-----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, CBnlqGshZ3qVyzVdHlvThjA6AP5eAWMU8ZcOpjdDfd5Bf5k8wvvgYQOcRlwwdHHM 0rWoM0QfYudyf1DKF4ZEkw== 0001005477-99-000053.txt : 19990115 0001005477-99-000053.hdr.sgml : 19990115 ACCESSION NUMBER: 0001005477-99-000053 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981130 FILED AS OF DATE: 19990114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NETWORKS NORTH 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: 99505941 BUSINESS ADDRESS: STREET 1: 14 METEOR DR STREET 2: BLDG 18 CITY: ETOBOCOKE ONTARIO STATE: A6 ZIP: 00000 BUSINESS PHONE: 4166756666 MAIL ADDRESS: STREET 1: 14 METEOR DR CITY: ETOBICOKE ONTARIO STATE: A6 FORMER COMPANY: FORMER CONFORMED NAME: NTN CANADA INC DATE OF NAME CHANGE: 19961016 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, 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. 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 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)
========================================================================================================= November 30, 1998 August 31, 1998 $ $ - --------------------------------------------------------------------------------------------------------- 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 =========================================================================================================
The accompanying notes are an integral part of these statements 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)
======================================================================================================== Three months ended November 30 1998 1997 $ $ - -------------------------------------------------------------------------------------------------------- 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 ========================================================================================================
The accompanying notes are an integral part of these statements 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)
======================================================================================================== Three months ended November 30 1998 1997 $ $ - -------------------------------------------------------------------------------------------------------- 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 - --------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements 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. Note 3. Business Segment Data for the three months ended November 30, 1998 and November 30, 1997
Interactive TV Educational and Entertainment Multimedia Distribution Total ------------- ----------------------- ----- $ $ $ 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
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 $0.07 ===== ===== Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Introduction The financial statements of the Company and the information contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations are expressed in Canadian dollars ("Cdn$"). 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. 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. 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. 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. 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. NETWORKS NORTH INC. Dated: January 14, 1999 By: /s/ Peter Rona ----------------------------------------- Peter Rona, President and Principal Financial Officer (Duly Authorized Officer) 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. 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-31-1999 SEP-01-1998 NOV-30-1998 1.5237 1,188,138 1,998,892 2,892,124 53,000 193,095 7,061,996 5,740,037 0 16,413,550 2,703,532 0 0 10,917 162,484 11,050,728 16,413,550 3,636,117 3,636,117 1,234,496 1,234,496 1,731,046 7,115 43,025 268,253 103,000 190,951 0 0 0 190,951 0.07 0.07
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