FORM 10-Q/A NO. 1


                       Securities and Exchange Commission
                              Washington D.C. 20549


      AMENDMENT NO. 1 TO QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934



For the fiscal quarter ended: FEBRUARY 28, 2001
Commission file number: 0-18066



                          CHELL GROUP CORPORATION INC.
                           F/K/A NETWORKS NORTH, 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.)




                          800 THIRD AVENUE, 21ST FLOOR
                            NEW YORK, NEW YORK 10022
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (416) 675-0874
              (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 11, 2001: 9,328,065 shares of common stock,
                          par value $.0467 per share.

<PAGE>


                          CHELL GROUP CORPORATION INC.
                     (FORMERLY KNOWN AS NETWORKS NORTH INC.)
                                AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL INFORMATION

                   FOR THE SIX MONTHS ENDED FEBRUARY 28, 2001

PART I - FINANCIAL INFORMATION

Item 1.            FINANCIAL STATEMENTS:                                    PAGE
                   --------------------                                     ----

     Consolidated Balance Sheets -
          as at February 28, 2001 (unaudited) and August 31, 2000              1

     Consolidated Statements of Operations and Retained Earnings (Deficit) -
          For the Six Months Ended February 28, 2001 and
          February 29, 2000 (unaudited)                                        2

     Consolidated Statements of Operations and Retained Earnings (Deficit) -
          For the Three Months Ended February 28, 2001 and
          February 29, 2000 (unaudited)                                        2

     Consolidated Statements of Cash Flows -
          For the Six Months Ended February 28, 2001 and
          February 29, 2000 (unaudited)                                        3

     Notes to Consolidated Financial Statements                                4

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS                                               11

PART II - OTHER INFORMATION

Item 2.           CHANGES IN SECURITIES                                       17

Item 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS         18

Item 6.            EXHIBITS AND REPORTS ON FORM 8-K                           18

SIGNATURES                                                                    20


                                       2
<PAGE>


                          CHELL GROUP CORPORATION INC.
                     (FORMERLY KNOWN AS NETWORKS NORTH INC.)
                           CONSOLIDATED BALANCE SHEETS
                   AS AT FEBRUARY 28, 2001 AND AUGUST 31, 2000
                         (Expressed in Canadian dollars)


================================================================================
                                                     FEBRUARY 28,    August 31,
                                                        2001            2000
                                                     (UNAUDITED)
                                                     (RESTATED -     (RESTATED -
                                                       NOTE 13)        NOTE 13)
                                                          $              $
================================================================================
ASSETS
CURRENT
Cash and cash equivalents                                221,675      1,355,613
Short-term investments                                    19,532        269,727
Accounts receivable, trade - net of allowance
      for doubtful accounts of $227,000;
      August - $178,000                                3,055,123      3,154,134
Other receivables                                         96,360        216,990
Income taxes receivable                                  241,718        143,227
Inventory                                                218,823        206,216
Prepaid expenses                                         751,522        636,726
--------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                   4,604,753      5,982,633
--------------------------------------------------------------------------------
Property and equipment, net                            9,148,828      7,721,769
Software development costs, net                          175,000        200,000
Licenses, net of accumulated amortization                240,074        250,248
Goodwill, net of accumulated amortization              2,946,655      2,863,146
Notes receivable                                         461,100        160,000
Deposit on purchase                                    1,689,710             --
Other assets, net of amortization                        166,110        202,799
--------------------------------------------------------------------------------
                                                      19,432,230     17,380,595
================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Bank indebtedness                                        121,000        133,000
Accounts payable - trade                               2,292,180      1,375,414
Accrued liabilities                                      994,480      1,654,917
Current portion of long-term debt                      3,296,495        397,632
--------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                              6,704,155      3,560,963
--------------------------------------------------------------------------------
Long-term debt                                         4,915,149      4,377,040
Deferred income taxes payable                             59,173         59,173
--------------------------------------------------------------------------------
TOTAL LIABILITIES                                     11,678,477      7,997,176
--------------------------------------------------------------------------------
Contingent liabilities
SHAREHOLDERS' EQUITY
Share capital
     900,000 preferred shares                             10,917         10,917
     8,531,637 common shares [August - 2,925,141]        576,664        191,122
     Capital in excess of par value                   15,388,772     10,454,669
    Deficit                                           (8,222,600)    (1,273,289)
--------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY                             7,753,753      9,383,419
--------------------------------------------------------------------------------
                                                      19,432,230     17,380,595
================================================================================

         The accompanying notes are an integral part of these statements

                                       1
<PAGE>


                          CHELL GROUP CORPORATION INC.
                     (FORMERLY KNOWN AS NETWORKS NORTH INC.)
                    CONSOLIDATED STATEMENTS OF OPERATIONS AND
                           RETAINED EARNINGS (DEFICIT)
                   (Expressed in Canadian dollars - unaudited)

<TABLE>
<CAPTION>
============================================================================================================
                                                     For Three Months Ended         For Six Months Ended
                                                   FEBRUARY 28,   February 29,   FEBRUARY 28,   February 29,
                                                       2001           2000           2001           2000
                                                   (Restated -                   (Restated -
                                                     Note 13)                      Note 13)
                                                        $              $              $              $
============================================================================================================
<S>                                                 <C>            <C>            <C>            <C>
REVENUE
Network services                                     1,648,269      1,678,538      3,274,340      3,276,562
Pay-TV                                               1,511,369      1,409,200      3,296,475      3,245,900
Event programming                                      136,492        108,451        197,699        209,151
Ad sponsorship                                          13,446         93,488         72,291        289,298
Video/software sales                                   902,800        992,510      2,118,654      2,650,880
Digital encoding                                       309,143        140,562        537,752        243,109
Other                                                   47,949          3,151         75,122         46,596
-------------------------------------------------------------------------------------------------------------
                                                     4,569,468      4,425,900      9,572,333      9,961,496
-------------------------------------------------------------------------------------------------------------

COST OF SALES
Network services                                       624,377        568,001      1,205,189      1,095,267
Pay-TV                                                 586,786        676,100      1,315,054      1,187,900
Event programming                                        1,340         21,976            340         40,914
Ad sponsorship                                              --          7,530             --         11,280
Video/software sales                                   326,133        368,959        723,807      1,107,507
Digital encoding                                         8,140         43,776         14,055         46,188
Other                                                       --         36,006             --         40,482
-------------------------------------------------------------------------------------------------------------
                                                     1,546,776      1,722,348      3,258,445      3,529,538
-------------------------------------------------------------------------------------------------------------

EXPENSES
Selling, general and administrative expenses         5,356,997      2,928,099     10,596,583      5,515,497

Bad debt                                                32,150        110,972         67,029        115,512

Interest and bank charges                              360,667         68,290        560,391        148,469

Write off of leasehold improvements                         --             --        355,560             --

Depreciation and amortization                          608,865      1,108,342
                                                                                     797,453      1,648,130
-------------------------------------------------------------------------------------------------------------
Loss before undernoted                              (3,524,575)    (1,012,674)    (6,913,805)      (455,862)

Provision for income taxes                                  --        (75,458)                      223,000

Minority interest
                                                        25,326          1,322         35,506         (2,931)
-------------------------------------------------------------------------------------------------------------
LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD          (3,549,901)      (938,538)    (6,949,311)      (675,931)

Retained earnings (deficit), beginning of period    (4,672,699)     1,312,939     (1,273,289)     1,050,332
-------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS (DEFICIT), END OF PERIOD          (8,222,600)       374,401     (8,222,600)       374,401
-------------------------------------------------------------------------------------------------------------

EARNINGS (LOSS) PER SHARE:
Basic                                                    (0.42)         (0.33)         (0.83)         (0.24)
Diluted                                                  (0.42)         (0.33)         (0.83)         (0.24)
=============================================================================================================
</TABLE>

         The accompanying notes are an integral part of these statements

                                       2
<PAGE>


                          CHELL GROUP CORPORATION INC.
                     (FORMERLY KNOWN AS NETWORKS NORTH INC.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
        FOR THE SIX MONTHS ENDED FEBRUARY 28, 2001 AND FEBRUARY 29, 2000
                   (Expressed in Canadian dollars - unaudited)

<TABLE>
<CAPTION>
============================================================================================================
                                                                    FEBRUARY 28, 2001    February 29, 2000
                                                                   (RESTATED - NOTE 13)
                                                                            $                    $
============================================================================================================
<S>                                                                     <C>                  <C>
OPERATING ACTIVITIES
Net income (loss) and comprehensive income (loss) for the period        (6,949,311)          (675,931)
Adjustments to reconcile net income to net cash
     used in operating activities:
     Depreciation and amortization                                       1,648,130          1,108,342
     Accretion of interest on non-interest bearing promissory notes         91,721             86,538
     Write-off of leasehold improvements                                   355,560                 --
     Amortization of discount                                              272,103                 --
     Services rendered for shares                                          429,766                 --
     Warrants issued                                                       152,702                 --
     Write-off of prepaids arising from Chell asset purchase               367,235                 --
Changes in assets and liabilities:
     Decrease in short-term investments                                    250,195              3,303
     Decrease (increase) in accounts receivable, trade                      99,011         (1,436,095)
     Decrease (increase) in income taxes receivable                        (98,491)           157,464
     Decrease (increase) in inventory                                      (12,607)            23,908
     Increase in prepaid expenses                                          (69,752)          (110,110)
     Decrease in other accounts receivable                                 122,035                 --
     Decrease in other assets                                                1,345                 --
     Increase in accounts payable and accrued liabilities                   49,446            950,834
     Increase in income taxes payable                                           --             61,042
------------------------------------------------------------------------------------------------------------
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                         (3,290,912)           169,295
------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Purchase of property and equipment                                        (964,229)        (1,178,810)
Increase in deposit on purchase                                         (1,689,710)                --
Increase in notes receivable                                              (301,100)                --
------------------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES                                       (2,955,039)        (1,178,810)
------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Bank indebtedness                                                          (12,000)           (12,000)
Increase in notes and loans payable                                      5,151,986                 --
Repayment of notes and loans payable                                       (27,973)           (24,853)
Proceeds from exercise of options                                               --              4,336
------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                          5,112,013            (32,517)
------------------------------------------------------------------------------------------------------------

NET DECREASE IN CASH AND CASH EQUIVALENTS DURING THE PERIOD             (1,133,938)        (1,042,032)
Cash and cash equivalents, beginning of period                           1,355,613          2,018,122
------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                   221,675            976,090
============================================================================================================


------------------------------------------------------------------------------------------------------------
Income Taxes Paid                                                           98,491              2,500
Interest Paid                                                               64,428             61,931
</TABLE>


        Non cash items arose from the  purchase of Chell.com  assets  during the
2001 First Fiscal Half. They are $1,936,272 of property & equipment, $107,589 of
goodwill,  $45,044  of  prepaids,  $1,404 in other  accounts  receivable  and in
addition  shares were issued (Note 5).  Other assets of $217,362  arose from the
issue of warrants,  and shares were issued for  consulting  fees and salaries in
the amount of $429,766.

         The accompanying notes are an integral part of these statements

                                       3
<PAGE>


                          CHELL GROUP CORPORATION INC.
                     (FORMERLY KNOWN AS NETWORKS NORTH INC.)
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        FOR THE SIX MONTHS ENDED FEBRUARY 28, 2001 AND FEBRUARY 29, 2000
                                   (UNAUDITED)

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. (the  "Company")  (Commission
No.:0-18066),  filed with the Securities and Exchange Commission on December 14,
2000.  The results of operations  for the six months ended February 28, 2001 are
not necessarily indicative of the results for the full fiscal year ending August
31, 2001.

Note 2.         GENERAL

        The  financial  statements  of the  Company for the three and six months
ended February 28, 2001 (the "2001 Second Fiscal Quarter" and "2001 First Fiscal
Half"), include the operations of the Company's wholly-owned  subsidiaries Chell
Merchant  Capital Group Inc.  ("CMCG"),  Chell.com  (USA) Inc., NTN  Interactive
Network Inc. ("NTNIN"),  3484751 Canada Inc., GalaVu Entertainment  Network Inc.
("GalaVu") and NTNIN's  wholly-owned  subsidiaries Magic Lantern  Communications
Ltd. ("Magic") and Interlynx Multimedia Inc. ("Interlynx").

        The  financial  statements  of the  Company for the three and six months
ended February 29, 2000 (the "2000 First Fiscal  Quarter" and "2000 First Fiscal
Half"), include the operations of the Company's wholly-owned subsidiaries NTNIN,
3484751  Canada Inc.,  GalaVu and NTNIN's  wholly-owned  subsidiaries  Magic and
Interlynx.

        Magic  conducts  its  operations  directly  and through its wholly owned
subsidiaries,  745695 Ontario Ltd.  ("Custom Video"),  B.C. Learning  Connection
Inc.  ("BCLC"),  and  1113659  Ontario  Ltd.  ("Viewer  Services")  and  its 75%
ownership of the outstanding shares of Sonoptic Technologies Inc.  ("Sonoptic").
Effective  September 1, 2000 the operations of BCLC and Custom Video were merged
with  Magic and the BCLC and Custom  Video  corporations  were  wound up.  Also,
effective  September 1, 2000 Magic's  wholly owned  subsidiary  TutorBuddy  Inc.
commenced operations.

        Prior period's figures have been  reclassified to be consistent with any
reclassifications in the current period.

                                       4
<PAGE>


Note 3.  BUSINESS SEGMENT DATA FOR THE THREE AND SIX MONTHS ENDED
         FEBRUARY 28, 2001 AND FEBRUARY 29, 2000

================================================================================
                            For Three Months Ended       For Six Months Ended
                          FEBRUARY 28,  February 29,  FEBRUARY 28,  February 29,
                              2001          2000          2001          2000
                                $             $             $             $
================================================================================

EXTERNAL REVENUE
  Entertainment            3,344,857     3,293,981     6,895,109     7,062,260
  Education                1,109,447     1,093,876     2,371,850     2,664,574
  E-commerce                 104,886        39,195       288,886       229,415
  ASP Services                    --            --            --            --
  Corporate                   10,278        (1,153)       16,488         5,248
--------------------------------------------------------------------------------
                           4,569,468     4,425,900     9,572,333     9,961,496
--------------------------------------------------------------------------------
INTER-SEGMENT REVENUE
  Entertainment                   --        (3,539)           --        28,475
  Education                   46,584            --        98,741            --
  Corporate                       --        32,049            --        64,300
--------------------------------------------------------------------------------
                              46,584        28,510        98,741        92,775
--------------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
  Entertainment             (140,192)     (208,329)     (223,136)      353,296
  Education                 (199,713)     (233,840)     (391,901)     (161,507)
  E-commerce                (157,896)     (542,506)     (286,221)     (629,536)
  ASP Services            (2,028,649)           --    (4,828,305)           --
  Corporate                 (998,125)      (27,999)   (1,184,242)      (18,115)
--------------------------------------------------------------------------------
                          (3,524,575)   (1,012,674)   (6,913,805)     (455,862)
--------------------------------------------------------------------------------
NET INCOME (LOSS)
  Entertainment             (140,192)     (132,871)     (223,136)      130,296
  Education                 (225,039)     (235,162)     (427,407)     (158,576)
  E-commerce                (157,896)     (542,506)     (286,221)     (629,536)
  ASP Services            (2,028,649)           --    (4,828,305)           --
  Corporate                 (998,125)      (27,999)   (1,184,242)      (18,115)
--------------------------------------------------------------------------------
                          (3,549,901)     (938,538)   (6,949,311)     (675,931)
--------------------------------------------------------------------------------

================================================================================
                                                                As at
                                                     FEBRUARY 28,   February 29,
                                                        2001           2000
                                                          $              $
================================================================================
TOTAL ASSETS
  Entertainment                                       10,628,126    12,229,724
  Education                                            3,483,320     4,310,639
  E-commerce                                                 243       578,221
  ASP Services                                         2,033,304            --
  Corporate                                            3,287,237     1,031,459
--------------------------------------------------------------------------------
                                                      19,432,230    18,150,044
--------------------------------------------------------------------------------

                                       5
<PAGE>


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 and six
months ended February 28, 2001 and February 29, 2000:

<TABLE>
<CAPTION>
=================================================================================================
                                        For Three Months Ended           For Six Months Ended
                                     FEBRUARY 28,     February 29,   FEBRUARY 28,    February 29,
                                         2001             2000           2001            2000
                                           $                $              $               $
=================================================================================================
<S>                                  <C>               <C>           <C>               <C>
NUMERATOR:
Net income (loss) (numerator for
basic and diluted earnings (loss)
per share)                           $(3,549,901)      $(938,538)    $(6,949,311)      $(675,931)
=================================================================================================

DENOMINATOR FOR BASIC AND
DILUTED LOSS PER SHARE -adjusted
weighted average number of shares
and assumed conversions                8,356,399       2,848,558       8,356,399       2,848,558
=================================================================================================

Basic loss per share                      $(0.42)         $(0.33)         $(0.83)         $(0.24)
=================================================================================================
Diluted loss per share                    $(0.42)         $(0.33)         $(0.83)         $(0.24)
=================================================================================================
</TABLE>


Note 5.  PURCHASE OF ASSETS AND SHARES FROM CHEL.COM LTD. AND CAMERON CHELL

        On  September  19,  2000,  pursuant to an Agreement of Purchase and Sale
dated as of August 4,  2000,  the  Company  and its  subsidiary  Chell  Merchant
Capital  Group  acquired,  certain  shares and  assets  from  Cameron  Chell and
Chell.com Ltd. ("Chell.com"), a Company owned 100% by Cameron Chell. Pursuant to
the  Agreement,  the Company  acquired:  (a) 480,000 common shares of cDemo Inc.
(23%);  (b) 875,000 common shares of Engyro,  Inc. (34%);  and (c) 60,000 common
shares of  Chell.com  USA (100%).  In addition,  Chell  Merchant  Capital  Group
acquired  962,500  common shares of eSupplies  (Alberta)  Ltd.  (27%) as well as
certain assets from Chell.com.

        This  acquisition was not reflected in the financial  statements for the
year  ended  August  31,  2000 since  shareholder  approval  to ratify the above
purchase transaction was not voted on and approved until September 8, 2000.

        In  consideration  for this  acquisition,  the Company issued  4,974,904
shares of its common stock and Chell  Merchant  Capital  Group issued  1,928,267
special convertible shares, inclusive of 1,476,399 shares issued in exchange for
the shares of eSupplies (Alberta) Ltd., to Cameron Chell,  Chell.com and others.
The  shares of the  Company  that  were  issued in  exchange  for the  shares of
eSupplies  (Alberta) Inc. have been placed in escrow and the investments in this
company will not be recorded  until such time as certain  contingent  conditions
are met. Each share issued by Chell Merchant  Capital Group is convertible  into
one share of common  stock of the  Company.  Pursuant  to a Voting and  Exchange
Trust Agreement entered into with a trustee, whereby voting privileges have been
granted, such


                                       6
<PAGE>


shares  issued  by Chell  Merchant  Capital  Group  can be voted by the  trustee
immediately.  The amount of shares issued was determined based upon an appraisal
valuation  of  the  investments   and  assets   acquired  which   aggregated  US
$28,652,086.

        The shares of the Company  that were  originally  issued in exchange for
the shares of cMeRun  Corp.  were  placed in escrow and the  investment  in this
company was not recorded.  The  conditions of the escrow were not met for cMeRun
Corp. and subsequently these shares were cancelled.

        As  a  result  of  the  above,  Cameron  Chell  and  Chell.com  now  own
approximately 65% of the Company's outstanding common stock, that is the Company
has in effect been acquired in a reverse acquisition.

        This  acquisition  of the Company by Cameron Chell and Chell.com and the
acquisition  by the Company of the equity  interests,  as described in the first
paragraph,  are reflected at historical cost in the Company's separate financial
statements.

        The Company  will  reflect the  minority  equity  investments  using the
equity method of accounting.

Note 6.         PURCHASE OF RICHARD WOLFF ENTERPRISES, INC. ASSETS

        Pursuant to an asset purchase  agreement dated September 1, 2000,  Magic
acquired the assets and business  operations of Richard Wolff Enterprises,  Inc.
("RWE"),  a  company  based  in  Illinois,  for a  purchase  price  of  $289,590
calculated on a discounted basis. As a result, Magic has expanded its library of
educational  titles  and  now  has  access  to  the  international  distribution
infrastructure formerly held by RWE. The acquisition was accounted for using the
purchase  method of  accounting  and  accordingly,  the purchase  price has been
allocated  to property  and  equipment.  The  purchase  price was  satisfied  by
$154,825 in cash and the issuance of four promissory  notes with maturity values
aggregating $147,350.  These promissory notes mature over a period of two years.
The fair values of these promissory notes approximate their carrying value.

        The asset purchase  agreement also contains a purchase price  adjustment
clause  whereby the price may be adjusted  upwards to a maximum of an additional
US$100,000  if certain  revenue  levels  are  achieved.  Specifically,  if gross
revenues for the acquired  business  exceed  US$500,000  for the 12 month period
ending August 31, 2001,  Magic will pay to RWE US$50,000,  and if gross revenues
exceed  US$600,000 for the second 12 month period ending August 31, 2002,  Magic
will pay to RWE an additional US$50,000.

        The operating  results  related to the  acquisition  are included in the
Company's  consolidated  statements of operations and retained earnings from the
date of acquisition.  Pro-forma  information has not been provided for the prior
year because it is not material.

                                       7
<PAGE>


Note 7.         DEPOSIT ON PURCHASE OF APPLICATIONSTATION.COM, INC. SHARES

        On  November  22,  2000,  the Company  entered  into an  agreement  with
Chell.com Ltd. to participate in the purchase of a 51% interest in the shares of
ApplicationStation.com, Inc. The Company has provided a deposit of $1,689,710 to
Chell.com  Ltd.  for  its  25%  share  of the  51%  interest  in the  shares  of
ApplicationStation.com,  Inc. The Company's  investment  will be reflected using
the equity method of accounting.

Note 8.         NOTE PAYABLE

        On January 15, 2001, the Company  received  US$1,500,000 in return for a
promissory  note  payable.  The note  bears  interest  at 2% per  month  and the
principal and accrued interest is due and payable on April 15, 2001.

Note 9.         CONVERTIBLE DEBENTURE - RELATED PARTY TRANSACTION

        On October  3,  2000,  the  Company  closed  the sale of a  US$3,000,000
Convertible 10% Debenture to the VC Advantage Limited Partnership ("VCALP").  As
at February 28, 2001, US$1,700,000 has been advanced. EITF-00-27 "Application of
Issue No. 98-5 to Certain Convertible  Instruments"  requires that a discount be
recorded for any beneficial  conversion  features  associated  with  convertible
debt.  The Company has recorded a discount of $1,959,144 in October 2000 and has
amortized  $268,173 to interest  expense for the six months ending  February 28,
2001. This unsecured  convertible  debenture is due three years from issue.  The
Convertible  Debenture bears interest at 10% per annum, payable upon conversion,
redemption or maturity.  The unpaid  principal of the debenture  bears  interest
from the date that it is actually  advanced  until paid.  Interest is payable in
cash or stock at the Company's option. The Convertible  Debenture is convertible
into common stock of the Company, at US $3.00 per share, in amounts specified by
the  VCALP.  The  maximum  number of common  shares  VCALP  will  receive is one
million.  On the close date, the Company also issued 50,000 warrants to purchase
50,000 common shares at US$3.00 per share to VCALP.  The warrants have a term of
four years. On November 30, 2000 the convertible debenture was assigned by VCALP
to CALP II Limited Partnership.

Note 10.          CONTINGENT LIABILITIES

        On June 18, 1992,  Interactive  Network Inc., a third party,  instituted
proceedings  against  NTN  Communications  Inc.,  one  of  the  Company's  major
suppliers,  NTN Interactive Network Inc. and the Company in the Federal Court of
Canada and in the California Supreme Court claiming patent  infringement.  It is
the opinion of the Company's management that this patent infringement claim will
be successfully defended.

        Canada Customs and Revenue  Agency is currently in discussions  with the
Company  regarding a potential  liability  with  respect to  withholding  tax on
certain amounts paid to NTN Communications,  Inc. No assessment has been made to
date by Canada Customs and Revenue Agency. Management believes that it has valid
defenses  with  respect to these  matters and,  accordingly,  no amount has been
recorded  in these  consolidated  financial  statements.  In the event that such
matters are settled in favour of Canada Customs and

                                       8
<PAGE>


Revenue  Agency,  the  amounts  could be  material  and would be recorded in the
period in which they become determinable.

Note 11.        CHANGES IN SHARE CAPITAL

        During  the  six  months  ended   February  28,  2001,   the   following
transactions  resulted in the issuance of 5,856,496 common shares of the Company
and Chell  Merchant  Capital  Group Inc. The  acquisition  of certain  assets of
Chell.com and Cameron  Chell was  satisfied by the issuance of 5,426,772  common
shares of the  Company.  In  addition  95,000  shares were issued as payment for
consulting  fees  rendered,  21,974  shares issued in lieu of salary and 250,000
warrants were issued as a finders fee. Also during the six months ended February
28, 2001,  options  totaling 62,750 were exercised  resulting in the issuance of
additional  62,750  common shares of the Company.  Effective  February 28, 2001,
common shares authorized to be issued was increased to 50,000,000.

Note 12.        RECENT PRONOUNCEMENTS

        In March 2000, the Financial  Accounting  Standards  Board (FASB) issued
Interpretation No. 44 (FIN 44), "Accounting for Certain  Transactions  involving
Stock  Compensation,  an Interpretation of APB Opinion No. 25." FIN 44 clarifies
the application of APB No. 25 for certain issues, including the definition of an
employee,  the treatment of the acceleration of stock options and the accounting
treatment for options assumed in business combinations.  FIN 44 became effective
on July 1, 2000,  but is  applicable  for  certain  transactions  dating back to
December  1998.  The  adoption  of FIN 44 did not have a material  impact on the
Company's financial position or results of operations.

        In December 1999, the  Securities and Exchange  Commission  (SEC) issued
Staff  Accounting  Bulletin  (SAB) No. 101,  "Revenue  Recognition  in Financial
Statements."  (SAB No. 101). SAB No. 101 expresses the views of the SEC staff in
applying generally accepted accounting principles to certain revenue recognition
issues.  The adoption of the  provisions  of SAB No. 101 in the first quarter of
fiscal 2001 did not have a material impact on the Company's  financial  position
or its results of operations.

        In June 1998, the FASB issued SFAS No. 133,  "Accounting  for Derivative
Instruments and Hedging  Activities."(SFAS No. 133). SFAS No. 133, as amended by
SFAS No. 138,  establishes  accounting  and reporting  standards for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts  (collectively referred to as derivatives) and for hedging activities.
SFAS No. 133 requires the  recognition  of all  derivatives  as either assets or
liabilities in the statement of financial  position and the measurement of those
instruments  at fair  value.  The  Company  adopted  this  standard in the first
quarter of fiscal  year 2001  pursuant  to SFAS No. 137  (issued in June  1999),
which delays the adoption of SFAS No. 133 until that time.  The adoption of SFAS
No. 133 did not have a material  impact on the Company's  financial  position or
its results of operations.

                                       9
<PAGE>


Note 13.        Restated Financial Statements

[a]     Discount on Convertible Debt

        On October  3,  2000,  the  Company  closed  the sale of a  US$3,000,000
Convertible  10% Debenture of which  US$1,700,000  has been  advanced  (NOTE 9).
EITF-00-27  "Application of Issue No. 98-5 to Certain  Convertible  Instruments"
requires  that a discount be recorded  for any  beneficial  conversion  features
associated with convertible debt. The Company did not record the discount on the
US$1,700,000 debt and therefore had to make an adjustment and restate its Fiscal
2001 financial statements. The Company has now recorded a discount of $1,959,144
in October  2000 and has  amortized  $268,173  to  interest  expense for the six
months ending February 28, 2001.

         Also as part of this transaction, the Company issued 50,000 warrants to
purchase  50,000 common shares at US$3.00 per share.  These warrants were valued
and the Company  recognized a $252,706 cost associated with these warrants.  The
company had  expensed  $35,334 and had  $217,372  as other  assets.  This entire
transaction  has  been  reversed  because  the  value of the  warrants  has been
included in the calculation of the discount above.

[b] Change in preferred shares

         On April  4th,  2000,  the  ratio at which  preferred  shares  could be
converted to common  shares was changed from 4.67 to 1 to 3 to 1. The  resulting
change  from  192,857 to 300,000  common  shares upon  conversion  resulted in a
one-time  compensation charge of $337,779.  In order to reflect this change, the
fiscal 2000 financial statements have been restated.

                                       10
<PAGE>


The following table presents the impact of the restatements.

<TABLE>
<CAPTION>
===========================================================================================================
                                         As Previously     As Restated       As Previously      As Restated
                                           Reported                            Reported
===========================================================================================================
                                                 3 Months ended                      6 Months ended
                                                February 28, 2001                   February 28, 2001
<S>                                       <C>              <C>                <C>               <C>
  Balance sheet:
      Other Assets                                                               383,482           166,110
Long-term debt                                                                 6,602,190         4,915,149
  Share Capital
    Common Shares                                                                568,777           576,664
    Capital in excess of par value                                            13,352,442        15,388,772
    Deficit                                                                   (7,648,052)       (8,222,600)

  Statement of operations:
    Selling, general and admin             5,389,974        5,356,997         10,627,987        10,596,583
    Interest and Bank Charges                199,763          360,667            292,218           560,391
    Net loss                              (3,421,974)      (3,549,901)        (6,712,542)       (6,949,311)

EPS
    Basic loss per share                      $(0.41)          $(0.42)            $(0.80)           $(0.83)
    Diluted loss per share                    $(0.41)          $(0.42)            $(0.80)           $(0.83)

                                                                            Year ended August 31, 2000

    Share Capital
      Common Shares                                                 `            183,235           191,122
      Capital in excess of par value                                          10,124,777        10,454,669
      Deficit                                                                   (935,510)       (1,273,289)
===========================================================================================================
</TABLE>

Note 14.        Subsequent Events

        On March 23, 2001, the Company entered into a financial public relations
consulting  agreement,  that will provide the consultant  with options valued at
US$2.00 to  purchase  500,000  free  trading  shares of the common  stock of the
Company subject to certain conditions being met. The agreement covers the period
of March 21, 2001 to September 21, 2001.

                                       11
<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.

GENERAL

        Chell Group Corporation is engaged in the business of defining, building
and   re-engineering   businesses,   interactive   entertainment   services  and
electronic/online  products  and  services  using new  economy  technologies  to
maximize  market value.  The Company's  main business  strategy is to operate or
invest in companies that represent the latest in technological  innovations.  In
that  regard,  the  Company  has two main  categories  of  companies:  operating
subsidiaries  and  investment  companies.  The Company  applies  its  expertise,
industry  contacts,  and market  foresight to these companies in order to create
shareholder  value.  The core businesses of the Company are the merchant capital
services provided through Chell Merchant Capital Group Inc.  (referred to as the
"Merchant Capital Group") and the interactive entertainment services provided by
NTN IN. In addition,  GalaVu is a  technology  based  entertainment  provider of
interactive  in-room  entertainment  systems to hotels across Canada;  the Magic
Lantern Group is involved in the marketing and distribution of educational video
and media resources and the conversion of analog video to digital video formats;
and Interlynx designs and develops web-based training software.


RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED FEBRUARY 28, 2001

        The Company's  total  revenues for the 2001 Second  Fiscal  Quarter were
$4,569,468,  compared to  $4,425,900  for the 2000  Second  Fiscal  Quarter,  an
increase of $143,568 or 3.2%.

        Revenues from network  services for the 2001 Second Fiscal  Quarter were
$1,648,269,  compared  to  $1,678,538  for the 2000  Second  Fiscal  Quarter,  a
decrease of $30,269 or 1.8%.  These  revenues are  relatively  constant  between
years due to the number of Hospitality sites remaining at approximately the same
level between the 2001 and 2000 Second Fiscal Quarters.

        Revenues from Pay-tv for the 2001 Second Fiscal Quarter were  $1,511,369
compared  to  $1,409,200  for the 2000  Second  Fiscal  Quarter,  an increase of
$102,169  or 7.3%.  This  increase  can be  attributed  to more  popular  movies
available  in the 2001 Second  Fiscal  Quarter  than in the 2000  Second  Fiscal
Quarter.

        Revenues from event  programming for the 2001 Second Fiscal Quarter were
$136,492,  compared to $108,451 for the 2000 Second Fiscal Quarter,  an increase
of $28,041 or 25.9%.  The increase  was due to an increased  number of corporate
events hosted in the 2001 Second  Fiscal  Quarter when compared to the number of
events hosted in 2000 Second Fiscal Quarter.

                                       12
<PAGE>


        Revenues  from ad  sponsorship  were $13,446 for the 2001 Second  Fiscal
Quarter,  compared to $93,488 for the 2000 Second Fiscal Quarter,  a decrease of
80,042 or 85.6%.  The  decrease  was the result of a decrease  in the number and
size of corporate sponsors over the level experienced in the previous period.

        Revenues  from  video  and  software  sales for the 2001  Second  Fiscal
Quarter were $902,800,  compared to $992,510 for the 2000 Second Fiscal Quarter,
a  decrease  of $89,710  or 9.0%.  The  decrease  is  primarily  the result of a
decrease  in analog  video  sales,  yet the  demand  for  digital  video has not
increased at the same corresponding levels.

        Revenues from digital  encoding were $309,143 for the 2001 Second Fiscal
Quarter, compared to $140,562 for the 2000 Second Fiscal Quarter, an increase of
$168,581 or 119.9%.  The increase  can be  attributed  to  increased  demand for
digital services and the greater sales effort in this area.

        Total cost of sales for the 2001 Second Fiscal Quarter were  $1,546,776,
compared  to  $1,722,348  for the 2000  Second  Fiscal  Quarter,  a decrease  of
$175,572 or 10.2%. The decrease is the result of decreased costs associated with
a  change  in  the  focus  of  event  programming,  the  decreased  sales  in ad
sponsorship  and the decrease in video and software  sales.  As a percentage  of
revenues,  cost of sales  decreased in the 2001 Second  Fiscal  Quarter to 33.9%
from 38.9% in the 2000 Second Fiscal Quarter.

        Total selling,  general and administrative  expenses for the 2001 Second
Fiscal  Quarter  were  $5,356,997,  compared to  $2,928,099  for the 2000 Second
Fiscal  Quarter,  an increase of  $2,428,898  or 83.0%.  The increase was caused
mainly by the  addition of the ASP  Services  segment,  which  accounted  for an
increase of $2,260,416.  The Company has also experienced increased investor and
public relation costs as a result of the addition of the ASP Services segment.

        Total selling,  general and administrative  expenses for the 2001 Second
Fiscal Quarter for the ASP Services segment comprised the following major items;
salaries of $934,782,  professional  fees of $749,043,  travel of $349,293,  and
investor and public relation costs of $90,193.

        As a percentage of the Company's  total revenues,  selling,  general and
administration  expenses  increased to 117.2% for the 2001 Second Fiscal Quarter
from 66.2% for the 2000 Second Fiscal Quarter.

        During the 2001 Second Fiscal Quarter, Chell Merchant Capital Group Inc.
decreased  its  staffing  levels  in the ASP  Services  segment.  The  costs  of
restructuring  this  company  are of a one time  nature and will not be incurred
beyond the 2001 Second Fiscal Quarter.

        Interest  and bank  charges  for the 2001  Second  Fiscal  Quarter  were
$360,667, compared to $68,290 for the 2000 Second Fiscal Quarter, an increase of
$292,377 or 428.1%.  This  increase  results from an increase in debt related to
the  purchase  of the  RWE  assets,  the  amortization  of the  discount  on the
convertible debenture and the sale of the convertible

                                       13
<PAGE>


debenture.  As a percentage of the Company's total  revenues,  interest and bank
charges  increased to 7.9% for the 2001 Second Fiscal  Quarter from 1.5% for the
2000 Second Fiscal Quarter.

        Total  depreciation and amortization  expense for the 2001 Second Fiscal
Quarter was $797,453,  compared to $608,865 for the 2000 Second Fiscal  Quarter,
an  increase  of $188,588 or 31.0%.  This  increase is  primarily  the result of
depreciation on the fixed assets acquired from RWE and Chell.com Ltd.

        There was no  provision  of income  taxes  recorded  in the 2001  Second
Fiscal Quarter  compared with a recovery of income taxes of $75,458 for the 2000
Second  Fiscal  Quarter.  As the tax  provision  is based  upon  the  individual
company's taxable income, no provision was incurred, as the companies are not in
a taxable position.

        The minority interest share in profit for the 2001 Second Fiscal Quarter
was $25,326.  This is compared to the minority  interest share in losses for the
2000 Second Fiscal Quarter of $1,322, an overall change of $26,648.  This change
results from profitable operations in Sonoptic Technologies Inc., in which there
is a 25% minority interest.

        As a result of all of the above, the net loss for the 2001 Second Fiscal
Quarter was  $3,549,901,  compared  to net loss of $935,894  for the 2000 Second
Fiscal  Quarter,  a decrease of $2,614,007.  The 2001 Second Fiscal Quarter loss
resulted  primarily from the addition of Chell  Merchant  Capital Group Inc. and
Chell.com (USA) Inc. to the Company and their activities including the provision
of services to developing ASP companies in which the Company has invested.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 28, 2001

        The  Company's  total  revenues  for the 2001  First  Fiscal  Half  were
$9,572,333, compared to $9,961,496 for the 2000 First Fiscal Half, a decrease of
$389,163 or 3.9%.

        Revenues  from  network  services  for the 2001 First  Fiscal  Half were
$3,274,340, compared to $3,276,562 for the 2000 First Fiscal Half, a decrease of
$2,222 or 0.1%. These revenues are relatively  constant between years due to the
number of Hospitality  sites remaining at  approximately  the same level between
the 2001 and 2000 First Fiscal Halves.

        Revenues  from  Pay-tv for the 2001 First  Fiscal  Half were  $3,296,475
compared to $3,245,900 for the 2000 First Fiscal Half, an increase of $50,575 or
1.6%. This increase can be attributed to more popular movies.

        Revenues  from event  programming  for the 2001 First  Fiscal  Half were
$197,699  compared to $209,151  for the 2000 First  Fiscal  Half,  a decrease of
$11,452 or 5.5%. The decrease was due to a decreased  number of corporate events
hosted in the 2001  First  Fiscal  Half when  compared  to the  number of events
hosted in 2000 First Fiscal Half.

        Revenues  from ad  sponsorship  were  $72,291 for the 2001 First  Fiscal
Half, compared to $289,298 for the 2000 First Fiscal Half, a decrease of 217,007
or 75.0%. The decrease was

                                       14
<PAGE>


the result of a decrease in the number and size of corporate  sponsors  over the
level experienced in the previous period.

        Revenues  from video and  software  sales for the 2001 First Fiscal Half
were  $2,118,654,  compared to  $2,650,880  for the 2000 First  Fiscal  Half,  a
decrease  of  $532,226 or 20.1%.  In the First  Fiscal Half of 2000,  a one time
large sale of $294,600 was recorded  that  resulted in  abnormally  high revenue
when year compared to 2001 First Fiscal Half.

        Revenues  from digital  encoding were $537,752 for the 2001 First Fiscal
Half,  compared  to  $243,109  for the 2000 First  Fiscal  Half,  an increase of
$294,643 or 121.2%.  The increase  can be  attributed  to  increased  demand for
digital services and the greater sales effort in this area.

        Total  cost of sales for the 2001  First  Fiscal  Half were  $3,258,445,
compared to  $3,529,538  for the 2000 First Fiscal Half, a decrease of $271,093.
The decrease is commensurate with the decreased sales levels  experienced offset
by increased  cable costs in the Pay-tv  segment.  As a percentage  of revenues,
cost of sales decreased in the 2001 First Fiscal Half to 34.0% from 35.4% in the
2000 First Fiscal Half.

        Total selling,  general and  administrative  expenses for the 2001 First
Fiscal Half were  $10,596,583,  compared to $5,515,497 for the 2000 First Fiscal
Half, an increase of $5,081,086 or 92.1%.  The increase was caused mainly by the
addition  of the ASP  Services  segment,  which  accounted  for an  increase  of
$4,597,209.

        Total selling,  general and  administrative  expenses for the 2001 First
Fiscal Half for the ASP Services  segment  comprised the following  major items;
salaries  $1,645,825,  professional fees of $1,021,422,  communication  costs of
$107,313,  travel of  $778,991,  advertising  and  promotion  of  $391,403,  and
investor and public relation costs of $464,820.

        As a percentage of the Company's  total revenues,  selling,  general and
administrative  expenses increased to 110.7% for the 2001 First Fiscal Half from
55.4% for the 2000 First Fiscal Half.

        During the 2001 First Fiscal Half,  Chell  Merchant  Capital  Group Inc.
vacated  certain leased space and as a result the Company wrote off the net book
value of the related  leasehold  improvements  in the amount of $355,560.  There
were no similar transactions in the 2000 First Fiscal Half.

        Interest and bank charges for the 2001 First Fiscal Half were  $560,391,
compared to $148,469 for the 2000 First Fiscal Half,  an increase of $411,922 or
277.4%.  This increase  results from an increase in debt related to the purchase
of the RWE assets, the amortization of the discount on the convertible debenture
and the sale of the  convertible  debenture.  As a percentage  of the  Company's
total revenues,  interest and bank charges  increased to 5.9% for the 2001 First
Fiscal Half from 1.5% for the 2000 First Fiscal Half.

        Total  depreciation and  amortization  expense for the 2001 First Fiscal
Half was  $1,648,130,  compared to $1,108,342 for the 2000 First Fiscal Half, an
increase  of  $539,788  or

                                       15
<PAGE>


48.7%. This increase is primarily the result of depreciation on the fixed assets
acquired from RWE and Chell.com Ltd.

        There was no provision of income taxes recorded in the 2001 First Fiscal
Half  compared  with a provision for income taxes of $223,000 for the 2000 First
Fiscal Half. As the tax provision is based upon the individual company's taxable
income,  no  provision  was  incurred,  as the  companies  are not in a  taxable
position.

        The minority interest share in profit for the 2001 First Fiscal Half was
$35,506.  This is compared to the minority interest share in losses for the 2000
First Fiscal Half of $2,931,  an overall change of $38,437.  This change results
from profitable  operations in Sonoptic  Technologies  Inc., in which there is a
25% minority interest.

        As a result of all of the above,  the net loss for the 2001 First Fiscal
Half was $6,949,311,  compared to net loss of $675,931 for the 2000 First Fiscal
Half,  a decrease  of  $6,273,380.  The 2001  First  Fiscal  Half loss  resulted
primarily from the addition of Chell  Merchant  Capital Group Inc. and Chell.com
(USA) Inc.  to the Company  and their  activities  including  the  provision  of
services to developing ASP companies in which the Company has invested.

LIQUIDITY AND CAPITAL RESOURCES

        At February  28,  2001,  the Company  had a working  capital  deficit of
$2,099,402,  a decrease of  $4,521,072  from working  capital of  $2,421,670  at
August 31, 2000.

        For the 2001 First Fiscal  Half,  the Company had a net decrease of cash
of $1,133,938  compared to a net decrease of $1,042,032 in the 2000 First Fiscal
Half.

        Cash used in  operating  activities  for the 2001 First  Fiscal Half was
$3,290,914,  compared to $169,295  provided by operating  activities in the 2000
First Fiscal Half. In 2001, the major items that  contributed to cash being used
in operating  activities  were as follows:  the net loss with non-cash  expenses
added back of $3,632,094, the increase in income taxes receivable of $98,491 and
the increase in prepaid expenses of $69,752. The major items that contributed to
cash being  provided by operating  activities  were as follows:  the decrease in
accounts  receivable  of $99,011 and a decrease  in  short-term  investments  of
$250,195.  In 2000,  the major items that  contributed to cash being provided by
operating  activities were as follows:  net income with non-cash  expenses added
back of $518,949, decreases in income taxes receivable and inventory of $157,464
and  $23,908  respectively,  and  increases  in  accounts  payable  and  accrued
liabilities and income taxes payable of $950,834 and $61,042  respectively.  The
major uses of operating  funds  included  increases in accounts  receivable  and
prepaid expenses of $1,436,095 and $110,110 respectively.

        Cash used in  investing  activities  in the 2001 First  Fiscal  Half was
$2,955,039  compared to the $1,178,810 used in investing  activities in the 2000
First Fiscal Half, an increase of $1,776,229. This increase was the result of an
increase in note  receivable  from Engyro and the deposit of  $1,689,710  on the
purchase of shares in ApplicationStation.com, Inc.

                                       16
<PAGE>


        Cash provided by financing  activities in the 2001 First Fiscal Half was
$5,112,013,  compared to the $32,517  used in the 2000 First  Fiscal  Half.  The
increase  is  primarily  due to the sale of the  convertible  debenture  and the
bridge financing.

        The Company is in the process of attempting to raise additional  capital
in order to realize its ASP strategy and to repay its loan  obligations that are
currently  being  negotiated.   The  Company's  subsidiaries  operating  in  the
entertainment,  education and E-commerce segments create liquidity sufficient to
fund their  operations.  Management  believes that the current  negotiations for
terms and financing will be successful  and that combined with the  reorganizing
of the ASP  segment in the First  Fiscal 2001 Half,  the  Company  will have the
required liquidity for its planned operating activities in the current year.


INFLATION

The rate of  inflation  has had little  impact on the  Company's  operations  or
financial  position  during the six months ended  February 28, 2001 and February
29,  2000 and  inflation  is not  expected to have a  significant  impact on the
Company's operations or financial position during the 2001 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.

                                       17
<PAGE>


                           PART II - OTHER INFORMATION

Item 1.         LEGAL PROCEEDINGS

                None.

Item 2.         CHANGES IN SECURITIES

                Pursuant to the Board of Directors authorization and a vote of a
majority of the issued and outstanding  voting  securities of the Company at the
Annual Meeting of Shareholders  held on February 28, 2001, the following  change
in the Company's  securities  were executed by  Certificate  of Amendment of the
Company's Certificate of Incorporation:

        The authorized  capital stock of the Company was increased by increasing
the number of  authorized  shares of Common Stock from  20,000,000 to 50,000,000
shares.



Item 3.         DEFAULTS UPON SENIOR SECURITIES

                None.


                                       18
<PAGE>


Item 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        The annual  meeting of  Shareholders  was held on  February  28, 2001 at
which the following items were voted upon:

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 as of October 4, 1994, between NTN
            Canada  Inc.  and  NetStar   Enterprises  Inc.   (formerly,   Labatt
            Communications  Inc.).  +  Option,  dated  as of  October  4,  1994,
            registered in the name of NetStar Enterprises Inc. (formerly, Labatt
            Communications Inc).+

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

   10.15    Asset Purchase  Agreement,  dated September 10, 1999, by and between
            1373224  Ontario  Limited,  Networks North Inc. and Arthur  Andersen
            Inc.,  to acquire the  property  and assets of GalaVu  Entertainment
            Inc.,   from  the  person   appointed  by  the  court  of  competent
            jurisdiction  as  the  receiver  or  receiver  and  manager  of  the
            property, assets and undertaking of GalaVu. +

   10.16    Promissory  Note,  dated  September 10, 1999, by and between 1373224
            Ontario Limited, as Debtor, and the Holder, as Creditor. +

   10.17    General Security Agreement, dated September 10, 1999, by and between
            1373224  Ontario  Limited,  to acquire  the  property  and assets of
            GalaVu Entertainment Inc., from the person appointed by the court of
            competent  jurisdiction  as the  receiver or receiver and manager of
            the property, assets and undertaking of GalaVu. +

   10.18    Securities  Pledge  Agreement,  dated  September  10,  1999,  by and
            between  1373224  Ontario Limited to acquire the property and assets
            of GalaVu Entertainment Inc., from the person appointed by the court
            of competent jurisdiction as the receiver or receiver and manager of
            the property, assets and undertaking of GalaVu. +

                                       19
<PAGE>


   10.23    Bill of Sale,  dated  September  13,  1999,  by and between  1373224
            Ontario  Limited  to  acquire  the  property  and  assets  of GalaVu
            Entertainment  Inc.,  from  the  person  appointed  by the  court of
            competent  jurisdiction  as the  receiver or receiver and manager of
            the property, assets and undertaking of GalaVu. +

   10.24    Covenant of Networks North Inc.,  dated September 13, 1999, to allot
            and issue and pay to the Bank in writing  100,000  common  shares of
            NETN.

   11.      Computation of Earnings Per Share (see note 4).

   22       List of Subsidiaries

+       Incorporated by reference. See Exhibit Index.

(b)     REPORTS ON FORM 8-K


        The  Company  filed an  Amended  Current  Report on Form  8-KA  (Date of
Report:  December 4, 2000) with the  Commission  on December 4, 2000,  reporting
Pro-forma Financial  Statements in connection with the Agreement of Purchase and
Sale dated as of August 4, 2000,  between the Company,  Chell  Merchant  Capital
Group, Cameron Chell and Chell.com Ltd.

        The Company filed a Current Report on Form 8-KA (Date of Report: January
16, 2001) with the Commission on February 6, 2001,  reporting a Promissory  Note
made on January 16,  2001,  by and between  Chell Group  Corporation  and Naveen
Chanana.

                                       20
<PAGE>


                                   SIGNATURES


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


                                             CHELL GROUP CORPORATION INC.
                                        (FORMERLY KNOWN AS NETWORKS NORTH INC.)



Dated: March 5, 2004                   By:            /s/ Stephen McDermott
                                       -----------------------------------------
                                         Chairman and Chief Executive Officer
                                               (Duly Authorized Officer)


                                       21
<PAGE>


                          CHELL GROUP CORPORATION INC.
                     (FORMERLY KNOWN AS NETWORKS NORTH INC.)
                                FORM 10-Q/A NO. 1
                                FEBRUARY 28, 2001

                                  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

   10.4     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

   10.15    Asset Purchase  Agreement,  dated September 10, 1999, by and between
            1373224  Ontario  Limited,  Networks North Inc. and Arthur  Andersen
            Inc.,  to acquire the  property  and assets of GalaVu  Entertainment
            Inc.,   from  the  person   appointed  by  the  court  of  competent
            jurisdiction  as  the  receiver  or  receiver  and  manager  of  the
            property, assets and undertaking of GalaVu. +5, Exh. 10.1

   10.16    Promissory  Note,  dated  September 10, 1999, by and between 1373224
            Ontario Limited,  as Debtor,  and the Holder, as Creditor.  +5, Exh.
            10.2

   10.17    General Security Agreement, dated September 10, 1999, by and between
            1373224  Ontario  Limited,  to acquire  the  property  and assets of
            GalaVu Entertainment Inc., from the person appointed by the court of
            competent  jurisdiction  as the  receiver or receiver and manager of
            the property, assets and undertaking of GalaVu.+5, Exh. 10.3

   10.18    Securities  Pledge  Agreement,  dated  September  10,  1999,  by and
            between  1373224  Ontario Limited to acquire the property and assets
            of GalaVu Entertainment Inc., from the person appointed by the court
            of competent jurisdiction as the receiver or receiver and manager of
            the property, assets and undertaking of GalaVu+5, Exh. 10.4

   10.23    Bill of Sale,  dated  September  13,  1999,  by and between  1373224
            Ontario  Limited  to  acquire  the  property  and  assets  of GalaVu
            Entertainment  Inc.,  from  the  person  appointed  by the  court of
            competent  jurisdiction  as the  receiver or receiver and manager of
            the property, assets and undertaking of GalaVu.+5, Exh. 10.9

                                       22
<PAGE>


   10.24    Covenant of Networks North Inc. for valuable  consideration to allot
            and issue and pay to the Bank in writing  100,000  common  shares of
            NETN. +5, Exh. 10.10

   11       Computation of earnings per share (see Note 4)

   22       List of Subsidiaries +1, Exh. 22

+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.

+5    All  Exhibits so  indicated  are  incorporated  herein by reference to the
      exhibit  listed above in the Company's 8-K (Date of Report:  September 13,
      1999) (File No. 0-18066), filed on September 29, 1999.

++    Filed electronically pursuant to Item 401 of Regulation S-T.