-----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, I4w97kY1wdbbLymLDZndNDGEpg5TMzJiH9EpXXC9ce6bsKNO2OMl0S9/JOMu7IyS 3+RCpCyr81FLkFx3l4oc9w== 0001005477-98-000064.txt : 19980115 0001005477-98-000064.hdr.sgml : 19980115 ACCESSION NUMBER: 0001005477-98-000064 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971130 FILED AS OF DATE: 19980114 SROS: NASD 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: SEC FILE NUMBER: 000-18066 FILM NUMBER: 98507017 BUSINESS ADDRESS: STREET 1: 14 METEOR DR STREET 2: BLDG 18 CITY: ETOBOCOKE ONTARIO STATE: A6 ZIP: L4W 5A1 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 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. 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 NTN CANADA, INC. CONSOLIDATED BALANCE SHEETS NOVEMBER 30, 1997 AND AUGUST 31, 1997 (Expressed in Canadian dollars - unaudited)
================================================================================================= November 30, 1997 August 31, 1997 $ $ - ------------------------------------------------------------------------------------------------- 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 =================================================================================================
The accompanying notes are an integral part of these statements 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)
================================================================================================= November 30, 1997 November 30, 1996 $ $ - ------------------------------------------------------------------------------------------------- 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 =================================================================================================
The accompanying notes are an integral part of these statements 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)
======================================================================================= November 30, 1997 November 30, 1996 $ $ - --------------------------------------------------------------------------------------- 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 =======================================================================================
The accompanying notes are an integral part of these statements 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. 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. 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 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 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 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. 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. 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. 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) 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. 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. Canadian dollars 3-MOS AUG-31-1998 SEP-01-1997 NOV-30-1997 1.4242 1,784,984 1,794,633 2,459,916 51,000 323,947 6,762,126 5,152,128 0 15,581,313 3,889,614 0 0 11,523 156,244 10,038,438 15,581,313 3,737,114 3,737,114 1,436,020 1,436,020 0 10,564 25,122 378,951 110,116 205,057 0 0 0 205,057 0.07 0.07
-----END PRIVACY-ENHANCED MESSAGE-----