United States Securities and Exchange Commission
Washington, DC 20549

FORM 10-Q

[ x ]
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
 
For the Quarterly Period Ended September 30, 2012March 31, 2013
 
[   ]
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
 
For the transition period from to                         .
_________to ________.
 
Commission File Number 001-09014
Chyron Corporation
(Exact name of registrant as specified in its charter)

New York 11-2117385
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   
5 Hub Drive, Melville, New York 11747
(Address of principal executive offices) (Zip Code)
(631) 845-2000
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
      Yes [x]     No [  ]

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).         [x] Yes        [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ]
(do not check if a smaller reporting company)
 Smaller reporting company [x]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes [  ]     No [x]

The number of shares outstanding of the issuer's common stock, par value $.01 per share, on NovemberMay 7, 20122013 was 17,111,117.17,434,972.
 

 
 
 

CHYRON CORPORATION


INDEX

PART IFINANCIAL INFORMATIONPage
   
Item 1.Financial Statements 
 
Consolidated Balance Sheets as of September 30, 2012March 31, 2013 (unaudited) and
December 31, 20112012
3
   
 
Consolidated Statements of Operations (unaudited) for the Three
And Nine    Months ended September 30,March 31, 2013 and 2012 and 2011
4
   
 
Consolidated Statements of Comprehensive Income (Loss) (unaudited)
for the Three and Nine Months ended September 30,March 31, 2013 and 2012and 2011
5
   
 
Consolidated Statements of Cash Flows (unaudited) for the Nine Three
Months ended September 30,March 31, 2013 and 2012 and 2011
6
   
 
Notes to Consolidated Financial Statements (unaudited)
7
   
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
1517
   
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
2022
   
Item 4.
Controls and Procedures
2022
   
PART IIOTHER INFORMATION 
   
Item 1.
Legal Proceedings
2123
   
Item 1A.
Risk Factors
2123
   
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
2231
   
Item 3.
Defaults Upon Senior Securities
2231
   
Item 4.
Mine Safety Disclosures
2231
   
Item 5.
Other Information
2231
   
Item 6.
Exhibits
2332

2
 
2
 

PART I  FINANCIAL INFORMATION
Item 1.    Financial Statements
CHYRON CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

 Unaudited    
 March 31,  December 31, 
Assets 
Unaudited
September 30,
2012
  
December 31,
2011
  2013  2012 
Current assets:            
Cash and cash equivalents $2,155  $4,216  $2,309  $2,483 
Accounts receivable, net 4,934  5,727   5,611   5,630 
Inventories, net 2,783  2,132   2,097   2,285 
Deferred taxes 2,504  2,508 
Prepaid expenses and other current assets  697   792   754   626 
Total current assets 13,073  15,375   10,771   11,024 
              
Property and equipment, net 1,541  1,620   1,256   1,347 
Intangible assets, net 583  658   535   559 
Goodwill 2,066  2,066   2,066   2,066 
Deferred taxes 16,924  15,994 
Other assets  134   93   115   119 
TOTAL ASSETS $34,321  $35,806  $14,743  $15,115 
   
Liabilities and Shareholders' EquityLiabilities and Shareholders' Equity Liabilities and Shareholders' Equity 
      
Current liabilities:              
Accounts payable and accrued expenses $3,645  $3,847  $3,448  $3,100 
Deferred revenue 3,627  3,203   3,525   3,637 
Current portion of pension liability 360  783   372   278 
Current portion of term loan -  135   280   280 
Capital lease obligations  26   38   13   20 
Total current liabilities 7,658  8,006   7,638   7,315 
              
Pension liability 2,701  2,664   3,979   3,873 
Deferred revenue 964  765   1,101   1,198 
Term Loan
  327   397 
Other liabilities  347   329   356   351 
Total liabilities  11,670   11,764   13,401   13,134 
              
Commitments and contingencies              
              
Shareholders' equity:              
Preferred stock, par value $1.00, without designation Authorized - 1,000,000 shares, Issued - none
      
Common stock, par value $.01 Authorized - 150,000,000 shares Issued and outstanding - 17,067,603 at September 30, 2012 and 16,639,704 at December 31, 2011
 171  166 
Preferred stock, par value $1.00, without designation        
Authorized - 1,000,000 shares, Issued - none        
Common stock, par value $.01        
Authorized - 150,000,000 shares        
Issued and outstanding - 17,419,622 at March 31, 2013        
and 17,135,239 at December 31, 2012
  174   171 
Additional paid-in capital 84,280  83,407   84,834   84,539 
Accumulated deficit (60,384) (58,103)  (81,321)  (80,404)
Accumulated other comprehensive loss  (1,416)  (1,428)  (2,345)  (2,325)
Total shareholders' equity  22,651   24,042   1,342   1,981 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $34,321  $35,806  $14,743  $15,115 



See Notes to Consolidated Financial Statements (unaudited)
 
3
 
3
 

CHYRON CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2013 AND 2012
(In thousands, except per share amounts)
(Unaudited)


 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
 
 2012  2011  2012  2011  2013  2012 
                  
Product revenues
 $4,861  $5,361  $16,434  $17,825  $5,974  $5,802 
Service revenues
  2,387   2,109   6,375   5,655   2,043   2,075 
Total revenues
  7,248   7,470   22,809   23,480   8,017   7,877 
                        
Cost of sales
  2,325   2,313   7,025   7,151   2,295   2,335 
Gross profit
  4,923   5,157   15,784   16,329   5,722   5,542 
                        
Operating expenses:                        
Selling, general and administrative
  4,114   4,270   13,278   12,827   4,751   4,685 
Research and development
  1,822   1,753   5,682   5,016   1,780   1,931 
                        
Total operating expenses
  5,936   6,023   18,960   17,843   6,531   6,616 
                        
Operating loss
  (1,013)  (866)  (3,176)  (1,514)  (809)  (1,074)
                        
Interest expense
  (7)  (8)  (16)  (29)  (14)  (5)
                        
Other income (loss), net
  18   (14)  12   20 
Other (loss) income, net   (83)  7 
                        
Loss before taxes
  (1,002)  (888)  (3,180)  (1,523)
Loss before income taxes   (906)  (1,072)
                        
Income tax benefit (expense), net
  302   (2,604)  899   (2,322)
Income tax (expense) benefit   (11)  121 
                        
Net loss
 $(700) $(3,492) $(2,281) $(3,845) $(917) $(951)
                        
Net loss per share - basic
 $(0.04) $(0.21) $(0.13) $(0.23) $(0.05) $(0.06)
                        
Net loss per share - diluted
 $(0.04) $(0.21) $(0.13) $(0.23) $(0.05) $(0.06)
                        
Weighted average shares outstanding:                        
Basic
  17,023   16,558   16,910   16,404   17,362   16,807 
Diluted
  17,023   16,558   16,910   16,404   17,362   16,807 





See Notes to Consolidated Financial Statements (unaudited)
 
4

 
4
 

CHYRON CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED MARCH 31, 2013 AND 2012
(In thousands)
(Unaudited)




 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
 
 2012  2011  2012  2011  2013  2012 
                  
Net loss
 $(700) $(3,492) $(2,281) $(3,845) $(917) $(951)
                        
Other comprehensive income (loss):                
Other comprehensive (loss) income:        
Foreign currency translation adjustment
  9   (7)  12   2   (20)  10 
                        
Comprehensive loss
 $(691) $(3,499) $(2,269) $(3,843) $(937) $(941)























See Notes to Consolidated Financial Statements (unaudited)
 
5


 
5
 

CHYRON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2013 AND 2012
(In thousands)
(Unaudited)


 
Nine Months
Ended September 30,
 
 2012  2011  2013  2012 
Cash Flows From Operating Activities            
Net loss $(2,281) $(3,845) $ (917) $(951)
Adjustments to reconcile net loss to net cash from operating activities:
      
Adjustments to reconcile net loss to net cash from        
operating activities:        
Depreciation and amortization 687  719   187   211 
Deferred tax asset allowance -  2,724   353     
Deferred income tax benefit (926) (429)  (353)  (133)
Inventory provisions 10  94       10 
Share-based payment arrangements 719  753   340   304 
Shares issued for 401(k) match 220  197   70   78 
Other (41) (9)  (130)  33 
Changes in operating assets and liabilities:              
Accounts receivable 793  462   19   349 
Inventories (661) 164   188   (2)
Prepaid expenses and other assets 46  (119)  (128)  (48)
Accounts payable and accrued expenses (202) (116)  348   (903)
Deferred revenue 623  326   (209)  56 
Other liabilities  (352)  (301)  210   (316)
Net cash (used in) provided by operating activities  (1,365)  620 
Net cash used in operating activities
  (22)  (1,312)
              
Cash Flows From Investing Activities              
Acquisitions of property and equipment  (534)  (807)  (72)  (79)
Net cash used in investing activities  (534)  (807)  (72)  (79)
              
Cash Flows From Financing Activities              
Proceeds from exercise of stock options 1  113 
Payments on term loan (135) (244)  (70)  (81)
Payments on capital lease obligations  (28)  (25)  (10)  (9)
Net cash used in financing activities  (162)  (156)  (80)  (90)
              
Change in cash and cash equivalents (2,061) (343)  (174)  (1,481)
Cash and cash equivalents at beginning of period  4,216   5,565   2,483   4,216 
Cash and cash equivalents at end of period $2,155  $5,222  $2,309  $2,735 








See Notes to Consolidated Financial Statements (unaudited)
 
6

 
6
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)



1.           BASIS OF PRESENTATION

Nature of Business

Chyron is a provider of Graphics as a Service for on-air and digital video applications including newsrooms, studios, sports broadcasting facilities, and corporate video environments. Chyron's graphics solutions include the Axis World Graphics online content creation software and order management system, on-air graphics systems, clip servers, channel branding, and graphics asset management solutions, all of which may be incorporated into the Company's BlueNet™ end-to-end graphics workflow.

General

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany amounts have been eliminated.

In the opinion of management of Chyron Corporation (the "Company" or "Chyron"), the accompanying unaudited consolidated interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position of the Company as of September 30, 2012March 31, 2013 and the consolidated results of its operations, its comprehensive loss and its cash flows for the periods ended September 30, 2012March 31, 2013 and 2011.2012. The results of operations for such interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2012.2013. In addition, management is required to make estimates and assumptions that affect the amounts reported and related disclosures. Estimates made by management include inventory valuations, stock and bonus compensation, allowances for doubtful accounts, income taxes, pension assumptions and reserves for warranty and incurred but not reported health insurance claims. Estimates, by their nature, are based on judgment and available information. Also, during interim periods, certain costs and expenses are allocated among periods based on an estimate of time expired, benefit received, or other activity associated with the periods. Accordingly, actual results could differ from those estimates. The Company has not segregated its cost of sales between costs of products and costs of services as it is not practicable to segregate such costs. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission. For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.2012. The December 31, 20112012 figures included herein were derived from such audited consolidated financial statements.
 
7

 
7
 

Recent Accounting Pronouncements

In July 2012, the Financial Accounting Standards BoardFASB issued Accounting Standard Update No. 2012-02, Testing Indefinite-Lived Intangible Assetsamendments to the indefinite-lived intangible asset impairment guidance which provides an option for Impairment. This guidance gives companies the option to performuse a qualitative assessmentapproach to determine whether it is more likely than not that antest indefinite-lived intangible assets for impairment if certain conditions are met. The amendments are effective for annual and interim indefinite-lived intangible asset might be impaired and whether it is necessary to perform a quantitative test. The updated accounting guidance is effectiveimpairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted.2012. The Company believes that thisimplementation of the amended accounting guidance will have nohas not had a material impact on itsthe Company's consolidated financial statements.position or results of operations.

In February 2013, the FASB issued amendments to disclosure requirements for presentation of comprehensive income. The standard requires presentation (either in a single note or parenthetically on the face of the financial statements) of the effect of significant amounts reclassified from each component of accumulated other comprehensive income based on its source and the income statement line items affected by the reclassification. If a component is not required to be reclassified to net income in its entirety, a cross reference to the related footnote for additional information will be required. The amendments are effective prospectively for reporting periods beginning after December 15, 2012. The implementation of the amended accounting guidance has not had a material impact on the Company's consolidated financial position or results of operations.
In February 2013, the FASB issued new accounting guidance clarifying the accounting for obligations resulting from joint and several liability arrangements for which the total amount under the arrangement is fixed at the reporting date. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2013. The implementation of the new accounting guidance is not expected to have a material impact on the Company's consolidated financial position or results of operations.

In March 2013, the FASB issued amendments to address the accounting for the cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. The amendments are effective prospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013 (early adoption is permitted). The implementation of the amended accounting guidance is not expected to have a material impact on the Company's consolidated financial position or results of operations.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed based on the weighted average number of common shares outstanding. Diluted earnings (loss) per share is based on the sum of the weighted average number of common shares outstanding and common stock equivalents. Potentially dilutive shares are excluded from the computation of diluted earnings per share when their effect is anti-dilutive. Shares excluded from the calculation are as follows (in thousands):

  
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
 
  2012  2011  2012  2011 
Weighted average shares which are not included in the calculation of diluted earnings (loss) per share because their impact is anti-dilutive:
            
Stock options  3,444   2,098   3,301   2,170 
Restricted stock units  379   1,968   475   1,854 
   3,823   4,066   3,776   4,024 
8


 Three Months
 Ended March 31,
 20132012
Weighted average shares which are not included in the  
  calculation of diluted earnings (loss) per share because  
  their impact is anti-dilutive:  
       Stock options3,0033,174
       Restricted stock units   120   556
 3,1233,730

2.           LONG-TERM INCENTIVE PLANS

Pursuant to the 2008 Long-term Incentive Plan (the "Plan"), the Company may grant stock options (non-qualified or incentive), stock appreciation rights, restricted stock, restricted stock units and other share-based awards to employees, directors and other persons who serve the Company. The Plan is overseen by the Compensation Committee of the Board of Directors, which approves the timing and circumstances under which share-based awards may be granted. At September 30, 2012,March 31, 2013, there were 0.90.5 million shares available to be granted under the Plan. The Company issues new shares to satisfy the exercise or release of share-based awards. Under the provisions of Accounting Standards Codification Topic 718, Stock Compensation, all share-based payments are required to be recognized in the statement of operations based on their fair values at the date of grant.
8

The fair value of each option award is estimated using a Black-Scholes option valuation model. Expected volatility is based on the historical volatility of the price of the Company's stock. The risk-free interest rate is based on U.S. Treasury issues with a term equal to the expected life of the option. The Company uses historical data to estimate expected dividend yield, expected life and forfeiture rates. Options generally have a life of 10 years and have either time-based or performance-based vesting features. Time-based awards generally vest over a three year period, while the performance-based awards vest upon the achievement of specific performance targets. At September 30, 2012,March 31, 2013, there were 0.9 million options outstanding that will vest upon the achievement of certain financial conditions for 2013 or will expire if the performance criteria are not met. No expense was recognized for these awards. If in the future it is probable that these awards will be earned, the Company will commence recording an expense for them. The fair values of the options granted during the three and nine months ended September 30,March 31, 2013 and 2012, and 2011, were estimated based on the following weighted average assumptions:

 Three Months 
 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  Ended March 31, 
 2012  2011  2012  2011  2013  2012 
Expected volatility  73.18%  70.72%  71.46%  71.11%  76.23%  69.82%
Risk-free interest rate  0.52%  1.42%  0.56%  1.79%  1.06%  1.48%
Expected dividend yield  0.00%  0.00%  0.00%  0.00%  0.00%  0.00%
Expected life (in years)  3.76   6.0   3.23   6.0   6.0   6.0 
Estimated fair value per option granted
 $0.55  $1.32  $0.70  $1.34  $0.87  $1.01 
9

The following table presents a summary of the Company's stock option activity for the ninethree months ended September 30, 2012:March 31, 2013:

 Number of
 
Number of
Options
Outstanding at January 1, 201220133,224,8794,294,273 
Granted1,498,45260,000 
Exercised   (1,667)(50,000)
Forfeited and cancelled   (399,339)(98,411)
Outstanding at September 30, 2012March 31, 20134,322,3254,205,862 

The Company also grants restricted stock units, or RSUs, that entitle the holder to a share of Company common stock. The fair value of an RSU is equal to the market value of a share of common stock on the date of grant. All RSUs that are currently outstanding have time-based vesting features over a one to three year period.

The following table presents a summary of the Company's RSU activity for the ninethree months ended September 30, 2012:March 31, 2013:

 Shares
Nonvested at January 1, 20122013528,443343,161 
Granted152,328329,164 
Vested and settled in shares(311,014)
Forfeited and cancelled(10,394)(168,995)
Nonvested at September 30, 2012March 31, 2013  359,363503,330 

9
The anticipated consummation of the business combination with Hego Aktiebolag as discussed in Note 8 to these Consolidated Financial Statements will constitute a change in control under the Company's long-term incentive plans. As a result, all outstanding equity awards will become immediately exercisable and fully vested, without regard to any time and/or performance vesting conditions. As a result, upon the anticipated closing of the transaction in the second quarter of 2013, the Company estimates it will record a charge of approximately $1.3 million, representing the unamortized expense related to the vesting of such equity awards. The estimated expense is subject to a number of assumptions and actual results may differ from these estimates.

In addition, each year the Company also hasadopts a 2012 Management Incentive Compensation Plan ("the 2012 Incentive(the "Incentive Plan") that entitles recipients to a combination of cash and equity awards based on achievement of certain performance and service conditionscriteria in the fiscal year ending December 31, 2012. No expense was recordedyears for these awards duringwhich the nineIncentive Plan is adopted. During the three months ended September 30,March 31, 2013 and 2012 as it is not yet probable that the performance conditions will be met.Company recorded an expense of $136 thousand and $73 thousand, respectively, associated with the equity portion of the awards under these Plans.

10

The impact on the Company's results of operations of recording share-based compensation expense is as follows (in thousands):

 Three Months 
 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  Ended March 31, 
 2012  2011  2012  2011  2013  2012 
Cost of sales $19  $24  $57  $76  $17  $19 
Research and development  82   84   247   270   87   96 
Selling, general and administrative  139   127   415   407   236   189 
 $240  $235  $719  $753  $340  $304 

3.           INVENTORIES

Inventories, net are comprised of the following (in thousands):

 September 30,  December 31,  March 31,  December 31, 
 2012  2011  2013  2012 
Finished goods $356  $653  $265  $465 
Work-in-progress  452   170   407   468 
Raw material  1,975   1,309   1,425   1,352 
 $2,783  $2,132  $2,097  $2,285 

4.           CREDIT FACILITY

In August 2012,March 2013, the Company entered into a seventh loan modification agreement and amended its loan and security agreement (the "Credit"Revised Credit Facility") with Silicon Valley Bank to extend("SVB"). Under this Revised Credit Facility, the termexpiration date of the Credit Facility tofacility remained at August 12, 2013 to increaseand the revolving line of credit (the "Revolving Line") was reduced from $1.5$3.0 million to $3.0 million, and to add a term loan facility that can be used to purchase equipment in an aggregate amount of up to $1.0 million (the "Term Loan").

Advances on$2.0 million. Available borrowings under the Revolving Line are limitedwas changed from 80% of eligible accounts receivable to 80% of eligible accounts receivable. At September 30, 2012 available borrowings were approximately $2.1 million and no borrowings were outstanding.receivable less the amount of principal outstanding under the term loan that forms part of the Revised Credit Facility, as described below. The Revolving Line continues to bear interest at a floating annual rate equal to Silicon Valley Bank'sSVB's prime rate ("Prime") +1.75%.

Advances The Company also has a term loan with SVB, that was unchanged under the Term Loan mayRevised Credit Facility, whereby advances were available to be drawn untilthrough December 31, 2012 in minimum amounts of $0.25 million.

At March 31, 2013, available borrowings under the Revolving Line were approximately $1.4 million but no borrowings were outstanding. During the fourth quarter of 2012, the Company took two advances of $0.35 million each from the term loan and the balance outstanding at March 31, 2013 was $0.6 million. The Term Loanterm loan bears interest at Prime +2.25% (which was 6.25% at March 31, 2013) and principal and interest will beare being repaid over thirty months. At September 30, 2012, no amounts were outstanding; however, on October 17, 2012,Interest expense related to the Company took an advance of $0.35 million onterm loan was $10 thousand for the Term Loan.three months ended March 31, 2013.
 
11

 
10
 

Pursuant to the Revised Credit Facility, the financial covenants were modified. The Company is required to maintain financial covenants based on an adjusted quick ratio ("AQR") of at least 1.2 to 1.0, measured at each calendar month-end, and the minimum tangible net worth covenant was replaced by a maximum EBITDA loss/profitability covenant (tested at quarter end) effective with the first quarter of 2013. Additionally, if the Company's AQR falls below 1.5x at any month-end during the remaining term of the facility, then any borrowings under the Revolving Line will be repaid by SVB applying collections from the Company's SVB collateral account (for receipts by wire) and SVB lockbox account (for receipts by check) to reduce the revolving loan balance on a daily basis, until such time as the month-end AQR is again 1.5x or greater. If the AQR at month-end is 1.5x or greater, the Company will maintain a static loan balance and all collections will be deposited into the Company's operating account. The Company was in compliance with its financial covenants as of March 31, 2013. As is usual and customary in such lending agreements, the agreements also contain certain non-financial requirements, such as required periodic reporting to the bank and various representations and warranties. The lending agreement also restricts the Company's ability to pay dividends without the bank's consent.

The Revised Credit Facilityfacility is collateralized by the Company's assets, except for (i) its intellectual property rights which are subject to a negative pledge arrangement with the bank, and (ii) any equipment whose purchase is financed by any other lender or lessor, solely to the extent the security agreement with such lender or lessor prohibits junior liens on such equipment, and only until the lien held by such lender or lessor is terminated or released with respect to such equipment. The Company is required to maintain financial covenants based on an adjusted quick ratio of at least 1.2 to 1.0, measured at each calendar month-end, and minimum tangible net worth of $18.5 million, increased by 60% of the sum of the gross proceeds received by the Company from any sale of its equity or incurrence of subordinated debt and any positive quarterly net income earned, measured at quarter end (both as defined as per the Credit Facility). As is usual and customary in such lending agreements, the agreements also contain certain nonfinancial requirements, such as required periodic reporting to the bank and various representations and warranties. The lending agreement also restricts the Company's ability to pay dividends without the bank's consent. The Company has been in compliance with all debt covenants since inception of the Credit Facility.

In 2009, the Company borrowed to finance capital equipment under the then existing credit facility which resulted in a term loan (the "2009 Term Loan") of $977 thousand payable over 36 months in equal monthly installments of principal plus accrued interest. As of September 30, 2012, the Company had repaid all principal and interest and there was no outstanding balance on the 2009 Term Loan. Interest expense related to the 2009 Term Loan was $1 thousand and $15 thousand for the nine months ended September 30, 2012 and 2011, respectively. Interest expense related to the 2009 Term Loan was $0 and $4 thousand for the three months ended September 30, 2012 and 2011, respectively.

5.           BENEFIT PLANS

The net periodic benefit cost relating to the Company's Pension Plan is as follows (in thousands):

 Three Months 
 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  Ended March 31, 
 2012  2011  2012  2011  2013  2012 
Service cost $130  $108  $390  $300  $146  $130 
Interest cost  88   86   264   248   90   88 
Expected return on plan assets  (87)  (80)  (261)  (220)  (100)  (87)
Actuarial loss (gain)  41   (7)  123   (19)
Amortization loss  66   41 
Amortization of prior service cost  (2)  20   (6)  30   (2)  (2)
 $170  $127  $510  $339  $200  $170 

The Company's policy is to fund the minimum contributions required under the Employee Retirement Income Security Act (ERISA) and, subject to cash flow levels, the Company may choose to make a discretionary contribution to its pension plan to reduce the unfunded liability. In the first quarter of 2012,2013, the Company made an additional contribution of $0.39 million in orderwas not required to exceed an 80% funding level measured at January 1, 2012. The Company also made requiredmake any contributions of $0.5 million in the nine months ended September 30, 2012 for a total of $0.89 million for the year to date. Basedits pension plan. However, based on current assumptions, the Company expects to make required contributions of $0.36$0.37 million in the next twelve months.
 
12

 
11
 

The Company has a 401(k) Plan exclusively for the benefit of participants and their beneficiaries. All U.S. employees of the Company are eligible to participate in the 401(k) Plan. The Company may make discretionary matching contributions of the compensation contributed by the participant. The Company has the option of making the matching contributions in cash or through shares of Company common stock. During the ninethree months ended September 30,March 31, 2013 and 2012, and 2011, the Company issued 17597 thousand and 9164 thousand shares of common stock in connection with the Company match for the Company's 401(k) Plan in lieu of an aggregate cash match of $220$70 thousand and $197$78 thousand, respectively.

6.           PRODUCT WARRANTY

The Company provides product warranties for its various products, typically for one year. Liabilities for the estimated future costs of repair or replacement are established and charged to cost of sales at the time the sale is recognized. The Company established its reserve based on historical data, taking into consideration specific product information. The following table sets forth the movement in the warranty reserve (in thousands):

 Three Months 
 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  Ended March 31, 
 2012  2011  2012  2011  2013  2012 
Balance at beginning of period $50  $50  $50  $50  $50  $50 
Provisions  -   7   25   63   29   34 
Warranty services provided, net  -   (7)  (25)  (63)
Warranty services provided  (24)  (34)
 $50  $50  $50  $50  $55  $50 

7.           INCOME TAXES

The components of deferred income taxes are as follows (in thousands):

 March 31,  December 31, 
 
September 30,
2012
  
December 31,
2011
  2013  2012 
Deferred tax assets:            
Net operating loss carryforwards $17,242  $16,728  $14,716  $14,491 
Inventory  1,740   1,736   1,769   1,769 
Other liabilities  2,579   2,229   3,155   3,055 
Fixed assets  447   452   424   440 
Other temporary differences  688   625   633   589 
  22,696   21,770   20,697   20,344 
Deferred tax valuation allowance  3,268   3,268   (20,697)  (20,344)
 $19,428  $18,502  $-  $- 

13

 
 
12
 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In accordance with accounting standards the Company has not recorded a deferred tax asset of approximately $1.0 million related to the settlement of share-based awards in the accompanying consolidated financial statements because it will not result in the reduction of income taxes payable, due to the existence of net operating loss carryforwards. The cumulative amountlosses that resulted from the exercise of unrecognized tax benefits associated with these awards was approximately $0.9 million at September 30, 2012, and ifdisqualifying stock options. If the Company is able to utilize this benefit in the future it would result in a credit to additional paid in capital.

At September 30, 2012,Accounting standards require that the Company had U.S. federal net operating loss carryforwards ("NOLs") of approximately $50 million expiring betweencontinually assess the years 2012 through 2031. Approximately $7.5 million of the NOLs are set to expirelikelihood that its deferred taxes will be realizable. All available evidence, both positive and negative, must be considered in 2012 if not utilized. The remaining amount of NOLs of approximately $42.5 million are not scheduled to expire until 2018 and beyond. Based on management's current estimate of book income and the uncertainty of the timing of future taxable income, it was determined thatdetermining whether it is more likely than not that the deferred tax assets will be realized. In making such assessments, significant weight is given to evidence that can be objectively verified. A company's current or previous losses are given more weight than its future outlook. As of March 31, 2013 and December 31, 2012, using that standard, the Company concluded that a full valuation allowance was required for its deferred tax assets. The Company will notcontinue to assess the likelihood that its deferred tax assets will be able to generate enough taxable incomerealizable, and its valuation allowance will be adjusted accordingly, which could materially impact its financial position and results of operations in the respective carry forward periods to realize all of its NOLs. Consequently, in the third quarter of 2011,future periods.

At March 31, 2013, the Company recorded a $2.7had approximately $44 million valuation allowance related to the $7.5 million of the NOLs that are set to expire in 2012, based on management's expectation that the NOLs may not be realized. While the Company believes its estimates and assumptions are reasonable, if the Company does not generate enough taxable income to fully realize the balance ofU.S. Federal net operating loss carryforwards additional valuation allowances or tax provisions may be required.

The components of the provision for income tax (expense) benefit are as follows (in thousands):

  
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
 
  2012  2011  2012  2011 
Current:            
State and foreign $(4) $(9) $(27) $(27)
                 
Deferred:                
State  13   6   44   20 
Federal  293   123   882   409 
   306   129   926   429 
Valuation allowance  -   (2,724)  -   (2,724)
Income tax (expense) benefit $302  $(2,604) $899  $(2,322)

The difference("NOLs") expiring between the Company's effective income tax rate2018 and the federal statutory rate is primarily due to the amount of expense associated with its share-based payment arrangements and the portion thereof that will give rise to tax deductions.
13

2032. The Company files U.S. federal income tax returns as well as income tax returns in various states and one foreign jurisdiction. The CompanyIt may be subject to examination by the Internal Revenue Service ("IRS") for calendar years 2009 through 20112012 under the normal statute of limitations. Additionally, any net operating losses that were generated in prior years and utilized in these years may also be subject to examination by the IRS. Generally, for state tax purposes, the Company's 2008 through 20112012 tax years remain open for examination by the tax authorities under a four year statutesstatute of limitations, however, certain state statutes of limitationsstates may remainkeep their review period open for six to ten years.

The components of the provision for income tax (expense) benefit are as follows (in thousands):

  Three Months 
  Ended March 31, 
  2013  2012 
Current:      
   State and foreign $(11) $(12)
         
Deferred:        
   State  10   9 
   Federal  343   124 
   353   133 
         
Valuation allowance  (353)  - 
         
Income tax (expense) benefit $(11) $121 
14


8.BUSINESS COMBINATION - PENDING ACQUISITION

On March 9, 2013, the Company entered into a stock purchase agreement (the "Stock Purchase Agreement") with Hego Aktiebolag ("Hego") to acquire all of the issued and outstanding shares of Hego. Hego is a global graphics services company based in Stockholm, Sweden that develops real-time graphics products and tools for the broadcast and sports industries.

If consummated, the transaction will take the form of a stock transaction whereby Chyron will issue a number of shares of Chyron common stock which will represent 40% of its aggregate shares of common stock outstanding, including certain outstanding options, after the closing, in exchange for all of Hego's outstanding capital stock. Upon the achievement of certain revenue milestones during 2013, 2014 and 2015, Hego's shareholders will also be entitled to receive additional shares of Chyron common stock such that the total number of shares of Chyron common stock issued in the transaction is equal to 50% of the aggregate shares of Chyron common stock outstanding, including certain outstanding options, after the closing.

The transaction is subject to customary closing conditions, including the approval by Chyron's shareholders, and is expected to close in the second quarter of 2013. Chyron's board of directors unanimously approved the transaction and Chyron shareholders representing 40% of Chyron's outstanding common stock have committed to vote in favor of the transaction.


9.           CONTINGENCIES

The Company is subject to litigation and other claims that arise in the ordinary course of business. While the ultimate result of the Company's outstanding legal matter described under "Legal Proceedings" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 20112012 cannot presently be determined, the Company does not expect that the ultimate disposition will have a material adverse effect on its results of operations or financial condition. However, legal matters are inherently unpredictable and subject to significant uncertainties, some of which are beyond the Company's control. As such, there can be no assurance that the final outcome will not have a material adverse effect upon the Company's financial condition or results of operations.
15


9.10.           SEGMENT AND GEOGRAPHIC INFORMATION

The Company operates and evaluates its business as one reporting unit.

Revenues by geography are based on the country in which the end user customer resides and are detailed as follows (in thousands):

 Three Months 
 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
  Ended March 31, 
 2012  2011  2012  2011  2013  2012 
North America $5,181  $5,884  $16,001  $17,967  $5,253  $5,672 
Europe, Middle East and Africa (EMEA)  671   644   2,480   3,355   1,212   1,001 
Latin America  794   550   2,276   1,438   591   772 
Asia  602   392   2,052   720   961   432 
 $7,248  $7,470  $22,809  $23,480  $8,017  $7,877 

11.           SUBSEQUENT EVENT

On May 2, 2013, the Company's Board of Directors approved a restructuring plan to reduce operating costs while maintaining its focus on strategic initiatives. The Company reduced the size of its workforce by 20 positions. The reductions were essentially completed prior to the filing of this Form 10-Q and the Company expects to incur restructuring charges of approximately $0.95 million in the second quarter in connection with this plan. The restructuring charges consist of approximately $0.6 million in severance pay and benefits expense and approximately $0.35 million in charges associated with modifications of equity awards outstanding on their termination date. These estimated costs are subject to a number of assumptions and actual results may differ from these estimates.

16

 
14
 

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q, including, without limitation, Management's Discussion and Analysis of Financial Condition and Results of Operations, contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend that the forward-looking statements be covered by the safe harbor for forward-looking statements in the Exchange Act. All statements, other than statements of historical fact, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. These forward-looking statements are usually accompanied by words such as "believe," "anticipate," "plan," "seek," "expect," "intend" and similar expressions.

Forward-looking statements necessarily involve risks and uncertainties, and our actual results could differ materially from those anticipated in the forward looking statements due to a number of factors, including, but not limited to: current and future economic conditions that may adversely affect our business and customers; our revenues and profitability may fluctuate from period to period and therefore may fail to meet expectations, which could have a material adverse effect on our business, financial condition and results of operations; our ability to maintain adequate levels of working capital; the impact of the pending merger with Hego; our ability to successfully maintain the level of operating costs; our ability to obtain financing for our future needs should there be a need; our ability to incentivize and retain our current senior management team and continue to attract and retain qualified scientific, technical and business personnel; our ability to expand our Axis online graphics creation solution or to develop other new products and services; our ability to generate sales and profits from our Axis online graphics services, workflow and asset management solutions; rapid technological changes and new technologies that could render certain of our products and services to be obsolete; competitors with significantly greater financial resources; new product and service introductions by competitors; challenges associated with expansion into new markets; and other factors set forth in Part I, Item 1A, entitled "Risk Factors," of our Annual Report on Form 10-K for the year ended December 31, 2011.2012. Those factors as well as other cautionary statements made in this Quarterly Report on Form 10-Q, should be read and understood as being applicable to all related forward-looking statements wherever they appear herein. The forward-looking statements contained in this Quarterly Report on Form 10-Q represent our judgment as of the date of this report. We encourage you to read those descriptions carefully. We caution you not to place undue reliance on the forward-looking statements contained in this report. These statements, like all statements in this report, speak only as of the date of this report (unless an earlier date is indicated) and we undertake no obligation to update or revise the statements except as required by law. Such forward-looking statements are not guarantees of future performance and actual results will likely differ, perhaps materially, from those suggested by such forward-looking statements. In this report, "Chyron," the "Company," "we," "us," and "our" refer to Chyron Corporation.
 
17
 
15
 

Overview

We are a leading provider of on-air and digital video applications for newsrooms, studios, sports broadcasting facilities and corporate video environments. We anticipate that our industry will consolidate over the next several years in response to the rapid technology changes currently exist in a worldwide TV marketimpacting the broadcast space. There are pockets of strong growth that continuesremain and that we must address, and we believe the best way to be persistently price competitive,do this quickly is through alliances, partnerships and where customer demand for purchases of new graphics systems,acquisitions. This was the strategic thinking behind our pending merger with Hego AB that we announced on March 11, 2013. Hego brings very strong sports products and services remains subdued. While our customersservice offerings that address the needs of both sports broadcasters and sports leagues and rights holders. There are experiencing some degree of recovery in their advertising revenues, they continue to emphasize cost containment and this is reflected in their capital spending.

The overall economic recovery is still tenuous, and our professional media customers continue to face fiscal challenges. These customers aresignificant budgets available in the processsports TV space for those companies who offer an improved viewer experience. Following completion of transforming their businessesthe transaction, we believe that we will be positioned to benefit from these kinds of capital expenditures. The Chyron and Hego product lines are complementary with very little overlap. Hego's solutions and services predominantly address new opportunities and threats. To help our customers transition their business models we have developed workflowthe needs of live sports production, while Chyron has recently been more focused on graphics solutions for them that we believelive and near-live news production workflows. We anticipate the merger of Chyron and Hego will bring cost advantages over traditional processes. These solutions are designedtogether two pioneering companies to help our media clients do more with less. By leveraging our Cloud-based technologies to deliver low-cost, scalable, collaborative applicationscreate a global leader in broadcast graphics creation, playout and services, we aim to help our customers transform their high fixed-cost business models to lower, variable and more flexible cost models. We have no intention of diminishing our product business. Rather, we are finding that adoption of our service offerings results in new product and systems sales and vice versa.real-time data visualization.

Results of Operations for the Three and Nine Months Ended September 30,March 31, 2013 and 2012 and 2011

Net sales. Revenues for the quarter ended September 30, 2012March 31, 2013 were $7.2$8.0 million, a decreasean increase of $0.3$0.1 million, or 3%2%, from the $7.5$7.9 million reported in the quarter ended September 30, 2011.March 31, 2012. Of these amounts, North American revenues were $5.2 million in the quarter ended September 30, 2012March 31, 2013 and $5.9$5.7 million in the quarter ended September 30, 2011.March 31, 2012. Revenues derived from other international regions were $2.0$2.8 million in the quarter ended September 30, 2012March 31, 2013 as compared to $1.6$2.2 million in the quarter ended September 30, 2011.

Revenues for the nine months ended September 30, 2012 were $22.8 million, a decrease of $0.6 million, or 3%, from the $23.4 million in the nine months ended September 30, 2011. Revenues derived from North American customers were $16.0 million in the nine month period ended September 30, 2012 as compared to $18.0 million in the nine month period ended September 30, 2011. Revenues derived from other international regions were $6.8 million in the nine months ended September 30, 2012 as compared to $5.4 million in the nine month period ended September 30, 2011.March 31, 2012.

Revenues, by type, for the three and nine month periods ended March 31 are as follows (dollars in thousands):

 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
 
    % of     % of     % of     % of     % of     % of 
 2012  Total  2011  Total  2012  Total  2011  Total  2013  Total  2012  Total 
Product $4,861   67% $5,361   72% $16,434   72% $17,825   76% $5,974   75% $5,802   74%
Services  2,387   33%  2,109   28%  6,375   28%  5,655   24%  2,043   25%  2,075   26%
 $7,248      $7,470      $22,809      $23,480      $8,017      $7,877     
16

We have experienced a slowdownslight increase in our product revenue stream as a result of delaysan improvement in spending as broadcasters emphasize cost controlour market share in Asia and reschedule their capital expenditures. This decline wasa major program upgrade in our European market. These improvements were somewhat offset by declines experienced in North America, and more markedly in Europe where the economymarket remains price competitive and the demand has stalled. This was offset by improvementsbeen weak, and in our Asian and Latin American markets from several major program upgrades.America.

Our services revenues have grown 13%declined slightly in the three and nine months periodsfirst quarter of 2012 as2013 compared to 2011.2012. This growth is primarily attributable to lower revenues from training and other professional services offset by increased sales of software and hardware maintenance contracts for our broadcast graphics products and increases in revenue from Axis.products.
18


Gross profit.  Gross margins for the quarters ended September 30,March 31, 2013 and 2012 and 2011 were 68% and 69%, respectively. Gross margins for the nine month periods ended September 30, 2012 and 2011 were 69%71% and 70%, respectively. The declineincrease in the gross margin percentage of 1% in each of the quarterly and nine month periods in 2012 as compared to the prior year, is primarily attributable to the decline in product revenues, and the associated lower level of absorption of fixed overhead costs.mix. Absent this affect,effect, we have been able to obtain reasonable and consistent pricing for our materials.

Selling, general and administrative expenses. Selling, general and administrative ("SG&A) expenses are as follows (in thousands):

 Three Months 
 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  Ended March 31, 
 2012  2011  2012  2011  2013  2012 
Sales and marketing $3,125  $3,193  $10,125  $9,068  $2,879  $3,526 
General and administrative  989   1,077   3,153   3,759   1,872   1,159 
 $4,114  $4,270  $13,278  $12,827  $4,751  $4,685 

The decrease in sales and marketing expenses in the thirdfirst quarter of 2012,2013, compared to the same period in 2011,2012, is primarily athe result of lower commissions earned on lower revenues. The increasepersonnel costs and the related direct costs. During the second half of 2012, we reduced costs in spendingthis area by redeploying our resources to growth markets and eliminating positions in sales and marketing expensesnon growth areas that resulted in savings realized in the nine months ended September 30, 2012 is due to additional compensation and related direct costsfirst quarter of increasing our senior sales, marketing and support staff. As planned, we made strategic hires in key sales positions and expanded our sales and marketing efforts overseas. In addition, key positions were filled in professional services as we increase our emphasis on services that complement our products business.2013.

The decreaseincrease in general and administrative expenses in the thirdfirst quarter of 2012, compared to the same period in 2011,2013 is a result of lower travel expenses and reduced consulting costs. The general and administrative expenses forapproximately $0.7 million of acquisition-related transaction costs associated with the nine month period in 2011 includes higher legal and lawsuit settlement costspending acquisition of approximately $0.3 million relating to a lawsuit that was settled in 2011. In addition, the nine month period in 2011 includes recruiting and executive search costs of $0.1 million and compensation related costs of $0.1 million for an executive position that was vacated. Since these costs did not recur in 2012, we experienced a modest decline in our year to date 2012 expenses.Hego AB.
17

Research and development expenses. Research and development ("R&D") expenses were $1.8 million in the three month periodsquarter ended September 30, 2012 and 2011. In the nine month period ended September 30, 2012 R&D costs increased to $5.7 millionMarch 31, 2013 compared to $5.0$1.9 million in the nine monthsquarter ended September 30, 2011.March 31, 2012. The majority of the increasedecrease in R&D spending in this period has resulted from our focus on integrating Axis with our graphics products and systems and future product introductions.a slight shift in the mix of expenses as ongoing projects are funded, but are offset as other projects are completed.

Interest expense. Interest expense declinedincreased slightly in the three and nine month periods ended September 30, 2012 asfirst quarter of 2013 compared to the same periodsfirst quarter of 2012. We took two advances in 2011. This decrease was attributable to decliningthe fourth quarter of 2012 that resulted in a higher outstanding balancesbalance on our term loan from 2009. We made the final payment on this term loan in May 2012.with SVB.

Other (loss) income, (loss), net.  The components of other (loss) income, (loss), net are as follows (in thousands):

 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  Three Months 
 2012  2011  2012  2011  Ended March 31, 
Foreign exchange transaction gain (loss) $16  $(14) $10  $22 
 2013  2012 
Foreign exchange transaction (loss) gain $(82) $7 
Other  2   -   2   (2)  (1)  - 
 $18  $(14) $12  $20  $(83) $7 

19

We continue to be exposed to foreign currency and exchange risk in the normal course of business due to our revenues that are negotiated in British Pounds Sterling. However, we believe that it is not material to our near-term financial position or results of operations.

Income tax (expense) benefit, (expense), net. In the thirdfirst quarter of 20122013 we recorded an expense of $0.01 million and 2011,in the first quarter of 2012 we recorded an income tax benefit of $0.3 million and an expense$0.1 million. As of $2.6 million, respectively. In the nine months ended September 30,December 31, 2012 and 2011 we recorded an incomeMarch 31, 2013, the Company determined that a full valuation allowance was required for its deferred tax assets and will continue to assess the likelihood that its deferred tax assets will be realizable. Consequently, in the first quarter of 2013, the tax benefit of $0.9 million and anthat would be associated with the operating loss was also fully reserved at this time resulting in a net zero deferred tax amount. The minor expense of $2.3 million, respectively. Inrecorded in the thirdfirst quarter of 2011, it was determined, based2013 is attributable to state and foreign tax provisions.

Subsequent Event.  On May 2, 2013, the Company's Board of Directors approved a restructuring plan to reduce operating costs while maintaining its focus on management's estimatestrategic initiatives. The Company reduced the size of book incomeits workforce by 20 positions. The reductions were essentially completed prior to the filing of this Form 10-Q and the uncertaintyCompany expects to incur restructuring charges of approximately $0.95 million in the timingsecond quarter in connection with this plan. The restructuring charges consist of future taxable income, that it was more likely than not that we would not realize a portion of our net operating loss carryforwardsapproximately $0.6 million in severance pay and therefore, recorded a charge of $2.7 million. The difference between our effective income tax ratebenefits expense and the federal statutory rate is primarily due to the amount of expenseapproximately $0.35 million in charges associated with our share-based payment arrangementscertain modifications of equity awards outstanding on their termination date. These estimated costs are subject to a number of assumptions and the portion thereof that will give rise to tax deductions. Furthermore, share-based paymentsactual results may result in tax deductions that do not result in a tax benefit in the accompanying unaudited consolidated financial statements because it will not result in the reduction of income taxes payable, due to the existence of net operating loss carryforwards.differ from these estimates.

Liquidity and Capital Resources

At September 30, 2012,March 31, 2013, we had cash and cash equivalents on hand of $2.2$2.3 million and working capital of $5.4$3.1 million. In the first ninethree months of 2012 we2013 our cash was used approximately $1.4primarily to fund acquisitions of property and equipment of $0.07 million in cash for operations primarily dueand to the net loss that was incurred.make required principal payments on our term loan of $0.07 million.
18

Also, duringDuring the nine month period ended September 30, 2012, we madefirst quarter of 2013 there were no required contributions tofor our pension plan totaling $0.89 million, including a $0.39 million contribution in order to exceed an 80% funding level, measured at January 1, 2012. Basedbased on current assumptions,assumptions. However, we expect to make contributions to our pension plan of $0.36$0.37 million over the next twelve months as required under ERISA. Our pension plan assets were valued at $5.4 million and $5.3 million and $4.1 million at September 30, 2012March 31, 2013 and December 31, 2011,2012, respectively. Our investment strategy remains the samehas been consistent in recent years and we believe that the pension plan's assets are more than adequate to meet pension plan obligations for the next twelve months.

DuringIn March 2013, the remainder of 2012, we plan to expend approximately $0.3 million for our continuing efforts of making improvements to our existing U.S. based Axis co-location facility, and for another disaster recovery and backup co-location for our Axis services that will be funded from advances on our existing term loan under our credit facility with Silicon Valley Bank, as described below.

In August 2012, weCompany entered into a loan modification agreement and amended ourits loan and security agreement (the "Credit"Revised Credit Facility") with Silicon Valley Bank to extend("SVB"). Under this Revised Credit Facility, the termexpiration date of the Credit Facility tofacility remained at August 12, 2013 to increaseand the revolving line of credit (the "Revolving Line") was reduced from $1.5$3.0 million to $3.0 million, and to add a term loan facility that can be used to purchase equipment up to $1.0 million (the "Term Loan"). Advances on$2.0 million. Available borrowings under the Revolving Line are limitedwas changed from 80% of eligible accounts receivable to 80% of eligible accounts receivable. At September 30, 2012, available borrowings were approximately $2.1 million and no borrowings were outstanding.receivable less the amount of principal outstanding under the term loan that forms part of the Revised Credit Facility, as described below. The Revolving Line bearscontinues to bear interest at a floating annual rate equal to Silicon Valley Bank'sSVB's prime rate ("Prime") +1.75%. Advances The Company also has a term loan with SVB, that was unchanged
20
under the Term Loan mayRevised Credit Facility, whereby advances were available to be drawn untilthrough December 31, 2012 in minimum amounts of $0.25 million.

At March 31, 2013, available borrowings under the Revolving Line were approximately $1.4 million but no borrowings were outstanding. During the fourth quarter of 2012, the Company took two advances of $0.35 million each from the term loan and the balance outstanding at March 31, 2013 was $0.6 million. The Term Loanterm loan bears interest at Prime +2.25% (which was 6.25% at March 31, 2013) and principal will beand interest are being repaid over thirty months. At September 30, 2012, no amounts were outstanding; however, on October 17, 2012 we took an advance of $0.35 million on the Term Loan.

Pursuant to the Revised Credit Facility, wethe financial covenants were modified. We are required to maintain financial covenants based on an adjusted quick ratio ("AQR") of at least 1.2 to 1.0, measured at each calendar month-end, and the minimum tangible net worth covenant was replaced by a maximum EBITDA loss/profitability covenant (tested at quarter end) effective with the first quarter of $18.5 million, increased by 60%2013. Additionally, if the Company's AQR falls below 1.5x at any month-end during the remaining term of the sumfacility, then any borrowings under the Revolving Line will be repaid by SVB applying collections from the Company's SVB collateral account (for receipts by wire) and SVB lockbox account (for receipts by check) to reduce the revolving loan balance on a daily basis, until such time as the month-end AQR is again 1.5x or greater. If the AQR at month-end is 1.5x or greater, the Company will maintain a static loan balance and all collections will be deposited into the Company's operating account. The Company was in compliance with its financial covenants as of the gross proceeds received by us from any sale of our equity or incurrence of subordinated debt and any positive quarterly net income earned, measured at quarter-end (both as defined in the Credit Facility).March 31, 2013. As is usual and customary in such lending agreements, the agreements also contain certain non-financial requirements, such as required periodic reporting to the bank and various representations and warranties. The lending agreement also restricts our ability to pay dividends without the bank's consent. We have been and currently are in compliance with all debt covenants under the Credit Facility.

Our long-term success will depend on our ability to achieve and sustain profitable operating results and our ability to raise additional capital on acceptable terms should such additional capital be required. In the event that we are unable to achieve expected goals of profitability or raise sufficient additional capital, if needed, we may have to scale back or eliminate certain parts of our operations.
19

We believe that cash on hand, net cash to be generated in the business, and availability of funding under our Credit Facility, will be sufficient to meet our cash needs for at least the next twelve months if we are able to achieve our planned results of operations and retain the availability of credit under our Credit Facility.

If these sources of funds are not sufficient, we may need to reduce, delay or terminate our existing or planned products and services. We may also need to raise additional funds through one or more capital financings. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances and licensing arrangements with third parties, we may have to
21
relinquish valuable rights to our technologies or products, or grant licenses on terms that are not favorable to us.

There can be no assurance that additional funds will be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate development activities for one or more of our products or services; or delay, limit, reduce or terminate our sales and marketing capabilities or other activities that may be necessary to commercialize one or more of our products or services.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK

The information called for by this item is omitted in reliance upon Item 305(e) of Regulation S-K.

ITEM 4.   CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange as of the end of the period covered by this Quarterly Report on Form 10-Q, have concluded that, based on such evaluation, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure, particularly during the period in which this report was being prepared.
20

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control that occurred during our most recent completed quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

22


PART II.   OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

There have been no material changes to our legal proceedings as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011.2012.

ITEM 1A.  RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2011,2012, which could materially affect our business, financial condition or results of operations. The risks described in our Annual Report on Form 10-K and this Quarterly Report on Form 10-Q are not the only risks that we face. In addition, risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or results of operations. Other than the addition of the following risk factor,factors, there have been no material changes in or additions to the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2011.2012.

Risks Related to the Proposed Transaction with Hego Aktiebolag, or Hego

We will issue a large number of shares of common stock in connection with our proposed transaction with Hego, which we refer to as the Share Purchase, which will result in substantial dilution to our existing stockholders. Our stockholders may not realize a benefit from the Share Purchase commensurate with the ownership dilution they will experience in connection with the Share Purchase.

The common stock consideration to be issued by us in our transaction with Hego consists of unregistered shares. Based on our outstanding capital stock at March 15, 2013, we anticipate that we will issue approximately 12,202,514 shares of our common stock upon the initial closing, which will represent 41.1% of our voting shares following the issuance. The actual amount of shares to be issued at the closing of the Share Purchase, or the Closing Shares, will equal 40.0% of the sum of (i) our issued and outstanding common stock as of the date that is ten (10) calendar days prior to the closing of the Share Purchase, or the Closing, (ii) the shares of our common stock that are issuable upon the exercise of all outstanding options and restricted stock units to purchase our common stock that have an exercise price at or below $1.25 as of the date that is ten (10) calendar days prior to the Closing, and (iii) the contemplated shares to be issued at the Closing, which we collectively refer to as the Outstanding Closing Shares. In addition, upon achieving certain revenue milestones, we may issue additional shares, or the Earn-Out Shares, such that the aggregate amount of Shares issued in the Share Purchase equals 50.0% of the sum of the Outstanding Closing Shares and the Earn-Out Shares. Based on our outstanding capital stock on March 15, 2013, we anticipate that we could issue up to 6,101,257 Earn-Out Shares. Our issuance of the Share Purchase Shares will result in substantial dilution of our existing stockholders’ ownership interests. Our issuance of the Share Purchase Shares may also have an adverse impact on our net income per share in fiscal periods that include (or follow) the Closing.
23


If we are unable to realize the strategic and financial benefits currently anticipated from the Share Purchase, our stockholders will have experienced substantial dilution of their ownership interest without receiving commensurate benefit.

The actual value of the consideration we will pay to the Hego shareholders may exceed the value allocated to it at the time we entered into the Stock Purchase Agreement with Hego on March 9, 2013.

Under the Stock Purchase Agreement, other than shares to potentially be issued as a result of the achievement of revenue milestones, the number of shares of common stock we will issue as consideration at the Closing is fixed, and there will be no adjustment for changes in the market price of our common stock. Neither we nor the Hego shareholders are permitted to “walk away” from the Share Purchase nor are we permitted to re-solicit the vote of our stockholders solely because of changes in the market price of our common stock between the signing of the Stock Purchase Agreement and the Closing. Our common stock has historically experienced significant volatility. Stock price changes may result from a variety of factors that are beyond our control, including changes in our business, operations and prospects, regulatory considerations and general market and economic conditions. The value of the shares we issue to acquire Hego may be significantly higher at the Closing than when we entered into the Stock Purchase Agreement.

If the conditions to the Closing of the Share Purchase are not met, the Share Purchase will not occur, which could adversely impact the market price of our common stock as well as our business, financial condition and results of operations.

Specified conditions must be satisfied or waived before the Share Purchase can be completed, including, without limitation, obtaining the requisite approval of our stockholders with respect to our proposed issuance of common stock in the Share Purchase. We cannot assure you that each of these conditions will be satisfied.  If the conditions are not satisfied or waived in a timely manner and the Share Purchase is delayed, we may lose some or all of the intended or perceived benefits of the transaction which could cause our stock price to decline and harm our business. If the transaction is not completed for any reason, our stock price may decline to the extent that the current market price reflects a market assumption that the Share Purchase will be completed.

In addition, we will be required to pay our costs related to the transaction even if the Share Purchase is not completed, such as amounts payable to legal and financial advisors and independent accountants, and such costs are significant. All of these costs will be incurred whether or not the transaction is completed.

Although we expect that the transaction of Hego will result in benefits to us, we may not realize those benefits because of integration difficulties.

Integrating the operations of Hego successfully or otherwise realizing any of the anticipated benefits of the transaction with Hego, including anticipated cost savings and additional revenue opportunities, involves a number of challenges. The failure to meet these
24
integration challenges could seriously harm our results of operations and the market price of our common stock may decline as a result.

Realizing the benefits of the transaction will depend in part on the integration of information technology, operations, personnel and sales forces. These integration activities are complex and time-consuming and we may encounter unexpected difficulties or incur unexpected costs, including:

·  our inability to achieve the cost savings and operating synergies anticipated in the transaction, which would prevent us from achieving the positive earnings gains expected as a result of the transaction;
·  diversion of management attention from ongoing business concerns to integration matters;
·  difficulties in consolidating and rationalizing information technology platforms and administrative infrastructures;
·  complexities in managing a significantly larger company than before the completion of the transaction;
·  complexities associated with managing the combined businesses and consolidating multiple physical locations where management may determine consolidation is desirable;
·  difficulties in the assimilation of Hego employees and the integration of two business cultures;
·  challenges in combining product offerings and sales and marketing activities;
·  challenges in demonstrating to our customers and to customers of Hego that the transaction will not result in adverse changes in customer service standards or business focus; and
·  possible cash flow interruption or loss of revenue as a result of change of ownership transitional matters.

We may not successfully integrate the operations of the businesses of Hego in a timely manner, and we may not realize the anticipated net reductions in costs and expenses and other benefits and synergies of the transaction of Hego to the extent, or in the timeframe, anticipated. In addition to the integration risks discussed above, our ability to realize these net reductions in costs and expenses and other benefits and synergies could be adversely impacted by practical or legal constraints on our ability to combine operations. As a non-public, non-U.S. company, Hego has not had to comply with the requirements of the Sarbanes-Oxley Act of 2002 for internal control and other procedures. Bringing Hego’s systems into compliance with those requirements may cause us to incur substantial additional expense. In addition, the integration process may cause an interruption of, or loss of momentum in, the activities of our business after completion of the transaction. If our management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer and our results of operations and financial condition may be harmed.
25


Failure to complete the Share Purchase could negatively impact our stock price and our future business and financial results.

Although we have agreed to solicit proxies from our stockholders to obtain stockholder approval of the proposal to issue shares of our common stock, there is no assurance that the Share Purchase will be approved. If the Share Purchase is not approved, and as a result the Share Purchase is not completed:

·  the price of our common stock may decline;
·  we will not realize our expected benefits of the Share Purchase; and
·  the costs incurred by us, and certain costs incurred by the Hego shareholders, related to the Share Purchase, such as certain accounting and legal fees, must be paid by us even if the Share Purchase is not completed.
The Share Purchase may be completed even though material adverse changes may result from the announcement of the Share Purchase, industry-wide changes and other causes.

In general, either party can refuse to complete the Share Purchase if there is a material adverse change affecting the other party between March 9, 2013, the date of the Stock Purchase Agreement, and the Closing. However, certain types of changes do not permit either party to refuse to complete the Share Purchase, even if such change would have a material adverse effect on us or Hego, including:

·  general economic or business conditions or acts of war or terrorism, in each case, that do not disproportionately affect the applicable party and its subsidiaries, taken as a whole;
·  factors affecting the digital and broadcast graphics industry in general which do not disproportionately affect either party or its subsidiaries; or
·  any change in accounting principles generally accepted in the United States or applicable laws.
If adverse changes occur but we and the Hego shareholders still complete the Share Purchase, our stock price may suffer.

The market price of our common stock may decline as a result of the Share Purchase.

The market price of our common stock may decline as a result of the Share Purchase for a number of reasons including if:

·  we do not achieve the perceived benefits of the Share Purchase as rapidly or to the extent anticipated by financial or industry analysts;
·  the effect of the Share Purchase on our business and prospects is not consistent with the expectations of financial or industry analysts; or
·  investors react negatively to the effect on our business and prospects from the Share Purchase.
26

Subject to certain limitations, the Hego shareholders may sell our common stock beginning 15 months following the Closing of the Share Purchase, which could cause our stock price to decline.

The shares of our common stock that the Hego shareholders will receive following the completion of the Share Purchase are restricted, but the Hego shareholders may sell the shares of our common stock following the Share Purchase under certain circumstances. The Hego shareholders will be subject to certain restrictions on their ability to transfer their shares of our common stock, including, among other things, a fifteen (15) month prohibition on the transfer of the shares of our common stock issued to the Hego shareholders in connection with the Share Purchase (other than transfers to certain permitted transferees). We have agreed to register for resale the Share Purchase Shares that are restricted from sale under the Securities Act. The sale of a substantial number of our shares by the Hego shareholders or our other stockholders within a short period of time could cause our stock price to decline, make it more difficult for us to raise funds through future offerings of our common stock or acquire other businesses using our common stock as consideration.

The fairness opinion obtained by Chyron from its financial advisor will not reflect changes in circumstances between signing the Stock Purchase Agreement and the completion of the Share Purchase.

We have not obtained and will not obtain an updated opinion regarding the fairness of the consideration to be paid by us pursuant to the Share Purchase from Morpheus Capital Advisors LLC, our financial advisor, which we refer to as Morpheus Capital. Morpheus Capital’s opinion speaks only as of its date and does not address the fairness of the consideration to be paid by us pursuant to the Share Purchase, from a financial point of view, at the time the Share Purchase is completed. Changes in the operations and prospects of Chyron or Hego, general market and economic conditions and other factors that may be beyond the control of Chyron and Hego, and on which the fairness opinion was based, may alter the value of Chyron or Hego or the prices of shares of our common stock by the time the Share Purchase is completed.

Risks Related to the Combined Business Following the Share Purchase

The future profitability, growth and success of our combined business will depend on our ability to achieve further product cost reductions by our combined operations.

The future profitability and growth of our combined business depends upon our ability to achieve further product cost reductions by our combined operations, including improved operating and manufacturing efficiencies and marketing and research and development synergies. If product cost reductions are not achieved on a timely basis, the future profitability of our combined business will be delayed and may not be delivered.
27

The announcement and pendency of the Share Purchase may cause disruptions in the business of Hego, which could have an adverse effect on its business, financial condition or results of operations and, post-closing, our business, financial condition or results of operations.

The announcement and pendency of the transaction could cause disruptions in the business of Hego. Specifically:

These disruptions could be exacerbated by a delay in the completion of the Share Purchase or termination of the Stock Purchase Agreement and could have an adverse effect on the business, financial condition or results of operations of Hego prior to the completion of the transaction and on us if the transaction is completed.

We expect to increase the level of our insurance coverage following the completion of the proposed Share Purchase; however, future claims could exceed our applicable insurance coverage.

The combined companies will continue to maintain insurance for property and general liability, directors’ and officers’ liability, products liability, workers compensation and other coverage in amounts and on terms deemed adequate by management based on our expectations for future claims. Although we may increase the level of our insurance coverage, particularly our directors’ and officers’ liability insurance, following the completion of the Share Purchase, future claims could exceed our applicable insurance coverage, or in some instances our coverage may not cover the applicable claims.

Significant costs are expected to be associated with the proposed Share Purchase.

We estimate that Chyron and Hego will incur direct transaction costs of approximately $0.85 million and $0.99 million, respectively, in connection with the proposed Share Purchase. In addition, the combined business may incur charges to operations that we cannot currently reasonably estimate in the quarter in which the Share Purchase is completed or the following quarters to reflect costs associated with integrating the two businesses. There can be no assurance that the combined business will not incur additional charges relating to the transaction in subsequent periods, which could have a material adverse effect on our cash flows, results of operations and financial position.

The success of the combined business will depend on the services of each of our senior executives as well as certain key research and development, engineering, sales and marketing personnel, the loss of whom could negatively affect the combined business.

Our success has always depended upon the skills, experience and efforts of our senior executives and other key personnel, including our research and development executives and managers. Following the completion of the Share Purchase, this will be even more important as we work to integrate our businesses. For both us and Hego, much of our expertise is concentrated in relatively few employees, the loss of whom for any reason could negatively affect our business. The failure of key employees to remain with the combined business could be harmful to the success of the combined business. Competition for our highly skilled employees is intense
28
and we cannot prevent the future resignation of any employee. Most of the combined business’s employees have or will have agreements which impose obligations that may prevent a former employee from working for a competitor for a period of time; however, these clauses may not be enforceable, or may be enforceable only in part.

The combined business will continue to require significant capital to build the business, and financing may not be available to us on reasonable terms, if at all.

The combined business will continue to require significant working capital for operations and marketing and research and development activities as well as the expansion and integration of our operations. If our existing resources are insufficient to satisfy our liquidity requirements, we may need to sell additional equity securities. Any sale of additional equity securities may result in additional dilution to our stockholders, and we cannot be certain that we will be able to obtain additional public or private financing in amounts, or on terms, acceptable to us, or at all.

Our executive officers and directors, together with their affiliates and related persons, own a large percentage of our voting common stock and could limit new stockholders’ influence on corporate decisions or could delay or prevent a change in corporate control.

Our current directors and executive officers and their affiliates will own, in the aggregate, approximately 24.3% of our outstanding shares of common stock (not including options or other convertible securities) assuming the issuance of approximately 12,202,514 shares of our common stock to acquire indirectly all of the issued and outstanding shares of Hego, based on our outstanding capital stock at March 15, 2013. The interests of this group of stockholders may not always coincide with our corporate interests or the interests of other stockholders, and they may act in a manner with which you may not agree or that may not be in the best interests of other stockholders. This concentration of ownership may have the effect of:

·  delaying, deferring or preventing, or alternatively, accelerating or causing, a change in control of our company;
·  entrenching our management and/or Board of Directors;
·  impeding a merger, consolidation, takeover or other business combination involving our company; or
·  discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company.
Hego conducts a significant amount of its sales activity outside of the United States, which subjects it to additional business risks and may adversely affect the combined business’s results of operations and financial condition due to increased costs.

During the year ended December 31, 2012, Hego derived approximately $13.8 million, or 93.1% of its net sales, from sales of its products and services outside of the United States. The combined business intends to continue to pursue growth opportunities in sales internationally, which could expose it to additional risks associated with international sales and operations that we do not currently face. Hego’s international operations are, and the combined business’s
29
international operations will continue to be, subject to a number of risks and potential costs, including:

·  unexpected changes in foreign regulatory requirements;
·  differing local product preferences and product requirements;
·  diminished protection of intellectual property in some countries outside of the United States;
·  differing payment cycles;
·  trade protection measures and import or export licensing requirements;
·  difficulty in staffing, training and managing foreign operations;
·  differing legal regulations and labor relations;
·  potentially negative consequences from changes in tax laws (including potentially taxes payable on earnings of foreign subsidiaries upon repatriation); and
·  political and economic instability.

In addition, Hego is subject to risks arising from currency exchange rate fluctuations, which could increase the combined business’s costs and may adversely affect its results of operations. The U.S. dollar value of Hego’s foreign-generated revenues varies with currency exchange rate fluctuations. The majority of Hego’s foreign-generated revenues were generated in Europe. Significant increases in the value of the U.S. dollar relative to foreign currencies could have a material adverse effect on the combined business’s results of operations.

Any of these factors may, individually or as a group, have a material adverse effect on the combined business’s financial condition, results of operations and cash flows.

Risks Related to Our Common Stock

If we fail to continue to meet all applicable NASDAQ Global Market requirements and The NASDAQ Stock Market determines to delist our common stock, the delisting could adversely affect the market liquidity of our common stock, impair the value of your investment, and harm our business.

Our common stock is currently listed on the NASDAQ Global Market. In order to maintain that listing, we must satisfy minimum financial and other requirements. On November 7, 2012,March 12, 2013, we received noticea letter, which we refer to as the "Notice," from the Listing Qualifications Department of the NASDAQThe Nasdaq Stock Market or NASDAQ,"NASDAQ," notifying us that our common stock had not met the $1.00 per share minimum bid price requirement for the last 30 consecutive business days pursuant to NASDAQ Listing Rule 5450(a)(1) and that, if we were unable to demonstrate compliance with this requirement during the applicable grace periods, our common stock would be delisted after that time. The notification letter stated that pursuant to NASDAQ Listing Rule 5810(c)(3)(A) we would be afforded 180 calendar days, or until May 6, 2013, to regainno longer in compliance with the minimum bid price requirement. In order to regain compliance, shares of our common stock must maintain a minimum closing bid price of at least $1.00 per sharestockholders' equity requirement for a minimum of ten consecutive business days. If we do not regain compliance by May 6, 2013, NASDAQ will provide written notification to us that our common stock will be delisted. At that time, we may appeal NASDAQ's delisting determination to a NASDAQ Listing Qualifications Panel. Alternatively, we may be eligible for an additional 180 day grace period if we satisfy all of the requirements, other than the minimum bid price requirement, forcontinued listing on the NASDAQ Capital Market set forth inGlobal Market. NASDAQ Listing Rule 5505. The closing bid price5450(b)(1)(A) requires companies listed on the NASDAQ Global Market to maintain a minimum of $10,000,000 in stockholders' equity. As disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed on March 8, 2013, our stockholders' equity as of December 31, 2012 did not meet this requirement.

In order to maintain the listing of our common stock on the NASDAQ Global Market, was $0.55 on November 12, 2012.we were required to submit by April 26, 2013 to NASDAQ a plan to regain compliance with this continued listing requirement. On April 22, 2013, we submitted our plan to regain compliance with the NASDAQ Listing Rules. NASDAQ will decide whether to accept our plan to regain
30
 
 
21
 
compliance with its listing requirements, considering criteria such as the likelihood that the plan will result in compliance with NASDAQ's continued listing criteria, our past compliance history, the reasons for our current non-compliance, other corporate events that may occur within the review period, our overall financial condition, and our public disclosures. If the plan is accepted, NASDAQ may grant us an extension of up to 180 calendar days from the date of the Notice for us to provide evidence of compliance.

If NASDAQ does not accept our plan, we may apply to transfer the listing of our common stock to the NASDAQ Capital Market (which has a lower stockholders' equity requirement for continued listing) if we satisfy all of the criteria for initial listing on the NASDAQ Capital Market. If we do not transfer our common stock to the NASDAQ Capital Market, NASDAQ will notify us that our common stock is subject to delisting. At that time, we may appeal the delisting determination to a NASDAQ Hearings Panel.

           While we intend to engage in efforts to regain compliance, and thus maintain our listing, there can be no assurance that we will be able to regain compliance during the applicable time periods set forth above. If we fail to continue to meet all applicable NASDAQ Global Market requirements in the future and NASDAQ determines to delist our common stock, the delisting could substantially decrease trading in our common stock and adversely affect the market liquidity of our common stock; adversely affect our ability to obtain financing on acceptable terms, if at all, for the continuation of our operations; and harm our business. Additionally, the market price of our common stock may decline further and stockholders may lose some or all of their investment.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAFETY DISCLOSURES

None.

ITEM 5.  OTHER INFORMATION

None.

31
 
22
 

ITEM 6.  EXHIBITS

(a) Exhibits:

Exhibit No.
Description of Exhibit
2.1
Stock Purchase Agreement by and among, Chyron Corporation, Chyron Holdings, Inc., Chyron AB, Hego Aktiebolag, Westhill Group AB (corp. reg. no. 556583-5948) as the stockholder representative of the Hego stockholders, and the stockholders of Hego Aktiebolag, dated as of March 9, 2013 (previously filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed with the Commission on March 12, 2013 (File No. 001-09014) and incorporated herein by reference.)
3.1
Amended and Restated By-Laws of Chyron Corporation, as amended (previously filed as Exhibit 3.1 to the Registrant's current report on Form 8-K filed with the Commission on March 12, 2013 (File No. 001-09014) and incorporated herein by reference).
10.1Sixth Loan Modification Agreement between Silicon Valley Bank and Chyron Corporation dated August 13, 2012
2013 Management Incentive Compensation Plan (previously filed as exhibitExhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on August 16, 2012January 15, 2013 (File No. 001-9014) and incorporated herein by reference) (File No. 001-09014).
10.2*#Seventh Loan Modification Agreement between Silicon Valley Bank and Chyron Corporation dated March 1, 2013.
31.1*
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  

32

101*
Interactive Data Files formatted in XBRL (Extensible Business Reporting Language) from (a) our Consolidated Balance Sheets as of September 30, 2012March 31, 2013 (unaudited) and December 31, 2011,2012, (b) our Consolidated Statements of Operations (unaudited) for the Three and Nine Months ended September 30,March 31, 2013 and 2012 and 2011,(unaudited), (c) our Consolidated Statements of Comprehensive (Loss) (unaudited) for the Three and Nine Months ended September 30,March 31, 2013 and 2012 and 2011,(unaudited), (d) our Consolidated Statements of Cash Flows (unaudited) for the NineThree Months ended September 30,March 31, 2013 and 2012 (unaudited) and 2011 and (d)(e) the Notes to such Consolidated Financial Statements (unaudited).**
  
*filed herewith
  
*filed herewith
**Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
 #  Portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission as part of an application for confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

33
 
23
 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


  CHYRON CORPORATION
  (Registrant)
   
NovemberMay 13, 20122013 /s/ Michael Wellesley-Wesley
(Date) Michael Wellesley-Wesley
  President and Chief Executive Officer
   
NovemberMay 13, 20122013 /s/ Jerry Kieliszak
(Date) Jerry Kieliszak
  Chief Financial Officer and Sr. Vice President
 
 
24
34