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 Septemberquarterly period ended June 30, 20122013
 
[   ]
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
ChyronHego 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 November 7, 2012August 9, 2013 was 17,111,117.30,110,068.

 
 
 

CHYRONCHYRONHEGO CORPORATION


INDEX

PART IFINANCIAL INFORMATIONPage
   
Item 1.Financial Statements 
 
Consolidated Balance Sheets as of SeptemberJune 30, 20122013 (unaudited) and
December 31, 20112012
3
   
 
Consolidated Statements of Operations (unaudited) for the Three and Six Months
And Nine Months    ended SeptemberJune 30, 2013 and 2012 and 2011(unaudited)
4
   
 
Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the
    Three and NineSix Months ended SeptemberJune 30, 2013 and 2012 and 2011(unaudited)5
   
 
Consolidated Statements of Cash Flows (unaudited) for the Nine Six Months
Months    ended SeptemberJune 30, 2013 and 2012 and 2011(unaudited)
6
   
 
Notes to Consolidated Financial Statements (unaudited)
7
   
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
1520
   
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
2026
   
Item 4.
Controls and Procedures
2026
   
PART IIOTHER INFORMATION 
   
Item 1.
Legal Proceedings
2126
   
Item 1A.
Risk Factors
2127
   
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
2228
   
Item 3.
Defaults Upon Senior Securities
2228
   
Item 4.
Mine Safety Disclosures
2228
   
Item 5.
Other Information
2228
   
Item 6.
Exhibits
2329

 
2
 

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

 Unaudited    
 June 30,  December 31, 
Assets 
Unaudited
September 30,
2012
  
December 31,
2011
  2013  2012 
Current assets:            
Cash and cash equivalents $2,155  $4,216  $2,189  $2,483 
Accounts receivable, net 4,934  5,727   9,958   5,630 
Inventories, net 2,783  2,132   2,686   2,285 
Deferred taxes 2,504  2,508 
Prepaid expenses and other current assets  697   792   1,987   626 
Total current assets 13,073  15,375   16,820   11,024 
              
Property and equipment, net 1,541  1,620   3,364   1,347 
Intangible assets, net 583  658   10,238   559 
Goodwill 2,066  2,066   16,621   2,066 
Deferred taxes 16,924  15,994 
Deferred tax asset
  253   - 
Other assets  134   93   191   119 
TOTAL ASSETS $34,321  $35,806  $47,487  $15,115 
   
Liabilities and Shareholders' EquityLiabilities and Shareholders' Equity Liabilities and Shareholders' Equity 
      
Current liabilities:              
Accounts payable and accrued expenses $3,645  $3,847  $8,977  $3,100 
Deferred revenue 3,627  3,203   4,239   3,637 
Due to related parties
  669   - 
Current portion of pension liability 360  783   377   278 
Current portion of term loan -  135 
Short-term debt
  1,269   280 
Capital lease obligations  26   38   224   20 
Total current liabilities 7,658  8,006   15,755   7,315 
              
Contingent consideration
  7,555   - 
Pension liability 2,701  2,664   4,069   3,873 
Deferred revenue 964  765   986   1,198 
Long-term debt
  575   397 
Other liabilities  347   329   657   351 
Total liabilities  11,670   11,764   29,597   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 - 30,094,464 at June 30, 2013        
and 17,135,239 at December 31, 2012
  301   171 
Additional paid-in capital 84,280  83,407   103,103   84,539 
Accumulated deficit (60,384) (58,103)  (83,406)  (80,404)
Accumulated other comprehensive loss  (1,416)  (1,428)  (2,255)  (2,325)
Total ChyronHego Corporation shareholders' equity
  17,743   1,981 
Non controlling interests
  147   - 
Total shareholders' equity  22,651   24,042   17,890   1,981 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $34,321  $35,806  $47,487  $15,115 


See Notes to Consolidated Financial Statements (unaudited)

 
3
 

CHYRONCHYRONHEGO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

(Unaudited)

  Three Months  Six Months 
  Ended June 30,  Ended June 30, 
  2013  2012  2013  2012 
             
Product revenues
 $6,744  $5,771  $12,718  $11,573 
Service revenues
  3,972   1,913   6,015   3,988 
Total revenues
  10,716   7,684   18,733   15,561 
                 
Cost of sales
  3,385   2,365   5,680   4,700 
Gross profit
  7,331   5,319   13,053   10,861 
                 
Operating expenses:                
   Selling, general and administrative
  6,836   4,479   11,587   9,164 
   Research and development
  2,345   1,929   4,125   3,860 
                 
Total operating expenses
  9,181   6,408   15,712   13,024 
                 
Operating loss
  (1,850)  (1,089)  (2,659)  (2,163)
                 
Interest expense, net
  (95)  (4)  (109)  (9)
                 
Other loss, net
  (39)  (13)  (122)  (6)
                 
Loss before taxes
  (1,984)  (1,106)  (2,890)  (2,178)
                 
Income tax (expense) benefit, net
  (93)  476   (104)  597 
                 
Net loss
  (2,077)  (630)  (2,994)  (1,581)
                 
Less: Net income attributable to                
 Non controlling interests
  8   -   8   - 
                 
Net loss attributable to ChyronHego                
 shareholders
 $(2,085) $(630) $(3,002) $(1,581)
                 
Net loss per share attributable to                
 ChyronHego shareholders- basic
 $(0.09) $(0.04) $(0.15) $(0.09)
                 
Net loss per share attributable to                
 ChyronHego shareholders- diluted
 $(0.09) $(0.04) $(0.15) $(0.09)
                 
Weighted average shares outstanding:                
  Basic
  22,989   16,898   20,191   16,852 
  Diluted
  22,989   16,898   20,191   16,852 

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

See Notes to Consolidated Financial Statements (unaudited)

 
4
 

CHYRONCHYRONHEGO CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)

(Unaudited)




 Three Months  Six Months 
 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  Ended June 30,  Ended June 30, 
 2012  2011  2012  2011  2013  2012  2013  2012 
                        
Net loss
 $(700) $(3,492) $(2,281) $(3,845) $(2,077) $(630) $(2,994) $(1,581)
                                
Other comprehensive income (loss):                                
                
Foreign currency translation adjustment
  9   (7)  12   2   90   (7)  70   3 
                                
Comprehensive loss
 $(691) $(3,499) $(2,269) $(3,843)  (1,987)  (637)  (2,924)  (1,578)
                
Less: Comprehensive income attributable                
to non controlling interests
  8   -   8   - 
                
Comprehensive loss attributable to                
ChyronHego Corporation
 $(1,995) $(637) $(2,932) $(1,578)
                

















See Notes to Consolidated Financial Statements (unaudited)




 
5
 


CHYRONCHYRONHEGO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

  Six Months 
  Ended June 30, 
  2013  2012 
Cash Flows from Operating Activities      
Net loss
 $(2,994) $(1,581)
Adjustments to reconcile net loss to net cash from        
 operating activities:        
   Depreciation and amortization
  768   441 
   Deferred tax allowance
  372   - 
   Deferred income tax benefit
  (316)  (620)
   Inventory provisions
  -   10 
   Share-based payment arrangements
  2,384   479 
   Shares issued for 401(k) match
  128   153 
   Other
  55   (19)
Changes in operating assets and liabilities, net of acquisition:        
   Accounts receivable
  (1,631)  98 
   Inventories
  (401)  101 
   Prepaid expenses and other assets
  (69)  (99)
   Accounts payable and accrued expenses
  1,837   (28)
   Deferred revenue
  52   347 
   Other liabilities
  339   (265)
Net cash provided by (used in) operating activities
  524   (983)
         
Cash Flows from Investing Activities        
Acquisitions of property and equipment
  (714)  (323)
Purchase of business, net of cash acquired
  (28)  - 
Net cash used in investing activities
  (742)  (323)
         
Cash Flows from Financing Activities        
Proceeds from borrowings
  222   - 
Proceeds from exercise of stock options
  2   - 
Payments on capital lease obligations
  (102)  (19)
Repayments on debt
  (213)  (135)
Net cash used in financing activities
  (91)  (154)
         
Effect of exchange rate changes on cash and cash equivalents
  15   - 
         
Change in cash and cash equivalents
  (294)  (1,460)
Cash and cash equivalents at beginning of period
  2,483   4,216 
Cash and cash equivalents at end of period
 $2,189  $2,756 
         
Supplemental Cash Flow Information:        
  Common stock issued for acquisition
 $16,591   - 
  Contingent consideration for acquisition
 $7,500   - 

  
Nine Months
Ended September 30,
 
  2012  2011 
Cash Flows From Operating Activities      
Net loss $(2,281) $(3,845)
Adjustments to reconcile net loss to net cash from operating activities:
        
Depreciation and amortization  687   719 
Deferred tax asset allowance  -   2,724 
Deferred income tax benefit  (926)  (429)
Inventory provisions  10   94 
Share-based payment arrangements  719   753 
Shares issued for 401(k) match  220   197 
Other  (41)  (9)
Changes in operating assets and liabilities:        
Accounts receivable  793   462 
Inventories  (661)  164 
Prepaid expenses and other assets  46   (119)
Accounts payable and accrued expenses  (202)  (116)
Deferred revenue  623   326 
Other liabilities  (352)  (301)
Net cash (used in) provided by operating activities  (1,365)  620 
         
Cash Flows From Investing Activities        
Acquisitions of property and equipment  (534)  (807)
Net cash used in investing activities  (534)  (807)
         
Cash Flows From Financing Activities        
Proceeds from exercise of stock options  1   113 
Payments on term loan  (135)  (244)
Payments on capital lease obligations  (28)  (25)
Net cash used in financing activities  (162)  (156)
         
Change in cash and cash equivalents  (2,061)  (343)
Cash and cash equivalents at beginning of period  4,216   5,565 
Cash and cash equivalents at end of period $2,155  $5,222 



See Notes to Consolidated Financial Statements (unaudited)

 
6
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


1.           BASIS OF PRESENTATION

Nature of Business

On May 22, 2013 Chyron Corporation ("Chyron") acquired the outstanding stock of Hego Aktiebolag ("Hego" or "Hego AB"), creating ChyronHego Corporation (the "Company" or "ChyronHego"). Hego is a global graphics services company based in Stockholm, Sweden that develops real-time graphics products for the broadcast and sports industries. The companies combined in a cash and stock-for-stock transaction and the Company will continue to trade on the NASDAQ under the symbol "CHYR." The combination of these two companies, which is referred to in these consolidated financial statements as the "Business Combination," forms a leading global provider of Graphics as a Service for on-airbroadcast graphics creation, playout 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.real-time data visualization.

General

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany amounts have been eliminated. The results of operations include the operating results of Hego since the completion of the Business Combination on May 22, 2013. See Note 8 of these consolidated financial statements.

In the opinion of management of Chyron Corporation (the "Company" or "Chyron"), the accompanyingCompany, the 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 SeptemberJune 30, 20122013 and the consolidated results of its operations, its comprehensive lossincome (loss) and its cash flows for the periods ended SeptemberJune 30, 20122013 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, allocations of purchase price, contingent consideration, valuation of intangible assets 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
 

Recent Accounting Pronouncements

In July 2012,February 2013, the Financial Accounting Standards BoardFASB issued Accounting Standard Update No. 2012-02, Testing Indefinite-Lived Intangible Assetsamendments to disclosure requirements for Impairment. Thispresentation 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 gives companieshas not had a material impact on the option to perform a qualitative assessment to determine whether itCompany'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 more likely than not that an asset might be impaired and whether it is necessary to perform a quantitative test.fixed at the reporting date. The updated accounting guidancenew 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 SeptemberDecember 15, 2012, with early2013 (early adoption permitted.is permitted). The Company believes that thisimplementation of the amended accounting guidance willis not expected to have noa material impact on itsthe Company's consolidated financial statements.position or results of operations.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed based onby dividing net income (loss) by the weighted average number of shares of common sharesstock outstanding. Diluted earnings (loss) per share is based oncomputed by dividing net income (loss) by the sum of the weighted averageweighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potential dilutive shares of common stock been issued. The dilutive effect of stock options and restricted stock units are reflected in diluted net income (loss) per share by applying the treasury stock method.

The Company recorded net losses for the three and six months ended June 30, 2013 and 2012. Potential common shares outstanding andare anti-dilutive in periods in which the Company records a net loss because they would reduce the respective period's net loss per share. Anti-dilutive potential common stock equivalents. Potentially dilutive shares are excluded from the computationcalculation of diluted earnings per share. As a result, net diluted loss per share when their effect is anti-dilutive. was equal to basic net loss per share in all periods presented.


8

Shares excluded from the calculationused to calculate net loss per share are as follows (in thousands):

 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
 Three Months Six Months
 2012  2011  2012  2011 Ended June 30, Ended June 30,
Weighted average shares which are not included in the calculation of diluted earnings (loss) per share because their impact is anti-dilutive:
            
20132012 20132012
Basic weighted average shares outstanding22,98916,898 20,19116,852
Effect of dilutive stock options- -
Effect of dilutive restricted stock units          -           -
Diluted weighted average shares outstanding22,98916,898 20,19116,852
   
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 3,3402,738 3,1722,684
Restricted stock units  379   1,968   475   1,854          -    186       60    190
  3,823   4,066   3,776   4,024  3,340 2,924  3,232 2,874

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 SeptemberJune 30, 2012,2013 there were 0.93.5 million shares available to be granted under the Plan.Plan, which includes 3.0 million shares that were approved for issuance under the Plan by the Company's stockholders in May 2013. 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 SeptemberThere were no options granted during the three months ended June 30, 2012, 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.2013. The fair values of the options granted during the three and nine months ended SeptemberJune 30, 2012 and 2011,the six months ended June 30, 2013 and 2012, were estimated based on the following weighted average assumptions:

9


 Three Months  Six Months 
 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  Ended June 30,  Ended June 30, 
 2012  2011  2012  2011  2012  2013  2012 
Expected volatility  73.18%  70.72%  71.46%  71.11%  68.49%  76.23%  69.44%
Risk-free interest rate  0.52%  1.42%  0.56%  1.79%  0.94%  1.06%  1.32%
Expected dividend yield  0.00%  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   6.0 
Estimated fair value per option granted
 $0.55  $1.32  $0.70  $1.34  $0.85  $0.87  $0.97 

The following table presents a summary of the Company's stock option activity for the ninesix months ended SeptemberJune 30, 2012:2013:

 Number of
 
Number of
Options
    
Outstanding at January 1, 201220133,224,8794,294,273 
Granted1,498,45260,000 
Exercised(1,667)(52,428)
Forfeited and cancelled  (399,339)(112,918)
Outstanding at SeptemberJune 30, 201220134,322,3254,188,927 

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 ninesix months ended SeptemberJune 30, 2012:2013:

 Shares
Nonvested at January 1, 20122013528,443343,161 
Granted152,328329,164 
Vested and settled in shares (311,014)
Forfeited and cancelled(10,394)(672,325)
Nonvested at SeptemberJune 30, 20122013              359,363- 

On May 22, 2013 the Business Combination of Chyron and Hego, as discussed in Note 8 to these Consolidated Financial Statements, constituted a change in control under the Company's long-term incentive plans. As a result, at the closing of the Business Combination, all outstanding awards became immediately exercisable and fully vested, without regard to any time and/or performance vesting conditions. As a result, the Company recorded a charge of $1.3 million, representing the unamortized expense related to the vesting of such equity awards.

On May 2, 2013 the Company implemented a restructuring plan to reduce operating costs that resulted in the reduction of its workforce by 20 employees. All affected employees were provided with an adjustment in the terms of their stock options and/or RSUs that were outstanding on their termination date. Subject to a properly executed release by the affected employees, the stock option and RSU awards were amended to permit those awards to vest at their termination date regardless of performance conditions if any in the original award, and the expiration date for exercise of the stock options was extended through the end of the original
 
 
910
 
term of the stock option, usually ten years from date of grant, rather than expiring ninety days after the employee's termination date as stated in the original awards. As a result, the Company recorded a charge of approximately $0.4 million associated with the modifications of these awards.

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. Noyears for which the Incentive Plan is adopted. During the three and six months ended June 30, 2013 the Company recorded an expense of $0.3 million and $0.5 million, respectively, associated with the awards under these Plans of which 65% is payable in common stock. During the six months ended June 30, 2012 no expense was recorded for these awards during the nine months ended September 30, 2012 as it is not yet probable that the performance conditions will be met.recorded.

The Company amortizes share-based compensation expense over the vesting period on a straight line basis. The impact on the Company's results of operations of recording share-based compensation expense is as follows (in thousands):

 Three Months  Six Months 
 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  Ended June 30,  Ended June 30, 
 2012  2011  2012  2011  2013  2012  2013  2012 
Cost of sales $19  $24  $57  $76  $11  $19  $28  $38 
Research and development  82   84   247   270   67   69   154   165 
Selling, general and administrative  139   127   415   407   1,966   87   2,202   276 
 $240  $235  $719  $753  $2,044  $175  $2,384  $479 

3.           INVENTORIES

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

 September 30,  December 31,  June 30,  December 31, 
 2012  2011  2013  2012 
Finished goods $356  $653  $241  $465 
Work-in-progress  452   170   487   468 
Raw material  1,975   1,309   1,958   1,352 
 $2,783  $2,132  $2,686  $2,285 


11

4.           LONG-TERM DEBT

4.              Long-term debt consists of the following (in thousands):

  June 30,  December 31, 
  2013  2012 
Revolving credit facilities - Sweden $824  $- 
Term loans - Europe  419   - 
Term loan - US  537   677 
Other  64   - 
   1,844   677 
Less: portion due within one year  (1,269)  (280)
  $575  $397 

CREDIT FACILITYRevolving credit facilities - Sweden

As a result of the Business Combination, the Company has revolving credit facilities in Sweden that total $1.15 million of which $0.824 million is outstanding at June 30, 2013. The revolving credit facilities have expiration dates of December 31, 2013 and automatically renew for twelve month periods, unless notified by the lender ninety days prior to expiration. The interest rate on these revolving credit facilities is 5.95%. The revolving credit agreements are collateralized by the assets of certain Swedish subsidiaries of the Company.

Term loans - Europe

As a result of the Business Combination, the Company also has three term loans related to its European operations that total $0.42 million. Two of the term loans require principal payments totaling $10 thousand per month and bear interest at rates that range between 7.45% and 7.75% and will mature in 2014 and 2015. The third term loan, which has an outstanding balance of $0.2 million, bears interest that is payable quarterly at 15%, requires no principal payments and will be due on December 31, 2014.

Credit facility and term loan - US

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.

12

At June 30, 2013, available borrowings under the Revolving Line were approximately $2 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 June 30, 2013 was $0.5 million. The Term Loanterm loan bears interest at Prime +2.25% (which was 6.25% at June 30, 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,

On August 5, 2013 the Company tookentered into a loan modification and waiver agreement with Silicon Valley Bank ("SVB") whereby the expiration date of the Revised Credit Facility has been extended to October 12, 2013 with the intention that the Company and SVB will enter into a new credit facility prior to that date.

Pursuant to the Revised Credit Facility, the financial covenants were modified. The Company is required to maintain financial covenants based on an advanceadjusted quick ratio ("AQR") of $0.35 millionat 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 Term Loan.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. Due to the Business Combination with Hego, which was not anticipated when the covenant requirements were established, the Company failed to meet the financial covenants at May 31, 2013 and June 30, 2013, and obtained waivers from SVB with respect to those financial covenants. 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.
10

The Revised Credit Facility 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 U.S. Pension Plan is as follows (in thousands):

13


 Three Months  Six Months 
 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  Ended June 30,  Ended June 30, 
 2012  2011  2012  2011  2013  2012   2013  2012 
Service cost $130  $108  $390  $300  $135  $130  $281  $260 
Interest cost  88   86   264   248   98   88   188   176 
Expected return on plan assets  (87)  (80)  (261)  (220)  (98)  (87)  (198)  (174)
Actuarial loss (gain)  41   (7)  123   (19)
Amortization of net loss  57   41   123   82 
Amortization of prior service cost  (2)  20   (6)  30   (2)  (2)  (4)  (4)
 $170  $127  $510  $339  $190  $170  $390  $340 

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 firstsecond quarter of 2012,2013 the Company made an additionala required contribution of $0.39$0.1 million in order to exceed an 80% funding level measured at January 1, 2012. The Company also made required 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 and, based on current assumptions, the Company expects to make required contributions of $0.36$0.4 million in the next twelve months.
11

The Company has adopted 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 ninesix months ended SeptemberJune 30, 20122013 and 2011,2012, the Company issued 175139 thousand and 91110 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$128 thousand and $197$153 thousand, respectively.

Substantially all employees of the Company's foreign subsidiaries receive pension coverage, at least to the extent required, through plans that are governed by local statutory requirements. Contributions to these plans are typically based on specified percentages of the employees' salaries.

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  Six Months 
 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  Ended June 30,  Ended June 30, 
 2012  2011  2012  2011  2013  2012  2013  2012 
Balance at beginning of period $50  $50  $50  $50  $55  $50  $50  $50 
Provisions  -   7   25   63   41   25   70   59 
Warranty services provided, net  -   (7)  (25)  (63)  (31)  (25)  (55)  (59)
 $50  $50  $50  $50  $65  $50  $65  $50 


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7.           INCOME TAXES

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

  
September 30,
2012
  
December 31,
2011
 
Deferred tax assets:      
Net operating loss carryforwards $17,242  $16,728 
Inventory  1,740   1,736 
Other liabilities  2,579   2,229 
Fixed assets  447   452 
Other temporary differences  688   625 
   22,696   21,770 
Deferred tax valuation allowance  3,268   3,268 
  $19,428  $18,502 
12
  June 30,  December 31, 
  2013  2012 
Deferred tax assets:      
  Net operating loss carryforwards $14,743  $14,491 
  Inventory  1,771   1,769 
  Other liabilities  3,365   3,055 
  Fixed assets  409   440 
  Other temporary differences  681   589 
   20,969   20,344 
Deferred tax valuation allowance  (20,716)  (20,344)
  $253  $- 

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 June 30, 2013 and December 31, 2012, using that standard, the Company concluded that a valuation allowance was required for the majority of 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 June 30, 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 Companyjurisdictions. It 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.


15

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

  Three Months  Six Months 
  Ended June 30,  Ended June 30, 
  2013  2012  2013  2012 
Current:            
   State and foreign $(37) $(11) $(48) $(23)
                 
Deferred:                
   State  -   22   10   31 
   Federal  (4)  465   339   589 
   Foreign  (33)  -   (33)  - 
   (37)  487   316   620 
   Valuation allowance  (19)  -   (372)  - 
Income tax (expense) benefit, net $(93) $476  $(104) $597 

The difference between the Company's effective income tax rate and the federal statutory rate is primarily due to the transaction costs associated with the Hego business combination that will not be deductible for tax purposes and the amount of expense associated with the Company's share-based payment arrangements and the portion thereof that will give rise to tax deductions. Furthermore, share-based payments may result in tax deductions that do not result in a tax benefit in the accompanying financial statements because it will not result in the reduction of income taxes payable, due to the existence of net operating loss carryforwards.

8.           CONTINGENCIESBUSINESS COMBINATION

On May 22, 2013, Chyron and Hego completed the Business Combination which was structured as a share purchase transaction, pursuant to the terms of a stock purchase agreement (the "Stock Purchase Agreement") whereby a wholly-owned subsidiary of Chyron acquired all of the issued and outstanding shares of Hego. Pursuant to the terms of the Stock Purchase Agreement, Chyron issued 12,199,431 shares of Chyron's common stock to the former Hego stockholders. The number of shares issued was equal to 40% of the total of (i) the issued and outstanding shares of Chyron's common stock as of May 10, 2013, (ii) the shares of Chyron's common stock issuable upon the exercise of all outstanding options and restricted stock units that had an exercise price of less than or equal to $1.25 per share as of May 10, 2013, and (iii) the shares issued at the closing, which are collectively referred to as the "Outstanding Closing Shares."  In addition, upon Hego achieving certain revenue milestones during the fiscal years 2013, 2014 and 2015, the Company may issue additional shares, which are referred to as the "Earn-Out Shares" to the former Hego stockholders, such that the aggregate amount of shares of the Company's common stock issued in the transaction would equal up to 18,299,147 shares, or 50% of the total Outstanding Closing Shares and Earn-Out Shares. The Company and Hego entered into the Business Combination to create a market leading company in the fields of TV graphics, data visualization and production services for 'Live' and on line news and sports production. The Company intends to broaden its range of sophisticated products and services offerings to grow in international markets.

16

The total purchase price of $24.6 million is comprised of 12.2 million shares of Chyron common stock (the Closing Shares) valued at $16.6 million, contingent consideration of shares of Chyron common stock (the Earn-Out Shares) valued at an estimated $7.5 million and $0.5 million in cash and other consideration. The $7.5 million represents the value of the Earn-Out Shares based on a probability-based model measuring the likelihood of achieving certain revenue milestones as detailed below, and has been recorded as a liability in the balance sheet. In connection with FASB ASC 805, the fair value of any contingent consideration is established at the date of the Business Combination and included in the total purchase price at fair value. The contingent consideration is then adjusted to the then current fair value as an increase or decrease to earnings in each reporting period which could have a material impact on the Company's financial position or results of operations. As of June 30, 2013 the Company recorded a charge of $55 thousand in order to adjust the contingent consideration to $7.555 million, its current fair value in the level 3 category. Based on the revenue milestones, additional shares could be issued as follows:

Revenue milestonesAdditional shares
$15.5 million in 20132,772,598
$16.0 million in 20141,584,342
$16.5 million in 20151,742,776
   Total6,099,716
Or, alternatively, if $33.0
 million for 2013 and 2014
 combined6,099,716

The following table summarizes the estimated allocation of the purchase price which is preliminary and subject to adjustment following the completion of the valuation process (in thousands):

Net fair value of assets acquired $107 
Intangible assets  9,930 
Goodwill  14,555 
  $24,592 

The Company believes that the goodwill resulting from the Business Combination reflects the unique proprietary image and player tracking technology that strengthens our product and services offerings internationally and provides access to new and existing customers. The Company believes that this preliminary estimate of goodwill will not be deductible for tax purposes.

The components and estimated useful lives of intangible assets acquired as of June 30, 2013 are stated below. Amortization is provided on a straight line method, or in the case of customer relationships, on an accelerated method, over the following estimated useful lives (dollars in thousands):

17


     Estimated 
     useful life 
Definite-lived intangibles:      
  Customer relationships $6,400   10 
  Proprietary technology  800   15 
  Other intangibles  830   15 
         
Indefinite-lived intangibles:        
  Tradename  1,900   - 
  $9,930     

In connection with the Business Combination, the Company incurred $0.3 million and $1.0 million in transaction costs in the three and six months ended June 30, 2013, respectively.

Below are the unaudited proforma results of operations for the six months ended June 30, 2013 and 2012 as if the Company had merged with Hego on January 1, 2012. Such proforma results are not necessarily indicative of the annual results of operations that would have been achieved if the Business Combination occurred on the date assumed, nor are they necessarily indicative of future consolidated results of operations (in thousands except per share data):

  June 30, 
  2013  2012 
Net sales $24,607  $23,310 
Net loss  (4,453)  (2,050)
Net loss per share - basic and diluted $(0.15) $(0.07)

In future periods, the combined business may incur charges to operations to reflect costs associated with integrating the two businesses that the Company cannot reasonably estimate at this time.

9.DUE TO RELATED PARTIES

The Company is subjectbalance due to litigation and other claimsrelated parties represents amounts that arise in the ordinary courseare due to certain former shareholders or employees of business. While the ultimate resultHego AB that are now shareholders or employees of the Company'sCompany. The balance resulted from loans to Hego AB, and dividends declared but not paid by Hego AB, prior to its merger with Chyron. Interest is accrued on the outstanding legal matter described under "Legal Proceedings" inbalance at the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 cannot presently be determined, the Company does not expect that the ultimate disposition will have a material adverse effect on its resultsrate 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.5.95%.

9.10.           RESTRUCTURING

On May 2, 2013, the Company's Board of Directors approved a restructuring plan to reduce operating costs. As a result, the Company reduced the size of its workforce by 20 positions and recorded a charge of $0.6 million in severance pay and benefits expense. As of June 30, 2013 the remaining liability was approximately $0.3 million and the Company expects that this will be paid in the third quarter of 2013. Also in the quarter ended June 30, 2013 the Company incurred a charge of $0.4 million associated with modifications of equity awards for the affected employees that were outstanding on their termination date.

18

11.           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  Six Months 
 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
  Ended June 30,  Ended June 30, 
 2012  2011  2012  2011  2013  2012  2013  2012 
North America $5,181  $5,884  $16,001  $17,967  $6,499  $5,148  $11,752  $10,820 
Europe, Middle East and Africa (EMEA)  671   644   2,480   3,355   3,660   808   4,872   1,809 
Latin America  794   550   2,276   1,438   374   710   965   1,482 
Asia  602   392   2,052   720   183   1,018   1,144   1,450 
 $7,248  $7,470  $22,809  $23,480  $10,716  $7,684  $18,733  $15,561 

Prior to the Business Combination with Hego, the Company operated as one reporting unit. As a result of the Business Combination the Company will be organized, managed and internally reported as two segments. Because the Company will not evaluate performance based upon return on assets at the operating segment level, assets are not tracked internally by segment, and therefore, segment asset information is not presented at this time. In addition, due to the preliminary status of the purchase price allocation, goodwill has not been allocated to reporting segments.

Operating segment data is as follows (in thousands):

  Three Months Ended  Six Months Ended 
  June 30, 2013  June 30, 2013 
Revenues:      
  Hego $2,307  $2,307 
  Chyron  8,409   16,426 
  $10,716  $18,733 
         
Operating income (loss):        
  Hego $240  $240 
  Chyron  799 �� 1,346 
  Unallocated corporate expense  (2,889)  (4,245)
  $(1,850) $(2,659)


 
1419
 

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; 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; our ability to integrate the business of Chyron and Hego; our ability to grow sales and profits from our Hego products and services; our ability to develop new Hego products and services; 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 (the "2012 Form 10-K"), as well as any updates or modifications to those risk factors filed from time to time in our Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. 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.hereof. 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,
20
"ChyronHego," the "Company," "we," "us," and "our" refer to Chyron Corporation.ChyronHego Corporation and "Hego" refers to Hego Aktiebolag.
15

Overview

We currently exist in a worldwide TV market that continues to be persistently price competitive, and where customer demand for purchasesOn May 22, 2013 we acquired the outstanding stock of new graphics systems,Hego AB, creating ChyronHego Corporation. Hego brings very strong sports products and service offerings that address the needs of both sports broadcasters and sports leagues and rights holders. There are significant budgets available in the sports TV space for those companies who offer an improved viewer experience. Now that the transaction has been consummated, we believe that we will be positioned to benefit from these kinds of expenditures. The Chyron and Hego product lines are complementary with very little overlap. Hego's solutions and services remains subdued. While our customers are experiencing some degreepredominantly address the needs of recoverylive sports production, while Chyron has recently been more focused on graphics solutions for live and near-live news production workflows. We believe that the business combination of Chyron and Hego will create a global leader in their advertising revenues, they continue to emphasize cost containmentbroadcast graphics creation, playout and this is reflected in their capital spending.real-time data visualization.

The overall economic recovery is still tenuous, and our professional media customers continue to face fiscal challenges. These customers are inresults of operations include the processoperating results of transforming their businesses to address new opportunities and threats. To help our customers transition theirHego since completion of the business models we have developed workflow solutions for them that we believe will bring cost advantages over traditional processes. These solutions are designed to help our media clients do more with less. By leveraging our Cloud-based technologies to deliver low-cost, scalable, collaborative applications 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.combination on May 22, 2013.

Results of Operations for the Three and NineSix Months Ended SeptemberJune 30, 20122013 and 20112012

Net sales. Revenues for the quarter ended SeptemberJune 30, 20122013 were $7.2$10.7 million, a decreasean increase of $0.3$3.0 million, or 3%39%, from the $7.5$7.7 million reported in the quarter ended SeptemberJune 30, 2011.2012. Of these amounts, North American revenues were $5.2$6.5 million in the quarter ended SeptemberJune 30, 20122013 and $5.9$5.1 million in the quarter ended SeptemberJune 30, 2011.2012. Revenues derived from other international regions were $2.0$4.2 million in the quarter ended SeptemberJune 30, 20122013 as compared to $1.6$2.6 million in the quarter ended SeptemberJune 30, 2011.2012.

Revenues for the ninesix months ended SeptemberJune 30, 20122013 were $22.8$18.7 million, a decreasean increase of $0.6$3.1 million, or 3%20%, from the $23.4$15.6 million in the ninesix months ended SeptemberJune 30, 2011.2012. Revenues derived from North American customers were $16.0$11.7 million in the ninesix month period ended SeptemberJune 30, 20122013 as compared to $18.0$10.8 million in the ninesix month period ended SeptemberJune 30, 2011.2012. Revenues derived from other international regions were $6.8$7.0 million in the ninesix months ended SeptemberJune 30, 20122013 as compared to $5.4$4.8 million in the ninesix month period ended SeptemberJune 30, 2011.2012.

Revenues by type, for the three and ninesix month periods are as follows (dollars in thousands):

 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  
Three Months Ended
June 30,
  
Six Months Ended
June 30,
 
    % of     % of     % of     % of     % of     % of     % of     % of 
 2012  Total  2011  Total  2012  Total  2011  Total  2013  Total  2012  Total  2013  Total  2012  Total 
Product $4,861   67% $5,361   72% $16,434   72% $17,825   76% $6,744   63% $5,771   75% $12,718   68% $11,573   74%
Services  2,387   33%  2,109   28%  6,375   28%  5,655   24%  3,972   37%  1,913   25%  6,015   32%  3,988   26%
 $7,248      $7,470      $22,809      $23,480      $10,716      $7,684      $18,733      $15,561     


 
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We have experienced a slowdownan increase in our product revenue stream in both the three and six month periods ended June 30, 2013 as a result of delayscustomer purchases for the upcoming winter Olympics in spending as broadcasters emphasize cost controlSochi, Russia and reschedule their capital expenditures. This decline was experienced in North America and more markedly in Europe where the economy has stalled. This was offset by improvements inincremental product sales of $0.5 million from our Asian and Latin American markets from several major program upgrades.business combination with Hego.

Our services revenues have grown 13%increased in all periods primarily from the three and nine months periodsincremental contribution of 2012 as compared to 2011. This growth is primarily attributable to increased sales$1.8 million of software and hardware maintenance contracts for our broadcast graphics products and increases in revenue from Axis.Hego services since the date of the business combination.

Gross profit.  Gross margins for the quarters ended SeptemberJune 30, 20122013 and 20112012 were 68% and 69%, respectively. The decrease in the gross margin percentage is primarily attributable to product mix. As services become a greater component of revenues we expect our margins to decline because our products carry a higher gross margin than our services. Gross margins for each of the ninesix month periods ended SeptemberJune 30, 2013 and 2012 and 2011 were 69% and 70%, respectively. The decline in gross margin. Absent the effect of 1% in each of the quarterly and nine month periods in 2012 as compared to the prior year, is attributable to the decline in product revenues, and the associated lower level of absorption of fixed overhead costs. Absent this affect,mix, 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  Six Months 
 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  Ended June 30,  Ended June 30, 
 2012  2011  2012  2011  2013  2012  2013  2012 
Sales and marketing $3,125  $3,193  $10,125  $9,068  $3,272  $3,474  $6,152  $7,000 
General and administrative  989   1,077   3,153   3,759   3,564   1,005   5,435   2,164 
 $4,114  $4,270  $13,278  $12,827  $6,836  $4,479  $11,587  $9,164 

The decrease in sales and marketing expenses in the third quarter of 2012,three and six month periods ended June 30, 2013, as compared to the same periodperiods 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 non growth areas that resulted in savings realized during the first half of 2013. These savings were slightly offset by the severance costs of $0.3 million in connection with the May restructuring. Hego sales and marketing expensescosts included in the nine months ended September 30, 2012 is due to additional compensationthree and related direct costs of increasing our senior sales, marketing and support staff. As planned, we made strategic hiressix month periods in key sales positions and expanded our sales and marketing efforts overseas. In addition, key positions2013 were filled in professional services as we increase our emphasis on services that complement our products business.approximately $0.4 million.

The decreaseincrease in general and administrative ("G&A") expenses in the third quarter of 2012, compared to the same period in 2011,three and six months ended June 30, 2013 is a result of lower travel expensesHego transaction-related costs and reduced consulting costs. The general$1.7 million of expense associated with our share based arrangements. In connection with the business combination, we incurred $0.3 million and administrative$1.0 million in transaction costs in the three and six months ended June 30, 2013, respectively. Also as a result of the business combination, all outstanding equity awards became immediately exercisable and fully vested which resulted in a charge of $1.3 million representing the unamortized expense of such awards. In addition, as a result of the Company's downsizing on May 2, 2013, affected employees were provided with an adjustment in the terms of their stock options and awards that were outstanding on their termination date. As a result, we recorded a $0.4 million charge related to the modification of these awards. Hego G&A expenses for the ninethree and six month periodperiods in 2011 includes higher legal and lawsuit settlement costs of2013 were 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.million.

 
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Research and development expenses. Research and development ("R&D") expenses were $1.8$2.3 million in the threequarter ended June 30, 2013 compared to $1.9 million in the quarter ended June 30, 2012. R&D expenses were $4.1 million and $3.9 million in the six month periods ended SeptemberJune 30, 2013 and 2012, and 2011. In the nine month period ended September 30, 2012 R&D costs increased to $5.7 millionrespectively. The increases in all periods in 2013, as compared to $5.0the respective prior periods, is due primarily to the incremental costs of $0.4 million of the Hego transaction, severance costs of $0.3 million in connection with the nine months ended September 30, 2011. The majority of the increase 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.May restructuring, offset by other expense decreases as projects are completed.

Interest expense. Interest expense declinedincreased slightly in the three and nine month periodssix months ended SeptemberJune 30, 20122013 as compared to the same periods in 2011.2012. This decrease was attributableis due to declining outstanding balancesthe advances that we took on our term loan from 2009. We made the final payment on thisU.S. term loan in May 2012.the fourth quarter of 2012 and the addition of interest expenses associated with the additional long-term debt that we assumed from Hego in the business combination.

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

 Three Months  Six Months 
 
Three Months
Ended September 30,
  
Nine Months
Ended September 30,
  Ended June 30,  Ended June 30, 
 2012  2011  2012  2011  2013  2012  2013  2012 
Foreign exchange transaction gain (loss) $16  $(14) $10  $22  $3  $(13) $(78) $(6)
Mark to market contingent consideration  (55)  -   (55)  - 
Other  2   -   2   (2)  13   -   11   - 
 $18  $(14) $12  $20  $(39) $(13) $(122) $(6)

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.international transactions. However, we believe that it is not material to our near-term financial position or results of operations. This exposure will possibly increase in the future due to the Business Combination, as a result of which a larger percentage of the Company's business is expected to be transacted in foreign currencies.

Income tax benefit (expense), net. In the third quarter ofthree months ended June 30, 2013 and 2012, and 2011, we recorded an income tax expense of $0.1 million and a benefit of $0.3 million and an expense of $2.6$0.5 million, respectively. In the ninesix months ended SeptemberJune 30, 20122013 and 20112012 we recorded an income taxexpense of $0.1 million and a benefit of $0.9$0.6 million, and an expense of $2.3 million, respectively. In the third quarter of 2011, it was determined, based on management's estimate of book income and the uncertainty of the timing of future taxable income, that it was more likely than not that we would not realize a portion of our net operating loss carryforwards and, therefore, recorded a charge of $2.7 million. The difference between our effective income tax rate and the federal statutory rate is primarily due to transaction costs associated with the Hego business combination that will not be deductible for tax purposes and the amount of expense associated with our share-based payment arrangements and the portion thereof that will give rise to tax deductions. Furthermore, share-based payments 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.


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Liquidity and Capital Resources

At SeptemberJune 30, 2012,2013, we had cash and cash equivalents on hand of $2.2 million and working capital of $5.4$1.1 million. In the first ninesix months of 2012 we2013 our cash from operations was used approximately $1.4primarily to fund acquisitions of property and equipment of $0.7 million in cash for operations primarily dueand to the net loss that was incurred.make required principal payments on our debt and capital leases of $0.3 million, offset by new borrowings of $0.2 million.
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Also, duringDuring the nine month period ended September 30, 2012,second quarter of 2013 we made contributionsa required contribution of $0.1 million to 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. Based on current assumptions,and we expect to make contributions to our pension plan of $0.36$0.4 million over the next twelve months as required under ERISA. Our pension plan assets were valued at $5.5 million and $5.3 million and $4.1 million at SeptemberJune 30, 20122013 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.

During 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,March 2013, we entered into a loan modification agreement and amended our 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%. AdvancesWe also have 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 June 30, 2013, available borrowings under the Revolving Line were approximately $2.0 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 June 30, 2013 was $0.5 million. The Term Loanterm loan bears interest at Prime +2.25% (which was 6.25% at June 30, 2013) and principal will beand interest are being repaid over thirty months. At September 30, 2012, no amounts were outstanding; however, on

 On August 5, 2013 we entered into a loan modification and waiver agreement with Silicon Valley Bank ("SVB") whereby the expiration date of the Revised Credit Facility has been extended to October 17, 201212, 2013 with the intention that we took an advance of $0.35 million on the Term Loan.will enter into a new credit facility with SVB prior to that date.

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 our AQR falls below 1.5x at any month-end during the remaining term of the sum offacility, then any borrowings under the gross proceeds receivedRevolving Line will be repaid by usSVB applying collections from any sale of our equitySVB 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 incurrence of subordinated debtgreater. If the AQR at month-end is 1.5x
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or greater, we will maintain a static loan balance and any positive quarterly net income earned, measuredall collections will be deposited into our operating account. Due to the business combination with Hego, which was not anticipated when the covenant requirements were established, we failed to meet the financial covenants at quarter-end (both as defined in the Credit Facility).May 31, 2013 and June 30, 2013 and obtained waivers from SVB. 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 also have beenrevolving credit facilities associated with our European operations that total $1.15 million of which $0.824 million is outstanding at June 30, 2013. The revolving credit facilities have expiration dates of December 31, 2013 and currently areautomatically renew for twelve month periods unless notified by the lender ninety days prior to expiration. In addition, we have three outstanding term loans in compliance with all debt covenants underEurope that total $0.4 million at June 30, 2013. Two of the Credit Facility.term loans require principal payments that total $10 thousand per month and the third term loan, which has an outstanding balance of $0.2 million, requires no principal payments and will be due December 31, 2014.

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.
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WeBased on our plan for combining the operating activities of both Chyron and Hego, and provided that we are able to achieve our planned results of operations and retain the availability under our credit facilities, we believe that cash on hand, net cash to be generated in the business, and availability of funding under our Credit Facility,credit facilities, will be sufficient to meet our cash needsrequirements 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.months.

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 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.


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ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                  MARKET RISK

The information called for by this itemItem 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 Act 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.

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On May 22, 2013 the Company completed the Hego business combination for a purchase price of $24.6 million represented substantially by goodwill and identifiable intangible assets. Hego's operations contributed approximately $2.3 million in revenues to our consolidated financial results for the three months ended June 30, 2013. We continue to evaluate the internal control over financial reporting of the acquired business. As permitted by SEC Staff interpretive guidance for newly acquired businesses, the internal control over financial reporting of Hego was excluded from a formal evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2013 but we will include an assessment within one year from the date of the business combination.

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.

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.


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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 Annual2012 Form 10-K and Part II, Item 1A in our Quarterly Report on Form 10-K10-Q for the yearquarter ended DecemberMarch 31, 2011,2013 (the "2013 First Quarter Form 10-Q"), which could materially affect our business, financial condition or results of operations. The risks described in our Annual Report on2012 Form 10-K, 2013 First Quarter Form 10-Q 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. OtherThere have been no material changes to the risk factors described in our 2012 Form 10-K and 2013 First Quarter Form 10-Q, other than the addition of the following risk factor, there have been no material changeswhich replaces and supersedes the corresponding risk factor in or additions to the risk factors included in our Annual Report on2013 First Quarter Form 10-K for the year ended December 31, 2011.10-Q:

Risks Related to Our Common Stock

If we fail to continue to meet all applicable NASDAQ Global Market requirements and Thethe 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, 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 and NASDAQ granted us an extension to provide evidence of compliance.

On May 22, 2013, we held our 2013 annual meeting and our stockholders approved our business combination with Hego. Based upon a valuation performed by an independent valuation services firm that we retained, we recorded the acquisition at a value of approximately $24.6 million. As a result of this transaction, and taking into account our results of operations through our second quarter ended June 30, 2013, our shareholders' equity was $0.55approximately $17.9 million at June 30, 2013, and is therefore in excess of the NASDAQ Global Market's stockholders' equity requirement. On August 8, 2013, we advised NASDAQ, via a filing on November 12, 2012.Form 8-K, of our belief that we are now in compliance with this requirement. On August 9, 2013, the Company received a letter from NASDAQ notifying it that as a result of the information contained in the Form 8-K, NASDAQ has determined that the Company complies with the continued listing requirement for shareholders' equity, subject to the Company
 
 
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providing evidence of its compliance upon filing this quarterly report on Form 10-Q for the quarter ended June 30, 2013.

While we intend to continue 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.compliance. 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 OFOF PROCEEDS

                 PROCEEDS
None.

ITEM 3.                DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.                MINE SAFETY DISCLOSURES

None.

ITEM 5.                OTHER INFORMATION

None.


 
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ITEM 6.   EXHIBITS

(a)  Exhibits:

Exhibit No.
Description of Exhibit
3.1
10.1Sixth Loan Modification Agreement between Silicon Valley Bank and Chyron Corporation dated August 13, 2012
Restated Certificate of Incorporation filed with the State of New York on December 27, 1991 (previously filed as exhibit 10.1Exhibit 3(a) to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1991 (File No. 000-05110) and incorporated herein by reference).
3.2
Certificate of Amendment of the Restated Certificate of Incorporation filed with the State of New York on February 7, 1997 (previously filed as Exhibit 3(c) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (File No. 001-09014) and incorporated herein by reference).
3.3
Certificate of Amendment of the Restated Certificate of Incorporation filed with the State of New York on September 19, 2007 (previously filed as Exhibit 3(i) to the Registrant's Current Report on Form 8-K filed with the Commission on August 16, 2012September 24, 2007 (File No. 000-05110) and incorporated herein by reference).
3.4
Certificate of Amendment of the Restated Certificate of Incorporation filed with the State of New York on May 22, 2013 (previously filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on May 29, 2013 (File No. 001-09014) and incorporated herein by reference).
10.1**Employment Agreement between ChyronHego Corporation and Johan Apel, dated as of May 23, 2013.*
10.2**Employment Agreement between ChyronHego Corporation and Kevin Prince, dated as of May 23, 2013.*
10.3**Employment Agreement between ChyronHego Corporation and Soren Kjellin, dated as of May 23, 2013.*
10.4**Eighth Loan Modification Agreement between Silicon Valley Bank and ChyronHego Corporation, dated August 5, 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.

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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.
101**Interactive Data Files formatted in XBRL (Extensible Business Reporting Language) from (a) our Consolidated Balance Sheets as of SeptemberJune 30, 20122013 (unaudited) and December 31, 2011,2012, (b) our Consolidated Statements of Operations (unaudited) for the Three and NineSix Months ended SeptemberJune 30, 2013 and 2012 and 2011,(unaudited), (c) our Consolidated Statements of Comprehensive (Loss) (unaudited) for the Three and NineSix Months ended SeptemberJune 30, 2013 and 2012 and 2011,(unaudited), (d) our Consolidated Statements of Cash Flows (unaudited) for the NineThree and Six Months ended SeptemberJune 30, 2013 and 2012 (unaudited) and 2011 and (d)(e) the Notes to such Consolidated Financial Statements (unaudited).***
  
 
    *Management contract or compensatory plan or arrangement.
  **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.


 
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SIGNATURES

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


  CHYRONCHYRONHEGO CORPORATION
  (Registrant)
   
November 13, 2012August 14, 2013 /s/ Michael Wellesley-Wesley
(Date) Michael Wellesley-Wesley
  President and     Chief Executive Officer
      (Principal Executive Officer)
November 13, 2012
August 14, 2013 /s/ Jerry Kieliszak
(Date) Jerry Kieliszak
       Senior Vice President and Chief Financial Officer and Sr. Vice President
    (Principal Financial Officer)

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