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: February 28, 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 April 14, 1998: 2,535,359 shares of common stock,
par value $.0467 per share.
<PAGE>

                         PART I - FINANCIAL INFORMATION


    NETWORKS NORTH INC. (FORMERLY KNOWN AS NTN CANADA, INC.) AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL INFORMATION

                         PERIOD ENDED FEBRUARY 28, 1998

Item

Item 1. Financial Statements:


      Consolidated Balance Sheets -
            February 28, 1998 and August 31, 1997

      Consolidated Statements of Income -
            For the Six Months Ended February 28, 1998 and February 28, 1997

      Consolidated Statements of Income -
            For the Three Months Ended February 28, 1998 and February 28, 1997

      Consolidated Statements of Cash Flows -
            For the Six Months Ended February 28, 1998 and February 28, 1997

      Notes to Consolidated Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations
<PAGE>

                               NETWORKS NORTH INC.
                      (FORMERLY KNOWN AS NTN CANADA, INC.)
                           CONSOLIDATED BALANCE SHEETS
                      FEBRUARY 28, 1998 AND AUGUST 31, 1997
                   (Expressed in Canadian dollars - unaudited)

<TABLE>
<CAPTION>
========================================================================================================
                                                                 February 28, 1998       August 31, 1997
                                                                          $                      $   
--------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                   <C>      
ASSETS
Current
Cash and cash equivalents                                             1,402,739             2,421,797
Short-term temporary investments                                      1,847,491             1,705,014
Accounts receivable, trade - net of allowance for doubtful
           accounts of $51,000; August - $51,000                      2,625,837             1,547,395
Inventory                                                               242,638               624,828
Prepaid expenses                                                        442,479               419,843
--------------------------------------------------------------------------------------------------------
Total current assets                                                  6,561,184             6,718,877
--------------------------------------------------------------------------------------------------------
Investment in Viewer Services                                             3,861                 5,758
Property and equipment, net                                           5,145,318             4,754,173
License, net of accumulated amortization                                218,795               225,046
Goodwill, net of accumulated amortization                             3,236,909             2,273,748
Notes receivable                                                        163,180               310,000
--------------------------------------------------------------------------------------------------------
                                                                     15,329,247            14,287,602
========================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness                                                       821,828               641,000
Accounts payable - trade                                              1,740,821             1,165,434
Accrued liabilities                                                     546,499               455,110
Income taxes payable                                                    140,069               352,161
Current portion of long-term debt                                       306,390               605,310
--------------------------------------------------------------------------------------------------------
Total current liabilities                                             3,555,607             3,219,015
--------------------------------------------------------------------------------------------------------
Long-term debt                                                        1,670,718             2,126,076
Less: current portion                                                  (306,390)             (605,310)
--------------------------------------------------------------------------------------------------------
                                                                      1,364,328             1,520,766
--------------------------------------------------------------------------------------------------------
Deferred income taxes payable                                            59,173                59,173
--------------------------------------------------------------------------------------------------------
Total liabilities                                                     4,979,108             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                                                     1,752,755             1,403,764
--------------------------------------------------------------------------------------------------------
Total shareholders' equity                                           10,350,139             9,488,648
--------------------------------------------------------------------------------------------------------
                                                                     15,329,247            14,287,602
========================================================================================================
</TABLE>

         The accompanying notes are an integral part of these statements
<PAGE>

                               NETWORKS NORTH INC.
                      (FORMERLY KNOWN AS NTN CANADA, INC.)
                    CONSOLIDATED STATEMENT OF OPERATIONS AND
                                RETAINED EARNINGS
        FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 AND FEBRUARY 28, 1997
                   (Expressed in Canadian Dollars - Unaudited)

<TABLE>
<CAPTION>
=====================================================================================================
                                                              February 28, 1998     February 28, 1997
                                                                      $                      $
-----------------------------------------------------------------------------------------------------
<S>                                                               <C>                   <C>      
Total revenue                                                     7,491,586             4,862,328

Cost of sales                                                     2,875,547             1,416,431
-----------------------------------------------------------------------------------------------------
                                                                  4,616,039             3,445,897
-----------------------------------------------------------------------------------------------------

Selling, general and administrative expenses                      3,276,960             2,437,141
Bad debts                                                            19,288                33,553
-----------------------------------------------------------------------------------------------------
Income before interest, depreciation and amortization,
   (income) loss from investment, income taxes and
   minority interest                                              1,319,791               975,203

Interest                                                             49,589                59,382
Depreciation and amortization                                       586,810               361,330
(Income) loss from investment in Viewer Services                     (3,997)                  393
-----------------------------------------------------------------------------------------------------
Income before income taxes and minority interest                    687,389               554,098

Provision for income taxes                                          238,515               256,908
-----------------------------------------------------------------------------------------------------
Income before minority interest                                     448,874               297,190

Minority interest                                                   (99,883)               27,775
-----------------------------------------------------------------------------------------------------
Net income for the period                                           348,991               324,965

Retained earnings, beginning of period                            1,403,764               794,377
-----------------------------------------------------------------------------------------------------
Retained earnings, end of period                                  1,752,755             1,119,342
=====================================================================================================

Earnings per share:
Primary                                                                0.13                  0.12
Fully diluted                                                          0.12                  0.12

Weighted average number of shares, primary                        2,775,359             2,704,765
Weighted average number of shares, fully diluted                  2,960,620             2,710,060

=====================================================================================================
</TABLE>

         The accompanying notes are an integral part of these statements
<PAGE>

                               NETWORKS NORTH INC.
                      (FORMERLY KNOWN AS NTN CANADA, INC.)
                    CONSOLIDATED STATEMENT OF OPERATIONS AND
                                RETAINED EARNINGS
       FOR THE THREE MONTHS ENDED FEBRUARY 28, 1998 AND FEBRUARY 28, 1997
                   (Expressed in Canadian Dollars - Unaudited)

<TABLE>
<CAPTION>
====================================================================================================
                                                             February 28, 1998     February 28, 1997
                                                                      $                     $
----------------------------------------------------------------------------------------------------
<S>                                                          <C>                   <C>      
Total revenue                                                     3,754,472             2,673,036

Cost of sales                                                     1,439,527               778,287
----------------------------------------------------------------------------------------------------
                                                                  2,314,945             1,894,749
----------------------------------------------------------------------------------------------------

Selling, general and administrative expenses                      1,667,185             1,350,941
Bad debts                                                             8,724                12,073
----------------------------------------------------------------------------------------------------
Income before interest, depreciation and amortization,
   income from investment, income taxes and minority
   interest                                                         639,036               531,735

Interest                                                             24,467                46,288
Depreciation and amortization                                       312,408               225,315
Income from investment in Viewer Services                            (6,277)               (8,370)
----------------------------------------------------------------------------------------------------
Income before income taxes and minority interest                    308,438               268,502

Provision for income taxes                                          128,399               112,643
----------------------------------------------------------------------------------------------------
Income before minority interest                                     180,039               155,859

Minority interest                                                   (36,105)               17,788
----------------------------------------------------------------------------------------------------
Net income for the period                                           143,934               173,647

Retained earnings, beginning of period                            1,608,821               945,695
----------------------------------------------------------------------------------------------------
Retained earnings, end of period                                  1,752,755             1,119,342
====================================================================================================

Earnings per Share                                                     0.06                  0.06
====================================================================================================
</TABLE>

         The accompanying notes are an integral part of these statements
<PAGE>

                               NETWORKS NORTH INC.
                      (FORMERLY KNOWN AS NTN CANADA, INC.)
                  CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE
            SIX MONTHS ENDED FEBRUARY 28, 1998 AND FEBRUARY 28, 1997
                   (Expressed in Canadian Dollars - Unaudited)

<TABLE>
<CAPTION>
================================================================================================
                                                         February 28, 1998     February 28, 1997
                                                                 $                     $
================================================================================================
<S>                                                      <C>                     <C>      
OPERATING ACTIVITIES
Net Income for the six months                                 348,991               324,965
Adjustments to reconcile net income to net cash
     provided by operating activities
     Depreciation and amortization                            586,810               362,406
     Minority interest                                         99,883               (27,775)
Changes in assets and liabilities
     Increase in short-term investments                      (142,477)              (38,552)
     Increase in accounts receivable                       (1,030,804)             (571,953)
     Decrease in inventory                                    393,600               264,530
     Increase in prepaid expenses                             (29,824)             (107,380)
     Increase (decrease) in accounts payable and
       accrued liabilities                                    508,176               (24,579)
     Decrease in deferred revenue                            (275,925)                   --
     Decrease in income taxes payable                        (250,611)              (88,550)
------------------------------------------------------------------------------------------------
Cash provided by operating activities                         207,819                93,112
------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Purchases of property and equipment                          (710,046)             (433,583)
Investment in Viewer Services                                   1,897                    --
Increase in notes receivable                                   (3,180)                   --
Investment in Interlynx Multimedia                           (380,001)                   --
Acquisition of Magic Lantern                                       --              (541,182)
------------------------------------------------------------------------------------------------
Cash used in investment activities                         (1,091,330)             (974,765)
------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Bank loan                                                      72,311              (214,500)
Proceeds from issuing common shares                           247,500                    --
Notes and loans payable                                      (455,358)               (1,734)
------------------------------------------------------------------------------------------------
Cash used in financing activities                            (135,547)             (216,234)
------------------------------------------------------------------------------------------------

Net decrease in cash and cash equivalents
     during the period                                     (1,019,058)           (1,097,887)
Cash and cash equivalents, beginning of period              2,421,797             1,777,889
------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                    1,402,739               680,002
================================================================================================
</TABLE>

         The accompanying notes are an integral part of these statements
<PAGE>

    NETWORKS NORTH INC. (FORMERLY KNOWN AS NTN CANADA, INC.) AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                         PERIOD ENDED FEBRUARY 28, 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 28, 1997. The results of operations for the six
months ended February 28, 1998 are not necessarily indicative of the results for
the full fiscal year ending August 31, 1998.

Note 2. General

            The financial statements of the Company for the six months ended
February 28, 1998, 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
and six months ended 

<PAGE>

February 28, 1998 (the "1998 Second Fiscal Quarter" and "1998 First Fiscal Half"
respectively) reflect 51% of the operating results of Interlynx, while the
Company's results of operations for the quarter and six months ended February
28, 1997 (the "1997 Second Fiscal Quarter" and "1997 First Fiscal Half"
respectively) 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 six months ended February 28, 1998 and
        February 28, 1997
     
                          Interactive TV       Educational and
                           Entertainment   Multimedia Distribution      Total
                           -------------   -----------------------      -----
                                 $                    $                   $
1998
Total revenues               4,130,070          3,361,516             7,491,586
Operating income (loss)        468,845            218,544               687,389
Net earnings (loss)            230,330            118,661               348,991
Total assets                11,931,564          3,397,683            15,329,247
Current liabilities          1,475,706          2,079,901             3,555,607
Total liabilities            2,083,673          2,895,435             4,979,108
                                                                    
1997                                                                
Total revenues               3,686,258          1,176,070             4,862,328
Operating income (loss)        615,217            (61,119)              554,098
Net earnings (loss)            343,325            (18,360)              324,965
Total assets                10,557,152          3,599,688            14,156,840
Current liabilities          1,055,314          1,964,729             3,020,043
Total liabilities            2,022,814          2,931,624             4,954,438
                                                                          
Note 4. Net income per Common Share

            Primary and fully diluted net income per common share is computed
using the weighted average number of common shares outstanding.
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Introduction

The financial statements of the Company and the information contained in this
Management's Discussion and Analysis of Financial Condition and Results of
Operations are expressed in Canadian dollars ("Cdn$"). For the convenience of
the reader, in this Management's Discussion and Analysis, certain financial
amounts are also given in U.S. dollars ("US$"), converted at the Noon Buying
Rate in effect at the end of the period to which the amount relates, or the
exchange rate on the date specified herein. The Noon Buying Rates for February
28, 1998 and February 28, 1997 were Cdn$1.4235 and Cdn$1.3665 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 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 joint venture Viewer Services, which is involved in the inbound
telemarketing and fulfilment services for television broadcasters and others.
The eighth unit is Interlynx, which 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 February 28, 1998

During the 1998 Second Fiscal Quarter, the programming license for Player's
Raceworld trivia was renewed for the third year. A new game called "Match &
Win", sponsored by the GM Card, was launched on the hospitality network. In
addition, Toyota Canada and the Toronto Raptors Basketball Club became the first
customers to use the new corporate training product known as Learnstar
Corporate.

Results of Operations for the Three Months ended February 28, 1998

The Company's total revenues for the 1998 Second Fiscal Quarter were
Cdn$3,754,472 (US$2,637,494), compared to Cdn$2,673,036 (US$1,956,119) for the
1997 Second Fiscal Quarter, an increase of Cdn$1,081,436 or 40.5%. Total
revenues, excluding Interlynx, for the 
<PAGE>

1998 Second Fiscal Quarter were Cdn$3,418,702 (US$2,401,617), compared to
Cdn$2,673,036 (US$1,956,119) for the 1997 Second Fiscal Quarter, an increase of
Cdn$745,666 or 27.9%. This increase was attributed to all of the following: an
increase in video and software sales, resulting from a greater emphasis on
marketing and additional sales from the implementation of the acquired business
assets of Image Media; increased revenue from program content and maintenance
services and equipment rental, all of which are attributable to there being an
average of 549 locations outstanding during the 1998 Second Fiscal Quarter as
compared to an average of 519 locations outstanding during the 1997 Second
Fiscal Quarter; increased revenues in event programming resulting from an
increased number of events in the 1998 Second Fiscal Quarter as compared to the
number of events in the 1997 Second Fiscal Quarter; and increased revenues in ad
sponsorship over the same period last year.

Total cost of sales for the 1998 Second Fiscal Quarter was Cdn$1,439,527
(US$1,011,259), compared to Cdn$778,287 (US$569,548) for the 1997 Second Fiscal
Quarter, an increase of Cdn$661,240 or 85.0%. Total cost of sales excluding
costs incurred by Interlynx for the 1998 Second Fiscal Quarter was Cdn$1,260,705
(US$885,638), compared to Cdn$778,287 (US$569,548) for the 1997 Second Fiscal
Quarter, an increase of Cdn$482,418 or 62.0%. This increase was the result of:
increased equipment costs and commissions, both of which are directly
attributable to the increase in the average number of Network locations
outstanding in the 1998 Second Fiscal Quarter over the number of locations
outstanding during the comparable prior period as discussed above; and increased
video, dubbing and software costs resulting from the implementation of the
business assets of Image Media acquired September 1, 1997.

Total selling, general and administrative expenses for the 1998 Second Fiscal
Quarter were Cdn$1,667,185 (US$1,171,187), compared to Cdn$1,350,941
(US$988,614) for the 1997 Second Fiscal Quarter, an increase of Cdn$316,244 or
23.4%. Total selling, general and administrative expenses excluding those
incurred by Interlynx, for the 1998 Second Fiscal Quarter were Cdn$1,640,850
(US$1,152,687), compared to Cdn$1,350,941 (US$988,614) for the 1997 Second
Fiscal Quarter, an increase of Cdn$289,909 or 21.5%. This increase was the
result of: increased advertising and promotion expenses resulting mainly from
the increased promotion of our QB1 game and additional marketing in the area of
video, software and dubbing sales; increased travel expenses, due to the
increase in the number of corporate events being hosted abroad and the travel
costs of additional area representatives hired to provide both customer service
and training to both new and existing locations; and the increase in freight
charges, which is commensurate with the increase in advertising and promotion
and the increase in volume of both equipment, being shipped to corporate events
and rental locations, and videos and software being shipped to customers. As a
percentage of the Company's total revenues, excluding those derived by
Interlynx, such expenses decreased to 48.0% for the 1998 Second Fiscal Quarter
from 50.5% for the 1997 Second Fiscal Quarter.

Total depreciation and amortization expenses for the 1998 Second Fiscal Quarter
were Cdn$312,408 (US$219,465), compared to Cdn$225,315 (US$164,885) for the 1997
Second Fiscal Quarter, an increase of Cdn$87,093 or 38.7%. This increase was the
result of additional depreciation on fixed assets added in 1998 and the
amortization of goodwill arising from the Interlynx purchase. As a percentage of
the Company's total revenues, excluding those derived by Interlynx, such
expenses increased to 9.1% for the 1998 Second Fiscal Quarter from 8.4% for the
1997 Second Fiscal Quarter.
<PAGE>

The provision for income taxes for the 1998 Second Fiscal Quarter was
Cdn$128,399 (US$90,200), compared to Cdn$112,643 (US$82,432) for the 1997 Second
Fiscal Quarter, an increase of Cdn$15,756 or 14.0%. As a percentage of the
Company's total revenues, excluding those derived by Interlynx, such expenses
decreased to 3.8% for the 1998 Second Fiscal Quarter from 4.2% for the 1997
Second Fiscal Quarter.

As a result of all the above, net income for the 1998 Second Fiscal Quarter was
Cdn$143,934 (US$101,113), compared to Cdn$173,647 (US$127,074) for the 1997
Second Fiscal Quarter, a decrease of Cdn$29,713 or 17.1%.

Results of Operations for the Six Months Ended February 28, 1998

The Company's total revenues for the 1998 First Fiscal Half were Cdn$7,491,586
(US$5,262,793), compared to Cdn$4,862,328 (US$3,558,235) for the 1997 First
Fiscal Half, an increase of Cdn$2,629,258 or 54.1%. Total revenues, excluding
Interlynx, for the 1998 First Fiscal Half were Cdn$6,683,846 (US$4,695,361),
compared to Cdn$4,862,328 (US$3,558,235) for the 1997 First Fiscal Half, an
increase of Cdn$1,821,518 or 37.5%. This increase was the result of: an increase
in video and software sales, resulting from a greater emphasis on marketing and
additional sales from the implementation of the acquired business assets of
Image Media; increased revenue from program content, maintenance services and
equipment rental, all of which are attributable to there being an average of 534
locations outstanding during the 1998 First Fiscal Half as compared to an
average of 514 locations outstanding during the 1997 First Fiscal Half;
increased revenues in event programming resulting from an increased number of
events in the 1998 First Fiscal Half as compared to the number of events in the
1997 First Fiscal Half; and increased revenues from ad sponsorship over the same
period last year.

Total cost of sales for the 1998 First Fiscal Half was Cdn$2,875,547
(US$2,020,054), compared to Cdn$1,416,431 (US$1,036,539) for the 1997 First
Fiscal Half, an increase of Cdn$1,459,116 or 103.0%. Total cost of sales
excluding costs incurred by Interlynx for the 1998 First Fiscal Half was
Cdn$2,526,500 (US$1,774,851), compared to Cdn$1,416,431 (US$1,036,539) for the
1997 First Fiscal Half, an increase of Cdn$1,110,069 or 78.4%. This increase was
the result of: increased equipment costs and commissions, both of which are
directly attributable to the increase in average Network locations outstanding
from the average number of locations outstanding during the comparable prior
period, as discussed above; and an increase in video and software costs,
directly related to the additional video and software sales above, and
additional costs resulting from the implementation of the business assets of
Image Media. As a percentage of the Company's total revenues, excluding revenues
derived by Interlynx, such costs of sales increased to 37.8% for the 1998 First
Fiscal Half from 29.1% for the 1997 First Fiscal Half.

Total selling, general and administrative expenses for the 1998 First Fiscal
Half were Cdn$3,276,960 (US$2,302,044), compared to Cdn$2,437,141 (US$1,783,491)
for the 1997 First Fiscal Half, an increase of Cdn$839,819 or 34.5%. Total
selling, general and administrative expenses, excluding those incurred by
Interlynx for the 1998 First Fiscal Half, were Cdn$3,089,985 (US$2,170,695),
compared to Cdn$2,437,141 (US$1,783,491) for the 1997 First Fiscal Half, an
increase of Cdn$652,844 or 26.8%. This increase was the result of: increased
staffing and salaries; increased advertising and promotion expenses resulting
mainly from the increased promotion of our QB1 game in the 1998 First Fiscal
Half and additional 
<PAGE>

marketing in the area of video, software and dubbing sales; increased travel
expenses, due to the increase in the number of corporate events being hosted
abroad and the travel costs of additional area representatives hired to provide
both customer service and training to both new and existing locations; and the
increase in freight charges, which is commensurate with the increase in
advertising and promotion and the increase in volume of both equipment, being
shipped to corporate events and rental locations, and videos and software being
shipped to customers. As a percentage of the Company's total revenues, excluding
revenues derived by Interlynx, such expenses decreased to 46.2% for the 1998
First Fiscal Half from 50.1% for the 1997 First Fiscal Half.

Total depreciation and amortization expenses for the 1998 First Fiscal Half were
Cdn$586,810 (US$412,230), compared to Cdn$361,330 (US$264,420) for the 1997
First Fiscal Half, an increase of Cdn$225,480 or 62.4%. This increase was
primarily the result of: additional depreciation on fixed assets added in the
1998 First Fiscal Half; a full six months of amortization on goodwill resulting
from the Magic purchase, as compared to the five months of amortization on the
said goodwill expensed in the 1997 First Fiscal Half; and the amortization of
goodwill arising from the Interlynx purchase. As a percentage of the Company's
total revenues, excluding those derived by Interlynx, such expenses increased to
8.8% for the 1998 First Fiscal Half from 7.4% for the 1997 First Fiscal Half.

The provision for income taxes for the 1998 First Fiscal Half was Cdn$238,515
(US$167,555), compared to Cdn$256,908 (US$188,004) for the 1997 First Fiscal
Half, a decrease of Cdn$18,393 or 7.2%. This decrease was primarily the result
of there being higher tax loss carry forward provisions available to a
subsidiary of the Company to utilize in the 1998 First Fiscal Half than there
had been for the 1997 First Fiscal Half. As a percentage of the Company's total
revenues, excluding those derived by Interlynx, the provision decreased to 3.6%
for the 1998 First Fiscal Half from 5.3% for the 1997 First Fiscal Half.

As a result of all of the above, net income for the 1998 First Fiscal Half was
Cdn$348,991 (US$245,164), compared to Cdn$324,965 (US$237,808) for the 1997
First Fiscal Half, an increase of Cdn$24,026 or 7.4%.

Liquidity and Capital Resources

At February 28, 1998, the Company had working capital of Cdn$3,005,577
(US$2,111,399), a decrease of Cdn$494,285 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 Half, the Company had a net decrease in cash flow of
Cdn$1,019,058, compared to a net decrease of Cdn$1,097,887 in the 1997 First
Fiscal Half.

Cash provided by operating activities for the 1998 First Fiscal Half was
Cdn$207,819 (US$145,992) an increase of Cdn$114,707 from cash provided by
operating activities in the 1997 First Fiscal Half. The major factor
contributing to this increase was an increase in net income before depreciation
and amortization of Cdn$248,430 over the same figure for the 1997 First Fiscal
Half.
<PAGE>

Cash used in investing activities in both the 1998 First Fiscal Half and 1997
First Fiscal Half was Cdn$1,091,330 (US$ 766,653) and Cdn$974,765 (US$713,330),
respectively. Cash used in the 1998 First Fiscal Half was for the purchase of
property and equipment and the investment in Interlynx. Cash was used in the
comparable prior period for the purchase of property and equipment and the
acquisition of Magic.

Cash used in financing activities in the 1998 First Fiscal Half was Cdn$135,547
(US$95,221). This cash was used in the early repayment of a loan from the
Federal Business Development Bank. Cash used in financing activities for the
1997 First Fiscal Half was Cdn$216,234 (US$158,239). This cash was used to
reduce debt in the Magic Lantern Group.

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, 1998 (the "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 six months ended February 28, 1998 and 1997 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
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.



                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

            None.

Item 2. Changes in Securities

            None.

Item 3. Defaults Upon Senior Securities
<PAGE>

            None.

Item 4. Submission of Matters to a Vote of Security Holders

                  The Annual Meeting of Shareholders of the Company was held on
            Friday, February 27, 1998. At the meeting the existing Directors of
            the Company were re-elected by 1,738,363 votes cast in favour of all
            the nominees for Director (except holders of shares possessing
            1,738,453 voted in favour of Adrian P. Towning and 1,566,863 voted
            in favour of Daniel C. Downs), being in excess of a majority of the
            shares present in person or by proxy. The holders of shares of the
            Company possessing 1,293,524 votes, being in excess of a majority of
            the votes present in person or by proxy, ratified the replacement of
            the Company's Long Term Incentive Plan with a new Stock Option Plan
            and to increase the number of shares of the Company's Common Stock
            subject to the Plan from 525,000 to 1,000,000. The holders of shares
            of the Company possessing 1,736,685 votes, being in excess of a
            majority of the shares present in person or by proxy, voted in
            favour of ratifying the appointment of Ernst & Young, as independent
            auditors of the Company for the fiscal year ending August 31, 1998.
            The holders of shares of the Company possessing 1,737,969 votes,
            being in excess of a majority of the shares present in person or by
            proxy, voted in favour of changing the name of the Company from NTN
            Canada, Inc. to Networks North Inc.

Item 5. Other Information

            None.
<PAGE>

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

            The following list sets forth the applicable exhibits (numbered in
accordance with Item 601 of Regulation S-K) required to be filed with this
Quarterly Report on Form 10-Q:

    Exhibit
    Number                               Title
    ------                               -----

       3.1  Certificate of Incorporation, as amended to date.+

       3.2  By-Laws, as amended to date.+

      10.1  License Agreement, dated March 23, 1990, between NTN Communications,
            Inc. and NTN Interactive Network Inc.+

      10.2  Stock Purchase Agreement, dated October 1, 1996, among Connolly-Daw
            Holdings Inc., 1199846 Ontario Ltd., Douglas Connolly, Wendy
            Connolly and NTN Interactive Network Inc., minus Schedules thereto.+

      10.3  Designation Agreement, dated as of October 4, 1994, among NTN
            Canada, Inc., NTN Interactive Network Inc. and NetStar Enterprises
            Inc. (formerly Labatt Communications Inc.).+

        22  List of Subsidiaries.+

        27  Financial Data Schedule.

+ Incorporated by reference. See Exhibit Index.

(b) Reports on Form 8-K

      None.
<PAGE>

                                   SIGNATURES

            Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                           NETWORKS NORTH INC.

Dated: April 14, 1998      By:         /s/ Peter Rona
                                     -----------------------------------------
                                           Peter Rona,
                                     President and Principal Financial Officer
                                             (Duly Authorized Officer)

<PAGE>

                               NETWORKS NORTH INC.
                      (FORMERLY KNOWN AS NTN CANADA, INC.)
                                    FORM 10-Q
                                FEBRUARY 28, 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.