------|--------------|------------|--------|-------------------------------------------------|--------|
|                                                                  |   | ended        |       |   |        ended      |   |
|                                                                  |   | June 30      |       |   |        June 30,   |   |
|                                                                  |   | 2011         |       |   | 2010                                            |   |   | 2011 |   |   | 2010 |   |
|                                                                  |   | $            |       |   | $                                               |   |   | $ |   |   | $ |   |
|                                                                  |   | (unaudited   |       |   | (unaudited                                      |   |   | (unaudited |   |   | (unaudited |   |
|                                                                  |   | actual)      |       |   | pro forma)                                      |   |   | actual) |   |   | pro forma) |   |
|                                                                  |   |         |       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
| Total revenue                                                         |   |         | 9,958,124  |   |                                            |   | 7,677,044 |   |   |   | 19,904,122 |   |   |   | 15,818,748 |   |
| Cost of services revenue, exclusive of depreciation                   |   |         |       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
|      and amortization shown separately below |   |         | (3,150,377 | )      |                                            |   | (2,650,266 | ) |   |   | (6,819,188 | ) |   |   | (6,014,674 | ) |
| Cost of equipment revenue                                             |   |         | (826,326   | )      |                                            |   | (707,032 | ) |   |   | (1,137,888 | ) |   |   | (1,258,557 | ) |
| Selling, general and administrative expenses                          |   |         | (7,594,955 | )      |                                            |   | (8,103,477 | ) |   |   | (15,598,815 | ) |   |   | (15,635,459 | ) |
| Stock-based compensation                                              |   |         | (334,183   | )      |                                            |   | (1,345,359 | ) |   |   | (729,397 | ) |   |   | (1,552,616 | ) |
| Depreciation and amortization                                         |   |         | (1,378,592 | )      |                                            |   | (1,414,039 | ) |   |   | (2,824,011 | ) |   |   | (2,820,845 | ) |
| Operating loss                                                        |   |         | (3,326,309 | )      |                                            |   | (6,543,129 | ) |   |   | (7,205,177 | ) |   |   | (11,463,403 | ) |
| Net loss attributable to common stockholders                          |   |         | (2,890,576 | )      |                                            |   | (6,194,847 | ) |   |   | (7,051,532 | ) |   |   | (10,127,450 | ) |
| Net loss per weighted average number of shares                        |   |         |       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
|    outstanding – basic and diluted               |   |         | (0.02      | )      |                                            |   | (0.04 | ) |   |   | (0.05 | ) |   |   | (0.07 | ) |

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|           |   | June 30, |      |   | December 31, |   |
|----------------|--------|----------|-----------|--------|--------------|--------|
|           |   | 2011     |      |   | 2010         |   |
|           |   | $        |      |   | $            |   |
|           |   |     |      |   |         |   |   |   |
| Raw materials  |   |     | 232,483   |   |         |   | 277,092 |   |
| Finished goods |   |     | 827,379   |   |         |   | 669,688 |   |
|           |   |     | 1,059,862 |   |         |   | 946,780 |   |

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|               |   | Three months |      |   | Six months |   |
|--------------------|--------|--------------|-----------|--------|------------|--------|
|               |   | ended        |      |   | ended      |   |
|               |   | June 30,     |      |   | June 30,   |   |
|               |   | 2011         |      |   | 2010       |   |   | 2011 |   |   | 2010 |   |
|               |   | $            |      |   | $          |   |   | $ |   |   | $ |   |
|               |   |         |      |   |       |   |   |   |   |   |   |   |   |   |
| New York Islanders |   |         | 78,519    |   |       |   | 140,506 |   |   |   | 168,686 |   |   |   | 237,485 |   |
| Renaissance        |   |         | 30,000    |   |       |   | 30,000 |   |   |   | 60,000 |   |   |   | 60,000 |   |
| Smile Train        |   |         | 27,000    |   |       |   | 27,000 |   |   |   | 54,000 |   |   |   | 54,000 |   |
| KyLinTV            |   |         | 873,753   |   |       |   | 490,290 |   |   |   | 1,484,300 |   |   |   | 967,503 |   |
|               |   |         | 1,009,272 |   |       |   | 687,796 |   |   |   | 1,766,986 |   |   |   | 1,318,988 |   |

|               |   | June 30, |    |   | December 31, |   |
|--------------------|--------|----------|---------|--------|--------------|--------|
|               |   | 2011     |    |   | 2010         |   |
|               |   | $        |    |   | $            |   |
|               |   |     |    |   |         |   |   |
| New York Islanders |   |     | 461     |   |         |   | (26 | ) |
| Renaissance        |   |     | — |   |         |   | 70 |   |
| KyLinTV            |   |     | 295,158 |   |         |   | 1,261,706 |   |
|               |   |     | 295,619 |   |         |   | 1,261,750 |   |

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|                      |   | June 30, |       |   | June 30, |   |
|---------------------------|--------|----------|------------|--------|----------|--------|
|                      |   | 2011     |       |   | 2010     |   |
|                      |   |     | #          |   |     |   | # |   |
|                      |   |     |       |   |     |   |   |   |
| Stock options             |   |     | 16,460,853 |   |     |   | 11,948,354 |   |
| Restricted share units    |   |     | —    |   |     |   | 1,264 |   |
| Stock appreciation rights |   |     | 675,000    |   |     |   | 1,675,000 |   |
| Warrants                  |   |     | 8,625,000  |   |     |   | 19,697,500 |   |
| Retention warrants        |   |     | 723,218    |   |     |   | 754,094 |   |
| Restricted stock          |   |     | 2,500,000  |   |     |   | — |   |
| Class 3 Preference Shares |   |     | 17,176,818 |   |     |   | — |   |
| Class 4 Preference Shares |   |     | 10,912,265 |   |     |   | — |   |

|                          |   | Three months |    |   | Six months |   |
|-------------------------------|--------|--------------|---------|--------|------------|--------|
|                          |   | ended        |    |   | ended      |   |
|                          |   | June 30,     |    |   | June 30,   |   |
|                          |   | 2011         |    |   | 2010       |   |   | 2011 |   |   | 2010 |   |
|                          |   | $            |    |   | $          |   |   | $ |   |   | $ |   |
|                          |   |         |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Stock options and warrants    |   |         | 291,738 |   |       |   | 1,315,540 |   |   |   | 547,791 |   |   |   | 1,510,646 |   |
| Restricted share units        |   |         | — |   |       |   | 317 |   |   |   | — |   |   |   | 3,245 |   |
| Stock appreciation rights     |   |         | (49,593 | )      |       |   | (31,638 | ) |   |   | (52,764 | ) |   |   | (78,168 | ) |
| Directors’ compensation |   |         | 33,875  |   |       |   | 50,000 |   |   |   | 54,492 |   |   |   | 93,250 |   |
| Escrowed shares               |   |         | — |   |       |   | 11,140 |   |   |   | — |   |   |   | 23,643 |   |
| Consultant compensation       |   |         | (5,158  | )      |       |   | — |   |   |   | 53,236 |   |   |   | — |   |
| Restricted stock              |   |         | 63,321  |   |       |   | — |   |   |   | 126,642 |   |   |   | — |   |
|                          |   |         | 334,183 |   |       |   | 1,345,359 |   |   |   | 729,397 |   |   |   | 1,552,616 |   |

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|   | · | 5,500,000 Series A warrants exercisable at Cdn$1.25 that expired on October 20, 2010. |
|--------|--------|---------------------------------------------------------------------------------------|
|   | · | 5,500,000 Series B warrants exercisable at Cdn$1.50 that expired on October 20, 2010. |

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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|   | Ø | Services Revenue, which is our recurring revenue stream, increased by $2.1 million, or 32%, as compared to the prior period. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | Ø | Cost of Services Revenue, exclusive of depreciation and amortization, as a percentage of Services Revenue, decreased by 4%, as compared to the prior period. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Ø | Non-GAAP Adjusted EBITDA (as defined below) improved by $1.8 million, or 53%, as compared to the prior period. |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | organic growth of $2.3 million; and |
|--------|--------|------------------------------------------|

|   | · | revenue from TransVideo of $0.4 million. |
|--------|--------|-----------------------------------------------|

|   | · | an increase in total revenue of $2.7 million; |
|--------|--------|----------------------------------------------------|

|   | · | a decrease in stock-based compensation of $1.0 million (non-cash item); and |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | an adjustment to the carrying amount of Class 3 Preference Shares of $0.4 million for the three months ended June 30, 2011 (non-cash item). |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase in cost of revenue, exclusive of depreciation and amortization of $0.8 million; |
|--------|--------|--------------------------------------------------------------------------------------------------|

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|   | · | an increase  in selling, general and administrative expenses, excluding stock-based compensation of $0.1 million; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase in depreciation and amortization of $0.1 million (non-cash item); and |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | an unrealized gain on derivative of $0.3 million for the three months ended June 30, 2010 (non-cash item). |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

|                                             |   | Three months ended, |       |
|--------------------------------------------------|--------|---------------------|------------|
|                                             |   | June 30,            |       |
|                                             |   | 2011                |       |   | 2010 |   |
|                                             |   | $                   |       |   | $ |   |
|                                             |   |                |       |   |   |   |   |   |
| Net loss                                         |   |                | (3,323,196 | ) |   |   | (5,731,101 | ) |
|                                             |   |                |       |   |   |   |   |   |
| Depreciation and amortization                    |   |                | 1,378,592  |   |   |   | 1,285,325 |   |
| Stock-based compensation                         |   |                | 334,183    |   |   |   | 1,345,359 |   |
| Unrealized gain on derivative                    |   |                | 0          |   |   |   | (319,000 | ) |
| Investment income and foreign exchange gain/loss |   |                | (3,113     | ) |   |   | (29,282 | ) |
|                                             |   |                |       |   |   |   |   |   |
| Non-GAAP Adjusted EBITDA loss                    |   |                | (1,613,534 | ) |   |   | (3,448,699 | ) |

|   | Ø | Services Revenue, which is our recurring revenue stream, increased by $4.2 million, or 30%, as compared to the prior period. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | Ø | Cost of Services Revenue, exclusive of depreciation and amortization, as a percentage of Services Revenue, decreased by 5%, as compared to the prior period. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Ø | Non-GAAP Adjusted EBITDA (as defined below) improved by $2.8 million, or 43%, as compared to the prior period. |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

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|   | · | organic growth of $4.2 million; and |
|--------|--------|------------------------------------------|

|   | · | revenue from TransVideo of $0.6 million. |
|--------|--------|-----------------------------------------------|

|   | · | an increase in total revenue of $4.8 million; |
|--------|--------|----------------------------------------------------|

|   | · | a decrease in stock-based compensation of $0.8 million (non-cash item); and |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | an adjustment to the carrying amount of Class 3 Preference Shares of $0.2 million for the six months ended June 30, 2011 (non-cash item). |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase in cost of revenue, exclusive of depreciation and amortization of $1.0 million; |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | an increase  in selling, general and administrative expenses, excluding stock-based compensation of $1.0 million; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase in depreciation and amortization of $0.3 million (non-cash item); and |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | an unrealized gain on derivative of $1.3 million for the six months ended June 30, 2010 (non-cash item). |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|                                        |   | Six months ended, |       |
|---------------------------------------------|--------|-------------------|------------|
|                                        |   | June 30,          |       |
|                                        |   | 2011              |       |   | 2010 |   |
|                                        |   | $                 |       |   | $ |   |
|                                        |   |              |       |   |   |   |   |   |
| Net loss                                    |   |              | (7,226,250 | ) |   |   | (9,242,903 | ) |
|                                        |   |              |       |   |   |   |   |   |
| Depreciation and amortization               |   |              | 2,824,011  |   |   |   | 2,562,290 |   |
| Stock-based compensation                    |   |              | 729,397    |   |   |   | 1,552,616 |   |
| Unrealized gain on derivative               |   |              | 0          |   |   |   | (1,318,900 | ) |
| Investment income and foreign exchange loss |   |              | 21,073     |   |   |   | (2,059 | ) |
|                                        |   |              |       |   |   |   |   |   |
| Non-GAAP Adjusted EBITDA loss               |   |              | (3,651,769 | ) |   |   | (6,448,956 | ) |

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|   | · | Subscriber revenue, which consists primarily of subscription, pay-per view and operations fees revenues and is recognized over the period of service or usage; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | eCommerce revenue, which consists of advertising, merchandise, donor and ticketing revenues and is recognized as the service is performed; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Technology revenue, which consists of set-up and transcoder revenue and is recognized over the life of the contract. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

| (ii) | Equipment revenue, which consists of the sale and rental of set top boxes (“STBs”) to content partners and/or end users and is recognized when title to an STB passes to the customer.  Shipping revenue is included in equipment revenue. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Cost of subscriber revenue, which consists of: |
|--------|---------|------------------------------------------------|

|   | · | royalty payments; |
|--------|--------|-------------------|

|   | · | network operating costs; |
|--------|--------|--------------------------|

|   | · | bandwidth usage fees; and |
|--------|--------|---------------------------|

|   | · | colocation fees. |
|--------|--------|------------------|

|   | ● | Cost of eCommerce revenue, which consists of: |
|--------|---------|-----------------------------------------------|

|   | · | merchandising, donor and ticketing revenues, which have minimal associated costs as revenue is booked on a net basis; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | cost of advertising revenue, which is subject to revenue shares with the content provider. |
|--------|--------|--------------------------------------------------------------------------------------------|

|   | ● | Cost of technology revenue, which consists of: |
|--------|---------|------------------------------------------------|

|   | · | transcoder licenses purchased from third parties; and |
|--------|--------|-------------------------------------------------------|

|   | · | maintenance costs for transcoders. |
|--------|--------|------------------------------------|

|   | ● | Wages and benefits – represents compensation for our full-time and part-time employees as well as fees for consultants who we use from time to time; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | Stock-based compensation – represents the estimated fair value of our options, warrants and stock appreciation rights (“Convertible Securities”) for financial accounting purposes, prepared using the Black-Scholes-Merton model;  |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketing – represents expenses for both global and local marketing initiatives that focus on various target sports properties and ethnic communities and include online and traditional marketing expenditures, search engine marketing and search engine optimization; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Professional fees – represents legal, accounting and recruiting fees; and |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | Other SG&A expenses – represents travel expenses, rent, office supplies, corporate IT services, credit card processing fees and other general operating expenses. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                              |   | 2011   |       | 2010   |   | Change     |   |
|-----------------------------------------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|
|                                                                              |   | $      |       | $      |   |       | %      |   |
| Revenue                                                                           |   |   |       |   |   |       |   |   |   |
|    Services revenue                                                |   |   | 8,813,595  |   |   | 6,692,792  |   |   | 32 | %   |
|    Equipment revenue                                               |   |   | 1,144,529  |   |   | 565,943    |   |   | 102 | %   |
| Total Revenue                                                                     |   |   | 9,958,124  |   |   | 7,258,735  |   |   | 37 | %   |
|                                                                              |   |   |       |   |   |       |   |   |   |   |
| Costs and expenses                                                                |   |   |       |   |   |       |   |   |   |   |
|    Cost of services revenue, exclusive of depreciation             |   |   |       |   |   |       |   |   |   |   |
|       and amortization shown separately below       |   |   | 3,150,377  |   |   | 2,650,266  |   |   | 19 | %  |
|    Cost of equipment revenue                                       |   |   | 826,326    |   |   | 540,192    |   |   | 53 | %   |
|    Selling, general and administrative,  including       |   |   |       |   |   |       |   |   |   |   |
|       stock-based compensation                      |   |   | 7,929,138  |   |   | 8,862,335  |   |   | -11 | %   |
|    Depreciation and amortization                                   |   |   | 1,378,592  |   |   | 1,285,325  |   |   | 7 | %   |
|                                                                              |   |   | 13,284,433 |   |   | 13,338,118 |   |   | 0 | %   |
| Operating loss                                                                    |   |   | (3,326,309 | )      |   | (6,079,383 | )      |   | -45 | %   |
|                                                                              |   |   |       |   |   |       |   |   |   |   |
| Other income (expense)                                                            |   |   |       |   |   |       |   |   |   |   |
|    Unrealized gain on derivative                                   |   |   | -          |   |   | 319,000    |   |   | - |   |
|    Gain (loss) on foreign exchange                                 |   |   | (3,796     | )      |   | 20,176     |   |   | -119 | %   |
|    Investment income                                               |   |   | 6,909      |   |   | 9,106      |   |   | -24 | %   |
|                                                                              |   |   | 3,113      |   |   | 348,282    |   |   | -99 | %   |
| Net and comprehensive loss                                                        |   |   | (3,323,196 | )      |   | (5,731,101 | )      |   | -42 | %   |
|    Net loss attributable to non-controlling interest               |   |   | 11,731     |   |   | -          |   |   | - |   |
| Net loss attributable to controlling interest                                     |   |   | (3,311,465 | )      |   | (5,731,101 | )      |   | -42 | %  |
|    Adjustment to the carrying amount of redeemable preferred stock |   |   | 420,889    |   |   | -          |   |   | - |   |
| Net and comprehensive loss attributable to NeuLion, Inc. common stockholders      |   |   | (2,890,576 | )      |   | (5,731,101 | )      |   | -50 | %  |

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|   | · | Wages and benefits increased from $5.0 million for the three months ended June 30, 2010 to $5.8 million for the three months ended June 30, 2011.  Wages and benefits were $0.3 million for TransVideo.  The organic increase of $0.5 million was due to an increase in employees. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Stock-based compensation expense decreased from $1.3 million for the three months ended June 30, 2010 to $0.3 million for the three months ended June 30, 2011.  The decrease was a result of a modification of 5,000,000 incentive warrants which resulted in an expense of $1.1 million in the prior period offset by additional compensation relating to a consultant’s fees and restricted stock.   |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketing expenses were $0.3 million for the three months ended June 30, 2010 and 2011. |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | · | Professional fees decreased from $1.0 million for the three months ended June 30, 2010 to $0.5 million for the three months ended June 30, 2011.  The decrease was a result of legal and valuation services incurred on the acquisition of TransVideo in the prior period. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other SG&A expenses decreased from $1.3 million for the three months ended June 30, 2010 to $1.0 million for the three months ended June 30, 2011.  The $0.3 million decrease was primarily due to a decrease in bank and processing fees. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                              |   | 2011   |       | 2010   |   | Change      |   |
|-----------------------------------------------------------------------------------|--------|--------|------------|--------|--------|-------------|--------|
|                                                                              |   | $      |       | $      |   |        | %      |   |
| Revenue                                                                           |   |   |       |   |   |        |   |   |   |
|    Services revenue                                                |   |   | 18,377,525 |   |   | 14,155,691  |   |   | 30 | %  |
|    Equipment revenue                                               |   |   | 1,526,597  |   |   | 947,539     |   |   | 61 | %  |
| Total Revenue                                                                     |   |   | 19,904,122 |   |   | 15,103,230  |   |   | 32 | %  |
|                                                                              |   |   |       |   |   |        |   |   |   |   |
| Costs and expenses                                                                |   |   |       |   |   |        |   |   |   |   |
|    Cost of services revenue, exclusive of depreciation             |   |   |       |   |   |        |   |   |   |   |
|       and amortization shown separately below       |   |   | 6,819,188  |   |   | 6,014,674   |   |   | 13 | %  |
|    Cost of equipment revenue                                       |   |   | 1,137,888  |   |   | 894,881     |   |   | 27 | %  |
|    Selling, general and administrative,  including       |   |   |       |   |   |        |   |   |   |   |
|       stock-based compensation                      |   |   | 16,328,212 |   |   | 16,195,247  |   |   | 1 | %  |
|    Depreciation and amortization                                   |   |   | 2,824,011  |   |   | 2,562,290   |   |   | 10 | %  |
|                                                                              |   |   | 27,109,299 |   |   | 25,667,092  |   |   | 6 | %  |
| Operating loss                                                                    |   |   | (7,205,177 | )      |   | (10,563,862 | )      |   | -32 | %  |
|                                                                              |   |   |       |   |   |        |   |   |   |   |
| Other income (expense)                                                            |   |   |       |   |   |        |   |   |   |   |
|    Unrealized gain on derivative                                   |   |   | -          |   |   | 1,318,900   |   |   | - |   |
|    Loss on foreign exchange                                        |   |   | (41,892    | )      |   | (28,952     | )      |   | 45 | %  |
|    Investment income                                               |   |   | 20,819     |   |   | 31,011      |   |   | -33 | %  |
|                                                                              |   |   | (21,073    | )      |   | 1,320,959   |   |   | -102 | %  |
| Net and comprehensive loss                                                        |   |   | (7,226,250 | )      |   | (9,242,903  | )      |   | -22 | %  |
|    Net loss attributable to non-controlling interest               |   |   | 21,485     |   |   | -           |   |   | - |   |
| Net loss attributable to controlling interest                                     |   |   | (7,204,765 | )      |   | (9,242,903  | )      |   | -22 | %  |
|    Adjustment to the carrying amount of redeemable preferred stock |   |   | 153,233    |   |   | -           |   |   | - |   |
| Net and comprehensive loss attributable to NeuLion, Inc. common stockholders      |   |   | (7,051,532 | )      |   | (9,242,903  | )      |   | -24 | %  |

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|   | · | Wages and benefits increased from $10.3 million for the six months ended June 30, 2010 to $11.7 million for the six months ended June 30, 2011.  Wages and benefits were $0.6 million for TransVideo.  The organic increase of $0.8 million was due to an increase in employees. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Stock-based compensation expense decreased from $1.6 million for the six months ended June 30, 2010 to $0.7 million for the six months ended June 30, 2011.  The decrease of $0.9 was a result of a modification of 5,000,000 incentive warrants which resulted in an expense of $1.1 million in the prior period offset by additional compensation relating to a consultant’s fees and restricted stock.   |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketing expenses decreased from $0.6 million for the six months ended June 30, 2010 to $0.4 million for the six months ended June 30, 2011.  The decrease was the result of marketing expenses incurred for our subsidiary Talfazat in the prior period. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Professional fees decreased from $1.4 million for the six months ended June 30, 2010 to $0.9 million for the six months ended June 30, 2011.  The decrease was a result of legal and valuation services incurred on the acquisition of TransVideo in the prior period. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | Other SG&A expenses increased from $2.3 million for the six months ended June 30, 2010 to $2.6 million for the six months ended June 30, 2011.  TransVideo comprised $0.3 million of the total other SG&A expenses increase for the period. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                          |   | June 30, |       |   | December 31, |   |
|-------------------------------|--------|----------|------------|--------|--------------|--------|
|                          |   | 2011     |       |   | 2010         |   |
|                          |   | $        |       |   | $            |   |
| Current Assets                |   |     |       |   |         |   |   |   |
| Cash and cash equivalents     |   |     | 9,338,782  |   |         |   | 12,929,325 |   |
| Accounts receivable, net      |   |     | 3,566,272  |   |         |   | 2,356,843 |   |
| Other receivables             |   |     | 184,120    |   |         |   | 296,154 |   |
| Inventory                     |   |     | 1,059,862  |   |         |   | 946,780 |   |
| Prepaid expenses and deposits |   |     | 1,112,498  |   |         |   | 1,014,703 |   |
| Due from related parties      |   |     | 295,619    |   |         |   | 1,261,776 |   |
| Total Current Assets          |   |     | 15,557,153 |   |         |   | 18,805,581 |   |
|                          |   |     |       |   |         |   |   |   |
| Current Liabilities           |   |     |       |   |         |   |   |   |
| Accounts payable              |   |     | 3,691,809  |   |         |   | 5,504,489 |   |
| Accrued liabilities           |   |     | 5,150,781  |   |         |   | 5,431,217 |   |
| Due to related parties        |   |     | -          |   |         |   | 26 |   |
| Deferred revenue              |   |     | 4,527,985  |   |         |   | 6,432,445 |   |
| Total Current Liabilities     |   |     | 13,370,575 |   |         |   | 17,368,177 |   |
|                          |   |     |       |   |         |   |   |   |
| Working Capital Ratio         |   |     | 1.16       |   |         |   | 1.08 |   |

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|                                  |   | Three months ended |       |   | Six months ended |   |
|---------------------------------------|--------|--------------------|------------|--------|------------------|--------|
|                                  |   | June 30            |       |   | June 30          |   |
|                                  |   | 2011               |       |   | 2010             |   |   | 2011 |   |   | 2010 |   |
|                                  |   | $                  |       |   | $                |   |   | $ |   |   | $ |   |
|                                  |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Cash used in operating activities     |   |               | (3,459,166 | )      |             |   | (3,718,391 | ) |   |   | (8,006,698 | ) |   |   | (8,594,499 | ) |
| Cash used in investing activities     |   |               | (188,645   | )      |             |   | (525,847 | ) |   |   | (487,751 | ) |   |   | (824,132 | ) |
| Cash provided by financing activities |   |               | 4,903,906  |   |             |   | 24,958 |   |   |   | 4,903,906 |   |   |   | 32,155 |   |

|   | · | non-cash items in the amount of $3.5 million, related to stock-based compensation and depreciation and amortization; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes in operating assets and liabilities of $4.3 million. |
|--------|--------|-------------------------------------------------------------------|

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Item 3.                  Quantitative and Qualitative Disclosures About Market Risk

Item 4.                  Controls and Procedures

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Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

| John R. Anderson    | 35,156  |
|---------------------|---------|
| Gabriel A. Battista | 21,875  |
| Shirley Strum Kenny | 59,375  |
| David Kronfeld      | 56,250  |
| Charles B. Wang     | 59,375  |
| Total               | 232,031 |

Item 6.  Exhibits

| Exhibit No. |   | Description                                                                                                                                                                                                                                                                                                            |
|-------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                                                                                                                   |
| 3.1.1       |   | Certificate of Amendment of Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 9, 2011)                                                                                               |
|        |   |                                                                                                                                                                                                                                                                                                                   |
| 3.1.2       |   | Certificate of Designation of Class 4 Preference Shares (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 1, 2011)                                                                                                |
|        |   |                                                                                                                                                                                                                                                                                                                   |
| 10.1        |   | Subscription Agreement dated as of June 29, 2011 between NeuLion, Inc. and JK&B Capital V Special Opportunity Fund, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 1, 2011)                          |
|        |   |                                                                                                                                                                                                                                                                                                                   |
| 10.2        |   | Subscription Agreement dated as of June 29, 2011 between NeuLion, Inc. and JK&B Capital V, L.P. (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 July 1, 2011)                                                   |
|        |   |                                                                                                                                                                                                                                                                                                                   |
| 10.3        |   | Registration Rights Agreement dated June 29, 2011 among JK&B Capital V Special Opportunity Fund, L.P., JK&B Capital V, L.P. and NeuLion, Inc. (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 July 1, 2011) |
|        |   |                                                                                                                                                                                                                                                                                                                   |
| 31.1        | *      | Certification of Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                |
|        |   |                                                                                                                                                                                                                                                                                                                   |
| 31.2        | *      | Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                |
|        |   |                                                                                                                                                                                                                                                                                                                   |
| 32.1        | *      | Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                 |

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SIGNATURES

|                             |                                      |   |
|----------------------------------|-------------------------------------------|--------|
|                             | NEULION, INC.                             |   |
|                             |                                      |   |
|                             |                                      |   |
|                             |                                      |   |
| Date:  August 11, 2011 | /s/ Nancy Li                              |   |
|                             | Name:  Nancy Li                 |   |
|                             | Title:  Chief Executive Officer |   |
|                             |                                      |   |
|                             |                                      |   |
|                             |                                      |   |
|                             |                                      |   |
| Date:  August 11, 2011 | /s/ Arthur J. McCarthy                    |   |
|                             | Name:  Arthur J. McCarthy       |   |
|                             | Title:  Chief Financial Officer |   |

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