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, 1998
Commission file number: 0-18066
NETWORKS NORTH INC.
formerly known as
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 November 30, 1998: 2,625,170 shares of common
stock, par value $.0467 per share.
<PAGE>
PART I - FINANCIAL INFORMATION
NETWORKS NORTH INC. (FORMERLY KNOWN AS NTN CANADA, INC.) AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL INFORMATION
PERIOD ENDED NOVEMBER 30, 1998
Item
Item 1. Financial Statements:
Consolidated Balance Sheets -
as at November 30, 1998 and August 31, 1998
Consolidated Statements of Operations and Retained Earnings -
for the Three Months Ended November 30, 1998 and 1997
Consolidated Statements of Cash Flows -
for the Three Months Ended November 30, 1998 and 1997
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
<PAGE>
NETWORKS NORTH INC.
(FORMERLY KNOWN AS NTN CANADA, INC.)
CONSOLIDATED BALANCE SHEETS
AS AT NOVEMBER 30, 1998 AND AUGUST 31, 1998
(Expressed in Canadian dollars - unaudited)
<TABLE>
<CAPTION>
=========================================================================================================
November 30, 1998 August 31, 1998
$ $
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents 1,188,138 1,001,115
Short-term temporary investments 1,998,892 2,042,333
Accounts receivable, trade - net of allowance for doubtful
accounts of $53,000; August - $53,000 2,839,124 2,668,184
Income taxes receivable -- 33,174
Inventory 193,095 308,088
Prepaid expenses 842,747 544,255
- ---------------------------------------------------------------------------------------------------------
Total current assets 7,061,996 6,597,149
- ---------------------------------------------------------------------------------------------------------
Property and equipment, net 5,740,037 5,785,616
Licenses, net of accumulated amortization 285,857 290,945
Goodwill, net of accumulated amortization 3,165,660 3,214,197
Notes receivable 160,000 160,000
- ---------------------------------------------------------------------------------------------------------
16,413,550 16,047,907
=========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness 143,560 145,339
Accounts payable - trade 1,592,615 1,440,223
Accrued liabilities 584,558 588,949
Income taxes payable 33,996 --
Current portion of long-term debt 348,803 348,803
- ---------------------------------------------------------------------------------------------------------
Total current liabilities 2,703,532 2,523,314
- ---------------------------------------------------------------------------------------------------------
Investment in Viewer Services 42,197 36,054
Long-term debt 2,733,322 2,744,991
Less: current portion (348,803) (348,803)
- ---------------------------------------------------------------------------------------------------------
2,426,716 2,432,242
- ---------------------------------------------------------------------------------------------------------
Deferred income taxes payable 59,173 59,173
- ---------------------------------------------------------------------------------------------------------
Total liabilities 5,189,421 5,014,729
- ---------------------------------------------------------------------------------------------------------
Shareholders' equity
Share capital
900,000 preferred shares 10,917 10,917
2,625,170 common shares 162,484 162,484
Capital in excess of par value 8,837,948 8,837,948
Retained earnings 2,212,780 2,021,829
- ---------------------------------------------------------------------------------------------------------
Total shareholders' equity 11,224,129 11,033,178
- ---------------------------------------------------------------------------------------------------------
16,413,550 16,047,907
=========================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
NETWORKS NORTH INC.
(FORMERLY KNOWN AS NTN CANADA, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS AND
RETAINED EARNINGS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1998 AND 1997
(Expressed in Canadian dollars - unaudited)
<TABLE>
<CAPTION>
========================================================================================================
Three months ended November 30 1998 1997
$ $
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total revenue 3,636,117 3,737,114
Cost of sales 1,234,496 1,436,020
- --------------------------------------------------------------------------------------------------------
2,401,621 2,301,094
- --------------------------------------------------------------------------------------------------------
Selling, general and administrative expenses 1,731,046 1,609,775
Bad debts 7,115 10,564
- --------------------------------------------------------------------------------------------------------
Income before interest, depreciation and amortization,
loss from investment, income taxes and
minority interest 663,460 680,755
Interest 43,025 25,122
Depreciation and amortization 346,182 274,402
Loss from investment in Viewer Services 6,000 2,280
- --------------------------------------------------------------------------------------------------------
Income before income taxes and minority interest 268,253 378,951
Provision for income taxes 103,000 110,116
- --------------------------------------------------------------------------------------------------------
Income before minority interest 165,253 268,835
Minority interest 25,698 (63,778)
- --------------------------------------------------------------------------------------------------------
Net income for the period 190,951 205,057
Retained earnings, beginning of period 2,021,829 1,403,764
- --------------------------------------------------------------------------------------------------------
Retained earnings, end of period 2,212,780 1,608,821
========================================================================================================
Earnings per share (Note 4):
Basic 0.07 0.08
Diluted 0.07 0.07
========================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
NETWORKS NORTH INC.
(FORMERLY KNOWN AS NTN CANADA, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1998 AND 1997
(Expressed in Canadian dollars - unaudited)
<TABLE>
<CAPTION>
========================================================================================================
Three months ended November 30 1998 1997
$ $
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income for the three months 190,951 205,057
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 346,182 274,402
Loss from investment in Viewer Services 6,000 2,280
Imputed interest on non-interest bearing long-term debt 7,619 11,139
Changes in assets and liabilities:
Decrease (increase) in short-term investments 43,441 (89,619)
Increase in accounts receivable (170,940) (864,883)
Decrease in inventory 114,993 312,291
Decrease (increase) in prepaid expenses (298,492) 25,145
Increase in accounts payable and
accrued liabilities 140,382 469,714
Decrease in deferred revenue -- (146,425)
Increase in income taxes payable 67,170 2,567
- --------------------------------------------------------------------------------------------------------
Cash provided by operating activities 447,306 201,668
- --------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of property and equipment (246,978) (479,542)
Investment in Viewer Services 143 640
Increase in notes receivable -- (3,180)
Investment in Interlynx Multimedia -- (361,380)
- --------------------------------------------------------------------------------------------------------
Cash used in investing activities (246,835) (843,462)
- --------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Bank indebtedness (1,779) 76,811
Proceeds from issuing common shares -- 247,500
Notes and loans payable (11,669) (319,330)
- --------------------------------------------------------------------------------------------------------
Cash provided by (used in) financing activities (13,448) 4,981
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents during the period 187,023 (636,813)
Cash and cash equivalents, beginning of period 1,001,115 2,421,797
- --------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 1,188,138 1,784,984
- --------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
NETWORKS NORTH INC. (FORMERLY KNOWN AS NTN CANADA, INC.) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED NOVEMBER 30, 1998
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 Networks North Inc., formerly known as NTN Canada,
Inc. (the "Company") (Commission No.:0-18066), filed with the Securities and
Exchange Commission on November 27, 1998. The results of operations for the
three months ended November 30, 1998 are not necessarily indicative of the
results for the full fiscal year ending August 31, 1999.
Note 2. General
The financial statements of the Company for the three months ended
November 30, 1998 (the "1999 First Fiscal Quarter") and 1997 (the "1998 First
Fiscal Quarter"), include the operations of the Company's wholly-owned
subsidiaries NTN Interactive Network Inc. ("NTNIN") and 3484751 Canada Inc.,
NTNIN's wholly-owned subsidiary Magic Lantern Communications Ltd. ("Magic") and
51% of the operations 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
Inc. ("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 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
brokering of CD-ROM products from developers around the world.
Prior period's figures have been reclassified to be consistent with
any reclassifications in the current period.
<PAGE>
Note 3. Business Segment Data for the three months ended November 30, 1998 and
November 30, 1997
<TABLE>
<CAPTION>
Interactive TV Educational and
Entertainment Multimedia Distribution Total
------------- ----------------------- -----
$ $ $
<S> <C> <C> <C>
1998
Total revenue 2,147,324 1,488,793 3,636,117
Operating income 244,888 23,365 268,253
Net income 141,888 49,063 190,951
Total assets 9,936,559 6,476,991 16,413,550
Current liabilities 1,470,051 1,233,481 2,703,532
Total liabilities 3,066,312 2,123,109 5,189,421
1997
Total revenue 1,963,417 1,773,697 3,737,114
Operating income 336,068 42,883 378,951
Net income (loss) 225,952 (20,895) 205,057
Total assets 8,884,303 6,697,010 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
</TABLE>
Note 4. Earnings per share
Earnings per share were calculated in accordance with Statement of
Financial Accounting Standards No. 128. The following table sets forth the
computation of basic and diluted earnings per share for the three months ended
November 30:
1998 1997
---- ----
Numerator:
Net income (numerator for basic
earnings per share) $190,951 $205,057
Imputed interest on non-interest bearing
long-term debt 7,619 8,220
---------- ----------
Numerator for diluted earnings
per share $198,570 $213,277
========== ==========
Denominator:
For basic - weighted
average number of shares 2,625,170 2,535,359
Effect of dilutive securities:
Convertible preferred shares 192,857 203,571
Convertible promissory notes 98,193 185,448
Employee stock options 69,929 62,535
---------- ----------
Denominator for diluted earnings per share -
adjusted weighted average number of shares
and assumed conversions 2,986,149 2,986,913
========== ==========
Basic earnings per share $0.07 $0.08
===== =====
Diluted earnings per share $0.07 $0.07
===== =====
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Introduction
The financial statements of the Company and the information contained in this
Management's Discussion and Analysis of Financial Condition and Results of
Operations are expressed in Canadian dollars ("Cdn$"). 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, 1998 and November 30, 1997 were Cdn$1.5237 and Cdn$1.4242 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,
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 ("Hospitality") and
the Corporate Products Group ("Corporate"). Five units, comprising the "Magic
Lantern Group", are (i) NTNIN's wholly-owned subsidiary Magic, which markets and
distributes an exclusively licensed library of educational video titles to
schools, school boards and Ministries of Education across Canada, (ii) Magic's
wholly-owned subsidiary Custom Video, which provides video dubbing and
conversion services, (iii) Custom Video's wholly-owned subsidiary BCLC, which
has traditionally operated under an exclusive arrangement with the British
Columbia Ministry of Education to provide marketing and fulfilment services for
educational video titles in the British Columbia school system, (iv) Magic's 75%
owned subsidiary Sonoptic, which operates a digital video facility that converts
analog video to digital video formats, and (v) Magic's 50% owned joint venture
Viewer Services, which was created to assume the inbound telemarketing and
product fulfilment services required by Canadian television broadcasters. The
eighth unit is Interlynx, which designs and develops educational and corporate
multimedia, web-based training programs, CD-ROMs and web sites.
Highlights of the Three Months Ended November 30, 1998
During the first quarter, Magic launched a brand loyalty program
with Campbell's Soup aimed at over 12,000 Canadian schools. This program
represents revenues of in excess of $Cdn300,000 over three years.
NTNIN signed three new sponsors to the NTN Entertainment Network
during the quarter. One of these was Universal Studios with its initial
marketing program surrounding the release of the movie Psycho. The Toronto Sun
newspaper sponsored a new sports challenge game on the Network. The third new
sponsor was Dyson Oil, manufacturers of Synergyn synthetic oil.
<PAGE>
Interlynx developed web-based training software for a major Canadian
financial institution in the last quarter of 1998. During the first quarter of
Fiscal 1999, Interlynx has modified this product to be a generic software that
is now being marketed to other potential customers.
Results of Operations for the Three Months ended November 30, 1998
The Company's total revenues for the 1999 First Fiscal Quarter were
Cdn$3,636,117 (US$2,386,373), compared to Cdn$3,737,114 (US$2,624,009) for the
1998 First Fiscal Quarter, a decrease of Cdn$100,997 or 2.7%. This decrease was
primarily the result of a weakened worldwide market for CD-ROMs resulting in
decreased revenues for Interlynx as well as a decrease in software sales by
Magic.
Total cost of sales for the 1999 First Fiscal Quarter was
Cdn$1,234,496 (US$810,196), compared to Cdn$1,436,020 (US$1,008,299) for the
1998 First Fiscal Quarter, a decrease of Cdn$201,524 or 14.0%. This decrease was
caused primarily by reducing production costs for CD-ROMs as a result of weaker
markets and a reduction in software purchases due to reduced software sales. As
a percentage of the Company's total revenues, cost of sales decreased to 34.0%
for the 1999 First Fiscal Quarter from 38.4% for the 1998 First Fiscal Quarter.
Total selling, general and administrative expenses for the 1999
First Fiscal Quarter were Cdn$1,731,046 (US$1,136,081), compared to
Cdn$1,609,775 (US$1,130,301) for the 1998 First Fiscal Quarter, an increase of
Cdn$121,271 or 7.5%. This increase in selling, general and administrative
expenses resulted from greater expenditures in the sales and marketing efforts
of NTNIN. In addition the 1998 selling, general and administrative expenses
include a foreign exchange gain of Cdn$81,541. As a percentage of the Company's
total revenues, such expenses increased to 47.6% for the 1999 First Fiscal
Quarter from 43.1% for the 1998 First Fiscal Quarter.
Interest expense for the 1999 First Fiscal Quarter was Cdn$43,025
(US$28,237), compared to Cdn$25,122 (US$17,639) for the 1998 First Fiscal
Quarter, an increase of Cdn$17,903 or 71.3%. This increase was as a result of
financing the purchase of the land and building at 10 Meteor Drive with bank
debt. As a percentage of the Company's total revenues, interest expense
increased to 1.2% for the 1999 First Fiscal Quarter from 0.7% for the 1998 First
Fiscal Quarter.
Depreciation and amortization expenses for the 1999 First Fiscal
Quarter were Cdn$346,182 (US$227,198), compared to Cdn$274,402 (US$192,671) for
the 1998 First Fiscal Quarter, an increase of Cdn$71,780 or 26.2%. This increase
was the result of increased depreciation on rental and office equipment and
furniture and fixtures added during the period. Depreciation on the building
located at 10 Meteor Drive, which was acquired in April 1998, also contributed
to the increase. As a percentage of the Company's total revenues, such expenses
increased to 9.5% for the 1999 First Fiscal Quarter from 7.3% for the 1998 First
Fiscal Quarter.
The minority interest share in losses for the 1999 First Fiscal
Quarter was Cdn$25,698 (US$16,866). This is compared to the minority interest
share in profits for the 1998 First Fiscal Quarter of Cdn$63,778 (US$44,781), an
overall decrease of Cdn$89,476 or 140.3%. As a percentage of the Company's total
revenues, the minority interest loss was 0.7% for the 1999 First Fiscal Quarter.
<PAGE>
As a result of all of the above, net income for the 1999 First
Fiscal Quarter was Cdn$190,951 (US$125,321), compared to Cdn$205,057
(US$143,980) for the 1998 First Fiscal Quarter, a decrease of Cdn$14,106 or
6.9%. As a percentage of the Company's total revenues, net income decreased to
5.3% for the 1999 First Fiscal Quarter from 5.5% for the 1998 First Fiscal
Quarter.
Liquidity and Capital Resources
At November 30, 1998, the Company had working capital of Cdn$4,358,464
(US$2,860,448), an increase of Cdn$284,629 from working capital of Cdn$4,073,835
(US$2,591,168) at August 31, 1998. This increase was primarily due to cash
provided by operating activities.
For the 1999 First Fiscal Quarter, the Company had a net increase in cash flow
of Cdn$187,023 (US$122,743), compared to a net decrease of Cdn$636,813
(US$447,137) in the 1998 First Fiscal Quarter.
Cash provided by operating activities for the 1999 First Fiscal Quarter was
Cdn$447,306 (US$293,566), compared to the Cdn$201,668 (US$141,601) provided by
operating activities in the 1998 First Fiscal Quarter. In 1999, the major
sources that contributed to cash being provided by operating activities were net
income of Cdn$550,752, decreases in short-term investments and inventory of
Cdn$43,441 and Cdn$114,993 respectively, and increases in accounts payable and
accrued liabilities and income taxes payable of Cdn$140,382 and Cdn$67,170
respectively. These sources were somewhat mitigated by increases in accounts
receivable and prepaid expenses of Cdn$170,940 and Cdn$298,492 respectively. In
1998, the major sources that contributed to cash being provided by operating
activities were net income of Cdn$492,878, decreases in inventory and prepaid
expenses of Cdn$312,291 and Cdn$25,145 respectively, and increases in accounts
payable and accrued liabilities and income taxes payable of Cdn$469,714 and
Cdn$2,567 respectively. These sources were somewhat offset by increases in
short-term investments and accounts receivable of Cdn$89,619 and Cdn$864,883
respectively, and a decrease in deferred revenue of Cdn$146,425.
Cash used in investing activities in the 1999 First Fiscal Quarter was
Cdn$246,835 (US$161,997), compared to the Cdn$843,462 (US$592,235) used in
investing activities in the 1998 First Fiscal Quarter. In 1999, cash was used in
the purchase of property and equipment. Cash was used in the comparable prior
period for the purchase of property and equipment and the acquisition of
Interlynx.
Cash used in financing activities in the 1999 First Fiscal Quarter was
Cdn$13,448 (US$8,826), compared to the Cdn$4,981 (US$3,497) provided by
financing activities in the 1998 First Fiscal Quarter. In 1999, cash was used to
meet scheduled debt principal repayments. In 1998, financing totaling
Cdn$324,311 was obtained, the majority of which was through the issuance of
common shares (Cdn$247,500). This cash was then used in the repayment of notes
payable and to meet scheduled debt principal repayments, which totaled
Cdn$319,330.
<PAGE>
Management believes that the Company's working capital position provides the
necessary liquidity, on both a short and long term basis, for its planned
activities and that additional external financing will not be required for its
operating activities during the year ending August 31, 1999 (the "1999 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, 1998, and
inflation is not expected to have a significant impact on the Company's
operations or financial position during the 1999 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
its gross profit as well as its net income. If the value of the Canadian dollar
falls against the US dollar, the cost of sales of the Company will increase
thereby reducing its gross profit and net income. Conversely, if the value of
the Canadian dollar rises against the US dollar, its gross profit and net income
will increase.
Year 2000
The Year 2000 Issue arises because many computerized systems use two
digits, rather than four, to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900, or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar problems
may arise in some systems which use certain dates in 1999 to represent something
other than a date. The effects of the Year 2000 Issue may be experienced before,
on, or after January 1, 2000, and if not addressed, the impact on operations and
financial reporting may range from minor errors to significant systems failure,
which could affect an entity's ability to conduct normal business operations. It
is not possible to be certain that all aspects of the Year 2000 Issue affecting
the entity, including those relating to the efforts of customers, suppliers, or
other third parties, will be fully resolved.
<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.
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.
NETWORKS NORTH INC.
Dated: January 14, 1999 By: /s/ Peter Rona
-----------------------------------------
Peter Rona,
President and Principal Financial Officer
(Duly Authorized Officer)
<PAGE>
NETWORKS NORTH INC.
(FORMERLY KNOWN AS NTN CANADA, INC.)
FORM 10-Q
NOVEMBER 30, 1998
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
Networks North Inc. (formerly known as 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, 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.
<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-31-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> NOV-30-1998
<EXCHANGE-RATE> 1.5237
<CASH> 1,188,138
<SECURITIES> 1,998,892
<RECEIVABLES> 2,892,124
<ALLOWANCES> 53,000
<INVENTORY> 193,095
<CURRENT-ASSETS> 7,061,996
<PP&E> 5,740,037
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,413,550
<CURRENT-LIABILITIES> 2,703,532
<BONDS> 0
0
10,917
<COMMON> 162,484
<OTHER-SE> 11,050,728
<TOTAL-LIABILITY-AND-EQUITY> 16,413,550
<SALES> 3,636,117
<TOTAL-REVENUES> 3,636,117
<CGS> 1,234,496
<TOTAL-COSTS> 1,234,496
<OTHER-EXPENSES> 1,731,046
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<INTEREST-EXPENSE> 43,025
<INCOME-PRETAX> 268,253
<INCOME-TAX> 103,000
<INCOME-CONTINUING> 190,951
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> 190,951
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
