<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 Commission File Number 0-17591
BNN CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Nevada 93-0957030
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
345 Park Avenue South, New York. New York 10010
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(212) 779-6601
- --------------------------------------------------------------------------------
(Registrant's telephone number)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock Par Value $0.01
- --------------------------------------------------------------------------------
(Title and Class of each)
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 _____ No __x___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained to the best
of Registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 1 O-K or any amendment to the
Form 10-K. [ ]
No market value for the common stock held by non-affiliates of the Registrant as
of any current date may be given since there is no current trading market for
the shares. As of December 31, 1995 there were 14,563,082 issued and outstanding
shares of common stock of the Registrant.
1
<PAGE>
PART I
Item 1. Business
History and Organization
BNN Corporation (the "Company" or "BNN") is a successor of Business
News Network, Inc., originally incorporated as Sunburst Construction, Inc. under
the laws of the state of Utah on February 27, 1978. The Company had little
activity since its inception. On May 21, 1987 the Company merged with Polo Clubs
of America, Inc. a Nevada corporation. Terms of the merger included a change in
domicile, from Utah to Nevada, a change in the capital structure of the Company,
the cessation of subsidiary, and a name change of the parent to Polo Clubs of
America, Inc.
On August 11, 1989, Polo Clubs of America, Inc. acquired 100% of the
outstanding stock of Business News Network, Inc. , a Nevada corporation, through
the issuance of 1,000,000 shares of its common stock. Certificate of ownership
and Articles of Merger were filed on September 17, 1987 in the office of the
Secretary of State in Nevada. Terms of the articles included the merger of the
parent and subsidiary into a single entity named Business News Network, Inc. and
the cancellation of the subsidiary's common stock.
Between 1987 and 1989 the Company attempted to commence various
business operations. Due to lack of funds, the Company was not able to commence
or continue their operations and rescinded or terminated any agreements or
arrangements with respect to such business.
In February 1992 the Company's Articles of Incorporation were revoked
by the State of Nevada. On November 18, 1994 a Certificate of Reinstatement was
issued by the State of Nevada and the name of the Company was changed to BNN
Corporation.
The Company as of December 31, 1995 was in the development stage, as
defined in FSAB No. 7 and has had no business operations.
Acquisition of Shares of Celebrity Shopping Network and Rescission of Agreement
As of March 3, 1995, and pursuant to an Exchange Agreement executed on
January I 1, 1995 the Company acquired all of the shares of Celebrity Shopping
Network, Inc. ("Celebrity") from Celebrity's shareholders and subscribers for
6,300,000 shares of BNN common stock. Celebrity contemplated launching a home
shopping network hosted by celebrities. The Company was unable to obtain
financing and the subsidiary did not operate the network. On November 3, 1995
the former shareholders of Celebrity and the Company entered into a Rescission
Agreement rescinding, the transaction. Pursuant to the Rescission Agreement the
Celebrity shareholders returned to the Company 5,500,000 shares and certain
Celebrity shareholders retained 800,000 shares for services
2
<PAGE>
rendered to the Company prior to the rescission.
Corporate Offices
The Company presently maintains its executive offices at 345 Park
Avenue South, New York, New York 10010 which are provided at no charge by an
affiliate of Henry Siegel, the President of the Company.
Item 2. PROPERTIES
None.
Item 3. LEGAL PROCEEDINGS
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to the shareholders of the
Company during 1995.
3
<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
There was no trading market for the Company's common stock
during 1994 and 1995.
As of December 31, 1995, there were 327 record holders of the Company's
Common Stock.
Although there are no restrictions on the Company's ability to declare
or pay dividends, the Company does not have and never has had the financial
ability to declare a dividend and has not declared or paid dividends on its
Common Stock since inception.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
The following is management's discussion and analysis of
significant factors which have affected the Company's financial position and
operations.
General
The Company had no activities during the year ended December 31, 1994.
On January 11, 1995 an Exchange Agreement was entered into between the Company
and shareholders of Celebrity Shopping Network, Inc. ("Celebrity") that called
for the exchange of one share of common stock of the Company for shares of
Celebrity stock outstanding or subscribed for. On March 3, 1995, the Company
completed its Exchange Agreement and Celebrity became a wholly-owned subsidiary
of the Company. Celebrity was a newly organized company attempting to establish
a celebrity based home shopping network. The network never became operational.
On November 3, 1995, the Exchange Agreement was rescinded. All of the shares of
stock issued by the Company in connection with the Exchange Agreement were
returned to the Company with the exception of 800,000 shares retained by
Celebrity shareholders as complete compensation for services rendered to the
Company prior to the rescission. The financial statements have been prepared as
if the transaction had not occurred other than the issuance of the aforesaid
800,000 shares retained.
The Company is a development stage company, as defined in FASB No. 7.
Management will continue to seek business opportunities for the
Company.
4
<PAGE>
Year Ended December 31, 1995 and 1994
During 1995 the Company had no revenues, but management continued.
Liquidity and Capital Resources
Except for nominal cash and deposits, the assets of the Company have
remained constant from the year ended December 31, 1994 and the year ended
December 31, 1995. In June 1995 the Company issued 4,000,000 shares for notes in
the aggregate amount of $2,100,000 a portion of which has been paid and used for
expenses incurred in connection with the Company's continued search for a
business.
Item 7. FINANCIAL STATEMENTS
Reference to the attached financial statements for December 31, 1994
and 1995 and the periods then ended attached hereto.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
5
<PAGE>
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS IN COMPLIANCE WITH SECTION 16(g) OF THE EXCHANGE
AGREEMENT
The following persons are the officers and directors of the
Company and their ages. Each such person assumed his office in 1995. Each
director serves until the next annual meeting of shareholders and until he dies,
resigns, is removed or his successor is elected.
Name: Age: Position:
Henry Siegel 54 Chairman of the Board, President and Chief
Executive Officer
Paul Siegel 54 Executive Vice President and Director
Ray Volpe 55 Vice President and Director
Martin Miller 56 Secretary, Treasurer and Director
Henry Siegel, Chairman of the Board and President, is a respected
broadcasting, marketing and advertising executive who has also served as
chairman of the board of Lexington Broadcasting Systems and All American
Entertainment. Henry Siegel is recognized as the pioneer of the television
barter syndication business who helped to launch many successful television
programs including "Fame" and "Baywatch," the most watched television program in
the world. Mr. Siegel's experiences in advertising and marketing executive with
Grey Advertising, and his work in developing and acquiring cable networks
compliments his expertise as an administrator and as a skilled corporate finance
network. Mr. Siegel was recently cited as one of "Fifty Who Made a Difference:
TV's landscape honed by pioneers and visionaries: these were the executives who
made it America's medium," as published in the Spring, 1995 Special Collector's
Edition of Advertising Age Magazine. The edition highlighted fifty years of
television advertising.
Paul Siegel, Chief Executive Officer, is a Los Angeles-based
producer/distributor of top rated television series such as "Baywatch" and
"Family Feud." He has also created successful live event television specials
including "The Mysteries of the Pyramids" and "The Return to the Titanic." Paul
Siegel has had extensive involvement in the tv shopping business as well as the
management of a cable network. In the early 1980's Paul Siegel was instrumental
in launching STN (Shop TV Network) with JC Penney as a partner. For the last ten
years Mr. Siegel has created infomercials for Glen Campbell and others as well
as developing the "All American Sports Shop," a weekly syndicated shopping show
for sports memorabilia. Most recently he was involved in "Maxmusic," a daily
late-night talk show for the sale of music library products. In the mid 1980's
Paul helped re-launch the nostalgia channel. Under [LBS] the joint venture
handled virtually all aspects of the channel including ad sales, marketing and
research. Paul Siegel and Henry Siegel are brothers.
6
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Ray Volpe, a Director, is President and was an establishing partner of
Kaleidoscope, a marketing and promotion company based in New York, representing
multi-national corporations including General Motors, Proctor & Gamble and other
blue chip companies.
Martin Miller has been a private investor since 1970. He commenced his
work in career and banking in New York where he was engaged in asset-based
leasing transactions. In 1965 he organized Leasing Consultants Incorporated
acting as President and Chief Executive Officer, to engage in aircraft leasing.
This company was sold to a consortium of European banks in 1970.
Henry Siegel and Paul Siegel are orally the officer, director or the
present shareholder filed a Form 3 or 4.
Item 10. EXECUTIVE COMPENSATION
During the fiscal year ended December 31, 1995, no officer,
director, employee, or affiliate of the Registrant received any remuneration.
Moreover, for this period the Company has had no bonus, profit sharing plan, or
other compensation plan in which the executive officers or directors are
participants. The Company's directors received no fees for their services as a
director; however, directors and their affiliates were reimbursed for expenses
incurred by them in connection with the Company's business.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
At December 31, 1995 there were issued and outstanding,
14,563,082 shares of common stock of the Company, the Company's only class of
voting securities. The Company has no knowledge of any arrangements which could
affect a chance of control of the Company.
The following table sets forth, as of December 31, 1995, the number and
percentage of outstanding shares of common stock owned by (i) each person known
to the Company who owns more than five percent of the outstanding, common stock,
(ii) each officer and director of the Company, and (iii) officers and directors
of the Company as a group:
<TABLE>
<CAPTION>
Name of Beneficial Owner Amount Ownership Percent of Class
------------------------ ---------------- ----------------
<S> <C> <C>
Henry Siegel 600,000 (1) 4.27$
Paul Siegel 510,000 (1) 4.27$
Raymond Volpe 900,000 (2) 6.4$
Kaleidoscope Media Group, Inc. 400,000 (2) 2.84%
Martin Miller 0 0
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
All directors and executive officers
<S> <C> <C>
as a group (3 persons) 2,000,000 (1) 14.94%
</TABLE>
(1) Includes 100,000 shares owned by an affiliate of Messrs. Henry Siegel and
Paul Siegel. The Siegels deny beneficial ownership of such shares.
(2) Raymond Volpe is a principal shareholder of Kaledoscope Media Group, Inc.
and the shares of such company Mr. Volpe denies beneficial ownership of such
shares.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Messrs. Henry Siegel and Paul Siegel, directors of the Company, were
principal shareholders and affiliates of Celebrity. The 5,500,000 shares
received upon completion of the recession transaction of Celebrity were
distributed by the Company. Of these shares, Messrs. Henry Siegel and Paul
Siegel each received 500,000 shares and an affiliated corporation received
100,000 shares. Mr. Raymond Volp, a director, received 500,000 shares and an
affiliated company received 400,000 shares
8
<PAGE>
PART IV
Item 14. Exhibits and Reports on Form 8-K
Exhibits:
None
Reports on Form 8-K:
None
9
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Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: November 5, 1996
BNN CORPORATION
(Registrant)
______________________________________________
Henry Siegel, Chairman of the Board, Director
(Principal, Financial and Accounting Officer)
______________________________________________
Paul Siegel, Director
______________________________________________
Martin Miller, Director
______________________________________________
Raymond Volpe, Director
10
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C O N T E N T S
Independent Auditors' Report .................................. 1-2
Balance Sheet as of December 31, 1994 .......................... 3
Statement of Stockholders' Equity ............................ 4-7
Notes to Audited Financial Statements ........................... 8-10
<PAGE>
WlLLIAM L. CLANCY
CERTIFIED PUBLIC ACCOUNTANTS
CENTRAL PLAZA
SUITE 890 (602) 266-2646
4041 NORTH CENTRAL AVENUE FAX: (602) 266-2402
P.O. BOX 16627 (85011-6627)
PHOENIX, ARIZONA 85012
INDEPENDENT AUDITORS' REPORT
Board of Directors
BNN Corporation
Beverly Hills, CA 90212
I have audited the accompanying balance sheet of BNN Corporation (a dormant
Corporation that has been reactivated to undertake development stage
activities) and the related statement of stockholders' equity as of December 31,
1994. This financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit of the financial statements provides a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BNN Corporation (a dormant
Corporation that has been reactivated to undertake development stage activities)
as of December 3l, 1994, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company is a Development Stage Company as defined in Financial
Accounting Standards Board Statement No. 7. The Company is devoting
substantially all of its present efforts in establishing a new business and its
planned principal operations have not commenced and, accordingly, no revenue has
been derived therefrom. In addition, the Company does not presently have
adequate financing to carry out its business plan. These factors raise
substantial doubt about its ability to continue as a going concern. The
Company's
<PAGE>
ability to continue as a going concern is dependent upon a successful purchase
and financing of a business and its ability to establish itself as a profitable
business. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ William L. Clancy
June 23, 1995
<PAGE>
BNN Corporation
(A Development Stage Company)
BALANCE SHEET
December 31, 1994
ASSETS
Assets NONE
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities NONE
Stockholders' Equity
Common Stock, Par Value $.01
Authorized 50, 000, 000 shares
Issued and Outstanding 4,263,082
Shares at December 31, 1994
$ 42,631
Additional Paid-In (capital 1,358,573
Deficit Accumulated During
The Development Stage (1,40I,204)
--------------
Total Liabilities and Stockholders' Equity NONE
The accompanying notes are an integral part of these
financia1 statements
-3-
<PAGE>
BNN Corporation
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
December 31, 1994
Deficit
Accumulated
Common Stock Additional During The
Shares Amount Paid-In Development
Capital Stage
Balance - February
27, 1978 Through
March, 1987 1,500 $ 1,500 $ $ (1,500)
2665:1 Stock
Split - April,
1987 3,996,000 2,498 (2,498)
Issuance of
Common Stock
for Services-
June, 1987 2,500 2
Acquisition of
Business News
Network, Inc .
August, 1987 1,000,000 1,000 11l,654
Acquisition of
Film Rights
and other
Assets From
Applause
Productions,
Inc - December,
1987 1,000,000 1,000
Net Loss For Year
Ended December
31, 1987 (494,594)
---------- ---------- ----- ----------
Balance - December
31, 1987 6,000,000 $ 6,000 $ 11l, 654 $ (498,592)
Acquisition of
Film Distribution
Rights From Filmagic'
Inc. - August,
1988 200,000 200 300
Issuance of Common
Stock to Pelham
Investments, Ltd.
in Cancellation
of Indebtedness -
September, 1988 759,315 759 378,899
Issuance of
Additional Shares
of Common Stock
to Filmagic, Inc.
Pursuant to
Distribution
Agreement
October, 1988 300,000 300 (300)
The accompanying notes are an integral part of these
financia1 statements
-4-
<PAGE>
BNN Corporation
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
December 31, 1994
Deficit
Accumulated
Common Stock Additional During The
Shares Amount Paid-In Development
Capital Stage
Issuance of Common
Stock to Yucca
International,
S.A., in
Cancellation of
$317.163 in
Indebtedness
December, 1988 634,326 634 316,529 --
Issuance of Common
Stock To Pelham
Investments, Ltd.,
in Cancellation
of $156,374 in
Indebtedness -
December, 1988 312,747 313 156,061 --
Cancellation of
Agreement to
Acquire Film
Distribution
Rights from
Filmagic, Inc.
February 28,
1989 Retroactive
to December 31,
1988 (500,000 (500) -- --
Cancellation of
Agreement to
Acquire Film
Distribution
Rights and
Other Assets
From Applause
Productions,
Inc. - February
28, 1989
Retroactive to
December 21,
1988 (750,000) (750) -- --
Net Loss For The
Year Ended
December 31,
1988 (449 991)
--------- ------ ---------- ----------
Balance - December
31, 1988 6,956,388 $6,956 $963,143 $ (948,583)
The accompanying notes are an integral part of these
financia1 statements
5
<PAGE>
BNN Corporation
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
December 31, 1994
Deficit
Accumulated
Common Stock Additional During The
Shares Amount Paid-In Development
Capital Stage
Issuance of Common
Stock in
Consideration for
Loan - February 2,
1989 300,000 300 2,700 --
Issuance of Common
Stock For
Consulting
Services - March
9, 1989 100,00 100 -- --
Issuance of Common
Stock For
Consulting
Services - April
13, 1989 100,000 100 -- --
10:1 Reverse
Split - May
24, 1989 (6,709,825) 9 (9) --
Issuance of
Common Stock
For Consulting
Services
July 19, 1989 10,000 100 4,900 --
Issuance of
Common Stock
In Cancellation
of $73,720 In
Indebtedness -
July 19, 1989 147,440 1,475 72,245 --
Net Loss For Year
Ended December
3l, 1989 (491,633)
------- -------- ------------ - --------
Ba1ance - December
31, 1989
(Unaudited) 904,003 $ 9,040 $ 1,042,979 $(l,440,216)
Issuance of
Common Stock
In Cancellation
Of $250,000 In
Indebtedness -
January 23,
1990 3,000,000 30,000 220,000 --
Issuance of
Common Stock
In Cancellation
Of $76,965 In
Indebtedness -
The accompanying notes are an integral part of these
financia1 statements
-6-
<PAGE>
BNN Corporation
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
December 31, 1994
Deficit
Accumulated
Common Stock Additional During The
Shares Amount Paid-In Development
Capital Stage
March 3, 1990 92,362 924 76,041
Issuance of
Common Stock
In Cancellation
Of $22,220 In
Indebtedness -
May, 1990 266,717 2,667 19,553
Net Gain On
Transfer Of
Assets For
Indebtedness
March 3, 1990 39,012
--------- ----------- ------------ ------------
Balance - December
3l, 1990
(Unaudited) 4,263,082 $ 42,631 $l,358,573 $ (l,40l,204)
Corporation has
Been Inactive
from January 1,
1991 Through
December 31,
1994. This
Audit of
Stockholders'
Equity inc1udes
The inactive
Period from
January 1, 1991
Through
December 31,
1994. 0
--------- ----------- ------------ ------------
Balance - December
31, 1994 4,263,082 $ 42,631 $ 1,358,573 $ (1,401,204)
The accompanying notes are an integral part of these
financia1 statements
-7-
<PAGE>
BNN Corporation
(A Development Stage Company)
NOTES TO AUDITED FINANCIAL STATEMENTS
December 31, 1994
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
a. Organization
BNN Corporation is a successor of Sunburst Construction, Inc., a corporation
organized under the laws of the state of Utah on February 27, 1978. The
corporation had little activity since its inception and on May 21, 1987 merged
with Polo Clubs of America, Inc., a Nevada corporation. Terms of the merger
included a change in domicile, from Utah to Nevada, a change in the capital
structure of the corporation, the cessation of subsidiary, and a name change of
the parent to Polo Clubs of American, Inc.
On August 11, 1987, Polo Clubs of America, Inc. acquired 100% of the outstanding
stock of Business News Network, Inc., a Nevada corporation, through the issuance
of 1,000,000 shares of its common stock. Certificate of ownership and Articles
of Merger were filed on September 17, 1987 in the office of the Secretary of
State in Nevada. Terms of the articles included the merger of the parent and
subsidiary into a single entity named Business News Network, Inc. and the
cancellation of the subsidiary's common stock.
On December 15, 1987, the Company purchased all of the assets of Applause
Productions, Inc including distribution rights to 84 titles of video software,
for 1,000,000 shares of the Company's restricted common stock and a promissory
note in the amount of $100,000. The Company did not have sufficient funds to
market the films and on February 28, 1989, the Company and the Management of
Applause Productions, Inc. agreed to cancel the purchase. For financial
statement reporting, the Company reflected this cancellation transaction as if
the cancellation occurred on December 31, 1988.
On August 4, 1988, the Company acquired the exclusive rights to distribute in
the United States and Canada, three theatrical motion pictures owned by
Filmagic, Inc., for 500,000 shares of the Company's restricted common stock
valued at $2.50 per share. The Company did not have sufficient funds to market
the films and on February 29, 1989, the Company and the Management of Film
Magic, Inc. agreed to cancel the purchase. For financial statement reporting,
the Company reflected this cancellation transaction as if the cancellation
occurred on December 3l, 1988.
On January 23, 1990, the Company issued 3,000,000 shares of restricted common
stock in cancellation of $250,000 of indebtedness.
8
<PAGE>
BNN Corporation
(A Development Stage Company)
NOTES TO AUDITED FINANCIAL STATEMENTS
December 31, 1994
On March 3, 1990, the Company decided to wind down its 900# operation as a
result of the Company's being unable to secure proper financing. The Company
exchanged it computers and equipment for cancellation of the indebtedness
against it. The remaining liabilities and accrued expenses were cancelled in
exchanged for common stock of the Company. Since this time the Company has been
dormant until its reactivation in November, 1994.
On February 2, 1992, the Company's Corporate Charter was revoked by the State of
Nevada. On November 1B, 1994, a Certificated of Reinstatement was issued by the
State of Nevada and the name of the Company was changed to BNN Corporation.
The Company is a development stage company, as defined in Financial Accounting
Standards Board No. 7. The Company is devoting substantially all of its present
efforts in securing and establishing a new business and its planned principal
operations have not commenced and, accordingly, no revenue has been derived
therefrom during the inactive period. In addition, the Company does not
presently have adequate financing to carry out its business plan. These factors
raise substantial doubt its ability to continue as a going concern.
The financial statements have been prepared on the basis of accounting
principles es applicable to a going concern. Accordingly, they do not purport to
give effect to adjustments, if any, that may be necessary should the Company be
unable to continue as a going concern. The continuation of the Company as a
going concern is dependent upon a successful purchase and financing of a
business and its ability to establish itself as a profitable business. The
Company's ability to achieve these objectives cannot be determined at this time.
NOTE 2 - INCOME TAXES
At December 31, 1994, the Company has available net operating loss carryforwards
of $1,397,209 which expire as follows:
Year Expiration Amount
Date
1987 2003 $ 455,582
1988 2004 449,991
1989 2005 491,633
-----------
$1,397,209
9
<PAGE>
BNN Corporation
(a Development Stage Company)
NOTES TO AUDITED FINANCIAL STATEMENTS
December 31, 1994
Note 3 - SUBSEQUENT EVENT
On January 11, 1995 an exchange agreement was entered into between BNN
Corporation and Celebrity Network that called for the exchange of one share of
BNN Corporation common stock for one share of Celebrity Network common stock
with the result that Celebrity Network will become a wholly owned subsidiary of
BNN Corporation.
On May 19, 1995, an additional 6,300,000 shares of common stock were issued at
.01 per share for $63,000. At June 23, 1995 a total of 10,563,082 shares of
common stock were outstanding.
As of June 23, 1995, the Company continues to be inactive and its planned
principal operations have not commenced.
<PAGE>
BNN CORPORATION
BEVERLY HILLS, CALIFORNIA
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995
<PAGE>
BNN CORPORATION
BEVERLY HILLS, CALIFORNIA
AS OF DECEMBER 31, 1995
CONTENTS
Accountants Report 1
Balance sheet 2
Statement Of Operations 3
Statement of Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6
<PAGE>
Herbert Woll
Certified Public Accountant
(Ohio)
2891 Gant Quarters Drive 23611 Chagrin Blvd., Ste 101
Marietta, GA 30068 Beechwood, OH 44122
(770) 565-7299 (216) 292-7505
FAX (770) 977-5622 FAX (216) 464-1802
INDEPENDENT AUDITOR'S REPORT
Board of Directors
BNN Corporation
Beverly Hil1s, California
I have audited the accompanying Balance Sheet of BNN corporation (a development
stage company) as of December 3l, 1995, and the related Statement of Operations.
These financial statements are the responsibility of the company' s management.
My responsibility is to express an Opinion on these financial statements based
on my audit.
I have conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used, and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
The BNN is a development stage company. The successful completion of the
Company's development program, an the attainment of profitable operations is
dependent upon future events, and the obtaining of adequate financing to fulfill
its activities, and achieve a level of sales, adequate to support the company.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. In my opinion, these financial statements
present fairly, in all material aspects, the financial position of the Company
as of December 31, 1995 and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
/s/ Herbert E. Woll
Herbert E. Woll,CPA (Ohio)
September 15,1996
Page 1
<PAGE>
BNN CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS AT DECEMBER 31,1995
ASSETS
------
Current Assets
- --------------
Cash $ -0-
Deposits 3,900
-----
Total Current Assets 3,900
- --------------------
Other Assets
- ------------
Organizational Costs 25,000
------
Total Assets $ 28,900
- ------------ ========
LIABILITIES & STOCKHOLDERS' EQUITY
-----------------------------------
Total Liabilities $ -0-
- -----------------
Stockholders' Equity
- --------------------
Cannon Stock . 01 par value
authorized 50, 000, 000 shares
Issued and outstanding 14,563,061 82,631
Paid-in Capital 3,362,613
Stock Subscription -1,865,713
Retained Earnings -12/31/94 -l,401,204
Loss on Operations 149,427
Total Stockholder's Equity 28,900
- -------------------------- ---------
Total Liab & Stockholders' Equity $ 28,900
- ---------------------------------- =========
The accompanying notes are an integral part of this financial
statement
Page 2
<PAGE>
BNN CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
Revenues - Net Sales $ -0-
- --------
Operating Expenses
- ------------------
General & Admin Expense 149,427
----------
Net Loss on Operations $ 149,427
=========
Net Loss per share $ .O1
- -------------------- ======
The accompanying notes are an integral part of this financial
statement
Page 3
<PAGE>
BNN CORPORATION
(A Development Stage Company)
Statement of Stockholders' Equity
December 31, 1995
Deficit
Accumulated
Additional CORPORATION during
Paid in Stock Development
Common Stock Capital Subscription Stage
------ ----- ---------- ------------ ------------
Balance Jan 1, 1995 3950000 39500 248,035 -1401204
Reverse acquisition
CSN Inc. Mar 3, 1995 4263082 42631 1,054,578 0
Reversal -63000
Sale of Stock 2350000 23500
Sale of Stock 4000000 40000 2,060,000 -1865713
Net(Loss) -149427
1453082 $82,631 3,362,613 -1865713 $(1,550,631.00)
<PAGE>
BNN CORPORATION
(A Development Stage Company)
Statement of Cash Flow
December 31, 1995
Cash FIows from Operating Activities
Net Loss -149427
28900
-------
Increase in asssets 178327
Cash Flows from Financing Activities
Proceedsfrom Issuance of Common Stock Net 178327
------
Net change in cash 0
Cash
Beginning period 0
End of period 0
Page 5
<PAGE>
BNN CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995
Note 1. Significant Accounting Policies
- -----------------------------------------
On November 18, 1994, a certificate was issued by the State of Nevada
authorizing the change of the name of the corporation to BNN Corporation.
The Company, has no assets and has been funded by loans and advances of
its officers.
The company is a development stage company, as defined by FASB #7. The
company is devoting all of its efforts to securing or establishing a new
business. As of December 31, 1995 a business has not been established, and
no income has been generated. In addition, financing is not available to
carry out its business plan. These factors raise substantial doubt about
its ability to continue as a going concern.
The financial statements have been prepared using the accounting principles
of a going concern basis. They do not purport to give effect to the
adjustments that may be necessary should the Company be unable to continue
as a going concern.
Note 2. Method of Accounting
- ------------------------------
These financial statements were prepared using the accrual method of
accounting.
Income Taxes
------------
Bnn has filed its corporate income taxes since its inception. There is an
operating loss of $ 1,550,000 which expire between 2003 and 2005.
Note 3. Start Up Costs
- ----------------------
These amounts represent certain capitalized expenses incurred in the
formation of the business including consulting fees, travel expenses, and
other costs. They will be amortized when revenue begins to be generated
Page 6
<PAGE>
BNN CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995
Note 4. Subsequent Events
- -------------------------
In 1995 the company raised working capital through the issuance of
4,000,000 shares of common stock for notes in the amount of $ 2,100.000.00.
As of December 31, 1995 $ 1,865,713 was still due. In 1996 the Company has
received $ 1,512,784 in payments against these notes.
Page 7
