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: May 31, 2002
Commission file number: 0-18066

                             CHELL GROUP CORPORATION
             (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
                        Toronto, 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 July 15, 2002: 17,924,913 shares of common stock,
par value US$.0467 per share.

<PAGE>

                             CHELL GROUP CORPORATION
                                AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL INFORMATION

                     FOR THE NINE MONTHS ENDED MAY 31, 2002

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:                                               Page
                                                                            ----

     Consolidated Balance Sheets -
          as at May 31, 2002 (unaudited) and August 31, 2001                  1

     Consolidated Statements of Operations
          For the Three Months and Nine Months Ended May 31, 2002 and
          May 31, 2001 (unaudited)                                            2

     Consolidated Statements of Cash Flows -
          For the Nine Months Ended May 31, 2002 and
          May 31, 2001 (unaudited)                                            3

     Notes to Consolidated Financial Statements                               4

Item 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations                                                12

PART II - OTHER INFORMATION

Item 1. Legal Proceedings                                                    19

Item 2. Changes in Securities                                                19

Item 3. Defaults Upon Senior Securities                                      19

Item 4. Submission of Matters to a Vote of Security Holders                  19

Item 5. Other information                                                    19

Item 6. Exhibits and Reports on Form 8-K                                     20

SIGNATURES                                                                   22


                                       2
<PAGE>

                             CHELL GROUP CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                     AS AT MAY 31, 2002 AND AUGUST 31, 2001
                         (Expressed in Canadian dollars)

<TABLE>
<CAPTION>
===================================================================================================
                                                                May 31, 2002       August 31, 2001
                                                                 (unaudited)     [restated Note 11]
                                                                      $                   $
===================================================================================================
<S>                                                               <C>                <C>
ASSETS
Current
Cash and cash equivalents                                          2,147,203            356,421
Short-term investments                                                    --             19,676
Accounts receivable, trade - net of allowance for doubtful
        Accounts of $275,071; August - $150,000                    6,902,022            996,557
Other receivables                                                    431,792             84,814
Income taxes receivable                                               70,004            140,607
Inventory                                                          2,194,712                957
Prepaid expenses                                                     282,398            301,470
---------------------------------------------------------------------------------------------------
Total current assets                                              12,028,131          1,900,502
---------------------------------------------------------------------------------------------------
Property and equipment, net                                        6,909,502          6,305,405
Licenses, net of accumulated amortization                            231,126            229,900
Goodwill, net of accumulated amortization                         13,617,893             37,421
Investment in Wareforce                                              176,518                 --
Deposit on purchase                                                1,689,710          1,689,710
Other assets, net of amortization                                    217,303            388,032
Net assets from discontinued operations                                   --          3,790,424
---------------------------------------------------------------------------------------------------
                                                                  34,870,183         14,341,394
===================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable - trade                                           5,449,736          2,044,182
Accrued liabilities                                                1,155,607          1,259,158
Current portion of long-term debt                                  8,347,023          3,625,587
---------------------------------------------------------------------------------------------------
Total current liabilities                                         14,952,366          6,928,927
---------------------------------------------------------------------------------------------------
Long-term debt, net of current portion                             9,687,178          5,134,339
Deferred income taxes payable                                         30,000             30,000
---------------------------------------------------------------------------------------------------
Total liabilities                                                 24,669,544         12,093,266
---------------------------------------------------------------------------------------------------
Commitments and Contingent liabilities
Shareholders' equity
Share capital
    Preferred shares                                                   7,294                 --
    17,924,913 common shares [August 2001 - 9,028,239]             1,260,107            604,109
    Capital in excess of par value                                36,235,461         14,143,533
    Accumulated deficit                                          (27,302,223)       (12,499,514)
---------------------------------------------------------------------------------------------------
Total shareholders' equity                                        10,200,639          2,248,128
---------------------------------------------------------------------------------------------------
                                                                  34,870,183         14,341,394
===================================================================================================
</TABLE>

         The accompanying notes are an integral part of these statements


                                       1
<PAGE>

                             CHELL GROUP CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   (Expressed in Canadian dollars - unaudited)

<TABLE>
<CAPTION>
=============================================================================================================================
                                                          For Three Months Ended               For Nine Months Ended
                                                    May 31, 2002        May 31, 2001      May 31, 2002        May 31, 2001
                                                                     (Restated Note 11)                    (Restated Note 11)
                                                          $                  $                  $                  $
=============================================================================================================================
<S>                                                  <C>                 <C>               <C>                 <C>
REVENUE
Product sales                                         16,727,313                 --         25,789,442                 --
Service sales                                          1,055,794                 --          1,614,037                 --
Network services                                       1,464,890          1,743,131          4,739,199          5,287,461
Pay-TV                                                 1,385,281          1,750,918          4,121,842          5,047,393
Other                                                      5,901             (1,310)            15,548             73,812
-----------------------------------------------------------------------------------------------------------------------------
                                                      20,639,179          3,492,739         36,280,068         10,408,666
-----------------------------------------------------------------------------------------------------------------------------

COST OF SALES
Product sales                                         15,520,144                 --         23,810,616                 --
Service sales                                            751,861                 --          1,249,215                 --
Network services                                         644,849            584,502          1,867,954          1,790,031
Pay-TV                                                   683,342            788,960          1,984,858          2,182,480
-----------------------------------------------------------------------------------------------------------------------------
                                                      17,600,196          1,373,462         28,912,643          3,972,511
-----------------------------------------------------------------------------------------------------------------------------

EXPENSES
Selling, general and administrative
expenses                                               3,789,948          2,133,535          8,609,523         10,712,469
Write off of leasehold improvements                           --                 --                 --            355,560
Depreciation and amortization                            548,827            480,014          1,686,775          1,775,804
-----------------------------------------------------------------------------------------------------------------------------
                                                       4,338,775          2,613,549         10,296,298         12,843,833
-----------------------------------------------------------------------------------------------------------------------------
Loss from operations                                  (1,299,792)          (494,272)        (2,928,873)        (6,407,678)
Interest cost of beneficial conversion
features                                               6,289,134                             6,831,701                 --
Interest and bank charges                                269,696            286,686            963,651            566,801
Financing costs                                        2,424,091                             2,424,091                 --
-----------------------------------------------------------------------------------------------------------------------------
Loss before provision for income taxes               (10,282,713)          (780,958)       (13,148,316)        (6,974,479)
Provision for income taxes                                    --                 --                 --                 --
-----------------------------------------------------------------------------------------------------------------------------
Loss from continuing operations                      (10,282,713)          (780,958)       (13,148,316)        (6,974,479)
Loss on sale of subsidiary                              (301,238)                --           (301,238)                --
Loss from discontinued operations (net of
income tax)                                             (361,395)        (1,519,263)        (1,216,139)        (2,038,284)
-----------------------------------------------------------------------------------------------------------------------------
Loss and comprehensive loss for the
period                                               (10,945,346)        (2,300,221)       (14,665,693)        (9,012,763)
=============================================================================================================================

Loss per share: (Note 4)
Basic and diluted from continuing operations               (0.64)             (0.09)             (1.03)             (0.84)
Basic and diluted from discontinued operations             (0.04)             (0.17)             (0.12)             (0.25)
-----------------------------------------------------------------------------------------------------------------------------
Net loss per share                                         (0.68)             (0.26)             (1.15)             (1.09)
=============================================================================================================================
</TABLE>

         The accompanying notes are an integral part of these statements


                                       2
<PAGE>

                             CHELL GROUP CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE NINE MONTHS ENDED MAY 31, 2002 AND MAY 31, 2001
                   (Expressed in Canadian dollars - unaudited)

<TABLE>
<CAPTION>
=============================================================================================================
                                                                           May 31, 2002      May 31, 2001
                                                                                         (restated - Note 11)
                                                                                $                 $
=============================================================================================================
<S>                                                                        <C>                <C>
OPERATING ACTIVITIES
Net loss and comprehensive loss for the period                             (14,665,693)       (9,012,763)
Adjustments to reconcile net loss to net cash (used in) operating
   activities:
     Depreciation and amortization                                           1,686,775         1,775,804
     Interest cost of beneficial conversion features                         6,831,701                --
     Accretion of interest on non-interest bearing promissory notes            129,807           137,617
     Write-off of leasehold improvements                                            --           355,560
     Services rendered for shares                                              110,943           659,359
     Warrants issued                                                           501,129           174,084
     Write-off of prepaids arising from Chell asset purchase                   136,023           367,235
     Financing costs                                                           776,314
     Write-off of goodwill                                                          --           636,268
Changes in assets and liabilities:
     Decrease in short-term investments                                         19,676           250,209
     Decrease in accounts receivable, trade                                  1,956,874           402,293
     Decrease (increase) in income taxes receivable                             72,039           (11,940)
     (Increase) decrease in inventory                                         (651,414)           36,284
     Decrease (increase) in prepaid expenses                                    71,608           (33,757)
     (Increase) in other accounts receivable                                  (346,980)           (5,323)
     Decrease in other assets                                                  170,729            72,627
     Decrease in net assets from discontinued operations                            --           527,185
     (Decrease) increase in accounts payable and accrued liabilities          (410,867)          419,333
-------------------------------------------------------------------------------------------------------------
Cash (used in) operating activities                                         (3,611,336)       (3,249,925)
-------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of property and equipment                                            (326,959)         (846,851)
Increase in deposit on purchase                                                     --        (1,689,710)
Investment in Logicorp                                                      (1,500,000)               --
Sale of Magic Lantern                                                        1,850,000
Increase in notes receivable                                                        --          (301,100)
-------------------------------------------------------------------------------------------------------------
Cash provided by (used in) investing activities                                 23,041        (2,837,661)
-------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase in notes and loans payable                                          6,587,622         4,922,880
Repayment of notes and loans payable                                        (1,522,011)          (27,377)
Proceeds from exercise of options                                              313,466            26,681
-------------------------------------------------------------------------------------------------------------
Cash provided by financing activities                                        5,379,077         4,922,184
-------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents during the period       1,790,782        (1,165,402)
Cash and cash equivalents, beginning of period                                 356,421         1,355,613
-------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                                     2,147,203           190,211
=============================================================================================================

-------------------------------------------------------------------------------------------------------------
Income Taxes Paid                                                                   --            98,491
Interest Paid                                                                  309,291            83,262
</TABLE>

         The accompanying notes are an integral part of these statements


                                       3
<PAGE>

                             CHELL GROUP CORPORATION
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       FOR THE NINE MONTHS ENDED MAY 31, 2002 AND MAY 31, 2001 (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 Chell Group Corporation (the "Company")
(Commission No.:0-18066), filed with the Securities and Exchange Commission on
November 30, 2001. The results of operations for the Nine Months ended May 31,
2002 are not necessarily indicative of the results to be expected for the full
fiscal year ending August 31, 2002.

Note 2. General

The financial statements of the Company for the three and nine months ended May
31, 2002 (the "2002 Third Fiscal Quarter" and "2002 First Three Fiscal
Quarters"), 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 discontinued operations from NTNIN's wholly-owned
subsidiary Magic Lantern Communications Ltd. ("Magic"), which was sold effective
in March 2002. The financial statements also include the operations of Logicorp
Data Systems Ltd. and Logicorp Service Group Ltd., which will be together
referred to as "Logicorp". Logicorp was purchased effective in January 2002.

      The financial statements of the Company for the three and nine months
ended May 31, 2001 (the "2001 Third Fiscal Quarter" and "2001 First Three Fiscal
Quarters"), include the operations of the Company's wholly-owned subsidiaries
CMCG, Chell.com (USA), NTNIN, 3484751 Canada Inc., GalaVu and NTNIN's
wholly-owned subsidiary Magic. Discontinued operations are the results of
NTNIN's wholly-owned subsidiaries Interlynx, which was sold effective in July
2001, and Magic, which was sold effective in March 2002.

      Prior period's figures have been restated (see note 11) and may have been
reclassified to be consistent with any reclassifications in the current period.


                                       4
<PAGE>

Note 3. Business Segment Data for the three and Nine Months ended May 31, 2002
        and May 31, 2001

<TABLE>
<CAPTION>
======================================================================================================
                                      For Three Months Ended                For Nine Months Ended
                                 May 31, 2002       May 31, 2001       May 31, 2002       May 31, 2001
                                       $                   $                $                    $
======================================================================================================
<S>                               <C>                 <C>               <C>                 <C>
Revenue
  Entertainment                     2,855,340          3,492,641          8,878,914         10,392,083
  Systems Integration              17,783,107                 --         27,403,479                 --
  Merchant Services                       724                 --                724                 --
  Corporate                                 8                 98             (3,049)            16,583
------------------------------------------------------------------------------------------------------
                                   20,639,179          3,492,739         36,280,068         10,408,666
------------------------------------------------------------------------------------------------------
Operating profit (loss)
  Entertainment                      (338,552)           106,465           (950,280)          (225,648)
  Systems Integration                  70,456                 --              4,896                 --
  Merchant Services                  (460,752)          (540,548)          (983,501)        (5,368,853)
  Corporate                        (9,553,865)          (346,875)       (11,219,431)        (1,379,978)
------------------------------------------------------------------------------------------------------
                                  (10,282,713)          (780,958)       (13,148,316)        (6,974,479)
------------------------------------------------------------------------------------------------------
Net income (loss)
  Entertainment                      (639,790)           106,465         (1,251,518)          (225,648)
  Systems Integration                  70,456                 --              4,896                 --
  Merchant Services                  (460,752)          (540,548)          (983,501)        (5,368,853)
  Corporate                        (9,553,865)          (346,875)       (11,219,431)        (1,379,978)
  Discontinued Operations            (361,395)        (1,519,263)        (1,216,139)        (2,038,284)
------------------------------------------------------------------------------------------------------
                                  (10,945,346)        (2,300,221)       (14,665,693)        (9,012,763)
------------------------------------------------------------------------------------------------------

<CAPTION>
======================================================================================================
                                                                                    As of
                                                                       May 31, 2002       May 31, 2001
                                                                            $                    $
======================================================================================================
<S>                                                                     <C>                 <C>
Total assets
  Entertainment                                                           6,702,453          6,677,987
  Systems Integration                                                    22,844,832                 --
  Merchant Services                                                       1,054,945          1,814,050
  Corporate                                                               4,267,953          3,312,963
  Discontinued Operations                                                        --          4,331,349
------------------------------------------------------------------------------------------------------
                                                                         34,870,183         16,136,349
------------------------------------------------------------------------------------------------------
</TABLE>


                                       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
nine months ended May 31, 2002 and May 31, 2001:

<TABLE>
<CAPTION>
=====================================================================================================================
                                                       For Three Months Ended               For Nine Months Ended
                                                  May 31, 2002      May 31, 2001       May 31, 2002      May 31, 2001
                                                        $                  $                 $                  $
=====================================================================================================================
<S>                                                <C>                <C>               <C>                <C>
Numerator:
Net loss (numerator for basic and diluted
loss per share) from continuing operations         (10,282,713)         (780,958)       (13,148,316)       (6,974,479)
Net loss (numerator for basic and diluted
loss per share) from discontinued operations          (662,633)       (1,519,263)        (1,517,377)       (2,038,284)
---------------------------------------------------------------------------------------------------------------------
Net loss (numerator for basic and diluted
loss per share)                                    (10,945,346)       (2,300,221)       (14,665,693)       (9,012,763)
=====================================================================================================================

Denominator for basic and diluted loss
per share -adjusted weighted average
number of shares and assumed conversions            16,140,827         8,759,215         12,716,411         8,259,709
=====================================================================================================================

Basic and diluted loss per share from
continuing operations                                    (0.64)            (0.09)             (1.03)            (0.84)
Basic and diluted loss per share from
discontinued operations                                  (0.04)            (0.17)             (0.12)            (0.25)
---------------------------------------------------------------------------------------------------------------------
Net loss per share                                       (0.68)            (0.26)             (1.15)            (1.09)
=====================================================================================================================
</TABLE>

Note 5. Business Acquisition/Disposition

      Effective January 1, 2002, the Company acquired 100% of Logicorp Data
Systems Ltd., Logicorp Service Group Ltd., 123557 Alberta Ltd. and 591360
Alberta Ltd. (collectively " Logicorp") for a purchase price of $13,880,968
calculated on a discounted basis. Logicorp is a Canadian systems integrator
handling all aspects of IT systems integration and solutions development,
including network integration and management, desktop support, hardware/software
procurement, systems architecture design and consulting. The acquisition was
recorded using the purchase method of accounting and, accordingly the purchase
price has been allocated as set out below:

                                                            $
                 ------------------------------------------------
                 Goodwill                              13,429,307
                 Net tangible assets                      451,661
                 ------------------------------------------------
                                                       13,880,968
                 ------------------------------------------------

      The purchase price was satisfied by $1,500,000 in cash, the issuance of
two non-interest bearing promissory notes with a maturity value of $2,300,000
and the issuance of 5,355,000 exchangeable shares of CMCG. These shares are
exchangeable on a one for one basis for the Common shares of the Company. The
first promissory note with a maturity value of $1,800,000 is due June 30, 2002.
Prior to payment of the first promissory note, the Company can elect to adjust
the purchase price by substituting the $1,800,000 note for an


                                       6
<PAGE>

interest-free promissory note in the amount of $2,040,000 one half of which
would be due June 30, 2002 and the second half would be due December 31, 2002.
The second promissory note has a maturity value of $500,000 and is due March 31,
2003.

      In addition, the purchase price may be adjusted upwards because the
Company is required to pay an amount by which the earnings before taxes,
interest, depreciation and amortization (EBITDA) of Logicorp exceeds $1,000,000
for the year ended December 31, 2002. The purchase price may be adjusted
downward by three times the amount that EBITDA for this period is less than
$1,000,000.

      The purchase price could be further adjusted on June 30, 2002, in the
event that the weighted average closing stock price of the Company's common
shares for the 10 trading days prior to June 30, 2002 was less than US$1.00. The
weighted average closing stock price was greater than US$1.00 during this period
and accordingly, no adjustment to the purchase price is required.

      The operating results of Logicorp are included in the Company's
consolidated statements of operations from the effective date of acquisition.

Pro forma information

The following pro forma information on results of operations assumes that
Logicorp was purchased at the beginning of each period presented.

<TABLE>
<CAPTION>
==============================================================================================================
                                                  For Three Months Ended              For Nine Months Ended
                                               May 31, 2002   May 31, 2001         May 31, 2002   May 31, 2001
                                                     $              $                    $              $
==============================================================================================================
<S>                                             <C>             <C>                 <C>             <C>
Revenues                                         24,928,899     27,148,097           51,815,609     58,887,078
Loss before extraordinary items                 (10,333,338)      (204,513)         (13,079,150)    (5,968,109)
Loss before extraordinary items per share             (0.64)         (0.02)               (1.03)         (0.72)
Net loss                                        (10,995,971)    (1,723,776)         (14,596,527)    (8,006,393)
Net loss per share                                    (0.68)         (0.20)               (1.15)         (0.97)
==============================================================================================================
</TABLE>


                                       7
<PAGE>

Sale of Magic Lantern

      Commencing in the second fiscal quarter, the Company began negotiations to
sell Magic Lantern and its subsidiaries. Effective March 18, 2002, the Company
completed this sale for cash consideration of $1,850,000. The Company's
financial statements have been restated to reflect Magic as a discontinued
operation for all periods presented. Summarized operating results of Magic's
discontinued operations are as follows:

<TABLE>
<CAPTION>
========================================================================================================================
                                                         For Three Months Ended               For Nine Months Ended
                                                     May 31, 2002      May 31, 2001      May 31, 2002       May 31, 2001
                                                             $                $                  $                 $
========================================================================================================================
<S>                                                      <C>              <C>              <C>                  <C>
Revenues                                                  113,294         1,300,238         1,621,287           3667,758
(Loss) income before extraordinary items                 (361,395)         (482,723)       (1,216,139)          (666,027)
(Loss) income before extraordinary items per share          (0.02)            (0.06)            (0.10)             (0.08)
Net (loss) income                                        (361,395)         (482,723)       (1,216,139)          (666,027)
Net (loss) income per share                                 (0.02)            (0.06)            (0.10)             (0.08)
========================================================================================================================
</TABLE>

Note 6. Convertible Debenture

      During the 2002 third fiscal quarter, the convertible debenture held by
CALP II Limited Partnership ("CALP II") on behalf of Canadian Advantage Limited
Partnership ("CALP") and Advantage (Bermuda) Fund Ltd. ("ABFL") was exchanged
for a note payable to CALP in the amount of US$1,365,100 and a note payable to
ABFL in the amount of US$504,900. These notes provide for payment of principal
and interest at the rate of 10% per annum on August 31, 2006. The notes are
secured by a general security agreement against the assets of the Company in
priority to all other claims subject to the existing security of the Bank of
Montreal and the CIBC.

      The Company entered into an agreement with CALP to convert the principal
amount of the note plus accrued interest into Common Stock at the rate of
US$0.80 pursuant to which CALP received 1,314,000 shares of the Company. CALP
will receive an additional 442,145 shares upon the approval of the Company's
shareholders.

      The Company also entered into an agreement with ABFL to convert the
principal amount of the note plus accrued interest into Common Stock at the rate
of US$0.80 pursuant to which ABFL received 486,000 shares of the Company. ABFL
will receive an additional 163,533 shares upon the approval of the Company's
shareholders.


                                       8
<PAGE>

Note 7. Convertible Promissory Notes

      The Company has issued 8% convertible notes in the amount of $6,587,622
under a private placement memorandum. These notes are due August 9, 2002. On
April 9, 2002 all of the holders of the notes signed commitments to voluntarily
convert the notes at US$0.95 per share. This conversion is subject to
shareholder approval. The conversion of these notes will result in the issuance
of approximately 4,389,000 shares, diluting the current common stockholders.

Note 8. Beneficial Conversion Feature

Convertible Promissory Notes

      The beneficial conversion feature of the 8% promissory notes issued in the
2002 third fiscal quarter has been recognized by recording additional paid in
capital and interest expense for the three months ended May 31, 2002. The amount
of the beneficial conversion and interest expense was calculated as of the date
the holders of the notes committed to converting the notes into common shares,
as the difference between the conversion price and the fair value of the common
stock into which the notes are convertible. The Company recognized beneficial
conversion interest expense and corresponding additional paid in capital in the
amount of approximately $2,637,000 for the three months ending May 31, 2002.

Notes Payable to CALP and ABFL

      The beneficial conversion feature of the notes payable to CALP and ABFL
that were converted to common shares in the third fiscal quarter has been
recognized by recording additional paid in capital and interest expense for the
three months ended May 31, 2002. The amount of the beneficial conversion and
interest expense was calculated as of the date the agreement to convert the
notes was signed, as the difference between the conversion price and the fair
value of the common stock into which the notes are convertible. The Company
recognized beneficial conversion interest expense and corresponding additional
paid in capital in the amount of approximately $3,131,000 for the three months
ending May 31, 2002.

Note Payable to Chanana

      The beneficial conversion feature of the note payable to Chanana that was
converted to common shares in the third fiscal quarter has been recognized by
recording additional paid in capital and interest expense for the three months
ended May 31, 2002. The amount of the beneficial conversion and interest expense
was calculated as of the date of the agreement to convert the notes to common
shares, as the difference between the conversion price and the fair value of the
common stock into which the notes are convertible. The Company recognized
beneficial conversion interest expense and corresponding additional paid in
capital in the amount of approximately $521,000 for the three months ending May
31, 2002.


                                       9
<PAGE>

Note 9. Subsequent Event

      Pursuant to an oral hearing before a Nasdaq Listings Qualifications Panel,
a determination was made to delist the Company's securities from the Nasdaq
Stock Market effective with the open of business June 27, 2002. The Company
disagrees with this determination and intends to appeal to the extent available
by law.

Note 10. New Accounting Pronouncements

      In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-lived Assets (SFAS 144), that is applicable to financial
statements issued for fiscal years beginning after December 15, 2001. The new
rules on asset impairment supersede SFAS 121, Accounting for the impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and portions of
Accounting Principles Board Opinion 30, "Reporting the Results of Operations."
This Standard provides a single accounting model for long-lived assets to be
disposed of and significantly changes the criteria that would have to be met to
classify an asset as held-for-sale. Classification as held-for-sale is an
important distinction since such assets are not depreciated and are stated at
the lower of fair value and carrying amount. This Standard also requires
expected future operating losses from discontinued operations to be displayed in
the period(s) in which the losses are incurred, rather than as of the
measurement date as presently required. The Company is currently assessing the
potential impact of SFAS 144 on the operating results and financial position.

      In June 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, business combinations can no longer be
reflected by using the pooling of interests method of accounting and goodwill
(and intangible assets deemed to have indefinite lives) will no longer be
amortized but will be subject to annual impairment tests in accordance with the
Statements. Other intangible assets will continue to be amortized over their
useful lives.

      The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter in the year beginning September
1, 2002 (Fiscal 2003). During fiscal 2003, the Company will perform the first of
the required impairment tests of goodwill and indefinite lived intangible assets
as of September 1, 2002 and has not yet determined what the effects of these
tests will be on the earnings and financial position of the Company.


                                       10
<PAGE>

Note 11.  Restatement of financial statements

      In Fiscal 2001, the Company sold its wholly-owned subsidiary, Interlynx.
In Fiscal 2002, the Company sold its wholly-owned subsidiary Magic Lantern
Communications, and its associated subsidiaries; Sonoptic Technologies Inc. and
Tutorbuddy Inc. The Company's financial statements have been restated to reflect
Interlynx and Magic Lantern as discontinued operations for all periods presented
(See Note 5).

Note 12.  Changes in share capital

      During the Nine Months ended May 31, 2002, the following transactions
resulted in the issuance of 8,896,674 common shares of the Company. The
acquisition of Logicorp resulted in the issuance of 5,355,000 exchangeable
shares of CMCG. These shares are exchangeable on a one for one basis for the
common shares of the Company and are held in escrow pending shareholder
approval. In addition 3,026,986 shares were issued as payment for debt, 52,500
for services rendered and 265,000 were issued for funds raised. Also during the
Nine Months ended May 31, 2002, options totaling 197,188 were exercised
resulting in the issuance of additional 197,188 common shares of the Company.


                                       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

      We are engaged in the business of providing interactive entertainment
services, systems integration products and services and merchant capital
services. Our core businesses are interactive entertainment services provided by
our NTN Interactive Network subsidiary and the merchant capital services
provided through our Merchant Capital Group subsidiary. GaluVu is a
technology-based entertainment provider of interactive in-room entertainment
systems to hotels across Canada. Interactive entertainment services also
involve, for example electronic sports trivia games played on computer units
installed in bars, pubs and restaurants. System integration products and
services are provided by our Logicorp subsidiary. Logicorp is a Western Canadian
Network Infrastructure provider, specializing in Server-Based Computing
solutions, Managed Services - using Computer Associates' Unicentre, Network
design, delivery, administration, and support Procurement services,
Warranty/Off-Warranty [W/OW] hardware support services, and Information Storage
technologies. Logicorp's primary focus is high-performance computer systems for
the corporate market. The firm provides solutions to mid-range and large
corporations, as well as the government, education and medical markets. In
addition, the business of merchant capital services involves our investment in
and acquisition of significant but undervalued operating companies or
technologies, to which we then apply management experience, in an effort to
appreciate the value of those companies.

      Our main business strategy is to operate or invest in companies that
represent the latest in technological innovations. We apply our expertise,
industry contacts, and market foresight to these companies in order to create
shareholder value.

Results of Operations for the Three Months ended May 31, 2002

      The Company's total revenues for the 2002 Third Fiscal Quarter were
$20,639,179, compared to $3,492,739 for the 2001 Third Fiscal Quarter, an
increase of $17,146,440 or 490.9%.

      Revenues from product sales for the 2002 Third Fiscal Quarter were
$16,727,313. There are no comparative figures for the 2001 Third Fiscal Quarter
as the revenues arose from the purchase of Logicorp in January 2002.

      Revenues from service sales for the 2002 Third Fiscal Quarter were
$1,055,794. There are no comparative figures for the 2001 Third Fiscal Quarter
as the revenues arose from the purchase of Logicorp in January 2002.


                                       12
<PAGE>

      Revenues from network services for the 2002 Third Fiscal Quarter were
$1,464,890, compared to $1,743,131 for the 2001 Third Fiscal Quarter, a decrease
of $278,241 or 16.0%. The decrease can be attributed to a decrease in event
programming of $91,572 and a decrease of $186,669 in hospitality services, which
can be attributed to a decrease in the number of Hospitality sites between the
2002 and 2001 Third Fiscal Quarters.

      Revenues from Pay-tv for the 2002 Third Fiscal Quarter were $1,385,281
compared to $1,750,918 for the 2001 Third Fiscal Quarter, a decrease of $365,637
or 20.9%. This decrease can be attributed to travel levels still being depressed
as a result of September 11th.

      Total cost of sales for the 2002 Third Fiscal Quarter were $17,600,196,
compared to $1,373,462 for the 2001 Third Fiscal Quarter, an increase of
$16,226,734 or 1,181.4%. The increase is primarily the result of the addition of
Logicorp's product and service cost of sales to the company. Product
($15,520,144) and service ($751,861) resulted in a total addition of $16,272,005
or almost 100% of the increase. Since Logicorp was added in January 2002, there
are no comparative figures for the 2001 Third Fiscal Quarter. Network services
cost of sales were $644,849 in the 2002 Third Fiscal Quarter, compared to
$584,502 in the 2001 Third Fiscal Quarter, an increase of $60,347 or 10.3%.
Pay-TV cost of sales were $683,342 in the 2002 Third Fiscal Quarter, compared to
$788,960 in the 2001 Third Fiscal Quarter, a decrease of $105,618 or 13.4%. As a
percentage of revenues, cost of sales increased in the 2002 Third Fiscal Quarter
to 85.3% from 39.3% in the 2001 Third Fiscal Quarter. The increase in percentage
is the resulting of lower margins from the Systems Integration segment.

      Total selling, general and administrative expenses for the 2002 Third
Fiscal Quarter were $3,789,948, compared to $2,133,535 for the 2001 Third Fiscal
Quarter, an increase of $1,656,413 or 77.6%. The increase can be attributed to a
couple of items: there was a decrease in the merchant services segment of
$427,918 resulting from decreased staffing costs and associated cost reductions;
offset by increases in legal and accounting fees and the addition of Logicorp
($1,290,865) which was purchased during January 2002, thus resulting in no
comparative figures.

      Total selling, general and administrative expenses for the 2002 Third
Fiscal Quarter for Logicorp comprised the following major items: salaries of
$758,763 and supplies and materials of $372,504.

      As a percentage of the Company's total revenues, selling, general and
administration expenses decreased to 18.4% for the 2002 Third Fiscal Quarter
from 61.1% for the 2001 Third Fiscal Quarter.

      Interest cost of beneficial conversion features for the 2002 Third Fiscal
Quarter were $6,289,134, compared to nil for the 2001 Third Fiscal Quarter. The
costs arose from the raising of funds required by The Company. There were no
similar costs for the 2001 Third Fiscal Quarter. As a percentage of the
Company's total revenues, Interest from beneficial conversion features increased
to 30.5% for the 2002 Third Fiscal Quarter from 0.0% for the 2001 Third Fiscal
Quarter.

                                       13
<PAGE>

      Financing costs for the 2002 Third Fiscal Quarter were $2,424,091,
compared to nil for the 2001 Third Fiscal Quarter. The costs arose from the
raising of funds required by The Company. There were no similar costs for the
2001 Third Fiscal Quarter. As a percentage of the Company's total revenues,
financing costs increased to 11.7% for the 2002 Third Fiscal Quarter from 0.0%
for the 2001 Third Fiscal Quarter.

      Interest and bank charges for the 2002 Third Fiscal Quarter were $269,696,
compared to $286,686 for the 2001 Third Fiscal Quarter, a decrease of $16,990 or
5.9%. The decrease results from a decreased level of high interest rate bearing
debt. As a percentage of the Company's total revenues, interest and bank charges
decreased to 1.3% for the 2002 Third Fiscal Quarter from 8.2% for the 2001 Third
Fiscal Quarter.

      Total depreciation and amortization expense for the 2002 Third Fiscal
Quarter was $548,827, compared to $480,014 for the 2001 Third Fiscal Quarter, an
increase of $68,813 or 14.3%. This is primarily the result of the addition of
Logicorp.

      The net loss from continuing operations for the 2002 Third Fiscal Quarter
was $10,282,713 compared to net loss of $780,958 for the 2001 Third Fiscal
Quarter, an increase of $9,501,755. The increase primarily resulted from the
interest cost of beneficial conversion features ($6,289,134), increased
financing costs ($2,424,091) and the decreased revenue experienced in network
services and Pay-Tv, offset by the decrease in the merchant services segment of
$427,918.

      As a result of all of the above, the net loss for the 2002 Third Fiscal
Quarter was $10,945,346, compared to net loss of $2,300,221 for the 2001 Third
Fiscal Quarter, an increase of $8,645,125. The increase primarily resulted from
the interest cost of beneficial conversion features ($6,289,134), increased
financing costs ($2,424,091), and the addition of Logicorp ($1,290,865) offset
by a decrease in loss from discontinued operations of $1,157,868 and merchant
services segment of $427,918.

Results of Operations for the Nine Months ended May 31, 2002

The Company's total revenues for the 2002 First Three Fiscal Quarters were
$36,280,068, compared to $10,408,666 for the 2001 First Three Fiscal Quarters,
an increase of $25,871,402 or 248.6%.

      Revenues from product sales for the 2002 First Three Fiscal Quarters were
$25,789,442. There are no comparative figures for the 2001 First Three Fiscal
Quarters as the revenues arose from the purchase of Logicorp in January 2002.

      Revenues from service sales for the 2002 First Three Fiscal Quarters were
$1,614,037. There are no comparative figures for the 2001 First Three Fiscal
Quarters as the revenues arose from the purchase of Logicorp in January 2002.

      Revenues from network services for the 2002 First Three Fiscal Quarters
were $4,739,199, compared to $5,287,461 for the 2001 First Three Fiscal
Quarters, a decrease of


                                       14
<PAGE>

$548,262 or 10.4%. The decrease can be attributed to a decrease in event
programming of $173,280 offset by an increase of $63,060 in advertising
sponsorship. The revenues are decreasing due to a slight decrease in the number
of Hospitality sites between the 2002 and 2001 First Three Fiscal Quarters.

      Revenues from Pay-tv for the 2002 First Three Fiscal Quarters were
$4,121,842 compared to $5,047,393 for the 2001 First Three Fiscal Quarters, a
decrease of $925,551 or 18.3%. This decrease can be attributed to travel levels
still being depressed as a result of September 11th.

      Total cost of sales for the 2002 First Three Fiscal Quarters were
$28,912,643, compared to $3,972,511 for the 2001 First Three Fiscal Quarters, an
increase of $24,940,132 or 627.8%. The increase is primarily the result of the
addition of Logicorp's product and service cost of sales to the company. Product
($23,810,616) and service ($1,249,215) resulted in a total addition of
$25,059,831 or almost 100% of the increase. Since Logicorp was added in January
2002, there are no comparative figures for the 2001 First Three Fiscal Quarters.
Network services cost of sales were $1,867,954 in the 2002 First Three Fiscal
Quarters, compared to $1,790,031 in the 2001 First Three Fiscal Quarters, an
increase of $77,923 or 4.4%. Pay-TV cost of sales were $1,984,858 in the 2002
First Three Fiscal Quarters, compared to $2,182,480 in the 2001 First Three
Fiscal Quarters, a decrease of $197,622 or 9.1%. As a percentage of revenues,
cost of sales increased in the 2002 First Three Fiscal Quarters to 79.7% from
38.2% in the 2001 First Three Fiscal Quarters.

      Total selling, general and administrative expenses for the 2002 First
Three Fiscal Quarters were $8,609,523, compared to $10,712,469 for the 2001
First Three Fiscal Quarters, a decrease of $2,102,946 or 19.6%. The decrease can
be attributed to a couple of items: there was a decrease in the merchant
services segment of $4,169,360 resulting from decreased staffing costs and
associated cost reductions; offset by an increase resulting from the addition of
Logicorp $2,114,196 which was purchased during January 2002, thus resulting in
no comparative figures.

      Total selling, general and administrative expenses for the 2002 First
Three Fiscal Quarters for Logicorp comprised the following major items; salaries
of $1,280,610 and supplies and materials of $570,471.

      As a percentage of the Company's total revenues, selling, general and
administration expenses decreased to 23.7% for the 2002 First Three Fiscal
Quarters from 102.9% for the 2001 First Three Fiscal Quarters.

      Interest cost of beneficial conversion features for the 2002 First Three
Fiscal Quarters were $6,831,701, compared to nil for the 2001 First Three Fiscal
Quarters. The costs arose from the raising of funds required by the Company.
There were no similar costs for the 2001 First Three Fiscal Quarters. As a
percentage of the Company's total revenues, Interest cost of beneficial
conversion features increased to 18.8% for the 2002 First Three Fiscal Quarters
from 0.0% for the 2001 First Three Fiscal Quarters.


                                       15
<PAGE>

      Financing costs for the 2002 First Three Fiscal Quarters were $2,424,091,
compared to nil for the 2001 First Three Fiscal Quarters. The costs arose from
the raising of funds required by The Company. There were no similar costs for
the 2001 First Three Fiscal Quarters. As a percentage of the Company's total
revenues, financing costs increased to 6.7% for the 2002 First Three Fiscal
Quarters from 0.0% for the 2001 First Three Fiscal Quarters.

      During the 2001 First Three Fiscal Quarters, 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 2002 First Three Fiscal Quarters.

      Interest and bank charges for the 2002 First Three Fiscal Quarters were
$963,651, compared to $566,801 for the 2001 First Three Fiscal Quarters, an
increase of $396,850 or 70.0%. The increase can be attributed to interest now
being incurred for full three fiscal quarters compared to a partial three fiscal
quarters. These items were not present for the entire 2001 First Three Fiscal
Quarters. As a percentage of the Company's total revenues, interest and bank
charges decreased to 2.7% for the 2002 First Three Fiscal Quarters from 5.4% for
the 2001 First Three Fiscal Quarters.

      Total depreciation and amortization expense for the 2002 First Three
Fiscal Quarters was $1,686,775, compared to $1,775,804 for the 2001 First Three
Fiscal Quarters, a decrease of $89,025 or 5.0%. This decrease is primarily the
result of some assets becoming fully depreciated.

      The net loss from continuing operations for the 2002 First Three Fiscal
Quarters was $13,148,316, compared to net loss of $6,974,479 for the 2001 First
Three Fiscal Quarters, a increase of $6,173,837. The increase primarily resulted
from the interest cost of beneficial conversion features ($6,831,701), increased
financing costs ($2,424,091) and the decrease in revenue from Network Services
and Pay-Tv, offset by the decrease in the merchant services segment of
$4,169,360.

      As a result of all of the above, the net loss for the 2002 First Three
Fiscal Quarters was $14,665,693, compared to net loss of $9,012,763 for the 2001
First Three Fiscal Quarters, an increase of $5,652,930. The increase primarily
resulted from the interest cost of beneficial conversion features ($6,831,701),
increased financing costs ($2,424,091), and the decrease in revenue from Network
Services and Pay-Tv, offset by a decreases in loss from discontinued operations
of $520,907 and merchant services segment of $4,169,360.

Liquidity and Capital Resources

      At May 31, 2002, the Company had a working capital deficit of $2,924,235,
an increase of $2,104,190 from working deficit of $5,028,425 at August 31, 2001.

      For the 2002 First Three Fiscal Quarters, the Company had a net increase
in cash of $1,790,782 compared to a net decrease of $1,165,402 in the 2001 First
Fiscal Half.


                                       16
<PAGE>

      Cash used in operating activities for the 2002 First Fiscal Half was
$3,611,336, compared to $3,249,925 used in operating activities in the 2001
First Fiscal Half. In 2002, 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 $4,493,001, the increase in inventory of $651,414, the increase in
other accounts receivable of $346,980 and the decrease in accounts payable and
accrued liabilities of $410,867. The major item that contributed to cash being
provided by operating activities was the decrease in accounts receivable of
$1,956,874. In 2001, the major items that contributed to cash being used in
operating activities were as follows: net loss with non-cash expenses added back
of $4,906,836, increases in income taxes receivable and prepaids of $11,940 and
$33,757 respectively. The major sources of operating funds included decreases in
short-term investments of $250,209 and accounts receivable of $402,293, an
increase in other accounts payable and accrued liabilities of $419,333 and a
decrease in net assets from discontinued operations of $527,185.

      Cash provided by investing activities in the 2002 First Three Fiscal
Quarters was $23,041 compared to the $2,837,661 used in investing activities in
the 2001 Three Fiscal Quarters, an increase of $2,860,702. In the 2002 First
Three Fiscal Quarters, $326,959 of property and equipment was purchased compared
to $846,851 in the 2001 First Three Fiscal Quarters, a decrease of $519,892. In
the 2002 First Three Fiscal Quarters, $1,500,000 was used in the purchase of
Logicorp (note 5), where in the 2001 First Three Fiscal Quarters, a $1,689,710
deposit on purchase occurred, a decrease of $189,710. In addition, a $1,850,000
increase due to sale of Magic Lantern (note 5) compared to a $301,000 increase
in notes receivable occurred in the 2001 Three Fiscal Quarters.

      Cash provided by financing activities in the 2002 First Three Fiscal
Quarters was $5,379,077, compared to the $4,922,184 provided in the 2001 First
Three Fiscal Quarters.

      During the 2002 Second Fiscal Quarter the Company issued promissory notes
in the amount $6,587,622 under a private placement memorandum. The Company is in
the process of raising additional capital under its private placement
memorandum. It is anticipated that such funds raised will be converted to
equity. These funds will allow the Company to realize its acquisition strategy
and to repay its loan obligations. In addition, in the 2002 Third Fiscal Quarter
the Company has negotiated the conversion of approximately $2,954,600 owing to
CALP and ABFL to equity. The Company's subsidiaries operating in the
entertainment and systems integration segments create liquidity sufficient to
fund their operations. Management believes that the current negotiations for
terms and financing will be successful and that 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 Nine Months ended May 31, 2002 and May 31, 2001
and inflation is not expected to have a significant impact on the Company's
operations or financial position during the 2002 Fiscal Year.


                                       17
<PAGE>

      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.

Forward-Looking Statements

         The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements made by or on behalf of Chell Group
Corporation. Chell Group Corporation and its representatives may from time to
time make written or oral forward-looking statements, including statements
contained in this report and in our other filings with the SEC. These statements
use words such as "believes", "expects", "intends", "plans", "may", "will",
"should", "anticipates" and other similar expressions. All statements which
address operating performance, events or developments that Chell Group
Corporation expects or anticipates will occur in the future are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act.
The forward-looking statements are and will be based on management's then
current views and assumptions regarding future events and operating performance.
Chell Group Corporation cannot assure that anticipated results will be achieved
since actual results may differ materially because of risks and uncertainties.
Chell Group Corporation does not undertake to revise these statements to reflect
subsequent developments.


                                       18
<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

      None.

Item 2. Changes in Securities

      None.

Item 3. Defaults Upon Senior Securities

      None.

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

      None

Item 5. Other Information

      None.


                                       19
<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 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. +

      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. +

      10.25       Agreement and Plan of Merger and Reorganization, dated
                  November 21, 2001, by and among Chell Group Corporation, Chell
                  Group Corporation, in trust for Chell SSI Acquisition Corp.,
                  and Stardrive Solutions Inc. +


                                       20
<PAGE>

      10.26       Share Purchase Agreement, dated December 13, 2001, by and
                  among Chell Group Corporation, Chell Merchant Capital Group,
                  Inc., Melanie Johannesen, Randy Baxandall, Morris Chynoweth,
                  Elaine Chynoweth, the Johannesen Family Trust, the Baxandall
                  Family Trust, the Merc Family Trust, Logicorp Data Systems
                  Ltd., 123557 Alberta Ltd., Logicorp Service Group Ltd. and
                  591360 Alberta Ltd. +

      11.         List of Subsidiaries

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

+     Incorporated by reference. See Exhibit Index.

(b)   Reports on Form 8-K

      The Company filed a Current Report on Form 8-K (Date of Report: February
20, 2002) with the Commission on March 7, 2002, reporting the notification by
Nasdaq to the Company that it had determined to deny the Company's request for
continued listing on the Nasdaq SmallCap Market (the "Determination"), the
Company's notice to Nasdaq of its intention to appeal same, and the scheduling
of a Nasdaq Hearing to review the Determination.

      The Company filed an Amended Current Report on Form 8-KA (Date of Report:
February 20, 2002) with the Commission on March 8, 2002, reporting Nasdaq
notification to the Company that it had determined to deny the Company's request
for continued listing on the Nasdaq SmallCap Market (the "Determination"), the
Company's notice to Nasdaq of its intention to appeal same, and the scheduling
of a Nasdaq Hearing to review the Determination.

      The Company filed a Current Report on Form 8-K (Date of Report: March 15,
2002) with the Commission on March 18, 2002, reporting the close of the Share
Purchase Agreement, dated December 13, 2001, by and among Chell Group
Corporation, Chell Merchant Capital Group, Inc., Melanie Johannesen, Randy
Baxandall, Morris Chynoweth, Elaine Chynoweth, the Johannesen Family Trust, the
Baxandall Family Trust, the Merc Family Trust, Logicorp Data Systems Ltd.,
123557 Alberta Ltd., Logicorp Service Group Ltd. and 591360 Alberta Ltd.

      The Company filed an Amended Current Report on Form 8-KA (Date of Report:
March 15, 2002) with the Commission on March 19, 2002, reporting the close of
the Share Purchase Agreement, dated December 13, 2001, by and among Chell Group
Corporation, Chell Merchant Capital Group, Inc., Melanie Johannesen, Randy
Baxandall, Morris Chynoweth, Elaine Chynoweth, the Johannesen Family Trust, the
Baxandall Family Trust, the Merc Family Trust, Logicorp Data Systems Ltd.,
123557 Alberta Ltd., Logicorp Service Group Ltd. and 591360 Alberta Ltd.

      The Company filed an Amended Current Report on Form 8-KA (Date of Report:
March 15, 2002) with the Commission on March 21, 2002, reporting the close of
the Share Purchase Agreement, dated December 13, 2001, by and among Chell Group
Corporation, Chell Merchant Capital Group, Inc., Melanie Johannesen, Randy
Baxandall, Morris Chynoweth, Elaine Chynoweth, the Johannesen Family Trust, the
Baxandall Family Trust, the Merc Family Trust, Logicorp Data Systems Ltd.,
123557 Alberta Ltd., Logicorp Service Group Ltd. and 591360 Alberta Ltd.

      The Company filed a Current Report on Form 8-K (Date of Report: March 18,
2002) with the Commission on April 3, 2002, reporting a Share Purchase Agreement
dated as of March 18, 2002 by and among the Company through, NTN Interactive
Network, Inc, a wholly owned subsidiary of the Company, Magic Vision Media,
Inc., NTN Interactive, Network, Inc. and Magic Lantern Communications Ltd., a
wholly owned subsidiary of Chell Group Corporation.


                                       21
<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.

                                         CHELL GROUP CORPORATION

Dated: July 15, 2002                 By: /s/ Stephen McDermott
                                         ---------------------------------------
                                            Stephen McDermott,
                                          Chief Executive Officer
                                         (Duly Authorized Officer)


Dated: July 15, 2002                 By: /s/ Don Pagnutti
                                         ---------------------------------------
                                             Don Pagnutti,
                                         President and Chief Financial Officer



Dated: July 15, 2002                 By: /s/ Mark Truman
                                         ---------------------------------------
                                             Mark Truman,
                                         Controller and Chief Accounting Officer


                                       22
<PAGE>

                             CHELL GROUP CORPORATION
                                    FORM 10-Q
                                  May 31, 2002

                                  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


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<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

  10.25       Agreement and Plan of Merger and Reorganization,
              dated November 21, 2001, by and among Chell Group
              Corporation, Chell Group Corporation, in trust for
              Chell SSI Acquisition Corp., and Stardrive
              Solutions Inc. +6

  10.26       Share Purchase Agreement, dated December 13, 2001,
              by and among Chell Group Corporation, Chell
              Merchant Capital Group, Inc., Melanie Johannesen,
              Randy Baxandall, Morris Chynoweth, Elaine
              Chynoweth, the Johannesen Family Trust, the
              Baxandall Family Trust, the Merc Family Trust,
              Logicorp Data Systems Ltd., 123557 Alberta Ltd.,
              Logicorp Service Group Ltd. and 591360 Alberta
              Ltd. +7

  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.

++6   All Exhibits so indicated are incorporated herein by reference to the
      exhibit listed above in the Company's 8-K (Date of Report: November 21,
      2001) (File No. 0-18066) filed on December 6, 2001.

++7   All Exhibits so indicated are incorporated herein by reference to the
      exhibit listed above in the Company's 8-K (Date of Report: December 13,
      2001) (File No. 0-18066) filed on December 28, 2001.

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


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