<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended September 30, 1996 Commission File No. 0-17591
BNN CORPORATION
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(Exact name of registrant as specific in its 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
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(Address of principal executive offices)
(212) 779-6601
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(Registrant's telephone number)
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 and Exchange Act of 1934
during the proceeding 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 _____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes_____ No______
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of September 30, 1996: 14,563,061
Transitional Small Business Disclosure Format (check one):
Yes______ No_____
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BNN Corporation
(A Development Stage Company)
INDEX
PAGE
----
PART I. Financial Information
Item 1. Financial Statements
Balance Sheets at September 30, 1996 3
(unaudited) and December 31, 1995
Statements of Income for the 4
Nine Months and Three Months
Ended September 30, 1996 and 1995 (unaudited)
Statements of Cash Flows for the Nine 5
Months Ended September 30, 1996 and 1995 (unaudited)
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition 9
and Results of Operations
2
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BNN Corporation
(A Development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
ASSETS
September 30, 1996 December 31, 1995
<S> <C> <C>
Current Assets:
Cash $ -0- $ -0-
Accounts Receivable 1,347,780 -0-
Deposits 3,900 3,900
----------- -----------
Total Current Assets 1,351,680 3,900
Other Assets:
Organizational Costs 25,000 25,000
----------- -----------
Total Assets 1,376,680 28,900
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued Expenses $ 6,000 $ -0-
----------- -----------
Total Liabilities 6,000 $ -0-
----------- -----------
Stockholders' Equity:
Common Stock, $.01 par value,
authorized 50,000,000 shares,
issued and outstanding 14,563,061 146,731 82,631
Paid-in Capital 3,393,573 3,362,613
Stock Subscription (448,055) (1,865,713)
Retained Earnings (1,550,631) (1,401,204)
Loss on Operations (170,938) (149,427)
----------- -----------
Total Stockholders' Equity 1,370,680 28,900
----------- -----------
Total Liabilities and Stockholders' Equity $ 1,376,680 $ 28,900
=========== ===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
3
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BNN Corporation
(A Development Stage Company)
Statement of Operations
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30,
-------------------------- -------------------------
1996 1995 1996 1995
-------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Revenue $ -0- $ -0- $ -0- $ -0-
Operating Expenses:
General administrative expenses 33,750 122,500 170,938 127,300
-------- --------- ---------- ---------
Operating Income (Loss) (33,750) (122,500) (170,938) (127,300)
Settlement of rescinding CSN -0- -0- -0- (80,000)
-------- --------- ---------- ---------
Income (Loss) before income tax (33,750) (122,500) (170,938) (207,300)
</TABLE>
4
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BNN Corporation
(A Development Stage Company)
Statement of Cash Flow
<TABLE>
<CAPTION>
Nine Months ended Nine Months ended
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (170,938) $ (207,300)
Adjustment to reconcile net loss to net cash
used by operating activities:
(Increase) in receivables (1,347,780) -0-
Increase in accrued expenses 6,000 14,800
---------- ---------
Net cash (used in) operating activities (1,512,718) (192,500)
---------- ---------
Cash Flows from Financing Activities:
Proceeds from issuance of common stock 1,512,718 192,500
---------- ---------
Net cash provided by financing activities 1,512,718 192,500
---------- ---------
Net change in cash -0- -0-
Cash -
Beginning of the period -0- -0-
---------- ---------
End of the period $ -0- $ -0-
---------- ---------
</TABLE>
5
<PAGE>
BNN Corporation
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 1. SIGNIFICANT ACCOUNTING PRINCIPLES
The accompanying balance sheet and the income and cash flow
statements of the Company (other than the Balance Sheet at
December 31, 1995) have been prepared by the Company, without
audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to
present fairly the financial position and results of
operations and cash flows at the date and for the period
herein have been made.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
The results of operations for the interim periods are not
necessarily indicative of the results for the full year.
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
America, Inc.
On August 11, 1987, Polo Clubs of America, Inc., acquired 100%
of the outstanding stock of Business News Network, Inc., a
Nevada corporation, followed by the merger of the parent and
subsidiary into a single entity named Business News Network,
Inc. The Company entered into a transaction whereby it
acquired assets of a business.
On March 3, 1990, the Company decided to wind down its
operations. Since this time, the Company was dormant and on
February 2, 1992, the Company's Corporate Charter was 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 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
6
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therefrom during the inactive period. In addition, the Company
does not presently have adequate financing to carry out its
business plan.
The financial statements have been prepared on the basis of
accounting principles 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. The Company acquired all of the shares of Celebrity
Shopping Network, Inc. in March and rescinded the transaction
in November 1995. No effect is given to the transaction
herein.
Income Taxes
The Company has filed its corporate income taxes since its
inception. There is an operating loss of $1,550,000 which
expires between 2003 and 2005.
Note 4. 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.
Note 5. 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. In 1996 the Company has received
$1,512,718.94 in payments against these notes.
The Company, in an exchange for 9,500,000 shares of its common
stock, acquired all of the shares of Kaleidoscope Media Group,
Inc. in October 1996.
7
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Item 2. 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. The financial information included herein should be read in
conjunction with the Financial Statements, including the Notes thereto.
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 BNN
Corporation and Celebrity Shopping Network, Inc. ("Celebrity") which called for
the exchange of shares of BNN Corporation common stock for shares of Celebrity's
common stock. On March 3, 1995, the Company completed the exchange and Celebrity
became a wholly-owned subsidiary of the Company. Celebrity was formed to
implement a celebrity home shopping television network but could not commence
broadcasting of the network.
In November 1995, that Agreement was rescinded. All of the
shares of stock issued by the Company to Celebrity were returned to the Company
with the exception of 800,000 shares retained as complete compensation for said
rescission.
Results of Operations
The Company continued to seek other business subsequent to the
rescission and in June 1996 entered into a letter of intent to acquire
Kaleidoscope Media Group, Inc. ("KMG"). During this period the Company advanced
sums to Kaleidoscope and incurred other expenses in connection with such
proposal acquisition as well as exploring other business including ventures with
KMG.
In October 1996 the Company completed the acquisition of all the
shares of KMG in exchange for its shares of common stock.
The Company incurred expenses of approximately $170,938 during
the nine month period ended September 30, 1996 while receiving no revenue. As a
result, the Company incurred a loss of $170,938 and 33,750, respectively, during
the nine months ended September 30, 1996 and the quarter then ended. This
compares to no income or revenue in prior periods and net losses of $122,500 and
207,300 for comparable periods, respectively.
Liquidity
The Company's funds have been provided by the sale of
securities. These funds have been used by the Company for advances to KMG and
for expenses incurred in connection with the exploration of new business and the
negotiation of the KMG letter of intent. The Company completed the acquisition
of KMG and is now an operating company and requires substantial
8
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amounts of capital for the operations of KMG. The Company contemplates selling
additional securities in private placements for such funding.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 -- Financial Data Schedule
(b) None
Pursuant to the requirements of Section 13 or 14(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 20, 1996 BNN CORPORATION
(Registrant)
/s/ Henry Siegel
---------------------------------------------
Henry Siegel, Chairman of the Board,
Director (Principal, Financial and Accounting
Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 1,348
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,352
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,377
<CURRENT-LIABILITIES> 6
<BONDS> 0
0
0
<COMMON> 1,371
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,377
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 171
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (171)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
