-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IJ/x5Dd3YMCrmt1AbjtDJBXIw/d0dlYXmIkzlgBnJhhYiUD+3BO7TYAL5kxRRelt NQvU+7zVw4yvcV8+VLWiTA== 0000950116-97-000103.txt : 19970122 0000950116-97-000103.hdr.sgml : 19970122 ACCESSION NUMBER: 0000950116-97-000103 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970121 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NTN CANADA INC CENTRAL INDEX KEY: 0000797313 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 112805051 STATE OF INCORPORATION: NY FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18066 FILM NUMBER: 97508282 BUSINESS ADDRESS: STREET 1: 14 METEOR DR CITY: ETOBOCOKE ONTARIO STATE: A6 BUSINESS PHONE: 4166756666 MAIL ADDRESS: STREET 1: 14 METEOR DR CITY: ETOBICOKE ONTARIO STATE: A6 10-Q 1 FORM 10-Q 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. 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 - NTN CANADA, INC. CONSOLIDATED BALANCE SHEETS NOVEMBER 30, 1996 AND AUGUST 31, 1996 (Expressed in Canadian Dollars - Unaudited)
November 30, 1996 August 31, 1996 ----------------- --------------- 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 ============ ============
The accompanying notes are an integral part of these statements - 3 - 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)
November 30, 1996 November 30, 1995 ----------------- ----------------- 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
The accompanying notes are an integral part of these statements - 4 - NTN CANADA, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995 (Expressed in Canadian Dollars - Unaudited)
November 30, 1996 November 30, 1995 ----------------- ----------------- 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 =========== ===========
The accompanying notes are an integral part of these statements - 5 - 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 - Note 3. Business Segment Data. ----------------------
Interactive TV Educational Video Entertainment Distribution Total -------------- ----------------- ----- 1996 - ---- Total Revenues......................... $1,810,091 412,433 2,222,524 Operating Income (Loss)................ 327,876 (42,280) 285,596 Net Earnings (Loss).................... 183,611 (32,293) 151,318 Total Assets........................... 11,114,691 3,357,331 14,472,022 Current Liabilities.................... 1,016,788 1,936,360 2,953,148 Total Liabilities...................... 1,954,288 3,587,396 5,541,684 1995 - ---- Total Revenues......................... 1,362,071 n/a 1,362,071 Operating Income (Loss)................ 227,291 n/a 227,291 Net Earnings (Loss).................... 191,791 n/a 191,791 Total Assets........................... 8,544,372 n/a 8,544,372 Current Liabilities.................... 806,170 n/a 806,170 Total Liabilities...................... 816,170 n/a 816,170
Note 4. Net income per Common Share. ---------------------------- Primary and fully diluted net income per common share is computed using the weighted average number of common shares outstanding. The computation reduces the net income available per common share by the amount of preferred stock dividends. - 7 - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. ------------------------------------------------------------ Introduction The financial statements of the Company and the information contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations are expressed in Canadian dollars ("Cdn$"). 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 - 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 - 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 - 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 - 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 - 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 - (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 - 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 - NTN CANADA, INC. FORM 10-Q NOVEMBER 30, 1996 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, 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 - EX-27 2 FINANCIAL DATA SCHEDULE
5 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. CANADIAN DOLLARS 3-MOS AUG-31-1997 SEP-01-1996 NOV-30-1996 1.3489 2,180,444 2,866,125 1,239,733 46,500 862,864 7,538,516 3,978,811 0 14,472,022 2,953,148 0 0 11,523 150,187 8,867,042 14,472,022 0 2,222,524 0 744,165 0 0 0 295,583 144,265 151,318 0 0 0 151,318 .06 .06
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