----

----

| x      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934  |
|--------|-------------------------------------------------------------------------------------------|
|   |                                                                                      |
|   | For the quarterly period ended June 30, 2010                                              |
|   |                                                                                      |
| or     |
|   |                                                                                      |
| o      | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|   |                                                                                      |
|   | For the transition period from _____ to _____                                             |

| Canada                                                        |   | 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 |

----

----

----

|          | Part I.  Financial Information                                          | Page No. |
|---------------|-----------------------------------------------------------------------------------|----------|
| Item 1.  | Financial Statements                                                              | 1        |
|          |                                                                              |     |
|          | Consolidated Balance Sheets as at                                                 |     |
|          |      June 30, 2010 (Unaudited) and December 31, 2009               | 1        |
|          |                                                                              |     |
|          | Consolidated Statements of Operations and Comprehensive Loss for the              |     |
|          |      Three and Six Months Ended June 30, 2010 and 2009 (Unaudited) | 2        |
|          |                                                                              |     |
|          | Consolidated Statement of Shareholders’ Equity for the                      |     |
|          |      Six Months Ended June 30, 2010 (Unaudited)                    | 3        |
|          |                                                                              |     |
|          | Consolidated Statements of Cash Flows for the                                     |     |
|          |      Three and Six Months Ended June 30, 2010 and 2009 (Unaudited) | 4        |
|          |                                                                              |     |
|          | Notes to Consolidated Financial Statements                                        | 5        |
|          |                                                                              |     |
| Item 2.  | Management’s Discussion and Analysis of Financial                      |     |
|          |      Condition and Results of Operations                           | 12       |
|          |                                                                              |     |
| Item 3.  | Quantitative and Qualitative Disclosures about Market Risk                        | 32       |
|          |                                                                              |     |
| Item 4.  | Controls and Procedures                                                           | 32       |
|          |
|          | Part II. Other Information                                                   |     |
|          |
| Item 2.       | Unregistered Sales of Equity Securities and Use of Proceeds                       | 33       |
|          |                                                                              |
| Item 6.  | Exhibits                                                                          | 33       |
|          |                                                                              |
| SIGNATURES    | 34                                                                                |

----

|                                                                                                   |   | June 30,    |        |   | December 31, |
|--------------------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------------|
|                                                                                                   |   | 2010        |        |   | 2009         |
|                                                                                                   |   | [unaudited] |        |   |         |
|                                                                                                   |   |        | $      |   |         |   | $ |
|                                                                                                   |   |        |        |   |         |   |   |
| ASSETS                                                                                                 |   |        |        |   |         |   |   |   |
| Current                                                                                                |   |        |        |   |         |   |   |   |
| Cash and cash equivalents                                                                              |   |        | 3,571,203   |   |         |   | 12,957,679 |   |
| Accounts receivable, net of allowance for doubtful accounts of $189,635 and $129,550,             |   |        |        |   |         |   |   |   |
|    respectively                                                                         |   |        | 2,053,785   |   |         |   | 1,809,147 |   |
| Other receivables                                                                                      |   |        | 702,426     |   |         |   | 857,168 |   |
| Inventory                                                                                              |   |        | 440,429     |   |         |   | 928,592 |   |
| Prepaid expenses and deposits                                                                          |   |        | 838,507     |   |         |   | 966,101 |   |
| Due from related parties [note 5]                                                                      |   |        | 98,744      |   |         |   | 246,992 |   |
| Total current assets                                                                                   |   |        | 7,705,094   |   |         |   | 17,765,679 |   |
| Property, plant and equipment, net                                                                     |   |        | 5,138,244   |   |         |   | 5,754,255 |   |
| Intangible assets, net                                                                                 |   |        | 8,419,924   |   |         |   | 9,542,071 |   |
| Goodwill                                                                                               |   |        | 6,757,194   |   |         |   | 6,757,194 |   |
| Other assets                                                                                           |   |        | 393,244     |   |         |   | 449,964 |   |
| Total assets                                                                                           |   |        | 28,413,700  |   |         |   | 40,269,163 |   |
|                                                                                                   |   |        |        |   |         |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                   |   |        |        |   |         |   |   |   |
| Current                                                                                                |   |        |        |   |         |   |   |   |
| Accounts payable                                                                                       |   |        | 3,234,334   |   |         |   | 5,383,518 |   |
| Accrued liabilities                                                                                    |   |        | 5,751,732   |   |         |   | 5,822,385 |   |
| Derivative liability [note 11]                                                                         |   |        | 70,400      |   |         |   | 1,389,300 |   |
| Due to related parties [note 5]                                                                        |   |        | 224,111     |   |         |   | 298,595 |   |
| Deferred revenue                                                                                       |   |        | 3,432,937   |   |         |   | 3,907,510 |   |
| Total current liabilities                                                                              |   |        | 12,713,514  |   |         |   | 16,801,308 |   |
| Long-term deferred revenue                                                                             |   |        | 430,210     |   |         |   | 469,191 |   |
| Other long-term liabilities                                                                            |   |        | 579,604     |   |         |   | 728,330 |   |
| Total liabilities                                                                                      |   |        | 13,723,328  |   |         |   | 17,998,829 |   |
|                                                                                                   |   |        |        |   |         |   |   |   |
|                                                                                                   |   |        |        |   |         |   |   |   |
| Shareholders' equity                                                                                   |   |        |        |   |         |   |   |   |
| Share capital                                                                                          |   |        | 11,433,407  |   |         |   | 11,260,415 |   |
|     Common shares (par value: none; authorized: unlimited; issued and outstanding: |   |        |        |   |         |   |   |   |
|     116,979,809 and 116,731,794, respectively)                                |   |        |        |   |         |   |   |   |
| Additional paid-in capital                                                                             |   |        | 56,513,516  |   |         |   | 55,023,567 |   |
| Promissory notes receivable                                                                            |   |        | (209,250    | )      |         |   |             (209,250) | ) |
| Accumulated deficit                                                                                    |   |        | (53,047,301 | )      |         |   |         (43,804,398) | ) |
| Total shareholders' equity                                                                             |   |        | 14,690,372  |   |         |   | 22,270,334 |   |
| Total liabilities and shareholders' equity                                                             |   |        | 28,413,700  |   |         |   | 40,269,163 |   |

----

|                                                                                                 |   | Three monthsendedJune 30, |        |   | Six monthsendedJune 30, |   |
|------------------------------------------------------------------------------------------------------|--------|---------------------------|-------------|--------|-------------------------|--------|
|                                                                                                 |   |   2010               |        |   |   2009             |   |   |   2010 |   |   |   2009 |   |
|                                                                                                 |   | $                         |        |   | $                       |   |   | $ |   |   | $ |   |
| Revenue                                                                                              |   |                      |        |   |                    |   |   |   |   |   |   |   |
| Services revenue                                                                                     |   |                      | 6,692,792   |   |                    |   | 6,038,405 |   |   |   | 14,155,691 |   |   |   | 12,072,735 |   |
| Equipment revenue                                                                                    |   |                      | 565,943     |   |                    |   | 424,033 |   |   |   | 947,539 |   |   |   | 963,730 |   |
|                                                                                                 |   |                      | 7,258,735   |   |                    |   | 6,462,438 |   |   |   | 15,103,230 |   |   |   | 13,036,465 |   |
|                                                                                                 |   |                      |        |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Costs and expenses                                                                                   |   |                      |        |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Cost of services revenue, exclusive of depreciation and amortization shown separately below          |   |                      | 2,650,266   |   |                    |   | 2,907,965 |   |   |   | 6,014,674 |   |   |   | 6,291,844 |   |
| Cost of equipment revenue                                                                            |   |                      | 540,192     |   |                    |   | 385,516 |   |   |   | 894,881 |   |   |   | 846,121 |   |
| Selling, general and administrative, including                                                       |   |                      |        |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| stock-based compensation [note 8]                                                                    |   |                      | 8,862,335   |   |                    |   | 6,778,665 |   |   |   | 16,195,247 |   |   |   | 13,952,006 |   |
| Depreciation and amortization                                                                        |   |                      | 1,285,325   |   |                    |   | 1,037,014 |   |   |   | 2,562,290 |   |   |   | 2,051,695 |   |
|                                                                                                 |   |                      | 13,338,118  |   |                    |   | 11,109,160 |   |   |   | 25,667,092 |   |   |   | 23,141,666 |   |
| Operating loss                                                                                       |   |                      | (6,079,383  | )      |                    |   | (4,646,722 | ) |   |   | (10,563,862 | ) |   |   | (10,105,201 | ) |
|                                                                                                 |   |                      |        |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense)                                                                               |   |                      |        |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized gain (loss) on derivative [notes 2 and 11]                                                |   |                      | 319,000     |   |                    |   | (332,200 | ) |   |   | 1,318,900 |   |   |   | (809,050 | ) |
| Gain (loss) on foreign exchange                                                                      |   |                      | 20,176      |   |                    |   | 2,991 |   |   |   | (28,952 | ) |   |   | 47,218 |   |
| Investment income                                                                                    |   |                      | 9,106       |   |                    |   | 47,801 |   |   |   | 31,011 |   |   |   | 145,025 |   |
|                                                                                                 |   |                      | 348,282     |   |                    |   | (281,408 | ) |   |   | 1,320,959 |   |   |   | (616,807 | ) |
| Net and comprehensive loss for the period                                                            |   |                      | (5,731,101  | )      |                    |   | (4,928,130 | ) |   |   | (9,242,903 | ) |   |   | (10,722,008 | ) |
|                                                                                                 |   |                      |        |   |                    |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |                      |        |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per weighted average number of shares    outstanding - basic and diluted [note 6] |   |                      | $(0.05      | )      |                    |   | $(0.04 | ) |   |   | $(0.08 | ) |   |   | $(0.10 | ) |
|                                                                                                 |   |                      |        |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of shares   outstanding - basic and diluted [note 6]          |   |                      | 116,786,463 |   |                    |   | 110,124,504 |   |   |   | 116,764,569 |   |   |   | 110,107,138 |   |

----

|                                                                         |   |   | Common shares |   |   | Additionalpaid-in capital |       |   | Promissory Notes |   |          | Accumulated deficit |   |   | Total shareholders' equity |   |
|------------------------------------------------------------------------------|--------|--------|---------------|--------|--------|---------------------------|------------|--------|------------------|--------|---------------|---------------------|--------|--------|----------------------------|--------|
|                                                                         |   | #      |          |   | $      |                      |       | $      |             |   | $             |                |   | $      |                       |   | $ |   |
|                                                                         |   |   |          |   |   |                      |       |   |             |   |          |                |   |   |                       |   |   |   |
| Balance, December 31, 2009                                                   |   |   | 116,731,794   |   |   |                      | 11,260,415 |   |             |   | 55,023,567    |                |   |   | (209,250                   | )      |   |   | (43,804,398 | ) |   |   | 22,270,334 |   |
|                                                                         |   |   |          |   |   |                      |       |   |             |   |          |                |   |   |                       |   |   |   |   |   |   |   |   |   |
| Exercise of stock options for                                                |   |   |          |   |   |                      |       |   |             |   |          |                |   |   |                       |   |   |   |   |   |   |   |   |   |
|     common shares                                        |   |   | 63,228        |   |   |                      | 52,852     |   |             |   | (20,697       | )                   |   |   | —                    |   |   |   | — |   |   |   | 32,155 |   |
| Stock-based compensation:                                                    |   |   |          |   |   |                      |       |   |             |   |          |                |   |   |                       |   |   |   |   |   |   |   |   |   |
|     Issuance of common shares on                         |   |   |          |   |   |                      |       |   |             |   |          |                |   |   |                       |   |   |   |   |   |   |   |   |   |
|        vesting of restricted share units  |   |   | 5,460    |   |   |                      | 3,247      |   |             |   | —       |                |   |   | —                    |   |   |   | — |   |   |   | 3,247 |   |
|     Issuance of common shares under                      |   |   |          |   |   |                      |       |   |             |   |          |                |   |   |                       |   |   |   |   |   |   |   |   |   |
|        Directors’ Compensation Plan |   |   | 179,327  |   |   |                      | 93,250     |   |             |   | —  |                |   |   | —                    |   |   |   | — |   |   |   | 93,250 |   |
|     Release of common shares from                        |   |   |          |   |   |                      |       |   |             |   |          |                |   |   |                       |   |   |   |   |   |   |   |   |   |
|        escrow for services                |   |   | —  |   |   |                      | 23,643     |   |             |   | —       |                |   |   | —                    |   |   |   | — |   |   |   | 23,643 |   |
|     Stock options and warrants                           |   |   | —  |   |   |                      | —    |   |             |   | 1,510,646     |                |   |   | —                    |   |   |   | — |   |   |   | 1,510,646 |   |
| Net loss                                                                     |   |   | —  |   |   |                      | —    |   |             |   | —       |                |   |   | —                    |   |   |   | (9,242,903 | ) |   |   | (9,242,903 | ) |
| Balance, June 30, 2010                                                       |   |   | 116,979,809   |   |   |                      | 11,433,407 |   |             |   | 56,513,516    |                |   |   | (209,250                   | )      |   |   | (53,047,301 | ) |   |   | 14,690,372 |   |

----

|                                                                                          |   |  Three months ended June 30, |       |   | Six months ended June 30,  |   |
|-----------------------------------------------------------------------------------------------|--------|---------------------------------------------|------------|--------|---------------------------------|--------|
|                                                                                          |   |  2010                                  |       |   |  2009                      |   |   |  2010 |   |   |  2009 |   |
|                                                                                          |   |   $                               |       |   |   $                   |   |   |  $ |   |   |  $ |   |
| OPERATING ACTIVITIES                                                                          |   |                                        |       |   |                            |   |   |   |   |   |   |   |
|                                                                                          |   |                                        |       |   |                            |   |   |   |   |   |   |   |
| Net loss                                                                                      |   |                                        | (5,731,101 | )      |                            |   | (4,928,130 | ) |   |   | (9,242,903 | ) |   |   | (10,722,008 | ) |
| Adjustments to reconcile net loss to net cash used in     operating activities |   |                                        |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                 |   |                                        | 1,285,325  |   |                            |   | 1,037,014 |   |   |   | 2,562,290 |   |   |   | 2,051,695 |   |
| Stock-based compensation [note 8]                                                             |   |                                        | 1,345,359  |   |                            |   | 361,836 |   |   |   | 1,552,616 |   |   |   | 615,579 |   |
| Unrealized (gain) loss on derivative [note 11]                                                |   |                                        | (319,000   | )      |                            |   | 332,200 |   |   |   | (1,318,900 | ) |   |   | 809,050 |   |
|                                                                                          |   |                                        |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Changes in operating assets and liabilities                                                   |   |                                        |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                                                           |   |                                        | (123,728   | )      |                            |   | 34,508 |   |   |   | (244,638 | ) |   |   | 467,377 |   |
| Inventory                                                                                     |   |                                        | 111,814    |   |                            |   | 92,185 |   |   |   | 488,163 |   |   |   | 56,565 |   |
| Prepaid expenses, deposits and other assets                                                   |   |                                        | 421,706    |   |                            |   | 667,066 |   |   |   | 184,314 |   |   |   | 763,851 |   |
| Other receivables                                                                             |   |                                        | 91,801     |   |                            |   | (292,159 | ) |   |   | 154,742 |   |   |   | (461,368 | ) |
| Due from related parties                                                                      |   |                                        | 109,306    |   |                            |   | 352,480 |   |   |   | 148,248 |   |   |   | 50,860 |   |
| Accounts payable                                                                              |   |                                        | (735,616   | )      |                            |   | (727,787 | ) |   |   | (2,149,182 | ) |   |   | (1,953,844 | ) |
| Accrued liabilities                                                                           |   |                                        | 214,361    |   |                            |   | (784,017 | ) |   |   | 7,515 |   |   |   | (908,868 | ) |
| Deferred revenue                                                                              |   |                                        | (428,371   | )      |                            |   | 49,112 |   |   |   | (513,554 | ) |   |   | (88,272 | ) |
| Long-term liabilities                                                                         |   |                                        | (74,672    | )      |                            |   | (52,392 | ) |   |   | (148,726 | ) |   |   | (155,031 | ) |
| Due to related parties                                                                        |   |                                        | 114,425    |   |                            |   | 106,182 |   |   |   | (74,484 | ) |   |   | 349,763 |   |
| Cash used in operating activities                                                             |   |                                        | (3,718,391 | )      |                            |   | (3,751,902 | ) |   |   | (8,594,499 | ) |   |   | (9,124,651 | ) |
|                                                                                          |   |                                        |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                                        |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                          |   |                                        |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Purchase of property, plant and equipment                                                     |   |                                        | (525,847   | )      |                            |   | (149,437 | ) |   |   | (824,132 | ) |   |   | (531,841 | ) |
| Cash used in investing activities                                                             |   |                                        | (525,847   | )      |                            |   | (149,437 | ) |   |   | (824,132 | ) |   |   | (531,841 | ) |
|                                                                                          |   |                                        |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                                        |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                          |   |                                        |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from exercise of stock options                                                       |   |                                        | 24,958     |   |                            |   | 67,000 |   |   |   | 32,155 |   |   |   | 67,000 |   |
| Cash provided by financing activities                                                         |   |                                        | 24,958     |   |                            |   | 67,000 |   |   |   | 32,155 |   |   |   | 67,000 |   |
|                                                                                          |   |                                        |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                                        |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Net decrease in cash and cash equivalents during                                              |   |                                        |       |   |                            |   |   |   |   |   |   |   |   |   |   |   |
|     the period                                                            |   |                                        | (4,219,280 | )      |                            |   | (3,834,339 | ) |   |   | (9,386,476 | ) |   |   | (9,589,492 | ) |
| Cash and cash equivalents, beginning of period                                                |   |                                        | 7,790,483  |   |                            |   | 21,567,868 |   |   |   | 12,957,679 |   |   |   | 27,323,021 |   |
| Cash and cash equivalents, end of period                                                      |   |                                        | 3,571,203  |   |                            |   | 17,733,529 |   |   |   | 3,571,203 |   |   |   | 17,733,529 |   |

----

----

----

|                                                                  |   |       | Three months ended June 30, |   |       |   | Six monthsendedJune 30, |       |
|-----------------------------------------------------------------------|--------|------------|---------------------------------------|--------|------------|--------|-------------------------|------------|
|                                                                  |   |       | 2010                             |   |       |   | 2009               |       |   |   | 2010  |   |   |   | 2009  |   |
|                                                                  |   |       | $                                     |   |       |   | $                       |       |   |   | $ |   |   |   | $ |   |
|                                                                  |   | [unaudited |                                  |   | [unaudited |   |                    | [unaudited |   |   | [unaudited |   |
|                                                                  |   | actual]    |                                  |   | pro forma] |   |                    | actual]    |   |   | pro forma] |   |
|                                                                  |   |       |                                  |   |       |   |                    |       |   |   |   |   |   |   |   |   |
| Total revenue                                                         |   |       | 7,258,735                             |   |       |   | 7,685,079               |       |   |   | 15,103,230 |   |   |   | 15,591,821 |   |
| Cost of services revenue, exclusive of depreciation                   |   |       |                                  |   |       |   |                    |       |   |   |   |   |   |   |   |   |
|      and amortization shown separately below |   |       | (2,650,266                            | )      |       |   | (3,535,688              | )          |   |   | (6,014,674 | ) |   |   | (7,776,195 | ) |
| Cost of equipment revenue                                             |   |       | (540,192                              | )      |       |   | (385,516                | )          |   |   | (894,881 | ) |   |   | (846,120 | ) |
| Selling, general and administrative expenses                          |   |       | (7,516,976                            | )      |       |   | (6,944,327              | )          |   |   | (14,642,631 | ) |   |   | (14,225,193 | ) |
| Stock-based compensation                                              |   |       | (1,345,359                            | )      |       |   | (361,836                | )          |   |   | (1,552,616 | ) |   |   | (615,579 | ) |
| Depreciation and amortization                                         |   |       | (1,285,325                            | )      |       |   | (1,351,883              | )          |   |   | (2,562,290 | ) |   |   | (2,677,973 | ) |
| Operating loss                                                        |   |       | (6,079,383                            | )      |       |   | (4,894,171              | )          |   |   | (10,563,862 | ) |   |   | (10,549,239 | ) |
| Net loss                                                              |   |       | (5,731,101                            | )      |       |   | (5,124,942              | )          |   |   | (9,242,903 | ) |   |   | (11,115,410 | ) |
| Net loss per weighted average number of shares                        |   |       |                                  |   |       |   |                    |       |   |   |   |   |   |   |   |   |
|    outstanding – basic and diluted               |   |       | (0.05                                 | )      |       |   | (0.04                   | )          |   |   | (0.08 | ) |   |   | (0.09 | ) |

----

|               |   | Three months |    |   |  Six months |   |
|--------------------|--------|--------------|---------|--------|------------------|--------|
|               |   | ended        |    |   |  ended      |   |
|               |   | June 30,     |    |   |  June 30,   |   |
|               |   | 2010         |    |   | 2009             |   |   | 2010 |   |   | 2009 |   |
|               |   |         | $       |   |             |   | $ |   |   |   | $ |   |   |   | $ |   |
|               |   |         |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| New York Islanders |   |         | 140,506 |   |             |   | 151,976 |   |   |   | 237,485 |   |   |   | 211,976 |   |
| Renaissance        |   |         | 30,000  |   |             |   | 30,000 |   |   |   | 60,000 |   |   |   | 60,000 |   |
| Smile Train        |   |         | 27,000  |   |             |   | 54,000 |   |   |   | 54,000 |   |   |   | 54,000 |   |
| Hawaii             |   |         | — |   |             |   | 15,017 |   |   |   | — |   |   |   | 31,488 |   |
| KyLinTV            |   |         | 490,290 |   |             |   | 485,915 |   |   |   | 967,503 |   |   |   | 887,400 |   |
|               |   |         | 687,796 |   |             |   | 736,908 |   |   |   | 1,318,988 |   |   |   | 1,244,864 |   |

|               |   | June 30, |     |   | December 31, |   |
|--------------------|--------|----------|----------|--------|--------------|--------|
|               |   | 2010     |     |   | 2009         |   |
|               |   |     | $        |   |         |   | $ |   |
|               |   |     |     |   |         |   |   |   |
| Renaissance        |   |     | (70,963  | )      |         |   | — |   |
| New York Islanders |   |     | 31,510   |   |         |   | (304 | ) |
| TransVideo         |   |     | (153,148 | )      |         |   | (298,291 | ) |
| KyLinTV            |   |     | 67,234   |   |         |   | 246,992 |   |
|               |   |     | (125,367 | )      |         |   | (51,603 | ) |

----

|                                    |   | Three months |       |   | Six months |   |
|-----------------------------------------|--------|--------------|------------|--------|------------|--------|
|                                    |   | ended        |       |   | ended      |   |
|                                    |   | June 30,     |       |   | June 30,   |   |
|                                    |   | 2010         |       |   | 2009       |   |   | 2010 |   |   | 2009 |   |
|                                    |   |         | $          |   |       |   | $ |   |   |   | $ |   |   |   | $ |   |
|                                    |   |         |       |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Condensed income statement information: |   |         |       |   |       |   |   |   |   |   |   |   |   |   |   |   |
|   Net sales                   |   |         | 2,228,120  |   |       |   | 2,000,681 |   |   |   | 4,457,198 |   |   |   | 3,955,764 |   |
|   Net loss                    |   |         | (1,576,072 | )      |       |   | (1,499,109 | ) |   |   | (3,438,369 | ) |   |   | (2,979,890 | ) |

|                                     |   | June 30, |      |   | December 31, |   |
|------------------------------------------|--------|----------|-----------|--------|--------------|--------|
|                                     |   | 2010     |      |   | 2009         |   |
|                                     |   |     | $         |   |         |   | $ |   |
|                                     |   |     |      |   |         |   |   |   |
| Condensed balance sheet information:     |   |     |      |   |         |   |   |   |
|   Current assets               |   |     | 9,143,052 |   |         |   | 1,924,891 |   |
|   Non-current assets           |   |     | 827,671   |   |         |   | 913,977 |   |
|   Total assets                 |   |     | 9,970,723 |   |         |   | 2,838,868 |   |
|   Current liabilities          |   |     | 6,020,139 |   |         |   | 15,168,149 |   |
|   Equity (deficiency)          |   |     | 3,950,584 |   |         |   | (12,329,281 | ) |
|   Total liabilities and equity |   |     | 9,970,723 |   |         |   | 2,838,868 |   |

----

|                            |   | June 30, |       |   | June 30, |   |
|--------------------------------------|--------|----------|------------|--------|----------|--------|
|                                 |   | 2010     |       |   | 2009     |   |
|                                 |   |     | #          |   |     |   | # |   |
|                                 |   |     |       |   |     |   |   |   |
| Stock options                        |   |     | 11,948,354 |   |     |   | 8,433,270 |   |
| Restricted share units               |   |     | 1,264      |   |     |   | 26,716 |   |
| Stock appreciation rights            |   |     | 1,675,000  |   |     |   | 1,690,000 |   |
| Warrants                             |   |     | 19,697,500 |   |     |   | 16,197,500 |   |
| Retention warrants                   |   |     | 754,094    |   |     |   | 907,005 |   |
| Contingent performance consideration |   |     | —    |   |     |   | 3,680,194 |   |

|                          |   | Three months |      |   | Six months |   |
|-------------------------------|--------|--------------|-----------|--------|------------|--------|
|                          |   | ended        |      |   | ended      |   |
|                          |   | June 30,     |      |   | June 30,   |   |
|                          |   | 2010         |      |   | 2009       |   |   | 2010 |   |   | 2009 |   |
|                          |   |         | $         |   |       |   | $ |   |   |   | $ |   |   |  $ |   |
|                          |   |         |      |   |       |   |   |   |   |   |   |   |   |   |   |
| Stock options and warrants    |   |         | 1,315,540 |   |       |   | 143,315 |   |   |   | 1,510,646 |   |   |   | 353,215 |   |
| Restricted share plan units   |   |         | 317       |   |       |   | 9,923 |   |   |   | 3,245 |   |   |   | 15,769 |   |
| Stock appreciation rights     |   |         | (31,638   | )      |       |   | 38,375 |   |   |   | (78,168 | ) |   |   | 70,160 |   |
| Directors’ compensation |   |         | 50,000    |   |       |   | 158,158 |   |   |   | 93,250 |   |   |   | 158,158 |   |
| Escrowed shares               |   |         | 11,140    |   |       |   | 12,065 |   |   |   | 23,643 |   |   |   | 18,277 |   |
|                          |   |         | 1,345,359 |   |       |   | 361,836 |   |   |   | 1,552,616 |   |   |   | 615,579 |   |

----

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

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

----

----

|   | · | content management  — encoding and transcoding of various digital and analog TV and video formats; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

|   | · | subscriber management — managing subscriber access and control of subscriber accounts; |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | · | digital rights management — preserving the integrity of the content and protecting it from unauthorized access; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | billing services — enabling customers to view subscription accounts, providing pay-per-view transactional billing and payment processing; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | delivery — delivering streamed audio, video and other multimedia content anywhere, anytime through the Company’s IPTV service and infrastructure; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | advertising insertion. |
|--------|--------|------------------------|

----

----

|   | · | content ingestion; |
|--------|--------|--------------------|

|   | · | web site design and hosting; |
|--------|--------|------------------------------|

|   | · | live and on-demand streaming of content on multiple platforms; |
|--------|--------|----------------------------------------------------------------|

|   | · | billing services; |
|--------|--------|-------------------|

|   | · | facilitating online merchandise sales; |
|--------|--------|----------------------------------------|

|   | · | mobile features (streaming highlights, alerts, wallpaper and ring tones); |
|--------|--------|---------------------------------------------------------------------------|

|   | · | online ticketing; |
|--------|--------|-------------------|

|   | · | auction engine (jerseys, tickets); |
|--------|--------|------------------------------------|

|   | · | social networking; |
|--------|--------|--------------------|

|   | · | customer and fan support; and |
|--------|--------|-------------------------------|

|   | · | marketing and advertising sales. |
|--------|--------|----------------------------------|

|   | · | Internet-connected browser-based devices such as personal computers, laptops and mobile devices; and |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | standard television sets through use of our Internet-connected STBs. |
|--------|--------|----------------------------------------------------------------------|

----

|   | Ø |  Services Revenue, which is the Company’s recurring revenue stream, increased by $0.7 million, or 11%, as compared to the same period a year ago. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Ø |  Cost of Services Revenue, exclusive of depreciation and amortization, decreased by $0.3 million, or 9%, as compared to the same period a year ago. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase in selling, general and administrative expenses, excluding stock-based compensation  of $1.1 million; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

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

|   | · | an increase in depreciation and amortization of $0.2 million (non-cash item), |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | an increase in total revenue of $0.8 million; |
|--------|--------|-----------------------------------------------|

|   | · | a decrease in cost of revenue, exclusive of depreciation and amortization of $0.1 million despite the increase in revenue; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | an unrealized gain on derivative of $0.3 million for the three months ended June 30, 2010 as compared to a $0.3 million loss on derivative for the three months ended June 30, 2009 (non-cash item). |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase in selling, general and administrative expenses, excluding stock-based compensation  of $0.5 million; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase in stock-based compensation of $1.0 million (non-cash item), |
|--------|--------|--------------------------------------------------------------------------|

|   | · | a decrease in cost of revenue, exclusive of depreciation and amortization of $0.7 million; and |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | an unrealized gain on derivative of $0.3 million for the three months ended June 30, 2010 as compared to a $0.3 million loss on derivative for the three months ended June 30, 2009 (non-cash item). |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                             |   | Three months ended June 30, |       |
|--------------------------------------------------|--------|-----------------------------|------------|
|                                             |   |                        |       |   |   |   |   | Pro forma |   |
|                                             |   | 2010                        |       |   | 2009 |   |   | 2009 |   |
|                                             |   |                        | $          |   |   |   | $ |   |   |   | $ |   |
|                                             |   |                        |       |   |   |   |   |   |   |   |   |   |
| Net loss                                         |   |                        | (5,731,101 | ) |   |   | (4,928,130 | ) |   |   | (5,124,942 | ) |
|                                             |   |                        |       |   |   |   |   |   |   |   |   |   |
| Add back:                                        |   |                        |       |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                    |   |                        | 1,285,325  |   |   |   | 1,037,014 |   |   |   | 1,351,883 |   |
| Stock-based compensation                         |   |                        | 1,345,359  |   |   |   | 361,836 |   |   |   | 361,836 |   |
| Unrealized (gain) loss on derivative             |   |                        | (319,000   | ) |   |   | 332,200 |   |   |   | 332,200 |   |
| Investment income and foreign exchange gain/loss |   |                        | (29,282    | ) |   |   | (50,792 | ) |   |   | (101,429 | ) |
|                                             |   |                        |       |   |   |   |   |   |   |   |   |   |
| Non-GAAP Adjusted EBITDA loss                    |   |                        | (3,448,699 | ) |   |   | (3,247,872 | ) |   |   | (3,180,452 | ) |

----

|   | Ø |  Services Revenue, which is the Company’s recurring revenue stream, increased by $2.1 million, or 17%, as compared to the same period a year ago. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Ø |  Cost of Services Revenue, exclusive of depreciation and amortization, decreased by $0.3 million, or 4%, as compared to the same period a year ago. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a decrease in cost of revenue, exclusive of depreciation and amortization of $0.2 million despite the increase in revenue; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | an unrealized gain on derivative of $1.3 million for the six months ended June 30, 2010 as compared to a $0.8 million loss on derivative for the six months ended June 30, 2009 (non-cash item), |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase in selling, general and administrative expenses, excluding stock-based compensation  of $1.3 million; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase in stock-based compensation of $0.9 million (non-cash item); |
|--------|--------|--------------------------------------------------------------------------|

|   | · | a decrease in gain/loss on foreign exchange of $0.1 million; |
|--------|--------|--------------------------------------------------------------|

|   | · | a decrease in investment income of $0.1 million; and |
|--------|--------|------------------------------------------------------|

|   | · | an increase in depreciation and amortization of $0.5 million (non-cash item). |
|--------|--------|-------------------------------------------------------------------------------|

|   |  · | a decrease in cost of revenue, exclusive of depreciation and amortization of $1.7 million; and |
|--------|--------------|------------------------------------------------------------------------------------------------|

|   |  · | an unrealized gain on derivative of $1.3 million for the six months ended June 30, 2010 as compared to a $0.8 million loss on derivative for the six months ended June 30, 2009 (non-cash item), |
|--------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a decrease in total revenue of $0.5 million; |
|--------|--------|----------------------------------------------|

|   | · | an increase in selling, general and administrative expenses, excluding stock-based compensation  of $0.4 million; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | · | an increase in stock-based compensation of $0.9 million (non-cash item); and |
|--------|--------|------------------------------------------------------------------------------|

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

----

|                                             |   | Six months ended June 30, |       |
|--------------------------------------------------|--------|---------------------------|------------|
|                                             |   |                      |       |   |   |   |   | Pro forma |   |
|                                             |   | 2010                      |       |   | 2009 |   |   | 2009 |   |
|                                             |   |                      | $          |   |   |   | $ |   |   |   | $ |   |
|                                             |   |                      |       |   |   |   |   |   |   |   |   |   |
| Net loss                                         |   |                      | (9,242,903 | ) |   |   | (10,722,008 | ) |   |   | (11,115,410 | ) |
|                                             |   |                      |       |   |   |   |   |   |   |   |   |   |
| Add back:                                        |   |                      |       |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                    |   |                      | 2,562,290  |   |   |   | 2,051,695 |   |   |   | 2,677,973 |   |
| Stock-based compensation                         |   |                      | 1,552,616  |   |   |   | 615,579 |   |   |   | 615,579 |   |
| Unrealized (gain) loss on derivative             |   |                      | (1,318,900 | ) |   |   | 809,050 |   |   |   | 809,050 |   |
| Investment income and foreign exchange gain/loss |   |                      | (2,059     | ) |   |   | (192,243 | ) |   |   | (242,879 | ) |
|                                             |   |                      |       |   |   |   |   |   |   |   |   |   |
| Non-GAAP Adjusted EBITDA loss                    |   |                      | (6,448,956 | ) |   |   | (7,437,927 | ) |   |   | (7,255,687 | ) |

----

| (i)    | Services revenue, which includes:                                                   |
|--------|-------------------------------------------------------------------------------------|
|   |                                                                                |   |
|   | ●                                                                             | Subscriber revenue, which is recognized over the period of service or usage; |
|   |                                                                                |   |
|   | ●                                                                             | eCommerce revenue, which is recognized as the service is performed; and |
|   |                                                                                |   |
|   | ●                                                                             | Technology revenue, which consists of the set up and transcoder revenue and is recognized over the life of the contract. |
|   |                                                                                |   |
| (ii)   | Equipment revenue, which is recognized when title to an STB passes to our customer. |

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

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

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

|   | · | bandwidth usage fees |
|--------|--------|----------------------|

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

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

|   | · | merchandising, donor and ticket sales, which has no associated cost – revenue is booked on a net basis |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

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

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

|   | · | third party transcoder licenses purchased |
|--------|--------|-------------------------------------------|

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

|   | · | Wages and benefits – represents compensation for the Company's full-time and part-time employees as well as fees for consultants who are used by the Company from time to time; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Stock-based compensation – we estimate the fair value of our options, warrants and stock appreciation rights (“Convertible Securities”) for financial accounting purposes using the Black-Scholes-Merton model, which requires a number of subjective assumptions, including the expected life of the Convertible Securities, risk-free interest rate, dividend rate, forfeiture rate and future volatility of the price of our Shares.  We expense the estimated fair value over the vesting period of the Convertible Securities, which is normally a four-year period, vesting in an equal amount each month; however, the Board of Directors has the discretion to grant options with different vesting periods; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketing – represents expenses for both global and local marketing programs that focus on various target sports properties and ethnic communities.  These initiatives include on-line and off-line 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. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                             |   | Three months ended |       |
|----------------------------------|--------|--------------------|------------|
|                             |   | 2010               |       |   | 2009 |   |   | 2008 |   |
|                             |   | June 30,           |       |   | March 31, |   |   | December 31, |   |   | September 30, |   |   | June 30, |   |   | March 31, |   |   | December 31, |   |   | September 30, |   |
|                             |   |               | $          |   |   |   | $ |   |   |   | $ |   |   |   | $ |   |   |   | $ |   |   |   | $ |   |   |   | $ |   |   |   | $ |   |
| Income Statement Data:           |   |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                          |   |               | 7,258,735  |   |   |   | 7,844,495 |   |   |   | 8,995,911 |   |   |   | 6,061,302 |   |   |   | 6,462,438 |   |   |   | 6,574,026 |   |   |   | 5,807,550 |   |   |   | 2,699,041 |   |
| Cost of revenue                  |   |               | 3,190,458  |   |   |   | 3,719,097 |   |   |   | 4,024,350 |   |   |   | 3,224,838 |   |   |   | 3,293,481 |   |   |   | 3,844,483 |   |   |   | 3,205,272 |   |   |   | 1,534,807 |   |
| Net loss for the period          |   |               | (5,731,101 | ) |   |   | (3,511,802 | ) |   |   | (1,454,962 | ) |   |   | (7,463,951 | ) |   |   | (4,928,130 | ) |   |   | (5,793,878 | ) |   |   | (7,223,468 | ) |   |   | (1,377,667 | ) |
| Basic and diluted loss per share |   |               | (0.05      | ) |   |   | (0.03 | ) |   |   | (0.01 | ) |   |   | (0.07 | ) |   |   | (0.04 | ) |   |   | (0.05 | ) |   |   | (0.13 | ) |   |   | (0.03 | ) |

----

|                                                                        |   | 2010   |       |   | 2009   |   |       | Change |   |
|-----------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
|                                                                        |   |   | $          |   |   | $      |       |   |   | % |   |
| Revenue                                                                     |   |   |       |   |   |   |       |   |   |   |   |
|    Services revenue                                          |   |   | 6,692,792  |   |   |   | 6,038,405  |   |   |   | 11 | % |
|    Equipment revenue                                         |   |   | 565,943    |   |   |   | 424,033    |   |   |   | 33 | % |
| Total Revenue                                                               |   |   | 7,258,735  |   |   |   | 6,462,438  |   |   |   | 12 | % |
|                                                                        |   |   |       |   |   |   |       |   |   |   |   |   |
| Costs and expenses                                                          |   |   |       |   |   |   |       |   |   |   |   |   |
|    Cost of services revenue, exclusive of depreciation       |   |   |       |   |   |   |       |   |   |   |   |   |
|       and amortization shown separately below |   |   | 2,650,266  |   |   |   | 2,907,965  |   |   |   | -9 | % |
|    Cost of equipment revenue                                 |   |   | 540,192    |   |   |   | 385,516    |   |   |   | 40 | % |
|    Selling, general and administrative,  including |   |   |       |   |   |   |       |   |   |   |   |   |
|       stock-based compensation                |   |   | 8,862,335  |   |   |   | 6,778,665  |   |   |   | 31 | % |
|    Depreciation and amortization                             |   |   | 1,285,325  |   |   |   | 1,037,014  |   |   |   | 24 | % |
|                                                                        |   |   | 13,338,118 |   |   |   | 11,109,160 |   |   |   | 20 | % |
| Operating loss                                                              |   |   | (6,079,383 | )      |   |   | (4,646,722 | )      |   |   | 31 | % |
|                                                                        |   |   |       |   |   |   |       |   |   |   |   |   |
| Other income (expense)                                                      |   |   |       |   |   |   |       |   |   |   |   |   |
|    Unrealized gain (loss) on derivative                      |   |   | 319,000    |   |   |   | (332,200   | )      |   |   | -196 | % |
|    Gain on foreign exchange                                  |   |   | 20,176     |   |   |   | 2,991      |   |   |   | 575 | % |
|    Investment income                                         |   |   | 9,106      |   |   |   | 47,801     |   |   |   | -81 | % |
|                                                                        |   |   | 348,282    |   |   |   | (281,408   | )      |   |   | -224 | % |
| Net and comprehensive loss for the period                                   |   |   | (5,731,101 | )      |   |   | (4,928,130 | )      |   |   | 16 | % |

----

|   | · | Wages and benefits increased from $4.8 million for the three months ended June 30, 2009 to $5.0 million for the three months ended June 30, 2010.  INSINC comprised $0.4 million of total wages and benefits increase for the period.  The organic decrease of $0.2 million was due to a decrease in headcount. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Stock-based compensation expense increased from $0.4 million for the three months ended June 30, 2009 to $1.3 million for the three months ended June 30, 2010.  The $0.9 million increase primarily relates to the modification of 5,000,000 incentive warrants.  On June 15, 2010, the shareholders of the Company approved a resolution to extend the expiry date of 5,000,000 incentive warrants from October 20, 2010 to October 20, 2013.  In accordance with Accounting Standards Codification (“ASC”) Topic 718, the Company recorded an expense of $1.1 million as a result of this modification. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketing expenses were $0.3 million for the three months ended June 30, 2009 and 2010. |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | · | Professional fees increased from $0.3 million for the three months ended June 30, 2009 to $1.0 million for the three months ended June 30, 2010.  The increase primarily represents legal expenses incurred in regard to a potential private placement and legal expenses and valuation services incurred in regard to the contemplated acquisition of TransVideo. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other SG&A expenses increased from $1.0 million for the three months ended June 30, 2009 to $1.3 million for the three months ended June 30, 2010.  INSINC accounted for $0.1 million of the total $0.3 million increase for the period.  The organic increase of $0.2 million was primarily the result of increases in office-related expenses. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                        |   | 2010   |        |   | 2009   |   |        | Change |   |
|-----------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|                                                                        |   |   | $           |   |   | $      |        |   |   | % |   |
| Revenue                                                                     |   |   |        |   |   |   |        |   |   |   |   |
|    Services revenue                                          |   |   | 14,155,691  |   |   |   | 12,072,735  |   |   |   | 17 | % |
|    Equipment revenue                                         |   |   | 947,539     |   |   |   | 963,730     |   |   |   | -2 | % |
| Total Revenue                                                               |   |   | 15,103,230  |   |   |   | 13,036,465  |   |   |   | 16 | % |
|                                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| Costs and expenses                                                          |   |   |        |   |   |   |        |   |   |   |   |   |
|    Cost of services revenue, exclusive of depreciation       |   |   |        |   |   |   |        |   |   |   |   |   |
|       and amortization shown separately below |   |   | 6,014,674   |   |   |   | 6,291,844   |   |   |   | -4 | % |
|    Cost of equipment revenue                                 |   |   | 894,881     |   |   |   | 846,121     |   |   |   | 6 | % |
|    Selling, general and administrative,  including |   |   |        |   |   |   |        |   |   |   |   |   |
|       stock-based compensation                |   |   | 16,195,247  |   |   |   | 13,952,006  |   |   |   | 16 | % |
|    Depreciation and amortization                             |   |   | 2,562,290   |   |   |   | 2,051,695   |   |   |   | 25 | % |
|                                                                        |   |   | 25,667,092  |   |   |   | 23,141,666  |   |   |   | 11 | % |
| Operating loss                                                              |   |   | (10,563,862 | )      |   |   | (10,105,201 | )      |   |   | 5 | % |
|                                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| Other income (expense)                                                      |   |   |        |   |   |   |        |   |   |   |   |   |
|    Unrealized gain (loss) on derivative                      |   |   | 1,318,900   |   |   |   | (809,050    | )      |   |   | -263 | % |
|    (Loss) gain on foreign exchange                           |   |   | (28,952     | )      |   |   | 47,218      |   |   |   | -161 | % |
|    Investment income                                         |   |   | 31,011      |   |   |   | 145,025     |   |   |   | -79 | % |
|                                                                        |   |   | 1,320,959   |   |   |   | (616,807    | )      |   |   | -314 | % |
| Net and comprehensive loss for the period                                   |   |   | (9,242,903  | )      |   |   | (10,722,008 | )      |   |   | -14 | % |

----

|   | · | Wages and benefits increased from $10.0 million for the six months ended June 30, 2009 to $10.3 million for the six months ended June 30, 2010.  INSINC comprised $0.7 million of the increase in total wages and benefits for the period.  The organic decrease of $0.4 million was due to a decrease in headcount. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Stock-based compensation expense increased from $0.6 million for the six months ended June 30, 2009 to $1.6 million for the six months ended June 30, 2010.  The $1.0 million increase primarily relates to the modification of 5,000,000 incentive warrants.  On June 15, 2010, the shareholders of the Company approved a resolution to extend the expiry date of 5,000,000 incentive warrants from October 20, 2010 to October 20, 2013.  In accordance with ASC Topic 718, the Company recorded an expense of $1.1 million as a result of this modification. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketing expenses increased from $0.5 million for the six months ended June 30, 2009 to $0.6 million for the three months ended June 30, 2010.  The increase was due to an increase in marketing expenses for Talfazat. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Professional fees increased from $0.6 million for the six months ended June 30, 2009 to $1.4 million for the six months ended June 30, 2010.  The increase primarily represents legal expenses incurred in regard to a potential private placement and legal expenses and valuation services incurred in regard to the contemplated acquisition of TransVideo. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other SG&A expenses were $2.3 million for the six months ended June 30, 2009 and 2010.  INSINC accounted for $0.3 million of the total for the current period.  The organic decrease of $0.3 million was primarily the result of decreases in travel and office-related expenses. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                          |   | June 30, |       |   | December 31, |   |
|-------------------------------|--------|----------|------------|--------|--------------|--------|
|                          |   | 2010     |       |   | 2009         |   |
|                          |   |     | $          |   |         |   | $ |   |
| Current Assets                |   |     |       |   |         |   |   |   |
| Cash and cash equivalents     |   |     | 3,571,203  |   |         |   | 12,957,679 |   |
| Accounts receivable, net      |   |     | 2,053,785  |   |         |   | 1,809,147 |   |
| Other receivables             |   |     | 702,426    |   |         |   | 857,168 |   |
| Inventory                     |   |     | 440,429    |   |         |   | 928,592 |   |
| Prepaid expenses and deposits |   |     | 838,507    |   |         |   | 966,101 |   |
| Due from related parties      |   |     | 98,744     |   |         |   | 246,992 |   |
| Total current assets          |   |     | 7,705,094  |   |         |   | 17,765,679 |   |
|                          |   |     |       |   |         |   |   |   |
| Current Liabilities           |   |     |       |   |         |   |   |   |
| Accounts payable              |   |     | 3,234,334  |   |         |   | 5,383,518 |   |
| Accrued liabilities           |   |     | 5,751,732  |   |         |   | 5,822,385 |   |
| Derivative liability          |   |     | 70,400     |   |         |   | 1,389,300 |   |
| Due to related parties        |   |     | 224,111    |   |         |   | 298,595 |   |
| Deferred revenue              |   |     | 3,432,937  |   |         |   | 3,907,510 |   |
| Total current liabilities     |   |     | 12,713,514 |   |         |   | 16,801,308 |   |
|                          |   |     |       |   |         |   |   |   |
| Working capital ratio         |   |     | 0.61       |   |         |   | 1.06 |   |

|                                  |   | Three months ended |       |   | Six months ended |   |
|---------------------------------------|--------|--------------------|------------|--------|------------------|--------|
|                                  |   | June 30,           |       |   | June 30,         |   |
|                                  |   | 2010               |       |   | 2009             |   |   | 2010 |   |   | 2009 |   |
|                                  |   |               | $          |   |             | $      |   |   |   | $ |   |   |   | $ |   |
|                                  |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |
| Cash used in operating activities     |   |               | (3,718,391 | )      |             |   | (3,751,902 | ) |   |   | (8,594,499 | ) |   |   | (9,124,651 | ) |
| Cash used in investing activities     |   |               | (525,847   | )      |             |   | (149,437 | ) |   |   | (824,132 | ) |   |   | (531,841 | ) |
| Cash provided by financing activities |   |               | 24,958     |   |             |   | 67,000 |   |   |   | 32,155 |   |   |   | 67,000 |   |

| · | non-cash items in the amount of $2.8 million, which relates to stock-based compensation, depreciation and amortization and unrealized gain on derivative; and |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | changes in operating assets and liabilities of $2.2 million. |
|--------|-------------------------------------------------------------------|

----

----

|               |   | Three months |    |   |  Six months |   |
|--------------------|--------|--------------|---------|--------|------------------|--------|
|               |   | ended        |    |   |  ended      |   |
|               |   | June 30,     |    |   |  June 30,   |   |
|               |   | 2010         |    |   | 2009             |   |   | 2010 |   |   | 2009 |   |
|               |   |         | $       |   |             |   | $ |   |   |   | $ |   |   |   | $ |   |
|               |   |         |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| New York Islanders |   |         | 140,506 |   |             |   | 151,976 |   |   |   | 237,485 |   |   |   | 211,976 |   |
| Renaissance        |   |         | 30,000  |   |             |   | 30,000 |   |   |   | 60,000 |   |   |   | 60,000 |   |
| Smile Train        |   |         | 27,000  |   |             |   | 54,000 |   |   |   | 54,000 |   |   |   | 54,000 |   |
| Hawaii             |   |         | — |   |             |   | 15,017 |   |   |   | — |   |   |   | 31,488 |   |
| KyLinTV            |   |         | 490,290 |   |             |   | 485,915 |   |   |   | 967,503 |   |   |   | 887,400 |   |
|               |   |         | 687,796 |   |             |   | 736,908 |   |   |   | 1,318,988 |   |   |   | 1,244,864 |   |

|               |   | June 30, |     |   | December 31, |   |
|--------------------|--------|----------|----------|--------|--------------|--------|
|               |   | 2010     |     |   | 2009         |   |
|               |   |     | $        |   |         |   | $ |   |
|               |   |     |     |   |         |   |   |   |
| Renaissance        |   |     | (70,963  | )      |         |   | — |   |
| New York Islanders |   |     | 31,510   |   |         |   | (304 | ) |
| TransVideo         |   |     | (153,148 | )      |         |   | (298,291 | ) |
| KyLinTV            |   |     | 67,234   |   |         |   | 246,992 |   |
|               |   |     | (125,367 | )      |         |   | (51,603 | ) |

----

|                                    |   | Three months |       |   | Six months |   |
|-----------------------------------------|--------|--------------|------------|--------|------------|--------|
|                                    |   | ended        |       |   | ended      |   |
|                                    |   | June 30,     |       |   | June 30,   |   |
|                                    |   | 2010         |       |   | 2009       |   |   | 2010 |   |   | 2009 |   |
|                                    |   |         | $          |   |       |   | $ |   |   |   | $ |   |   |   | $ |   |
|                                    |   |         |       |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Condensed income statement information: |   |         |       |   |       |   |   |   |   |   |   |   |   |   |   |   |
|   Net sales                   |   |         | 2,228,120  |   |       |   | 2,000,681 |   |   |   | 4,457,198 |   |   |   | 3,955,764 |   |
|   Net loss                    |   |         | (1,576,072 | )      |       |   | (1,499,109 | ) |   |   | (3,438,369 | ) |   |   | (2,979,890 | ) |

|                                     |   | June 30, |      |   | December 31, |   |
|------------------------------------------|--------|----------|-----------|--------|--------------|--------|
|                                     |   | 2010     |      |   | 2009         |   |
|                                     |   |     | $         |   |         |   | $ |   |
|                                     |   |     |      |   |         |   |   |   |
| Condensed balance sheet information:     |   |     |      |   |         |   |   |   |
|   Current assets               |   |     | 9,143,052 |   |         |   | 1,924,891 |   |
|   Non-current assets           |   |     | 827,671   |   |         |   | 913,977 |   |
|   Total assets                 |   |     | 9,970,723 |   |         |   | 2,838,868 |   |
|   Current liabilities          |   |     | 6,020,139 |   |         |   | 15,168,149 |   |
|   Equity (deficiency)          |   |     | 3,950,584 |   |         |   | (12,329,281 | ) |
|   Total liabilities and equity |   |     | 9,970,723 |   |         |   | 2,838,868 |   |

----

| Balance Sheet Data:   |                                                                                             |   | Income Statement Data:  |                                                                                                                                  |    |                                                                                                                            |    |
|-----------------------|--------------------------------------------------------------------------------------------------|--------|-------------------------|---------------------------------------------------------------------------------------------------------------------------------------|---------|---------------------------------------------------------------------------------------------------------------------------------|---------|
|                  | June 30,                                                                                         |   |                    |  Three months ended,                                                                                                             |    |  Six months ended,                                                                                                         |    |
|                  | 2010                                                                                             |   |                    | June 30, 2010                                                                                                                         |    | June 30, 2010                                                                                                                   |    |
|                  | $                                                                                                |   |                    | $                                                                                                                                     |    | $                                                                                                                               |    |
| Current assets        |              704,547            |   | Total revenue           |                     723,844       |    |                  1,599,618                 |    |
| Long-term assets      |              185,633            |   | Total cost of revenue   |                     239,801       |    |                     609,121 |    |
| Current liabilities   |              891,467            |   | Net loss for the period |                      (39,918 | )  |                     (35,156 | )  |
| Long-term liabilities |                49,284 |   |                    |                                                                                                                                  |    |                                                                                                                            |    |

----

----

|  John R. Anderson    |  24,519  |
|---------------------------|---------------|
|  Gabriel A. Battista |  20,192  |
|  Shirley Strum Kenny |  52,885  |
|  David Kronfeld      |  50,962  |
|  Charles B. Wang     |  30,769  |
|  Total               |  179,327 |

| Exhibit No.  |   | Description                                                                                                                                                                                                                                                                                                      |
|--------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  10.1 # |   |  Second Amended and Restated Stock Option Plan, as amended (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 May 5, 2010)                                                                                  |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.2 #  |   | 2006 Stock Appreciation Rights Plan, as amended (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 5, 2010)                                                                                                  |
|         |   |                                                                                                                                                                                                                                                                                                             |
|  10.3 # |   | Amended and Restated Retention Warrants Plan, as amended  (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 5, 2010)                                                                              |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.4 #       |   | Restricted Share Plan, as amended (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 5, 2010)                                                                                                                |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 10.5         |   | Amendment to that Certain “Contract for Services” Agreement dated June 22, 2007 by and between Sky Angel U.S. LLC and NeuLion, Inc. (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 2, 2010) |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 31.1         | *      | Certification of principal executive officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)                                                                                                                                                                                                  |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 31.2         | *      | Certification of principal financial officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)                                                                                                                                                                                                  |
|         |   |                                                                                                                                                                                                                                                                                                             |
| 32           | *      | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by the principal executive officer of the Company and the principal financial officer of the Company                                                                             |

----

|                             |                                      |   |
|----------------------------------|-------------------------------------------|--------|
|                             | NEULION, INC.                             |   |
|                             |                                      |   |
|                             |                                      |   |
|                             |                                      |   |
| Date:  August 13, 2010 | /s/ Nancy Li                              |   |
|                             | Name:  Nancy Li                 |   |
|                             | Title:  Chief Executive Officer |   |
|                             |                                      |   |
|                             |                                      |   |
|                             |                                      |   |
| Date:  August 13, 2010 | /s/ Arthur J. McCarthy                    |   |
|                             | Name:  Arthur J. McCarthy       |   |
|                             | Title:  Chief Financial Officer |   |

----