<PAGE>
FORM 10-Q
Securities and Exchange Commission
Washington D.C. 20549
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended: November 30, 1996
Commission file number: 0-18066
NTN CANADA, INC.
(Exact name of registrant as specified in its charter)
New York 11-2805051
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14 Meteor Drive
Etobicoke, Ontario, Canada M9W 1A4
(Address of principal executive offices)
(Zip Code)
(416) 675-6666
(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 the number of shares outstanding of each of the registrant's
classes of common stock, as of January 13, 1997: 2,441,531 shares of common
stock, par value $.0467 per share.
<PAGE>
PART I - FINANCIAL INFORMATION
NTN CANADA, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL INFORMATION
PERIOD ENDED NOVEMBER 30, 1996
Item Page
- ---- ----
Item 1. Financial Statements:
Consolidated Balance Sheets -
November 30, 1996 and August 31, 1996....................... 3
Consolidated Statements of Income -
For the Three Months Ended November 30, 1996 and 1995....... 4
Consolidated Statements of Cash Flows -
For the Three Months Ended November 30, 1996 and 1995....... 5
Notes to Consolidated Financial Statements........................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 8
- 2 -
<PAGE>
NTN CANADA, INC.
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1996 AND AUGUST 31, 1996
(Expressed in Canadian Dollars - Unaudited)
<TABLE>
<CAPTION>
November 30, 1996 August 31, 1996
----------------- ---------------
<S> <C> <C>
ASSETS:
Current -
Cash ..................................................... $ 2,180,444 $ 1,777,889
Short-term temporary investments ......................... 2,866,125 3,577,151
Accounts receivable, trade - net of allowance for doubtful
accounts of $46,500; August - $39,000 .............. 1,193,233 563,601
Note receivable .......................................... -- 350,000
Inventory ................................................ 862,864 631,171
Prepaid expenses ......................................... 435,850 162,003
------------ ------------
Total current assets ..................................... $ 7,538,516 $ 7,061,815
============ ============
Note receivable .......................................... 160,000 --
Property and equipment, net .............................. 3,978,811 2,447,937
Goodwill and other intangibles ........................... 2,794,695 373,341
------------ ------------
6,933,506 2,821,278
------------ ------------
$ 14,472,022 $ 9,883,093
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current -
Bank loan ................................................ $ 360,000 --
Accounts payable - trade ................................. 1,717,189 $ 715,651
Income taxes payable ..................................... 283,143 260,008
Current portion of long-term debt ........................ 592,816 --
------------ ------------
Total current liabilities ................................ 2,953,148 975,659
Long-term debt -
Debenture ................................................ 652,407 --
Loans payable ............................................ 1,079,441 --
Notes payable ............................................ 1,381,100 --
------------ ------------
3,112,948 0
Less current portion ..................................... 592,816 --
------------ ------------
2,520,132 0
Deferred income taxes payable ............................ 68,404 30,000
Minority interest ........................................ (98,414) --
------------ ------------
Total liabilities ........................................ 5,443,270 1,005,659
Shareholders' equity -
Common Stock - 2,441,531 issued ..................... 150,187 150,187
Preferred Stock - 950,000 issued .................... 11,523 11,523
Capital in excess of par value ...................... 7,921,347 7,921,347
Retained earnings ....................................... 945,695 794,377
------------ ------------
Total shareholders' equity ............................... 9,028,752 8,877,434
------------ ------------
$ 14,472,022 $ 9,883,093
============ ============
</TABLE>
The accompanying notes are an integral part of these statements
- 3 -
<PAGE>
NTN CANADA, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995
(Expressed in Canadian Dollars - Unaudited)
<TABLE>
<CAPTION>
November 30, 1996 November 30, 1995
----------------- -----------------
<S> <C> <C>
Revenues.................................................... $2,222,524 $1,362,071
Cost of sales............................................... 744,165 526,971
----------- -----------
1,478,359 835,100
General and administrative expenses......................... 1,192,763 607,809
----------- -----------
Income before provision for income taxes and minority
interest............................................... 285,596 227,291
Provision for income taxes.................................. 144,265 35,500
----------- -----------
Income before minority interest............................. 141,331 191,791
Minority interest........................................... 9,987 -
----------- -----------
Net income.................................................. $ 151,318 $ 191,791
----------- -----------
Retained earnings, beginning of period...................... 794,377 253,318
----------- -----------
Retained earnings, end of period............................ $ 945,695 $ 445,109
=========== ===========
Earnings per share, primary................................. $0.06 $0.09
===== =====
Earnings per share, fully diluted........................... $0.06 $0.09
===== =====
Weighted average number of shares, primary and fully
diluted................................................ 2,715,514 2,157,005
</TABLE>
The accompanying notes are an integral part of these statements
- 4 -
<PAGE>
NTN CANADA, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995
(Expressed in Canadian Dollars - Unaudited)
<TABLE>
<CAPTION>
November 30, 1996 November 30, 1995
----------------- -----------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income for the three months ........................ $ 151,318 $ 191,791
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization ..................... 136,015 82,312
Minority interest ................................. (9,987) --
Changes in assets and liabilities
Decrease (increase) in accounts receivable ........ 15,721 (50,290)
Decrease (increase) in inventory .................. 82,824 (149,786)
Decrease (increase) in prepaid expenses ........... (29,563) 12,016
Increase (decrease) in accounts payable and accrued
liabilities ................................... 46,329 208,634
Increase in income taxes payable .................. 48,411 35,500
----------- -----------
Cash provided by operating activities .................. 441,068 330,177
FINANCING ACTIVITIES:
Mortgage payable ....................................... -- (244,223)
----------- -----------
Cash used in financing activities ...................... 0 (244,223)
INVESTING ACTIVITIES:
Purchases of property and equipment .................... (235,074) (294,169)
Acquisition of Magic Lantern ........................... (514,465) --
----------- -----------
Cash used in investing activities ...................... (749,539) (294,169)
Net increase (decrease) in cash and cash equivalents ... (308,471) (208,215)
Cash and cash equivalents, beginning of period ......... 5,355,040 5,149,521
----------- -----------
Cash and cash equivalents, end of period ............... $ 5,046,569 $ 4,941,306
=========== ===========
Cash and cash equivalents are represented by:
Cash ................................................... 2,180,444 466,253
Short-term temporary investments ....................... 2,866,125 4,475,053
----------- -----------
$ 5,046,569 $ 4,941,306
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
- 5 -
<PAGE>
NTN CANADA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD ENDED NOVEMBER 30, 1996
Note 1. Basis of Presentation.
----------------------
The accompanying financial statements for the interim periods
are unaudited and reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for the periods
presented. These financial statements should be read in conjunction with the
financial statements and notes thereto, together with Management's Discussion
and Analysis of Financial Condition and Results of Operations, contained in the
Annual Report on Form 10-K of NTN Canada, Inc. (the "Company") (Commission
No.:0-18066), filed with the Securities and Exchange Commission on December 14,
1996. The results of operations for the three months ended November 30, 1996 are
not necessarily indicative of the results for the full fiscal year ending August
31, 1997.
Note 2. General.
--------
The financial statements of the Company for the three months
ended November 30, 1997, include the operations of the Company's wholly owned
subsidiary, NTN Interactive Network Inc. ("NTNIN"). On October 2, 1996, NTNIN
acquired, effective October 1, 1996, all of the outstanding stock of Magic
Lantern Communications Ltd. ("Magic"), pursuant to which Magic became a
wholly-owned subsidiary of NTNIN. Magic conducts its operations directly and
through its wholly owned subsidiaries, 745695 Ontario Ltd. ("Custom Video") and
B.C. Learning Connection ("BCLC"), and its 75% ownership of the outstanding
shares of Sonoptic Technologies Inc. ("Sonoptic"). On October 10, 1996, Magic
acquired 50% of the outstanding shares of 1113659 Ontario Ltd. ("Viewer
Services"), a joint venture operated with International Tele-Film Enterprises
Ltd. (Magic, Custom Video, BCLC, Sonoptic and Viewer Services are referred to as
the "Magic Lantern Group"). Reference is hereby made to the Company's Current
Report on Form 8-K, filed with the Securities and Exchange Commission (the
"Commission") on October 17, 1996, as amended by Form 8-K/A No.1, filed with the
Commission on December 16, 1996, for further information with respect to the
Company's acquisition of Magic.
The acquisitions of Magic and Viewer Services were made
effective October 1, 1996 and October 10, 1996, respectively. Both acquisitions
were accounted for as purchases. Accordingly, the Company's results of
operations for the quarter ended November 30, 1996 (the "1997 First Fiscal
Quarter") reflect the operating results of the Magic Lantern Group, while the
Company's results of operations for the quarter ended November 30, 1995 (the
"1996 First Fiscal Quarter") do not reflect the operating results of the Magic
Lantern Group.
- 6 -
<PAGE>
Note 3. Business Segment Data.
----------------------
<TABLE>
<CAPTION>
Interactive TV Educational Video
Entertainment Distribution Total
-------------- ----------------- -----
<S> <C> <C> <C>
1996
- ----
Total Revenues......................... $1,810,091 412,433 2,222,524
Operating Income (Loss)................ 327,876 (42,280) 285,596
Net Earnings (Loss).................... 183,611 (32,293) 151,318
Total Assets........................... 11,114,691 3,357,331 14,472,022
Current Liabilities.................... 1,016,788 1,936,360 2,953,148
Total Liabilities...................... 1,954,288 3,587,396 5,541,684
1995
- ----
Total Revenues......................... 1,362,071 n/a 1,362,071
Operating Income (Loss)................ 227,291 n/a 227,291
Net Earnings (Loss).................... 191,791 n/a 191,791
Total Assets........................... 8,544,372 n/a 8,544,372
Current Liabilities.................... 806,170 n/a 806,170
Total Liabilities...................... 816,170 n/a 816,170
</TABLE>
Note 4. Net income per Common Share.
----------------------------
Primary and fully diluted net income per common share is
computed using the weighted average number of common shares outstanding. The
computation reduces the net income available per common share by the amount of
preferred stock dividends.
- 7 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
------------------------------------------------------------
Introduction
The financial statements of the Company and the information
contained in this Management's Discussion and Analysis of Financial Condition
and Results of Operations are expressed in Canadian dollars ("Cdn$"). For the
convenience of the reader, in this Management's Discussion and Analysis, certain
financial amounts are also given in U.S. dollars ("US$"), converted at the Noon
Buying Rate in effect at the end of the period to which the amount relates, or
the exchange rate on the date specified herein. The Noon Buying Rates for
November 30, 1996 and 1995 were Cdn$1.3489 and Cdn$1.3587 per US$1.00,
respectively. As the Noon Buying Rate fluctuates daily, financial comparisons
between periods expressed in U.S. dollars do not accurately reflect the true
difference in the Company's financial position or results of operations between
periods. Accordingly, the comparisons between periods presented below, both in
dollar amounts and as percentages from prior periods, are expressed in Canadian
dollars only.
General
The Company, through its wholly owned subsidiary, NTNIN,
currently provides its products and services through seven business units or
subsidiaries. Of these seven, two are considered to be the traditional core of
the Company's business, that is, directly related to multi-player interactive
entertainment programs. The two traditional core business units are the
Hospitality Group and the Corporate Events/Home Market Group. The other five
units, collectively referred to as the "Magic Lantern Group," are (i) NTNIN's
wholly-owned subsidiary Magic, which is involved in the marketing and
distribution of educational video and media resources, (ii) Magic's wholly-owned
subsidiary Custom Video, which is involved in the manufacturing of videotape
copies, (iii) Custom Video's wholly-owned subsidiary BCLC, which is involved in
the marketing and fulfilment services of educational video titles, (iv) Magic's
75%-owned subsidiary Sonoptic, which is involved in the conversion of analog
video to digital video formats, and (v) Magic's 50%-owned subsidiary Viewer
Services, which is involved in the inbound telemarketing and fulfilment services
for television broadcasters and others.
The Company's acquisitions of Magic and Viewer Services were
made effective October 1, 1996 and October 10, 1996, respectively. Both
acquisitions were accounted for as purchases. Accordingly, the Company's results
of operations for the 1997 First Fiscal Quarter reflect the operating results of
the Magic Lantern Group, while the Company's results of operations for the 1996
First Fiscal Quarter do not reflect the operating results of the Magic Lantern
Group.
Highlights of the Three Months Ended November 30, 1996
Three notable events took place during the 1997 First Fiscal
Quarter: the acquisition of the Magic Lantern Group, effective October 1, 1996;
the signing of a contract with AOL Canada to provide Canadian content on AOL
Canada's gateway service; and the signing of a contract with
- 8 -
<PAGE>
Bell Canada which is expected to lead to the Company providing a variety of
programming for Bell Canada's broadband implementation scheduled for September
1997.
Results of Operations
The Company's total revenues for the 1997 First Fiscal Quarter
were Cdn$2,222,524 (US$1,647,657), compared to Cdn$1,362,071 (US$1,002,481) for
the 1996 First Fiscal Quarter, an increase of Cdn$860,453 or 63.2%.
Total revenues, excluding Magic, for the 1997 First Fiscal
Quarter were Cdn$1,810,091 (US$1,341,902), compared to Cdn$1,362,071
(US$1,002,481) for the 1996 First Fiscal Quarter, an increase of Cdn$448,020 or
32.9%. This increase is primarily the result of increased revenues from program
content services and equipment rentals, both of which are attributable to a net
increase of 89 Network locations during the year, and to increased revenues from
event programming.
Total cost of sales for the 1997 First Fiscal Quarter was
Cdn$744,165 (US$ 551,683), compared to Cdn$526,971 (US$ 387,849) for the 1996
First Fiscal Quarter, an increase of Cdn$217,194 or 41.2%. Total cost of sales
excluding costs incurred by the Magic Lantern Group for the 1997 First Fiscal
Quarter were Cdn$643,349 (US$476,943), compared to Cdn$526,971 (US$387,849) for
the 1996 First Fiscal Quarter, an increase of Cdn$116,378 or 22.1%. This
increase is primarily the result of increased equipment costs, operations costs
and commissions, all of which are attributable to an increase in Network
locations from the number of locations during the comparable prior period. As a
percentage of the Company's total revenues, excluding revenues derived by the
Magic Lantern Group, such costs of sales decreased to 35.5% for the 1997 First
Fiscal Quarter from 38.7% for the 1996 First Fiscal Quarter.
Total expenses for the 1997 First Fiscal Quarter were
Cdn$1,192,763 (US$884,249), compared to Cdn$607,809 (US$447,346) for the 1996
First Fiscal Quarter, an increase of Cdn$584,954 or 96.2%. Total expenses
excluding expenses incurred by the Magic Lantern Group for the 1997 First Fiscal
Quarter were Cdn$838,866 (US$621,889), compared to Cdn$607,809 (US$447,346) for
the 1996 First Fiscal Quarter, an increase of Cdn$231,057 or 38.0%. This
increase is primarily the result of a foreign exchange loss; increased costs of
advertising and promotion, salaries, and bad debts; and a reduction in
depreciation costs. As a percentage of the Company's total revenues, excluding
expenses incurred by the Magic Lantern Group, such expenses increased to 46.3%
for the 1997 First Fiscal Quarter from 44.6% for the 1996 First Fiscal Quarter.
As a result of all of the above, net income for the 1997 First
Fiscal Quarter was Cdn$151,318 (US$112,179), compared to Cdn$191,791
(US$141,158) for the 1996 First Fiscal Quarter, a decrease of Cdn$40,473 or
21.1%.
Net income, excluding the results of the Magic Lantern Group,
for the 1997 First Fiscal Quarter was Cdn$183,611 (US$136,119), compared to
Cdn$191,791 (US$141,158) for the 1996 First Fiscal Quarter, a decrease of
Cdn$8,180 or 4.3%. This decrease is primarily the result of
- 9 -
<PAGE>
the foreign exchange loss and costs associated with the acquisition of the Magic
Lantern Group. As a percentage of the Company's total revenues, excluding the
results of the Magic Lantern Group, net income decreased to 9.3% for the 1997
First Quarter from 14.1% for the 1996 First Fiscal Quarter.
Liquidity and Capital Resources
At November 30, 1996, the Company had working capital of
Cdn$4,585,368 (US$3,399,339), a decrease of Cdn$1,500,788 from working capital
of Cdn$6,086,156 (US$4,447,319) at August 31, 1996. This decrease is primarily
due to the acquisition of the Magic Lantern Group which was made effective
October 1, 1996.
For the 1997 First Fiscal Quarter, the Company had a net
decrease in cash flow of Cdn$308,471, compared to a net decrease of Cdn$208,215
in the 1996 First Fiscal Quarter.
Cash provided by operating activities for the 1997 First
Fiscal Quarter was Cdn$441,068 (US$326,983), an increase of Cdn$110,891 from
cash provided by operating activities in the 1996 First Fiscal Quarter. The
major factors contributing to this increase include a decrease in inventory of
Cdn$82,824 resulting from the use of existing inventory for new system
installations, an increase in accounts payable and accrued liabilities of
Cdn$46,329 resulting from growth in the Company's operations and an increase in
income taxes payable of Cdn$48,411 resulting from increased taxable income.
Cash used in investing activities in both the 1997 First
Fiscal Quarter and 1996 First Fiscal Quarter was Cdn$749,539 (US$555,667) and
Cdn$294,169 (US$216,508), respectively. Cash used in the 1997 First Fiscal
Quarter was greater than in the comparable prior period primarily due to the
purchase of the Magic Lantern Group.
Cash used in financing for the 1996 First Fiscal Quarter was
Cdn$244,223 (US$181,053). This cash was primarily used to repay in full the
outstanding mortgage loan on the land and building serving as the Company's
headquarters. There were no financing activities transacted in the 1997 First
Fiscal Quarter.
Management believes that the Company's working capital
position provides the necessary liquidity, on both a short and long term basis,
for the Company's planned activities and that the Company will not require
additional external financing for its operating activities during the Company's
fiscal year ending August 31, 1997 (the "1997 Fiscal Year"). However, any
changes in such plans may require the Company to seek outside financing. No
arrangements are presently in place for outside financing should the need arise.
Inflation
The rate of inflation has had little impact on the Company's
operations or financial position during the three months ended November 30, 1996
and 1995 and inflation is not expected
- 10 -
<PAGE>
to have a significant impact on the Company's operations or financial position
during the 1997 Fiscal Year.
The Company pays a number of its suppliers, including its
licensor and principal supplier, NTN Communications, Inc., in US dollars.
Therefore, fluctuations in the value of the Canadian dollar against the US
dollar will have an impact on gross profit as well as the net income of the
Company. If the value of the Canadian dollar falls against the US dollar, the
cost of sales of the Company will increase thereby reducing the Company's gross
profit and net income. Conversely, if the value of the Canadian dollar rises
against the US dollar, gross profit and net income will increase.
- 11 -
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
Reference is hereby made to Item 3. Legal Proceedings, on
pages 16 and 17 of the Annual Report on Form 10-K, for the fiscal year ended
August 31, 1996 (Commission No.: 0-18066), filed with the Securities and
Exchange Commission on December 14, 1996, for information with respect to
material legal proceedings to which the Company or any of its subsidiaries are,
and may in the future become, parties. To the knowledge of the Company, no other
proceedings of a material nature have been commenced or are contemplated by
governmental authorities or others.
Item 2. Changes in Securities.
----------------------
None.
Item 3. Defaults Upon Senior Securities.
--------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
None.
Item 5. Other Information.
------------------
Effective November 29, 1996, Richard Peddie resigned as a
director of the Company in connection with his resignation as an officer of
NetStar Communications Inc. (formerly, Labatt Communications Inc.) ("NetStar").
Pursuant to a Designation Agreement, dated as of October 4, 1994 (the
"Designation Agreement"), among the Company, NTNIN and NetStar, NetStar has the
right to designate a specified number of directors of the Company, currently two
directors. In connection with the resignation of Mr. Peddie, on November 29,
1996, NetStar designated James Thompson to fill the vacancy in the Board of
Directors of the Company created by Mr. Peddie's resignation. The Board of
Directors of the Company elected Mr. Thompson to the Board to fill such vacancy
on January 13, 1997.
James Thompson is the President (since June 1994) of TSN The
Sports Network ("TSN"), a cable network providing sports, news and entertainment
programming throughout Canada and an affiliate of NetStar. Mr. Thompson also
served as General Manager (July 1988 to January 1997), Vice-President (July 1988
to June 1994), Vice-President of Programming (January 1986 to
- 12 -
<PAGE>
July 1988) and Program Director (July 1985 to January 1986) of TSN. Prior to
joining TSN, Mr. Thompson was employed for over twenty years by the Canadian
Broadcasting Corporation, serving in positions of increasing responsibility up
to the level of Executive Producer.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits.
The following list sets forth the applicable exhibits
(numbered in accordance with Item 601 of Regulation S-K) required to be filed
with this Quarterly Report on Form 10-Q:
Exhibit
Number Title
------- -------
3.1 Certificate of Incorporation, as amended to date.+
3.2 By-Laws, as amended to date.+
10.1 License Agreement, dated March 23, 1990, between NTN
Communications, Inc. and NTN Interactive Network Inc.+
10.2 Stock Purchase Agreement, dated October 1, 1996, among
Connolly-Daw Holdings Inc., 1199846 Ontario Ltd., Douglas
Connolly, Wendy Connolly and NTN Interactive Network Inc.,
minus Schedules thereto.+
10.3 Designation Agreement, dated as of October 4, 1994, among
NTN Canada, Inc., NTN Interactive Network Inc. and NetStar
Enterprises Inc. (formerly Labatt Communications Inc.).+
22 List of Subsidiaries.+
27 Financial Data Schedule.
- ----------
+ Incorporated by reference. See Exhibit Index.
- 13 -
<PAGE>
(b) Reports on Form 8-K.
The Company filed a Current Report on Form 8-K (Date of
Report: October 2, 1996) with the Commission on October 17, 1996, reporting the
Company's acquisition of the Magic Lantern Group. The Form 8-K was thereafter
amended, by the filing of Form 8-K/A No. 1, filed with the Commission on
December 14, 1996, which provided the following financial statements and
information:
1. Financial Statements of Magic Lantern Communications Ltd.
Report of Independent Chartered Accountants
Consolidated Balance Sheets - August 31, 1996
Consolidated Statement of Income - Eleven Months Ended August 31, 1996
Consolidated Statement of Deficit - Eleven Months Ended August 31, 1996
Consolidated Statement of Changes in Financial Position -
Eleven Months Ended August 31, 1996
Notes to Consolidated Financial Statements
2. Pro Forma Condensed Consolidated Financial Statements
Introductory Comment
Pro Forma Condensed Consolidated Balance Sheets - August 31, 1996 Pro
Forma Condensed Statement of Operations - Year Ended August 31, 1996
Notes to Pro Forma Condensed Financial Statements
- 14 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
NTN CANADA, INC.
Dated: January 20, 1997 By: /s/ Peter Rona
-----------------------------------------
Peter Rona,
President and Principal Financial Officer
(Duly Authorized Officer)
- 15 -
<PAGE>
NTN CANADA, INC.
FORM 10-Q
NOVEMBER 30, 1996
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit Location
- ------- ---------------------- --------
<S> <C> <C>
3.1 Certificate of Incorporation, as amended to date........................... +1, Exh. 3.1
3.2 By-Laws, as amended to date................................................ +1, Exh. 3.2
10.1 License Agreement, dated March 23, 1990, between NTN
Communications, Inc. and NTN Interactive Network Inc...................... +2, Exh. 10.9
10.2 Stock Purchase Agreement, dated October 1, 1996, among Connolly-
Daw Holdings Inc., 1199846 Ontario Ltd., Douglas Connolly, Wendy
Connolly and NTN Interactive Network Inc., minus Schedules thereto......... +3, Exh. 10.1
10.3 Designation Agreement, dated as of October 4, 1994, among NTN
Canada, Inc., NTN Interactive Network Inc. and NetStar Enterprises
Inc. (formerly Labatt Communications Inc.)................................. +4, Exh. C
22 List of Subsidiaries....................................................... +1, Exh. 22
27 Financial Data Schedule.................................................... ++
</TABLE>
- ----------
+1 All exhibits so indicated are incorporated herein by reference to the
exhibit number listed above in the Annual Report on Form 10-K of the
Company, for its fiscal year ended August 31, 1996 (File No. 0-18066),
filed on December 16, 1996.
+2 All exhibits so indicated are incorporated herein by reference to the
exhibit number listed above in the Annual Report on Form 10-K of NTN
Communications, Inc., for its fiscal year ended December 31, 1990 (File
No. 2-91761-C), filed on April 1, 1991.
+3 All exhibits so indicated are incorporated herein by reference to the
exhibit number listed above in the Current Report on Form 8-K of the
Company (Date of Report: October 2, 1996) (File No. 0-18066), filed on
October 17, 1996.
+4 All exhibits so indicated are incorporated herein by reference to the
exhibit number listed above in the Current Report on Form 8-K of the
Company (Date of Report: October 4, 1994) (File No. 0-18066), filed on
October 18, 1994.
++ Filed electronically pursuant to Item 401 of Regulation S-T.
- 16 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS CONTAINED THEREIN.
</LEGEND>
<CURRENCY> CANADIAN DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> NOV-30-1996
<EXCHANGE-RATE> 1.3489
<CASH> 2,180,444
<SECURITIES> 2,866,125
<RECEIVABLES> 1,239,733
<ALLOWANCES> 46,500
<INVENTORY> 862,864
<CURRENT-ASSETS> 7,538,516
<PP&E> 3,978,811
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,472,022
<CURRENT-LIABILITIES> 2,953,148
<BONDS> 0
0
11,523
<COMMON> 150,187
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</TABLE>
