FORM 10-Q
Securities and Exchange Commission
Washington D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended: November 30, 1997
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 14, 1998: 2,535,359 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, 1997
Item Page
- ---- ----
Item 1. Financial Statements:
Consolidated Balance Sheets -
November 30, 1997 and August 31, 1997 3
Consolidated Statements of Income -
For the Three Months Ended November 30, 1997 and 1996 4
Consolidated Statements of Cash Flows -
For the Three Months Ended November 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
<PAGE>
NTN CANADA, INC.
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1997 AND AUGUST 31, 1997
(Expressed in Canadian dollars - unaudited)
<TABLE>
<CAPTION>
=================================================================================================
November 30, 1997 August 31, 1997
$ $
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents 1,784,984 2,421,797
Short-term temporary investments 1,794,633 1,705,014
Accounts receivable, trade - net of allowance for doubtful
accounts of $51,000; August - $51,000 2,459,916 1,547,395
Inventory 323,947 624,828
Prepaid expenses 398,646 419,843
- -------------------------------------------------------------------------------------------------
Total current assets 6,762,126 6,718,877
- -------------------------------------------------------------------------------------------------
Investment in Viewer Services 2,838 5,758
Property and equipment, net 5,152,128 4,754,173
License, net of accumulated amortization 221,921 225,046
Goodwill, net of accumulated amortization 3,279,120 2,273,748
Notes receivable 163,180 310,000
- -------------------------------------------------------------------------------------------------
15,581,313 14,287,602
=================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness 826,328 641,000
Accounts payable - trade 1,566,363 1,165,434
Accrued liabilities 593,751 455,110
Income taxes payable 393,247 352,161
Deferred revenue 129,500 --
Current portion of long-term debt 380,425 605,310
- -------------------------------------------------------------------------------------------------
Total current liabilities 3,889,614 3,219,015
- -------------------------------------------------------------------------------------------------
Long-term debt 1,806,746 2,126,076
Less: current portion (380,425) (605,310)
- -------------------------------------------------------------------------------------------------
1,426,321 1,520,766
- -------------------------------------------------------------------------------------------------
Deferred income taxes payable 59,173 59,173
- -------------------------------------------------------------------------------------------------
Total liabilities 5,375,108 4,798,954
- -------------------------------------------------------------------------------------------------
Shareholders' equity
Share capital
950,000 preferred shares 11,523 11,523
2,535,359 common shares [August - 2,441,992] 156,244 150,211
Capital in excess of par value 8,429,617 7,923,150
Retained earnings 1,608,821 1,403,764
- -------------------------------------------------------------------------------------------------
Total shareholders' equity 10,206,205 9,488,648
- -------------------------------------------------------------------------------------------------
15,581,313 14,287,602
=================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
NTN CANADA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
RETAINED EARNINGS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1997 AND NOVEMBER 30, 1996
(Expressed in Canadian dollars - unaudited)
<TABLE>
<CAPTION>
=================================================================================================
November 30, 1997 November 30, 1996
$ $
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Total revenue 3,737,114 2,189,292
Cost of sales 1,436,020 638,144
- -------------------------------------------------------------------------------------------------
2,301,094 1,551,148
- -------------------------------------------------------------------------------------------------
Selling, general and administrative expenses 1,609,775 1,086,200
- -------------------------------------------------------------------------------------------------
Bad debts 10,564 21,480
- -------------------------------------------------------------------------------------------------
Income before interest, depreciation and amortization,
loss from investment, income taxes and minority
interest 680,755 443,468
Interest 25,122 13,094
Depreciation and amortization 274,402 136,015
Loss from investment in Viewer Services 2,280 8,763
- -------------------------------------------------------------------------------------------------
Income before income taxes and minority interest 378,951 285,596
Provision for income taxes 110,116 144,265
- -------------------------------------------------------------------------------------------------
Income before minority interest 268,835 141,331
Minority interest (63,778) 9,987
- -------------------------------------------------------------------------------------------------
Net income for the period 205,057 151,318
Retained earnings, beginning of period 1,403,764 794,377
- -------------------------------------------------------------------------------------------------
Retained earnings, end of period 1,608,821 945,695
=================================================================================================
Earnings per share:
Primary 0.07 0.06
Fully diluted 0.07 0.06
Weighted average number of shares, primary 2,800,836 2,715,514
Weighted average number of shares, fully diluted 2,985,643 2,715,514
=================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
NTN CANADA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
THREE MONTHS ENDED NOVEMBER 30, 1997 AND NOVEMBER 30, 1996
(Expressed in Canadian dollars - unaudited)
<TABLE>
<CAPTION>
=======================================================================================
November 30, 1997 November 30, 1996
$ $
- ---------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income for the three months 205,057 151,318
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 274,402 136,015
Minority interest 63,778 (9,987)
Changes in assets and liabilities
Decrease (increase) in short-term investments (89,619) 711,026
Decrease (increase) in accounts receivable (864,883) 15,721
Decrease in inventory 312,291 82,824
Decrease (increase) in prepaid expenses 25,145 (29,563)
Increase in accounts payable and
accrued liabilities 417,075 46,329
Decrease in deferred revenue (146,425) --
Increase in income taxes payable 2,567 48,411
- ---------------------------------------------------------------------------------------
Cash provided by operating activities 199,388 1,152,094
- ---------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of property and equipment (479,542) (235,074)
Investment in Viewer Services 2,920 --
Increase in Notes Receivable (3,180) --
Investment in Interlynx Multimedia (361,380) --
Acquisition of Magic Lantern -- (514,465)
- ---------------------------------------------------------------------------------------
Cash used in investing activities (841,182) (749,539)
- ---------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Bank loan 76,811 --
Proceeds from issuing common shares 247,500 --
Notes and loans payable (319,330) --
- ---------------------------------------------------------------------------------------
Cash provided by financing activities 4,981 --
- ---------------------------------------------------------------------------------------
Net decrease in cash and cash
equivalents during the period (636,813) 402,555
Cash and cash equivalents, beginning of period 2,421,797 1,777,889
- ---------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 1,784,984 2,180,444
=======================================================================================
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
NTN CANADA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD ENDED NOVEMBER 30, 1997
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 November 28,
1997. The results of operations for the three months ended November 30, 1997 are
not necessarily indicative of the results for the full fiscal year ending August
31, 1998 (the "1998 Fiscal Year").
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") and NTNIN's wholly-owned
subsidiary Magic Lantern Communications Ltd. ("Magic"). On September 10, 1997,
NTNIN acquired, effective September 1, 1997, 51% of the outstanding stock of
Interlynx Multimedia, Inc. ("Interlynx").
Magic conducts its operations directly and through its wholly-owned
subsidiaries, 745695 Ontario Ltd. ("Custom Video") and B.C. Learning Connection
("BCLC"), its 75% ownership of the outstanding shares of Sonoptic Technologies
Inc. ("Sonoptic"), and its 50% ownership 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").
Interlynx is involved in designing and developing educational and
corporate multimedia, programming for CD-ROMs and Web Sites and animation, and
3-D rendering. It conducts its operations directly and through its 60% ownership
of the outstanding shares of Interlynx International, Inc., which is the
marketing and sales arm of Interlynx responsible for the international
distribution of all CD-ROM products, licensing and partnerships in other
countries.
<PAGE>
The acquisition of Interlynx was accounted for as a purchase in
fiscal 1998. Accordingly, the Company's results of operations for the quarter
ended November 30, 1997 (the "1998 First Fiscal Quarter") reflect 51% of the
operating results of Interlynx, while the Company's results of operations for
the quarter ended November 30, 1996 (the "1997 First Fiscal Quarter") do not
reflect 51% of the operating results of Interlynx.
Prior period's figures have been reclassified to be consistent with
any reclassifications in the current period.
Note 3. Business Segment Data for the three months ended November 30, 1997 and
November 30, 1996 (in Canadian dollars)
Interactive TV Educational and
Entertainment Multimedia Distribution Total
------------- ----------------------- -----
$ $ $
1997
- ----
Total revenues 1,963,417 1,773,697 3,737,114
Operating income (loss) 306,892 72,059 378,951
Net earnings (loss) 196,776 8,281 205,057
Total assets 12,015,588 3,565,725 15,581,313
Current liabilities 1,593,069 2,296,545 3,889,614
Total liabilities 2,201,036 3,174,072 5,375,108
1996
- ----
Total revenues 1,810,091 379,201 2,189,292
Operating income (loss) 327,826 (42,280) 285,596
Net earnings (loss) 183,611 (32,293) 151,318
Total assets 11,114,691 3,328,299 14,442,990
Current liabilities 1,329,288 1,593,257 2,922,545
Total liabilities 2,296,788 3,215,862 5,512,650
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.
<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, 1997 and 1996 were Cdn$1.4242 and Cdn$1.3489 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 eight business units or subsidiaries.
Of these eight, 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. 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 eighth unit, Interlynx, is involved in designing and developing educational
and corporate multimedia, programming for CD-ROMs and Web Sites and animation,
and 3-D rendering.
Highlights of the Three Months Ended November 30, 1997
During the 1998 First Fiscal Quarter, NTNIN acquired 51% of
Interlynx, effective September 1, 1997. In addition, the testing of a
hospitality stand-alone system, in various Pizza Hut locations in Ontario, was
implemented. The Corporate Events/Home Market Group had an increase in the
number of special events during the quarter, including a 10-city tour in Japan
with Tourism Canada, and a 10-day event in Dubai, United Arab Emirates for Air
Canada. In the Home Market area, the company signed an
<PAGE>
agreement with Sympatico to provide NTN Interactive Olympic Trivia on CBC
Television's Olympic Web Site. Lastly, Magic's business expanded as a result of
the acquisition of the business assets of Image Media Ltd. and 802117 Ontario
Inc., trading as Pilot Software ("Image Media"), which was concluded in August
of 1997.
Results of Operations
The Company's total revenues for the 1998 First Fiscal Quarter were
Cdn$3,737,114 (US$2,624,009), compared to Cdn$2,189,292 (US$1,623,020) for the
1997 First Fiscal Quarter, an increase of Cdn$1,547,822 or 70.7%. Total
revenues, excluding Interlynx, for the 1998 First Fiscal Quarter were
Cdn$3,265,144 (US$2,292,616), compared to Cdn$2,189,292 (US$1,623,020) for the
1997 First Fiscal Quarter, an increase of Cdn$1,075,852 or 49.1%. This increase
is primarily the result of: an increase in video and software sales, resulting
from a greater emphasis on marketing and direct mailings and additional sales
from the implementation of the newly acquired business assets of Image Media;
increased revenues from program content services, maintenance services and
equipment rentals, all of which are attributable to a net increase of 22 Network
locations over the number of locations in the 1997 First Fiscal Quarter;
increased revenues from event programming resulting from an increased number of
events in the 1998 First Fiscal Quarter when compared to the prior period; and
increased revenues from ad sponsorship.
Total cost of sales for the 1998 First Fiscal Quarter was
Cdn$1,436,020 (US$1,008,299), compared to Cdn$638,144 (US$473,085) for the 1997
First Fiscal Quarter, an increase of Cdn$797,876 or 125.0%. Total cost of sales,
excluding costs incurred by Interlynx for the 1998 First Fiscal Quarter were
Cdn$1,265,795 (US$888,776), compared to Cdn$638,144 (US$473,085) for the 1997
First Fiscal Quarter, an increase of Cdn$627,651 or 98.4%. This increase is
primarily the result of: an increase in video and software costs, which were
directly related to the additional video and software sales above, and
additional costs resulting from the implementation of the newly acquired
business assets of Image Media; and increased commissions attributable to the
increase in the number of Network locations during the quarter. As a percentage
of the Company's total revenues, excluding revenues derived from Interlynx, such
costs of sales increased to 38.8% for the 1998 First Fiscal Quarter from 29.1%
for the 1997 First Fiscal Quarter.
Total selling, general and administrative expenses for the 1998
First Fiscal Quarter were Cdn$1,609,775 (US$1,130,301), compared to
Cdn$1,086,200 (US$805,249) for the 1997 First Fiscal Quarter, an increase of
Cdn$523,575 or 48.2%. Total selling, general and administrative expenses,
excluding those expenses incurred by Interlynx for the 1998 First Fiscal
Quarter, were Cdn$1,449,135 (US$1,017,508), compared to Cdn$1,086,200
(US$805,249) for the 1997 First Fiscal Quarter, an increase of Cdn$362,935 or
33.4%. This increase in selling, general and administrative expenses reflects
the greater volume of the Company's business activities. As a percentage of the
Company's total revenues, excluding revenues derived from Interlynx, such
expenses
<PAGE>
decreased to 44.4% for the 1998 First Fiscal Quarter from 49.6% for the 1997
First Fiscal Quarter.
Interest expense for the 1998 First Fiscal Quarter was Cdn$25,122
(US$17,639), compared to Cdn$13,094 (US$9,707) for the 1997 First Fiscal
Quarter, an increase of Cdn$12,028 or 91.9%. This increase is primarily the
result of having notes payable, related to the purchase of Magic Lantern,
outstanding for a full quarter in 1998 versus two months in the first quarter of
1997. As a percentage of the Company's total revenues, excluding revenues
derived from Interlynx, interest expense increased to 0.8% for the 1998 First
Fiscal Quarter from 0.6% for the 1997 First Fiscal Quarter.
Depreciation and amortization expenses for the 1998 First Fiscal
Quarter were Cdn$274,402 (US$192,671), compared to Cdn$136,015 (US$100,834) for
the 1997 First Fiscal Quarter, an increase of Cdn$138,837 or 101.7%. This
increase is primarily the result of amortization of goodwill associated with the
purchase of Magic Lantern as well as increased depreciation resulting from
property and equipment additions during the previous year. As a percentage of
the Company's total revenues, excluding revenues derived from Interlynx, such
expenses increased to 8.4% for the 1998 First Fiscal Quarter from 6.2% for the
1997 First Fiscal Quarter.
The provision for income taxes for the 1998 First Fiscal Quarter was
Cdn$110,116 (US$77,318), compared to Cdn$144,265 (US$106,950) for the 1997 First
Fiscal Quarter, an decrease of Cdn$34,149 or 23.7%. This is primarily because
the income subject to tax generated by NTNIN has decreased from the level
experienced in the 1997 First Fiscal Quarter. The income earned by Interlynx in
the 1998 First Fiscal Quarter is not taxable due to the use of prior years'
losses carried forward to reduce current year's taxable income.
Minority interest for the 1998 First Fiscal Quarter was Cdn$63,778
(US$44,781), compared to a minority interest loss of Cdn$9,987 (US$7,404) for
the 1997 First Fiscal Quarter, an increase of Cdn$73,765 or 738.6%. Total
minority interest, excluding that on the income of Interlynx for the 1998 First
Fiscal Quarter, was a minority interest loss of Cdn$2,280 (US$1,601), compared
to a loss of Cdn$9,987 (US$7,404) for the 1997 First Fiscal Quarter, an increase
of Cdn$7,707 or 77.2%. As a percentage of the Company's total revenues,
excluding revenues derived from Interlynx, the minority interest loss decreased
to 0.1% for the 1998 First Fiscal Quarter from 0.5% for the 1997 First Fiscal
Quarter.
As a result of all of the above, net income for the 1998 First
Fiscal Quarter was Cdn$205,057 (US$143,980), compared to Cdn$151,318
(US$112,179) for the 1997 First Fiscal Quarter, an increase of Cdn$53,739 or
35.5%. Net income, excluding the results of Interlynx, for the 1998 First Fiscal
Quarter was Cdn$141,524 (US$99,371), compared to Cdn$151,318 (US$112,179) for
the 1997 First Fiscal Quarter, a decrease of Cdn$9,794 or 6.5%. As a percentage
of the Company's total revenues, excluding the
<PAGE>
revenues derived from Interlynx, net income decreased to 4.3% for the 1998 First
Quarter from 6.9% for the 1997 First Fiscal Quarter.
Liquidity and Capital Resources
At November 30, 1997, the Company had working capital of
Cdn$2,872,512 (US$2,016,930), a decrease of Cdn$627,350 from working capital of
Cdn$3,499,862 (US$2,520,606) at August 31, 1997. This decrease is primarily due
to the investment in Interlynx and the purchase of equipment.
For the 1998 First Fiscal Quarter, the Company had a net decrease in
cash flow of Cdn$636,813 (US$447,137), compared to a net increase of Cdn$402,555
(US$298,432) in the 1997 First Fiscal Quarter.
Cash provided by operating activities for the 1998 First Fiscal
Quarter was Cdn$199,388 (US$140,000), while cash provided by operating
activities in the 1997 First Fiscal Quarter was Cdn$1,152,094 (US$854,099). The
major factors contributing to this decrease in cash include an increase in
accounts receivable of Cdn$864,883 reflecting a higher volume of sales activity
during the quarter.
Cash used in investing activities in both the 1998 First Fiscal
Quarter and 1997 First Fiscal Quarter was Cdn$841,182 (US$590,635) and
Cdn$749,539 (US$555,667), respectively. Cash was used to purchase 51% of the
outstanding shares of Interlynx in September 1997 (Cdn$361,380;US$260,266). The
increase in Network sites also required the purchase of additional equipment
(Cdn$479,542;US$336,710).
Cash provided by financing activities for the 1998 First Fiscal
Quarter was Cdn$4,981 (US$3,497). Financing of Cdn$247,500 (US$178,250) was
provided by issuing common shares, and this financing was used in the repayment
of notes payable of Cdn$319,330 (US$229,982). 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 1998 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, 1997
and 1996 and inflation is not expected to have a significant impact on the
Company's operations or financial position during the 1998 Fiscal Year.
<PAGE>
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.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
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.
None.
<PAGE>
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.
(b) Reports on Form 8-K.
None.
<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 14, 1998 By: /s/ Peter Rona
-----------------------------------------
Peter Rona,
President and Principal Financial Officer
(Duly Authorized Officer)
<PAGE>
NTN CANADA, INC.
FORM 10-Q
NOVEMBER 30, 1997
EXHIBIT INDEX
Exhibit
Number Description of Exhibit Location
- ------ ---------------------- --------
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 ++
- ----------
+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, 1997 (File No. 0-18066),
filed on November 28, 1997.
+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.
<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.
</LEGEND>
<CURRENCY> Canadian dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> NOV-30-1997
<EXCHANGE-RATE> 1.4242
<CASH> 1,784,984
<SECURITIES> 1,794,633
<RECEIVABLES> 2,459,916
<ALLOWANCES> 51,000
<INVENTORY> 323,947
<CURRENT-ASSETS> 6,762,126
<PP&E> 5,152,128
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,581,313
<CURRENT-LIABILITIES> 3,889,614
<BONDS> 0
0
11,523
<COMMON> 156,244
<OTHER-SE> 10,038,438
<TOTAL-LIABILITY-AND-EQUITY> 15,581,313
<SALES> 3,737,114
<TOTAL-REVENUES> 3,737,114
<CGS> 1,436,020
<TOTAL-COSTS> 1,436,020
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10,564
<INTEREST-EXPENSE> 25,122
<INCOME-PRETAX> 378,951
<INCOME-TAX> 110,116
<INCOME-CONTINUING> 205,057
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 205,057
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
