SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) December 19, 2001
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Jaguar Investments, Inc.
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(Exact name of registrant as specified in Charter)
Nevada 0-25753 87-0449667
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(State or other jurisdiction (Commission (IRS employer
of incorporation) file no.) identification no.)
30 Broad Street, 43rd Floor, New York, NY 10004
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 269-2659
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7025 E. First Avenue, Suite 5, Scottsdale, AZ 85251
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(Former Name or Former Address, if Changed Since Last Report)
Forward Looking Statements
This Form 8-K and other reports filed by Registrant from time to time
with the Securities and Exchange Commission (collectively the "Filings") contain
or may contain forward looking statements and information that are based upon
beliefs of, and information currently available to, Registrant's management as
well as estimates and assumptions made by Registrant's management. When used in
the filings the words "anticipate", "believe", "estimate", "expect", "future",
"intend", "plan" or the negative of these terms and similar expressions as they
relate to Registrant or Registrant's management identify forward looking
statements. Such statements reflect the current view of Registrant with respect
to future events and are subject to risks, uncertainties, assumptions and other
factors (including the risks contained in the section of this report entitled
"Risk Factors") relating to Registrant's industry, Registrant's operations and
results of operations and any businesses that may be acquired by Registrant.
Should one or more of these risks or uncertainties materialize, or should the
underlying assumptions prove incorrect, actual results may differ significantly
from those anticipated, believed, estimated, expected, intended or planned.
Although Registrant believes that the expectations reflected in the
forward looking statements are reasonable, Registrant cannot guarantee future
results, levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, Registrant
does not intend to update any of the forward-looking statements to conform these
statements to actual results. The following discussion should be read in
conjunction with Registrant's financial statements and the related notes that
appear elsewhere in this report and Registrant's quarterly report on Form 10-QSB
for the three months ended September 30, 2001, as filed with the Securities and
Exchange Commission (the "Commission").
Item 1. Changes in Control of Registrant.
Pursuant to an Agreement and Plan of Share Exchange, dated as of
September 24, 2001, and as amended as of November 8, 2001 and November 9, 2001
(the "Exchange Agreement"), by and among Jaguar Investments, Inc., a Nevada
corporation ("Jaguar"), Premier Sports Media and Entertainment Group, Inc., a
New York corporation ("Premier"), and the shareholders of Premier (collectively,
the "Shareholders"), Jaguar agreed to issue to the Shareholders an aggregate of
1,000,000 shares of Jaguar's common stock, par value $.001 per share (the
"Jaguar Common Stock"), in exchange for all of the issued and outstanding shares
of Premier's common stock, par value $.01 per share (the "Premier Common
Stock"). The closing of the exchange (the "Closing") occurred on December 19,
2001 (the "Closing Date").
At the Closing, the Shareholders were issued an aggregate of 1,000,000
shares of Premier Common Stock, which shares (after giving effect to such
issuance) represented approximately 8% of the total then issued and outstanding
shares of Jaguar Common Stock. Pursuant to the Exchange Agreement, on the
Closing Date, Ian Rice, Jaguar's sole director and Chairman, resigned as
Chairman and appointed Gregory Ricca as Chief Executive Officer and a director
of Jaguar, and, thereafter, Mr. Rice resigned as a director of Jaguar. Subject
to and effective upon compliance with Rule 14f-1 under the Securities Exchange
Act of 1934, it is expected that Mr. Ricca will appoint additional directors of
Jaguar.
Immediately following the Closing, Mr. Rice, the then owner of
10,000,000 shares of Jaguar Common Stock, entered into an agreement with R & M
Capital Partners, Inc., a New York corporation wholly owned by Mr. Richard
Milano, one of the Shareholders ("R & M"), pursuant to which Mr. Rice agreed to
sell 9,000,000 of his shares of Jaguar Common Stock to R & M and/or certain
permitted designees of R & M, for an aggregate consideration of $20,000. The
sale was consummated on December 21, 2001, at which time Mr. Rice sold 9,000,000
of his shares of Jaguar Common Stock, of which 6,500,000 shares were acquired by
R & M, 600,000 shares were acquired by Amerman Investments LLC ("Amerman"),
300,000 shares were acquired by Smoke Rise Investments LLC ("Smoke Rise"),
1,000,000 shares were acquired by G-P USW, Inc. ("G-P") and 600,000 shares were
acquired by Alder Investments LLC ("Alder"). Simultaneously, Jaguar granted
certain demand and "piggyback" registration rights to each of Amerman, Smoke
Rise, G-P and Alder. As the 6,500,000 shares of Jaguar Common Stock acquired by
R & M, represent approximately 52% of the total issued and outstanding capital
stock of Jaguar, R & M is in control of Jaguar.
The details of the transaction, including all information required by
Item 1 of this Current Report on Form 8-K (this "Report"), are set forth in
"Item 2. Acquisition or Disposition of Assets" below, the contents of which are
incorporated by reference herein.
Item 2. Acquisition or Disposition of Assets.
Overview of the Transaction
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The information below is a summary description of the Exchange
Agreement and is qualified in its entirety by reference to the Exchange
Agreement and related documents that the Registrant has filed as exhibits to
this Report.
Pursuant to the Exchange Agreement, on the Closing Date Jaguar issued
an aggregate of 1,000,000 shares of Jaguar Common Stock to the Shareholders and
in exchange the Shareholders conveyed to Jaguar all of the issued and
outstanding shares of Premier Common Stock, consisting of an aggregate of
388,889 shares. The ratio of 1,000,000 shares of Jaguar Common Stock for 388,889
shares of Premier Common Stock (the "Exchange Ratio") was determined arbitrarily
by the parties to the Exchange Agreement, and the parties did not assign any
value to the shares of Jaguar Common Stock or the shares of Premier Common
Stock.
In connection with the Exchange Agreement, the following transactions
took place on or before the Closing Date:
- Each holder of a warrant to purchase shares of Premier Common
Stock executed a written agreement, pursuant to which such
holder agreed that upon exercise of such warrant after the
Closing the holder would be entitled to receive shares of
Jaguar Common Stock in lieu of shares of Premier Common Stock
determined on the basis of the Exchange Ratio.
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- Ian Rice resigned as Chairman of Jaguar and appointed Gregory
Ricca as Chief Executive Officer and a director of Jaguar.
Immediately following the Closing, Mr. Rice resigned as a
director of Jaguar.
Description of Jaguar's Business
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Jaguar was formed in Nevada on October 28, 1987. Since its inception,
Jaguar has not engaged in an material business operations until the acquisition
of 100% of the issued and outstanding shares of common stock of Premier Sports
Media and Entertainment Group, Inc., a New York corporation ("Premier"). The
acquisition of all the issued and outstanding shares of Premier's Common Stock
was completed on December 19, 2001 by a share exchange (the "Share Exchange")
whereby Jaguar acquired 388,889 shares of Premier's Common Stock in exchange for
1,000,000 of Jaguar's common stock, all of which are restricted regarding
transferability. The shares of Jaguar's common stock issued to the shareholders
of Premier represented approximately 8% of the total issued and outstanding
shares of Jaguar common stock immediately after the Share Exchange. As a result
of the Share Exchange, Jaguar now carries on business through its wholly-owned
subsidiary Premier, which maintains its business office at 30 Broad Street, New
York, NY 10004.
Description of Premier's Business
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Overview
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Premier was incorporated as Premier Sports Media Group, Inc., a New
York corporation, in September 2000. In January 2001, it changed its name to
Premier Sports Media and Entertainment Group, Inc.
Premier is a sports, media and entertainment company. Its mission is to
expand (through the acquisition of related and/or complimentary companies) to
create a diverse, sports, media and entertainment company. Premier expects its
core business interests to include television programming, motion picture
production, memorabilia, publishing, boxing promotion, event production and
marketing. Premier's goal is to develop a cohesive business structure that can
produce, finance, promote and bring to market packaged products that meet the
growing consumer demand for sports, media and entertainment productions. Premier
is relying upon the increasing popularity of sports and entertainment to
accomplish these goals.
In furtherance of Premier's corporate mission, in 2001 Premier acquired
Explosion Promotions, Inc. ("Explosion") and CNB Sports and Entertainment, Inc.
("CNBE") as wholly owned subsidiaries, and formed Premier Publishing Group, Inc.
("PPG"). Explosion is engaged in the businesses of boxing promotion and
television production. CNBE is an entertainment finance and property management
company. PPG intends to create and distribute magazines that focus on and are
edited by legendary sports and entertainment personalities. Hereinafter,
references to Jaguar or the "Company" shall include Premier, Explosion CNBE and
PPG.
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Explosion Promotions, Inc.
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History
In April 2001, Premier acquired Explosion Promotions, Inc.
("Explosion") through a merger of Explosion with and into Premier's wholly owned
subsidiary, Premier Boxing, Inc. ("PBI"). Upon completion of the merger, PBI
changed its name to Explosion. As consideration for the merger, Premier issued
an aggregate of 250,000 shares of its common stock to the shareholders of
Explosion, and a promissory note in the principal amount of One Million Eight
Hundred Seventy-Eight Thousand One Hundred Eighty Five Dollars and Sixty Nine
Cents ($1,878,185.69) to The D.A.R. Group, Inc., a creditor of Explosion. The
promissory note is due and payable on or before March 31, 2002. In addition,
Premier granted the shareholders of Explosion a right of first refusal with
respect to any proposed sale, transfer or disposition of the shares or assets of
Explosion.
Business
Explosion is engaged in the businesses of boxing promotion and
television production. During 2000 and early 2001, Explosion produced a boxing
talk show known as Inside the Ring that was aired on the Madison Square Garden
television cable network. Explosion is currently seeking a syndication partner
to produce and distribute additional. Inside the Ring shows. Also during 2000
and 2001, Explosion produced approximately 30 boxing matches that were aired on
the ESPN 2 television cable network. Lastly, during late 1999 through early
2001, Explosion operated a boxing gym in Garden City, New York, that proved
unprofitable and was closed. '
Explosion's business plan is to build upon its record as a boxing
promoter and producer of a boxing talk show and create a boxing-based
multidimensional leisure-time company. Explosion intends to implement a
marketing strategy to heighten and maintain awareness of Explosion and its
boxers, with the belief that the Explosion name will be associated with the best
that boxing has to offer.
Explosion's business strategy includes the following:
o Expanding the promotions business through the signing of new boxing
talent. Explosion intends to continue to sign promotional contracts
with young boxers who are just beginning their professional careers,
such as it has done in the past with David Jackson (2000 Olympian),
Mike Brittingham (who defeated Prince Naseem Hamed as an amateur), and
Dorian Beaupierre, as well as with other talented, well-known boxers.
In addition, Explosion hopes to continue to make matches for Eric
Harding, a current light heavyweight contender, and to sign at least
one "superstar" boxer per year for the next four years. Explosion hopes
these boxers will help enhance other Explosion businesses. Some
examples of this include having these boxers make appearances on Inside
the Ring and at Explosion gyms, visiting Explosion-supported charities,
and "chatting" with fans over the Internet.
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o Producing and distributing its own syndicated, televised live boxing
events and its boxing talk show, Inside the Ring. Explosion has created
a promotional/pilot video with TalentWorks, Inc., to assist Explosion
and TalentWorks in syndicating its re-vamped boxing talk show, Inside
the Ring, and developing a live boxing show series that Explosion hopes
will become syndicated. TalentWorks is an independent production
company that produced the "Tuesday Night Fights" boxing series for USA
Networks from 1990 to 1995, and that serves as the remote production
team for the new boxing series "ESPN2 Friday Night Fights" and the new
"BattleBots" series for Comedy Central Networks. Explosion hopes to
utilize its business relationship with TalentWorks to obtain
directorial and filming services, including, producing Inside the Ring
and the live boxing show, acquiring talent, selling advertising, and
syndicating these shows to broadcast outlets. Explosion also hopes that
the proposed series will allow it to build upon its successes in 2000
and 2001, when it produced successful boxing shows for ESPN, and to
revamp its Inside the Ring show, which is a unique boxing talk show.
o Building a new gym facility (i.e., Pug's Boxing Club). Explosion plans
to utilize the knowledge and experience it gained from its operation of
a gym in Garden City, New York, to open additional new facilities, and
to attract amateur, professional and civilian boxers to exercise and
train at Explosion's own facilities. Explosion also plans on building a
new gym facility, Pug's Boxing Club, to be located in New York City,
where recreational boxers, amateurs and professionals will be able to
share a common training ground. In addition, Explosion hopes to launch
a boxing health club designed to appeal to both boxers and others who
want to include boxing, kickboxing or the martial arts into their
workouts.
o Opening a professional boxing training camp (Explosion Professional
Training Camp). In addition, Explosion hopes to build upon its
experience in boxing to build a professional boxing training camp.
Explosion plans on marketing this camp to boxers, managers and
promoters. Explosion plans to build this facility at a location that is
within a one-hour drive of New York City.
o Launching an Internet strategy. Explosion plans to establish an
interactive Internet site that will allow it to distribute information
(the website will include vital statistics about Explosion, CNBE and
PPG, information about management, the fighters, upcoming events and
more), support home pages and e-mail for boxers, and offer visitors
access to sports entertainment content and limited shopping. Explosion
expects that this website will enable interactive polling and voting
during live events, promote upcoming boxing matches, Explosion
television shows, and generate revenue from direct or auctioned sales
of boxing memorabilia, t-shirts and other merchandise. In addition,
Explosion intends to create revenue through advertising, sponsorship
and hyperlinks to Explosion's strategic business partners, which may
include boxing venues, casinos, bus operators, restaurants, sports bars
and hotels.
o Implementing a marketing plan for Explosion's not-for-profit efforts.
Explosion intends to use its resources to implement charity-related
marketing programs that are designed to associate the Explosion name
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and "brand" with significant donations to high profile charitable
causes. Specifically, Explosion plans to assist deserving charities by
using cause related marketing techniques to associate the Explosion
name and the names of its boxers with deserving causes, and as a means
to cross-promote particular events
By signing new boxing talent and implementing a new promotions
strategy, and adding new businesses in the areas of television, gym and
training, and the Internet, Explosion hopes to vertically integrate its
operations, maximize investments in its infrastructure, minimize marketplace
risks, implement a coordinated marketing plan, and reap the financial rewards of
diversification. As separate businesses, Explosion believes that each of its
enterprises could produce significant revenue; however, as a whole, Explosion
anticipates that it will greatly benefit from the synergy inherent in the
diversified boxing-based enterprise.
CNB Sports and Entertainment, Inc.
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History
In April 2001, Premier acquired CNB Sports and Entertainment, Inc.
("CNBE") through a merger of CNBE with and into Premier's wholly owned
subsidiary, Premier Entertainment Group, Inc. ("PEG"). Upon completion of the
merger, PEG changed its name to CNBE. As consideration for the merger, Premier
issued ten percent (10%) of its common stock to Mr. John Halle, the former sole
shareholder of PEG. In addition, Premier granted Mr. Halle the following rights:
o Twenty-five percent (25%) of the net profits from all business and
transactions originating from CNBE;
o The right of first refusal with respect to any proposed sale, transfer
or disposition of the shares or assets of CNBE; and
o Anti-dilution rights to protect his 10% interest in Premier which, as a
result of the share exchange, will apply to Jaguar;
In addition, Premier agreed to provide CNBE with a line of credit in an
amount up to Eight Hundred Thousand Dollars ($800,000) to offset operating costs
for the first six (6) months of CNBE's operation following the merger and a
further line of credit in an amount up to Four Million Dollars ($4,000,000) for
the financing costs associated with certain ventures to be undertaken by CNBE.
Business
CNBE is an entertainment finance and property management company. CNBE
seeks to identify commercially viable entertainment properties (films, TV
programs, special/single-day events and music), secure financing for such
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properties and drive execution to deliver innovative, break-through
entertainment to audiences worldwide. CNBE anticipates its core services will
include capital acquisition, project development and entertainment property
management. Premier believes CNBE will provide it with the experience to finance
and produce entertainment projects and contribute synergistically to the
advancement of Premier's corporate properties and ventures.
Premier believes that CNBE is capable of effectively competing in this
evolving marketplace based upon the fact that CNBE has either entered into
arrangements for, or is in the process of negotiating for an interest in,
several entertainment properties, including a proposed golf tournament,
tentatively entitled, "The National Match Play Tournament", in which CNBE will
be seeking to capitalize on the popularity of golf and on the recent emergence
of reality based programming.
Premier hopes that CNBE will provide it with the ability to fully
finance these proposed properties and bring them to market over the next twelve
(12) to eighteen (18) months. Simultaneously with the development of the above
properties, CNBE is also planning on pursuing the development of proposed other
properties. In order to fund the early development stages of these other
properties, CNBE plans to form, and seek to raise capital through, separate new
entities.
Film Finance
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To display its film finance capabilities, CNBE hopes to partner with an
A-list Hollywood producer in a joint venture to produce major motion pictures to
be distributed over the next three (3) years.
Other Projects
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In addition to the projects described above, CNBE through a majority
owned subsidiary, Film Realty Funding Company, LLC ("Film Realty"), has acquired
approximately 210,000 square feet of property in Montreal (with an option to
purchase an additional 200,00 square feet), upon which CNBE plans to build a
film production studio. Film Realty acquired this property through the purchase
of 90% of the outstanding common stock (with an option to purchase the
additional 10%) of Partek, Inc., a Canadian corporation, which owned the
property.
Premier Publishing Group, Inc.
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History
Premier Publishing Group, Inc. ("PPG") was formed in 2001 as a wholly
owned subsidiary of Premier.
Business
PPG's business model is the creation of magazines that focus on and are
edited by legendary sports and entertainment personalities. Premier expects PPG
to contribute to the penetration of Premier's target markets and deepen
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Premier's presence in existing markets. PPG's initial plan includes contracting
with well-recognized athletes and entertainers for a series of commemorative
collector's edition issues each, a ("Commemorative Edition"). PPG's intent is to
develop publications that are filled with insightful content, minimal but
effective advertising, lifestyle segments and spotlight interviews reflecting
the athletes and entertainers contributions to their industries and humanity.
PPG anticipates that this enhanced content, coupled with and effective marketing
strategy, will establish these magazines as premium publications. PPG is
expected to utilize the appeal of such well-known personalities to elevate the
magazines to a status as timeless memorabilia collectibles.
Premier expects that PPG will be able to enter into agreements with
strategic partners in development, production, content, promotion and web-design
that will allow PPG to produce and distribute high quality publications and
compete successfully within the current marketplace. Premier believes that PPG's
management has the experience in creating, producing and distributing
publications, as well as, important related areas such as marketing and web
design, to form these strategic alliances.
Premier expects to use the expertise of PPG's management to establish a
template that can be utilized to turnkey future projects focusing on sports
professionals, entertainers and musicians. Premier's other properties, including
Explosion and CNBE, also include managers and officers that have experience in
media and publishing. Premier hopes that the collaborative knowledge base of its
businesses and professionals create an intellectual property that, in and of
itself, will be the focal point in the creation of this media enterprise.
The subject of PPG's first Commemorative Edition is expected to be
Muhammad Ali. Premier and Mr. Ali's legal representatives have agreed, subject
to the execution of a definitive agreement within the next thirty (30) days,
that Mr. Ali will be named as Editor-in-Chief of the project. The magazine will
be a one-time Commemorative Edition provisionally entitled Muhammad Ali's The
Greatest. The Commemorative Edition will be an oversized, soft cover publication
offered for sale as a collectible. It will contain photographs and stories
featuring the history of the heavyweight championship that will profile no less
than ten former heavyweight champions. Special profiles and photographs will be
devoted to Muhammad Ali himself, including a cover page photo of the boxing
legend. Mr. Ali will identify his picks for the top ten fighters of all-time and
the top ten bouts in boxing history. The terms include approval by Columbia
Pictures to include tie-ins to the December 2001 release of the Columbia motion
picture "ALI", starring Will Smith. No assurance can be given that a definitive
agreement will be executed with Mr. Ali or, if executed, that it will contain
the foregoing expected terms.
Description of Property
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The Company's executive offices are temporarily located at 30 Broadway,
43rd Floor, New York, New York in the premises of The D.A.R. Group, Inc., a
creditor of Premier and Explosion ("D.A.R."). At present the Company occupies
its executive offices without a formal lease or rent obligation. The Company
expects to enter into a sublease arrangement with D.A.R. to share office space
within the next sixty (60) days. CNBE currently occupies separate premises under
a lease which lease it expects to terminate and replace by relocating its
employees to the Company's executive offices.
Employees
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Currently the Company has four (4) employees, including its Chief
Executive Officer, Gregory Ricca and CNBE's President and Chief Executive
Officer, John Halle. Mr. Ricca does not have a formal employment arrangement
with the Company, has not received compensation from the Company for his
services to date and does not expect to receive compensation in the future
unless and until the Company's resources permit. Mr. Halle receives annual
compensation from CNBE in the amount of $150,000.
Management
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Gregory Ricca, (Chief Executive Officer and the sole Director of the
Company). Since March 2001, Mr. Ricca has been a Vice- President at TDG
Partners, Ltd., an investment banking consulting firm located in New York City.
From December 1993 to January 2001, Mr. Ricca was employed in various capacities
at LCP Capital Corp., a broker/dealer located in New York City. Originally
employed as a registered representative at LCP's predecessor firm, First Hanover
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Securities, Inc., Mr. Ricca was appointed as the Branch Office Manager of the
firm's New Jersey Office in July of 1996. In late 1998, he became the firm's
Director of Compliance and reporting supervisor. In January of 2000, he became
LCP's Chief Operating Officer. He holds various securities licenses including
Series 7, 63 and 24.
John Halle (President & Chief Executive Officer of CNBE). Mr. Halle has
held the position of President and Chief Executive Officer at CNBE since April
5, 2001. Mr. Halle has also been the founder, president and CEO of CNB Capital,
Inc., an investment banking firm, since its inception in 1994. Mr. Halle has
also held the position of Chief Executive Officer of CNBE since its inception in
1998. Mr. Halle attended the University of New Hampshire and participated in
their business management program.
Security Ownership of Certain Beneficial Owners and Management.
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The following table sets forth information available to the Company, as
of December 21, 2001 with respect to the beneficial ownership of the outstanding
shares of the Company's Common Stock by (i) any holder of more than five percent
(5%) of the outstanding shares; (ii) the Company's officers and directors; and
(iii) the Company's officers and directors as a group:
Name and Address of Beneficial Shares of Common Stock Percentage (%) of
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Owner (1): Owned: Common Stock (2):
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R&M Capital Partners Inc. 6,500,000 52%
545 8th Avenue, Suite 401
New York NY 10018
Richard Milano (3) 125,000 1%
39 Berglund Avenue
Staten Island, NY 10314
Ian Rice 1,000,000 8%
7025 E. First Avenue, Suite 5
Scottsdale, AZ 85251
G-P USW, Inc. 1,000,000 8%
2295 Corporate Boulevard, N.W.
Suite 222
Boca Raton, FL 33431
John Halle (4) 100,000 .8%
80 South Road
North Hampton, NH 03862
Gregory Ricca (4) none .0%
30 Broad Street
New York, New York 10004
All officers and directors 100,000 .8%
as a group (two (2) persons)(4)
(1) Beneficial ownership as reported in the table above has been determined
in accordance with Instruction (1) to Item 403 (b) of Regulation S-B of
the Securities Exchange Act.
(2) Percentages are approximate.
(3) In addition to his individual shares, Richard Milano has the exclusive
right to vote all the shares of R&M Capital Partners, Inc., thus giving
Mr. Milano the right to vote an excess of 53% of the shares in the
Company.
(4) John Halle is the President and Chief Executive Officer of CNBE and
Gregory Ricca is the Chief Executive Officer and sole director of the
Company.
Risk Factors.
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Prospective investors should carefully consider the following risks, in
addition to the other information contained in this Report, concerning the
Company, before making any investment in the Company's securities.
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PREMIER IS A NEW VENTURE WITH A LIMITED OPERATING HISTORY
Premier was organized in September 2000. Due to Premier's limited
operating history, the Company's ability to operate successfully is materially
uncertain and its operations and prospects are subject to all risks inherent in
a developing business enterprise. Premier's limited operating history also makes
it difficult to evaluate the Company's proprietary business, as well as the
likelihood of regulatory approval, commercial viability, and market acceptance
of its potential products. The Company's potential success must be evaluated in
light of the problems, expenses and difficulties frequently encountered by new
businesses in general and the sports, media and entertainment businesses
specifically.
THE COMPANY WILL NEED ADDITIONAL CAPITAL IN ORDER TO DEVELOP ITS BUSINESS.
To date, Premier has primarily financed its operations through capital
investments made by its founders. In addition, in April 2001, Premier borrowed
$100,000 from The D.A.R. Group, Inc. The principal amount of the loan is
repayable in sixty (60) days, after which time the principal amount of the loan
will be repayable, together with interest thereon at the rate of 2% per month.
The Company's expense levels are anticipated to be based entirely on
its expectations of the future expenses and revenues of its operating
subsidiaries. The Company may be unable to adjust spending to compensate for any
unexpected delay in the development of its subsidiaries or commencement of their
operations. Accordingly, any unexpected delay in the commencement and
development of its subsidiaries will materially and adversely impact on the
Company's business, operating results and financial condition.
The Company expects to incur operating losses until it generates
significant revenues from its projects and operations. As a result, the Company
anticipates that it will be required to obtain additional capital through the
sale of additional equity or debt securities or seek other forms of financing.
There can be no assurance that the Company will be able to obtain such
additional financing on terms and conditions acceptable to the Company or at
all. If the Company is unable to obtain additional financing when needed, it
will likely be necessary to curtail the Company's planned operations.
Furthermore, any additional equity or convertible debt financing may involve
substantial dilution to the Company's then-existing shareholders.
THE COMPANY'S OPERATIONS MAY BE ADVERSELY AFFECTED BY GOVERNMENT REGULATION.
Laws and regulations directly applicable to the sports and
entertainment industry, Internet communications, commerce and advertising are
becoming prevalent. The United States Congress has enacted Internet laws
regarding children's privacy, copyright and taxation. Such legislation could
dampen the growth in use of the Internet generally and decrease the acceptance
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of the Internet as a communications, commercial and advertising medium. The laws
governing the Internet, however, remain largely unsettled, even in areas where
there has been some legislative action. It may take years to determine whether
and how existing laws such as those governing intellectual property, privacy,
libel and taxation apply to the Internet and Internet advertising.
The growth and development of the market for internet commerce may
prompt calls for more stringent consumer protections laws, both in the United
States and abroad, that may impose additional burdens on companies conducting
business over the Internet.
THE COMPANY DEPENDS UPON KEY PERSONNEL AND MAY NEED ADDITIONAL PERSONNEL
The success of the Company depends upon the continuing services of John
Halle, CNBE's Chief Executive Officer and Gregory Ricca, the Company's Chief
Executive Officer. The loss of Mr. Halle or Mr. Ricca could have a material and
adverse effect on the Company's business operations. The Company intends to
obtain key man insurance on its key employees but no assurance can be given that
such insurance will be obtainable at prices that the Company can afford or at
all. The Company's success also depends on their ability to attract and retain
qualified sales, marketing, and management personnel for their operations. The
Company believes that the sports media and entertainment employment markets are
highly competitive. No assurance can be given that the Company will be
successful in attracting and retaining key personnel for its business
operations. The Company's inability to attract and retain key personnel may
materially and adversely affect its business operations.
THE COMPANY HAS PAID NO DIVIDENDS ON ITS COMMON STOCK
The Company has paid no cash dividends on its Common Stock in the past
and it does not intend to pay any dividends on its Common Stock in the
foreseeable future. The Company's Board of Directors is empowered to declare
dividends, if any, to holders of the common stock, based on the Company's
earnings, capital requirements, financial condition, and other relevant factors.
While it is anticipated that the Company will reinvest the profits from its
operations, if any, into its business, there is no assurance that the Company
will ever pay dividends to holders of its common stock.
EXPLOSION DEPENDS UPON ITS ATHLETES AND ENTERTAINERS.
Because Explosion's revenues are expected to be derived in part from a
specified percentage of the income generated by Explosion's clients and events,
both the amount of Explosion's revenues and the likelihood that Explosion will
receive revenues is dependent upon the professional success of its athletes,
entertainers, and the continued popularity of professional sports and the
entertainment industry. The income levels of Explosion's potential clients, and
therefore the revenues of Explosion, may be subject to wide fluctuations, in
most cases due to circumstances beyond the control of Explosion or the Company.
THE MULTIMEDIA ENTERTAINMENT BUSINESS IS SPECULATIVE IN NATURE.
Profits, if any, from the businesses in which the Company is currently
engaged, or plans to engage in, are dependent on widespread public acceptance
of, and interest in, each creative project undertaken by its various segments.
Audience appeal depends upon factors that cannot be ascertained reliably in
advance and over which the Company may have no control, including, among other
things, unpredictable critical review, positioning in the market and changeable
public tastes. Due to factors such as the unpredictability of audience appeal,
11
many of the Company's projects may fail to generate sufficient revenues to
recover their costs of acquisition, development, production and distribution.
All revenue and cash flow, if any, will be dependent upon the success of the
Company's existing and contemplated sports, media and entertainment operations.
THE COMPANY MAY HAVE LOWER REVENUES IF IT IS UNABLE TO SECURE APPROPRIATE
ARTISTS, EVENTS AND VENUES.
As a participant in the sports, media and entertainment industry, the
Company's ability to generate revenues is highly sensitive to public tastes,
which are unpredictable. A change in public tastes, an increase in competition
or a lack of performer or event availability could damage Explosion's business,
financial condition and results of operations. Similarly, Explosion's and CNBE's
ability to generate revenues from live entertainment events may be limited if
other competitive forms of entertainment are available. Since Explosion relies
on unrelated parties to create and perform live entertainment content, any lack
of availability of popular athletes, boxing venues, boxing trainers, broadcast
personalities, and other performers could limit Explosion's ability to generate
revenues.
Explosion requires access to venues to generate revenues from
entertainment events. Explosion's long-term success will depend in part on its
ability to obtain these agreements on terms acceptable to us, and on our ability
to renew these agreements when they expire or end. Explosion may be unable to
obtain and/or renew these agreements on acceptable terms or at all, and
Explosion may be unable to obtain favorable agreements with new venues.
EXPLOSION NEEDS ADDITIONAL AGENTS AND CLIENTS
The success of the Company will be dependent, in part, upon the ability
of Explosion to attract and develop promising new boxing talent and to expand
its boxing, media, and corporate sponsorship operations so as to represent both
a substantially greater number of athletes and a larger percentage of athletes
with significantly greater earning and marketing potential. Explosion's boxing
business currently depends, in large part, on the success of its fighters, which
include Eric Harding. Boxers Dorian Beaupierre, David Jackson and Michael
Brittingham are currently renegotiating their contracts with Premier. The
athletic careers of professional fighters tend to be short and Explosion must
continuously look to augment its stable of fighters to increase revenues from
boxing. In addition, Explosion anticipates that in order to attract an adequate
number and caliber of professional athletes, it will need to enter into
employment or consulting agreements with registered agents who have existing
representation agreements with professional athletes and who have experience
negotiating such agreements. There can be no assurance that Explosion will be
able to attract the quantity or caliber of agents and/or professional athletes
necessary to achieve and sustain profitable operations. In addition, there can
be no assurance that professional athletes who are currently, or who may in the
future be, under management or representation contracts with Explosion, will
continue to engage in professional sports through the term of their contracts or
will renew such contracts upon their expiration. Explosion will need to incur
significant promotional, marketing, travel and entertainment expenses in the
recruitment of professional athletes without any guarantee that the targeted
athletes will enter into representation agreements with Explosion.
12
EXPLOSION MAY NEED MORE EXPERIENCED PERSONNEL
The management of Explosion, on the whole, has less experience in
operating a sports, media and entertainment company than many of its
competitors, and the success of the business will depend in large part on its
ability to establish Explosion as an effective sports, media and entertainment
company. If Explosion is unable to achieve its goals with it current personnel
it may need to seek additional employees with more substantial experience.
INTENSE COMPETITION COULD ADVERSELY IMPACT THE COMPANY'S BUSINESS.
The Company currently competes or plans to compete in the areas of
television broadcasting, boxing promotion, athletic clubs and gyms, motion
picture production, publishing, corporate sponsorship, concerts and other events
with other companies. Many of its competitors have substantially larger
financial and other resources than the Company. From time to time, there may be
competition for, and shortage of, broadcasting talent, athletes, and qualified
production personnel. The Company may therefore not be able to attract the best
available talent required to develop the Company's businesses. This competition
and these shortages could lead to an increase in costs that could adversely
affect the Company by increasing losses or reducing profits. All of these
factors could lead to the Company incurring higher costs and receiving lower
revenues so that the Company's losses increase.
In addition, the Company's clients face intense competition in
achieving success and recognition in their respective sports. There can be no
assurance that any of the Company's clients will achieve or sustain success or
realize the financial rewards thereof.
CNBE DOES NOT HAVE BINDING CONTRACTS WITH CAST, SCREENWRITER(S) OR THE DIRECTOR
OF ITS CONTEMPLATED PROJECTS.
CNBE will derive substantially all of its income from the distribution
of its contemplated motion pictures. The success of the motion pictures will be
dependent on the participation of actors and actresses to perform in the motion
pictures. The failure of CNBE to retain the services of actors and actresses to
perform in the motion pictures may have an adverse effect on the success of the
motion pictures. The success of the contemplated motion pictures will also be
dependent upon the ability to create a screenplay, hire a director and
distribute the motion pictures, none of which is yet in place or under contract.
There can be no assurance that CNBE will be able to retain any principal cast,
director or screenwriter with significant name recognition or appeal to help
attract financing or audiences for the motion pictures.
13
THE SUCCESS OF THE MOTION PICTURE CANNOT BE ESTIMATED IN ADVANCE.
The success of the motion pictures distributed by CNBE will be
dependent on numerous unpredictable and subjective factors, including the
quality and acceptance of other competing films released into the market at or
near the same time, the availability of alternative forms or entertainment and
leisure time activities, general economic conditions and other tangible and
intangible factors, all of which can change and cannot be predicted with
certainty. Accordingly, CNBE's income may fluctuate significantly or fail to
materialize. Even if the motion pictures have artistic or critical success,
there can still be no assurance that they will obtain distribution, substantial
gross revenues or any profits for its producer or investors.
Further, the domestic theatrical success of a motion picture is
generally a key factor in generating revenue from other distribution channels.
Accordingly, it is not possible to predict accurately the success of any film or
group of films prior to release. There may also be an adverse effect on revenues
from domestic home video sales and rentals of the motion pictures due to the
increase in revenue sharing arrangements between home video distributors and
retailers and the increased number of units of major studio films available for
rental. CNBE's motion picture development activities require the initial
expenditure of significant funds, while revenues relating to the motion pictures
typically are not generated for some period after such expenditure and may be
received over an extended period of time. In addition, the timing of CNBE's
receipt of revenues depends on a number of factors, including the release dates
of the motion pictures. Revenue from the theatrical distribution of the motion
pictures may vary significantly based on the season in which they are released.
DELAYS IN COMPLETION OR RELEASE OF THE MOTION PICTURES MAY ADVERSELY AFFECT
THEIR SUCCESS.
The decision to release a particular film on a particular date is based
on many factors and, accordingly, a projected release date for a motion picture
may be changed upon the assessment of such factors. There can be no assurance
that any motion picture will be completed or that completion will occur in
accordance with the anticipated schedule or budget. The release of a motion
picture may occur at a less favorable time due to delays in acquisition of
financing, production and negotiation of favorable contract terms with
theatrical distributors which may impair the ability of CNBE to obtain the
release dates, number or quality of screens or length of theatrical runs that it
desires to obtain in connection with the release of a motion picture.
CNBE AND THE MOTION PICTURES FACE INTENSE COMPETITION FROM OTHER MOTION
PICTURES, ENTERTAINMENT AND LEISURE ACTIVITIES.
Motion picture production and distribution are highly competitive
businesses. CNBE faces competition from companies within the motion picture
industry and alternative forms of leisure activities. CNBE competes with major
studios, independent production companies, and others for the acquisition of
artistic properties, the services of creative and technical personnel,
exhibition outlets, and interest in its products from the public and the limited
number of effective distributors in each territory. Many of CNBE's competitors,
particularly major studios, have greater financial, technical, marketing and
other resources than CNBE, longer operating histories, broader name recognition
14
and better relationships with exhibitors and distributors. Other independent
production and/or distribution companies may have less overhead than CNBE. Due
to their greater resources, many companies may be able to enter into more
favorable distribution agreements, with greater promotion, than CNBE. The motion
pictures will have to compete with the films produced or distributed by such
companies for exhibition on a limited number of screens generally available to
independent pictures. No assurance can be given that CNBE will successfully
compete with existing or future competitors or that its pictures, if completed,
will be distributed or will generate any revenue whatsoever.
As major studios drive to consolidate film production and distribution
in the U.S. and other markets, competition with the major film studios may
become even more difficult. Most of the major studios are part of large
diversified corporate groups with a variety of other operations, including
television networks and cable channels which can provide both means of
distributing their products and stable sources of earnings and cash flows that
offset fluctuations in the financial performance of their motion picture
operations. The number of motion pictures released by CNBE's competitors and
CNBE's share of gross box office admissions may make it more difficult for
CNBE's films to succeed.
In addition, television networks are now producing more programs
internally and thus may reduce such networks' demand for programming from other
parties. Accordingly, it is difficult to predict the revenues, commercial
success or profitability from any film, or group of films, prior to release.
THE MOTION PICTURES MAY NOT BE SUCCESSFULLY DISTRIBUTED.
In order to sell distribution rights for the motion pictures, the
producer or its sales representative must convince distributors to undertake
distribution of the motion pictures in various territories, preferably on
favorable terms that may result in significant commissions and possibly net
revenues to the sales representative and producer. However, there can be no
assurance that any distribution deals will be made for the motion pictures.
Even if the motion pictures are completed and CNBE obtains distribution
agreements, there can be no guarantee that such distribution will succeed
commercially in the highly competitive and uncertain motion picture market. If
the pictures are distributed, there can be no guarantee that they will generate
any revenues in excess of advances and costs. Although CNBE may receive at least
a portion of its financing in advance of theatrical release, there can be no
assurance that it will receive any shares of net profits from the motion
pictures, even if it is successful critically or artistically.
THE SUCCESS OF THE MOTION PICTURES IS DEPENDENT UPON AUDIENCE ACCEPTANCE, WHICH
CANNOT BE PREDICTED.
The motion pictures, if completed, will each be a distinct artistic
work. Their commercial success will be primarily determined by audience reaction
and the appeal of their stories, characters, style and contents to audiences,
all of which are unpredictable. Such success depends on several factors,
15
including the quality of the motion pictures, their correspondence with trends,
their appeal to niche or broader audiences, the quality and acceptance of
competing films released into the marketplace at or near the same time, critical
reviews, the availability of alternative forms of entertainment and leisure time
activities, general economic conditions and social trends and other tangible and
intangible factors, all of which can change and none of which can be predicted
with any certainty. In addition, motion picture attendance is seasonal, with the
greatest occurring during the summer and holidays. The release of any picture
during a period of relatively low turnout would be likely to affect the film's
box office receipts adversely. Further, due to a trend toward release of large
numbers of films in recent years by studios and independent distributors, there
is a risk that the motion pictures may be affected by saturation or oversupply
in the market. As a consequence of any and all of the foregoing factors, there
is a very high risk that the motion pictures will not be commercially
successful, even if they are well received critically, with the result that
shares of profits in excess of initial, advance commissions will not be realized
by CNBE or investors.
THE SUCCESS OF THE MOTION PICTURES IS SUBJECT TO NUMEROUS MOTION PICTURE
INDUSTRY RISKS.
The production, completion, release, distribution and success of the
motion pictures is subject to a host of uncertainties, including budget and
financing requirements, audience response, the availability and performance of
actors, directors, writers and creative, production and business personnel, the
release of competitive films, the abilities of the producer and other personnel
associated with the motion pictures and numerous other variables, all of which
may affect, reduce or prevent the financial success of the motion pictures and
any financial returns based on net profit participation in their revenues. There
can be no assurance as to the economic success of the motion pictures.
Any revenue CNBE may receive will be derived from the sale, licensing,
distribution and exploitation of the motion pictures. CNBE's ability to generate
revenues is subject to many of the risks generally associated with motion
pictures. In addition, the motion picture business is highly volatile. It is
subject to great uncertainties and fluctuations in the availability and success
of film projects and in the generation of revenues.
The ability of CNBE to achieve any revenues and net proceeds from the
motion pictures will depend on CNBE's success in obtaining effective
distribution of the motion pictures, which cannot be predicted or assured. Since
CNBE does not have and will not raise sufficient funds to distribute and promote
the motion pictures itself, CNBE will have to negotiate with one or more third
parties either to distribute and promote the motion pictures or to finance such
distribution and the potentially substantial costs of advertising and making
prints. The willingness of any parties to distribute the motion pictures will be
dependent on their assessment of critical success and audience response to the
motion pictures, which are both unpredictable and subject to change.
Distributors cannot be guaranteed that the motion pictures will generate large
enough theatrical audiences and revenue from other media to become profitable.
The ability of CNBE to achieve any revenues and net proceeds from the motion
pictures will depend on success in obtaining effective distribution of the
motion pictures, which cannot be predicted or assured.
16
In addition to potential cash payments from distributors in the form of
rentals, minimum guarantees or advances of production costs, CNBE may be able to
obtain a participation in "overages" or "net proceeds" from distribution of the
motion pictures in territories granted to such distributors. Such shares of
profits would be payable to CNBE only after the distributor recoups any
guarantees and advances and deducts its fees and claimed expenses. Only a small
minority of all independent feature films ever generates any overages or net
receipts in excess of such amounts deducted by the distributor. As a
consequence, any net profit participations negotiated by CNBE are unlikely to
result in any significant revenues to CNBE.
Ultimately, the revenues derived from the motion pictures will depend
primarily on their acceptance by the public, which cannot be predicted and which
does not necessarily bear any direct correlation to the production or
distribution costs incurred in connection with the motion pictures. The
commercial success of the motion pictures will also vary with promotion and
marketing, quality, the timing and extent of release in theaters, television and
video, competing films, general economic conditions and numerous other factors.
A lack of success or favorable conditions in any of these matters may reduce or
preclude net revenue participations to CNBE.
PRODUCTION OF THE MOTION PICTURES IS SUBJECT TO PRODUCTION PROBLEMS AND COST
OVERRUNS WHICH MAY PREVENT COMPLETION OF THE MOTION PICTURES.
The process of producing a feature film is time consuming, complex and
expensive. A high degree of planning and organization and budget control is
essential to controlling the costs of production and the ability of the producer
to complete the picture with the funds and time available. Many factors may
arise that lead to substantial overruns in excess of the budgeted costs of the
motion pictures. Delays occasioned by illness, accidents, strikes, faulty
equipment, weather or other causes may cause costly production overruns or even
result in the abandonment of completion of the motion pictures. Delays in
delivery of the motion pictures to distributors may cause substantial problems
with such entities and may postpone the receipt of sales commissions and
reimbursement of expenses that are payable following delivery. There is a
significant risk that the motion pictures may not reach principal photography
and may not be finished.
THE SUCCESS OF THE MOTION PICTURES WILL DEPEND, IN PART, ON THE EFFORTS OF THE
MOTION PICTURE'S DISTRIBUTORS.
If CNBE is able to enter into contracts for distribution of the motion
pictures, the success of the release and any revenues generated will be largely
dependent on the decisions and efforts made by the distributors in different
territories, including the number of cinema screens booked, advertising and
promotion and the distributors' timing and strategy for release. CNBE is not
likely to have full control over these actions by any distributor, which will
have a substantial effect on any revenue participation and potential profits
that may be anticipated by CNBE. If any distributor devotes more attention and
effort to other films that it may be distributing than it does to the motion
pictures, the financial success of the motion pictures may be adversely
affected.
17
THE PRODUCER MAY INCUR ADDITIONAL PROBLEMS AND EXPENSES IN THE COLLECTION OF
PROCEEDS GENERATED BY THE MOTION PICTURES.
A significant portion of the rental revenues that CNBE negotiates for
the motion pictures will be paid upon delivery to the distributors for various
territories. However, parts of the minimum "price" agreed to be paid by
distributors to acquire distribution rights may be payable in installments after
delivery of the physical print of the motion pictures. Shares of any "overages"
that accrue in a territory, after repayment of the minimum advance and retention
of distribution fees and expenses by the distributor, will only be paid to the
film producer following release of the motion pictures. A producer may face a
substantial burden in pursuing collection of proceeds from the motion pictures.
There is a risk that the producer may not be able to prove the amount of
revenues generated by the motion pictures in a territory and may not be able to
collect the revenues due to it from distributors. In some cases, the producer of
a motion picture may be forced to pursue an audit of receipts or litigation in
order to collect revenues claimed from distributors.
IF THE MOTION PICTURES FAIL TO GENERATE THE REVENUES ANTICIPATED BY THE
PRODUCER, THE DISTRIBUTORS MAY SEEK ADDITIONAL PAYMENTS FROM THE PRODUCER.
In order to arrange production financing for a motion picture, a
producer will seek to obtain "minimum guarantees" and advances from distributors
prior to delivery of the finished prints of the motion picture. Such guaranteed
advances can sometimes be procured based on a reputable sales representative's
estimates of revenues that are likely to be derived from the motion picture in
particular territories. In light of the extraordinary uncertainty of commercial
success of motion pictures, the sales estimates and advance payments or
guarantees obtained by CNBE may prove to be too high in relation to the eventual
receipts generated by the pictures.
If substantial losses are incurred by distributors due to the failure
of the motion pictures to generate enough revenues in their territories to
recoup guaranteed advances, the distributors may seek to renegotiate subsequent
payments owed under their distribution agreements. In addition, the distributors
may seek to negotiate off-setting arrangements involving revenues from other
films sold by the producer to the distributors.
THE MOTION PICTURES WILL BE SUBJECT TO EXHIBITION, DISTRIBUTION, SALES AND
PRODUCTION CHARGES THAT ARE BEYOND THE CONTROL OF CNBE, WHICH MAY REDUCE, OR
ELIMINATE ANY PROFITS.
Even if the motion pictures are critically and artistically successful
and generate substantial gross revenues, there can be no assurance that CNBE
will receive any net "overages" in excess of advance commissions paid to finance
development and production of the motion pictures or that any share of profits
from the motion pictures will accrue. Exhibitors of the motion pictures are
likely to keep 50% to 60% of any gross theatrical receipts, while a foreign
distributor may retain 15% to 40% of gross receipts as a distribution fee. In
addition, under certain distribution arrangements, a distributor may deduct from
gross revenues further amounts accounted for as fees, expenses, overhead and
substantial print and advertising costs, as well as interest imputed on advances
or guarantees paid by the distributor. The amounts of such additional deductions
from gross revenues will in all probability not be controlled by CNBE. Sales
agents for the motion pictures will also demand substantial commissions which
will be payable out of revenues. All of the foregoing will be deducted from the
18
motion pictures' revenues before CNBE's producer share is determined. Once the
producer's share of net profits is determined, the producer will be responsible
for paying its costs of production and profit participations that may have been
granted to directors, actors, writers or others who worked on the motion picture
project. Even before such deductions from net receipts, stars and directors with
sufficient bargaining power may obtain shares of contractually defined "gross"
receipts of the picture, which will be deducted from revenues before the
producer's share is determined. Unless the motion pictures are an extraordinary
box office success, the likelihood of significant net revenues is small.
THE MOTION PICTURES MAY NOT BE DISTRIBUTED IN ALL MEDIA OUTLETS.
To maximize the potential for revenues, distribution of a motion
picture is generally sought in a number of media: (a) theatrical exhibition, (b)
home video, (c) presentation on television, including pay-per-view, basic cable,
network or "free" television and syndication, (d) other non-theatrical
exhibition, including airlines, hotels and armed forces facilities and (c)
marketing of other rights in the motion picture, which may include merchandising
of soundtrack recordings or products derived from characters in the film. There
can be no assurance that the motion pictures will be exploited through all of
these outlets or will derive substantial revenue from any of them.
THE LOSS OF ORIGINAL MOTION PICTURE FOOTAGE PRIOR TO EXHIBITION OF THE MOTION
PICTURES MAY REDUCE THE PROCEEDS PAID TO CNBE.
There is a risk that all or a portion of original footage shot for the
motion pictures may be damaged, stolen or lost during or prior to the time of
final making of prints for exhibition. It may be too costly or impossible to
re-shoot damaged or lost portions of a film. Other casualties or accidents
affecting CNBE's pictures may also occur. Although insurance against these
hazards may be obtained, there can be no assurance that any such policy will be
available at affordable rates or that the proceeds from insurance, if obtained,
will be sufficient to cover any losses. If such a loss occurs, it may prevent
CNBE's receipt of deferred installments of revenues payable after delivery of
the motion pictures and any share of "overages" that might have been paid to
CNBE if the motion pictures succeeded in distribution.
INCREASING COSTS MAY MAKE THE MOTION PICTURES UNPROFITABLE.
While box office receipts have been relatively stable, the costs of
producing films, making prints required for exhibition, and the advertising
necessary to promote and market films continue to increase substantially. Costs
associated with creative and artistic personnel have also increased in certain
instances. The combination of these factors has caused the proportion of
unprofitable films in the industry to increase. In the event that a film is
distributed in foreign countries, some or all of the revenue derived from such
distribution may be subject to currency controls and other restrictions which
would restrict the available funds.
19
NEW TECHNOLOGY MAY ADVERSELY AFFECT THE SUCCESS OR AMOUNT OF PROCEEDS RECEIVED
BY CNBE.
The entertainment industry in general, and the motion picture industry
in particular, are continuing to undergo significant changes, primarily due to
technological developments. Due to this rapid growth of technology, shifting
consumer tastes and the popularity and availability of other forms of
entertainment, it is impossible to predict the overall effect these factors will
have on the potential revenue from and profitability of the motion pictures.
Several major companies have announced that they are developing or have
developed other technologies, including video-server and compression
technologies, which will provide movies "on demand" directly to consumer homes
over cable television lines, telephone lines or satellite transmission. If these
or other new technologies are introduced on a wide scale basis, CNBE's home
video revenues and overall business could be significantly impacted and CNBE
might be required to develop and implement new operating strategies and
distribution capabilities in order for its business to remain viable.
LACK OF EXPERIENCE OF CURRENT MANAGEMENT OF PPG IN PUBLICATION OF A MAGAZINE.
Management of PPG does not have any prior experience in the publication
of magazines. Management will be largely dependent on employees and consultants
to render advice on developing, designing, producing and marketing magazines.
The lack of experience in developing, designing, producing and marketing
magazines could adversely affect PPG. Although PPG anticipates entering into
agreements with certain consultants, no assurance can be given that these
consultants will be able to successfully develop, design, produce, market and
distribute PPG 's magazine.
COMPETITION IN THE PUBLISHING INDUSTRY
With respect to the PPG's proposed publications, PPG believes that the
main competition it will face for its target audience will come from other
companies that are engaged in the sale of sports and entertainment memorabilia,
as well as from companies engaged in the collectibles industry. In addition, and
to a lesser extent, PPG may compete with other sports and sports-related
magazine titles published currently, and other electronic or entertainment media
such as television, newspapers and the internet. PPG will also face intense
competition for the engagement of sports and entertainment celebrities. PPG's
competitors may have greater financial and other resources than PPG.
UNCERTAINTY OF PPG ATTAINING PROFITABILITY.
PPG expects to incur significant operating losses for the foreseeable
future as it develops, designs, produces, markets and distributes its
contemplated publications. There can be no assurance that PPG will ever achieve
profitability.
PURCHASERS OF THE COMPANY'S SECURITIES MAY BE ADVERSELY EFFECTED BY THE PENNY
STOCK REGULATIONS.
The Company's common stock is currently traded on the OTC Electronic
Bulletin Board. Unless and until the Company's common stock is quoted on the
Nasdaq System or on a national securities exchange and if and so long as the
common stock trades below $5.00 par share, the common stock would come within
the definition of a "penny stock" as defined in the Securities Exchange Act of
1934, as amended (the "Exchange Act") and be covered by Rule 15g-9 of the
Exchange Act. That rule imposes additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
20
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse). For
transactions covered by Rule 15g-9, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to sale. In addition, prior to effecting any
penny stock transaction, the broker-dealer must provide a customer with a
document that discloses the risks of investing in the penny stock market,
including a description of the broker-dealer's duties to the customer and the
rights and remedies available to the customer, explain the nature of "bid" and
"ask" prices in the penny stock market, supply a toll-free telephone number to
provide information on disciplinary histories and describe all significant terms
used in such disclosure document. Consequently, Rule 15g-9, if it becomes
applicable, would affect the willingness of broker-dealers to sell the Company's
securities and therefore would affect the ability of purchaser of the Jaguar's
securities to sell their securities in the secondary market.
THE AVAILABILITY OF SHARES ELIGIBLE FOR FUTURE SALE MAY HAVE AN ADVERSE EFFECT
ON THE MARKET PRICE OF THE COMPANY'S SECURITIES.
Sales of substantial amounts of the Company's common stock in the
public market or the prospect of such sales could materially and adversely
effect the market price of Company's common stock. Prior to the completion of
the share exchange between Jaguar and the shareholders of Premier and the
related transactions, there were 11,410,000 shares of Jaguar common stock
outstanding. Of such amount, approximately 310,000 shares were immediately
eligible for sale in the public market without restriction or were restricted
securities eligible for sale in the public market pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended. Upon completion of the
share exchange and related transactions, an additional 1,000,000 shares of
Jaguar Common Stock were issued which shares will become eligible for sale in
the public market without restriction pursuant to the provisions of Rule 144.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for at
least one year including affiliates of the Company, wold be entitled to sell in
brokers' transactions or to market makers within any three-month period a number
of Restricted Shares that does not exceed the greater of 1% of the then
outstanding Jaguar Common Stock or the average weekly trading volume in the
principal market on which such securities trade during the four calendar weeks
preceding the date on which notice of the sale is filed with the Commission.
Sales under Rule 144 are also subject to certain manner of sale provisions,
notice requirements and the availability of current public information about the
Company. A person who is not an affiliate of the Company at any time during the
90 days preceding a sale, and who has beneficially owned Restricted Shares for
at least two years is currently entitled to sell such Restricted Shares without
21
any of the restrictions above-mentioned. However, Restricted Shares held by
affiliates must continue, after the two-year holding period to be sold in a
brokers' transaction or to market makers subject to the volume, manner of sale,
notice and availability of public information limitations described above. The
above is a summary of Rule 144 and is not intended to be a complete description.
In addition, immediately following the share exchange with the
shareholders of Premier, Jaguar entered into registration rights agreements (the
"Registration Rights Agreements") with each of Amerman, Smoke Rise, G-P and
Alder (the "Holders"). The Registration Rights Agreements grant each of the
Holders, under certain circumstances, the right to demand registration of all or
a portion of their shares on or after March 18, 2002. There can be no assurance
that any or all of the Holders will exercise or refrain from exercising such
right.
THE LIMITED PUBLIC MARKET FOR THE COMPANY'S SECURITIES MAY RESULT IN ILLIQUIDITY
FOR PURCHASER'S OF THE COMPANY'S SECURITIES AND VOLATILITY IN THE PRICE OF SUCH
SECURITIES.
The Company's outstanding shares of its common stock are currently
traded to a very limited extent on the OTC Bulletin Board. Factors such as
announcements by the Company or its competitors concerning technological
innovations, new products or procedures, proposed government regulations and
developments, interruptions in Internet service or disputes relating to patents
or proprietary rights may have a significant effect on the market price of the
Company's securities. Changes in the market price of the Company's Common Stock
may bear no relation to the Company's actual operational or financial results.
There is no assurance than an active trading market for Jaguar's common stock
will be established or maintained. As a result, purchaser's of the Company's
securities could find it difficult to sell their securities.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of CNBE and Explosion.
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CNB ENTERTAINMENT & SPORTS, LLC
FINANCIAL STATEMENTS
AND SUPPLEMENTAL INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1999
with
INDEPENDENT AUDITORS' REPORT
CNB ENTERTAINMENT & SPORTS, LLC
CONTENTS
PAGE
Independent auditors' report 1
Financial Statements:
Balance Sheet 2
Statement of Operations 3
Statement of Cash Flows 4
Notes to Financial Statements 5 - 7
Supplemental Information:
Schedule of Cost of Sales 8
Schedule General and Administrative Expenses 8
To the Members
CNB Entertainment & Sports, LLC
Manchester, New Hampshire
We have audited the balance sheet of CNB Entertainment & Sports LLC as of
December 31, 1999, and the related statements of operations, members' deficiency
and cash flows for the year then ended in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we 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 statements
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects the financial position of CNB Entertainment & Sports LLC
as of December 31, 1999, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
Liebman Goldberg & Drogin, LLP
May 23, 2001
CNB ENTERTAINMENT & SPORTS, LLC
BALANCE SHEET
DECEMBER 31, 1999
- -----------------
Assets
Current Assets:
Cash and cash equivalents $ 3,090
Accounts receivable 99,770
Loan receivable 15,000
--------
Total current assets 117,860
Property and Equipment:
- - net of accumulated depreciation
and amortization of $5,294 20,885
Other Assets:
Security deposits 18,375
--------
Total assets $157,120
========
Liabilities and Members' Equity
Current Liabilities:
Accounts payable $ 47,172
Due to affiliated company 48,530
--------
Total current liabilities 95,702
Members' Equity 61,418
--------
Total liabilities and members' equity $157,120
========
See notes to financial statements.
-2-
CNB ENTERTAINMENT & SPORTS, LLC
STATEMENT OF OPERATIONS AND MEMBERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1999
Sales - commissions $552,393
Selling, general and
administrative expenses 491,286
--------
Income from operations 61,107
Interest income 311
--------
Net income 61,418
Members' equity - beginning of year --
--------
Members' equity - end of year $ 61,418
========
See notes to financial statements.
-3-
CNB ENTERTAINMENT & SPORTS, LLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
Cash Flows from Operating Activities:
Net income $ 61,418
Adjustments to Reconcile Net (Loss) to Net
Cash provided by Operating Activities:
Depreciation and amortization $ 5,294
Increase (decrease) in cash attributable to changes
in assets and liabilities:
Accounts receivable (99,770)
Other receivables (15,000)
Security deposits (18,375)
Accounts payable 47,172
Due to affiliated company 48,530
--------
Total adjustments (32,149)
--------
Net cash provided by operating activities 29,269
Cash Flows from Investing Activities:
Purchases of fixed assets (26,179)
--------
Net cash (used in) investing activities (26,179)
--------
Net increase in cash and cash equivalents 3,090
Cash and cash equivalents - beginning of year --
--------
Cash and cash equivalents - end of year $ 3,090
========
See notes to financial statements.
-4-
CNB ENTERTAINMENT & SPORTS, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
Note 1 - Nature of Business:
- ----------------------------
CNB Entertainment & Sports LLC was formed as a Limited Liability
Company in New Hampshire on May 13, 1999. As of December 1999, the
Company has one member and no capital had been contributed. All
activities have been funded from collections of revenues generated. The
Company was initially formed to provide corporate sponsorship
activities including film product placement support, celebrity and
athlete procurement for corporate commercial advertising and print ad
and appearances and corporate consulting. As discussed further in Note
6, the Company entered into a merger agreement with Premier
Entertainment Group, Inc. As part of that merger it will be managed by
CNB Sports and Entertainment, Inc. and expand its activities into
capital acquisition, and film and event production.
Note 2 - Significant Accounting Policies:
- -----------------------------------------
Revenue Recognition:
--------------------
Currently, the Company recognizes revenue when service is provided.
Upon notification of film product placement support or celebrity and
athlete appearance, etc., the customer receiving the service is
invoiced.
Fair Value of Financial Instruments:
------------------------------------
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments,"
requires disclosure of the fair value information, whether or not
recognized in the balance sheet, where it is practicable to estimate
that value. The amounts reported for cash, accounts receivable, loans
payable, accounts payable and accrued expenses approximate the fair
value because of their short maturities.
Cash and Cash Equivalents:
--------------------------
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
Property and Equipment:
-----------------------
Property and equipment is stated at cost and are depreciated under the
straight-line method over the estimated useful lives of the assets.
Ordinary repairs and maintenance are charged to expense as incurred.
Impairment of Long-Lived Assets:
--------------------------------
At December 31, 1999, the Company had not completed its evaluation of
the Adoption of SFAS #121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of".
-5-
CNB ENTERTAINMENT & SPORTS, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
Note 2 - Significant Accounting Policies (Continued):
- -----------------------------------------------------
Impairment of Long-Lived Assets (Continued):
--------------------------------------------
Intangible and other long-lived assets should be reviewed whenever
indicators of impairment are present and the undiscounted cash flows
are not sufficient to recover the related asset carrying amount.
Concentration of Credit Risk:
-----------------------------
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist primarily of cash and
cash equivalents and accounts receivable. The Company's investment
policy is to invest in low risk, highly liquid investments.
Income Taxes:
-------------
As a limited liability company, the Company files a federal partnership
tax return and state business tax return. The Company has elected to
file its tax returns on a cash basis. However, the financial statements
are on an accrual basis.
Use of Estimates:
-----------------
The preparation of financial statements in conformity with generally
accepted principles requires management to make estimated and
assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could
differ from those estimates and such differences could be material to
the financial statements.
Note 3 - Loan Receivable:
- -------------------------
During the year, the Company loaned $15,000 to an entity owned by
certain related partners. As of December 31, 1999, no repayment has
been made and there is a possibility that subsequent to the year-end
the loan may not be collected.
Note 4 - Property and Equipment:
- --------------------------------
Property and equipment are summarized by major classifications as
follows:
Machinery and equipment $ 26,179
Less: Accumulated depreciation (5,294)
--------
$ 20,885
========
Depreciation expense for the year was $5,294.
-6-
CNB ENTERTAINMENT & SPORTS, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
Note 5 - Loans Payable:
- -----------------------
During the year ended December 31, 1999, the company received various
loans from a related entity. The loans mature at various periods and
accrued interest at 10% per annum. The loans do not require any
principal payment be made.
The loans represent advances made to and on behalf of the Company as
well as expenses paid by CNB Capital. CNB Capital then allocates these
expenses to the Company based upon their proportionate share. The sole
shareholder of CNB Capital is the only member of the limited liability
company.
Note 6 - Commitments and Contingencies:
- ---------------------------------------
The Company utilizes office facilities at the location of its related
party. Annual rental for the years ended December 31, are as follows:
2000 $ 42,000
2001 42,000
2002 42,000
2003 12,000
Note 7 - Subsequent Events:
- ---------------------------
On April 5, 2001, the Company entered into a merger agreement with
Premier Entertainment Group, inc. ("PEG"), a wholly owned subsidiary of
Premier Sports Media and Entertainment Group, Inc. ("PSM & EG"), PEG
was incorporated April 2, 2001 to acquire the Company. Prior to this
merger, the Company liquidated; transferring all its assets and
liabilities to its sole member. The member subsequently transferred the
assets and liabilities to a newly formed entity; CNB Sports and
Entertainment, Inc. with its sole shareholder being the former LLC
member. PSM & EG issued 10% of its outstanding shares for all of the
outstanding (200) shares of CNB. Additionally, PSM & EG agreed to pay
CNB $250,000 no later than one month after the closing as consideration
for loans made to the LLC by the sole member and transferred to CNB,
Inc. Also, subsequent to the closing, PSM & EG agreed to grant a line
of credit to CNB of $800,000 for working capital and an additional line
of credit of up to $4,000,000 for financing and production costs of
certain projects and ventures associated with CNB. As part of the
merger, PEG changed it name to CNB Sports and Entertainment, Inc.
Additionally, as part of the merger, another wholly owned subsidiary of
PSM & EG acquired a non-related entity. PSM & EG acquired Explosion
Promotions, Inc. through its subsidiary, Premier Boxing, Inc.
PSM & EG intends to become a diverse sports media and entertainment
company, and is involved in a private placement intending to utilize
proceeds to develop and finance its future activities.
-7-
Supplemental Information
------------------------
CNB ENTERTAINMENT & SPORTS, LLC
-------------------------------
SUPPLEMENTAL INFORMATION
DECEMBER 31, 1999
Selling, General and Administrative Expenses:
Salaries - office $168,123
Payroll taxes 15,119
Rent expense 46,836
Telephone 6,655
Insurance 39
Consulting 37,490
Auto expenses 440
Dues and subscriptions 2,421
Management fees 49,799
Office supplies and expense 5,453
Maintenance and repairs 1,450
Postage and messengers 1,418
Outside services 59,400
Travel and entertainment 45,024
Professional fees 8,700
Client relations 27,259
Depreciation expense 5,294
Public Relations 7,654
Taxes-State 2,712
--------
Total selling, general and
Administrative expenses $491,286
========
See notes to financial statements.
-8-
CNB ENTERTAINMENT & SPORTS, LLC
FINANCIAL STATEMENTS
AND SUPPLEMENTAL INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2000
with
INDEPENDENT AUDITORS' REPORT
CNB ENTERTAINMENT & SPORTS, LLC
CONTENTS
PAGE
Independent auditors' report 1
Financial Statements:
Balance Sheet 2
Statement of Operations & Members Deficiency 3
Statement of Cash Flows 4
Notes to Financial Statements 5 - 7
Supplemental Information:
Schedule of Cost of Sales 8
Schedule General and
Administrative Expenses 8
To the Members
CNB Entertainment & Sports, LLC
Manchester, New Hampshire
We have audited the balance sheet of CNB Entertainment & Sports LLC as of
December 31, 2000, and the related statements of operations, members' deficiency
and cash flows for the year then ended in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we 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 statements
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects the financial position of CNB Entertainment & Sports LLC
as of December 31, 2000, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Notes 2 and 8 to the
financial statements, the Company has suffered a loss from operations which
raise substantial doubt about its ability to continue as a going concern.
Management's plans regarding those matters also are described in Notes 2 and 8.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Liebman Goldberg & Drogin, LLP
May 30, 2001
CNB ENTERTAINMENT & SPORTS, LLC
BALANCE SHEET
DECEMBER 31, 2000
Assets
Current Assets:
$ 247
Accounts receivable 25,500
Due from affiliated companies 2,710
---------
Total current assets 28,457
--------------------
Property and Equipment:
- net of accumulated depreciation
And amortization of $15,744 23,498
Other Assets:
Investment 15,000
Security deposits 1,100
---------
Total assets $ 68,055
------------ =========
Liabilities and Members' Deficiency
Current Liabilities:
Accounts payable and accrued expenses $ 36,220
Due to affiliated company 206,307
Loan payable 125,000
---------
Total current liabilities 367,527
-------------------------
Members' Deficiency (299,472)
---------
Total liabilities and members' deficiency $ 68,055
----------------------------------------- =========
See notes to financial statements.
-2-
CNB ENTERTAINMENT & SPORTS, LLC
-------------------------------
STATEMENT OF OPERATIONS AND MEMBERS' DEFICIENCY
-----------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2000
------------------------------------
Sales - commissions $ 506,859
Selling, general and
administrative expenses 867,749
---------
Loss from operations (360,890)
Members' equity - beginning of year 61,418
---------
Members' deficiency - end of year $(299,472)
=========
See notes to financial statements.
-3-
CNB ENTERTAINMENT & SPORTS, LLC
-------------------------------
STATEMENT OF CASH FLOWS
-----------------------
FOR THE YEAR ENDED DECEMBER 31, 2000
------------------------------------
Cash Flows from Operating Activities:
Net (loss) $(360,890)
Adjustments to Reconcile Net (Loss) to Net
Cash provided by Operating Activities:
Depreciation and amortization $ 10,450
Increase (decrease) in cash attributable to changes
in assets and liabilities:
Accounts receivable 74,270
Other receivables 15,000
Due from affiliated company (2,710)
Security deposits 17,275
Accounts payable (10,952)
Due to affiliated company 157,777
Investment (15,000)
Loan payable 125,000
---------
Total adjustments 371,110
---------
Net cash provided by operating activities 10,220
Cash Flows from Investing Activities:
Purchases of fixed assets (13,063)
------------------------- ---------
Net cash provided by investing activities (13,063)
---------
Net decrease in cash and cash equivalents (2,843)
Cash and cash equivalents - beginning of year 3,090
---------
Cash and cash equivalents - end of year $ 247
=========
See notes to financial statements.
-4-
CNB ENTERTAINMENT & SPORTS, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
Note 1 - Nature of Business:
- ----------------------------
CNB Entertainment & Sports LLC was formed as a Limited Liability
Company in New Hampshire on May 13, 1999. The Company had one member
and no capital has been contributed. The Company was initially formed
to provide corporate sponsorship activities including film product
placement support, celebrity and athlete procurement for corporate
commercial advertising and print ad and appearances and corporate
consulting. As discussed further in Note 8, the Company entered into a
merger agreement with Premier Entertainment Group, Inc. As part of that
merger it will be managed by CNB Sports and Entertainment, Inc. and
expand its activities into capital acquisition, and film and event
production. Also, as further discussed in Note 8, Premier executed a
letter of intent to sell 100% of its outstanding shares for 1,000,000
shares of Jaguar Investments. Jaguar is a publicly traded shell having
approximately 11,300,000 shares outstanding.
Note 2 - Ability to Continue as a Going Concern:
- ------------------------------------------------
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles which contemplate
continuation of the Company as a going concern. The Company, as shown
in the accompanying financial statements, has a members' deficit of
$299,472 for the period of inception (May 13, 1999) through December
31, 2000. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty. Subsequent to
December 31, 2000, and as discussed in Note 8, the Company merged into
a successor Company and is pursuing additional capital resources.
Note 3 - Significant Accounting Policies:
- -----------------------------------------
Revenue Recognition:
--------------------
Currently, the Company recognizes revenue when service is provided.
Upon notification of film product placement support or celebrity and
athlete appearance, etc., the customer receiving the service is
invoiced.
Fair Value of Financial Instruments:
------------------------------------
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments,"
requires disclosure of the fair value information, whether or not
recognized in the balance sheet, where it is practicable to estimate
that value. The amounts reported for cash, accounts receivable, loans
payable, accounts payable and accrued expenses approximate the fair
value because of their short maturities.
Cash and Cash Equivalents:
--------------------------
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
-5-
CNB ENTERTAINMENT & SPORTS, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
Note 3 - Significant Accounting Policies (Continued):
- -----------------------------------------------------
Property and Equipment:
-----------------------
Property and equipment is stated at cost and are depreciated under the
straight-line method over the estimated useful lives of the assets.
Ordinary repairs and maintenance are charged to expense as incurred.
Depreciation expense for the year ended December 31, 2000 was $10,450.
Impairment of Long-Lived Assets:
--------------------------------
At December 31, 2000, the Company had not completed its evaluation of
the Adoption of SFAS #121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of".
Intangible and other long-lived assets should be reviewed whenever
indicators of impairment are present and the undiscounted cash flows
are not sufficient to recover the related asset carrying amount.
Concentration of Credit Risk:
-----------------------------
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist primarily of cash and
cash equivalents and accounts receivable. The Company's investment
policy is to invest in low risk, highly liquid investments.
Income Taxes:
-------------
As a one member limited liability company, the member files a Schedule
C on his personal tax return to account for the LLC's activity. The
member has elected to file its Schedule C on a cash basis. However, the
financial statements are on an accrual basis.
Use of Estimates:
-----------------
The preparation of financial statements in conformity with generally
accepted principles requires management to make estimated and
assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could
differ from those estimates and such differences could be material to
the financial statements.
Note 4 - Investment:
- --------------------
The Company converted a loan receivable from an entity owned by certain
related parties in the amount of $15,000 into a 3% equity ownership
stake. No repayments on the original loan were made prior to
conversion.
-6-
CNB ENTERTAINMENT & SPORTS, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
Note 5 - Property and Equipment:
- --------------------------------
Property and equipment are summarized by major classifications as
follows:
Machinery and equipment $ 9,242
Less: Accumulated depreciation (15,744)
--------
$ 23,498
========
Note 6 - Loans Payable:
- -----------------------
During the year ended December 31, 2000, the company received various
loans from a related entity. The loans mature at various periods and
accrued interest at 10% per annum. The loans do not require any
principal payment be made.
The Company also secured a loan from an individual in the amount of
$150,000.
The loans represent advances made to and on behalf of the Company as
well as expenses paid by CNB Capital. CNB Capital then allocates these
expenses to the Company based upon their proportionate share. The sole
shareholder of CNB Capital is the majority member of the limited
liability company.
Note 7 - Commitments and Contingencies:
- ---------------------------------------
The Company utilizes office facilities at the location of its related
party. Rent expense allocated to the Company in 2000 was $86,738.
Annual rental for the subsequent years ended December 31, are as
follows:
2001 $ 42,000
2002 42,000
2003 12,000
Note 8 - Subsequent Events:
- ---------------------------
On April 5, 2001, the Company entered into a merger agreement with
Premier Entertainment Group, Inc. ("PEG") whereby PEG acquired all of
the Company's common stock for 10% of PEG's common stock and cash
consideration. As part of the merger agreement, PEG also acquired a
non-related entity, Explosion Promotions, Inc. Premier intends to
become a diverse sports media and entertainment company. Also, as
previously discussed, the surviving company (PEG) is involved in a
private placement and intends to utilize the proceeds to develop and
finance its activities.
On May 25, 2001, Premier entered into a non-binding letter of intent to
sell 100% of its outstanding shares to Jaguar Investment. Jaguar; a
publicly traded shell, will issue 1,000,000 shares of its outstanding
common stock to Premier. Jaguar currently trades over the counter on
the bulletin board and has 11,310,000 of common shares outstanding. The
Company anticipates closing the acquisition by Jaguar on August 1,
2001, subject to a definitive agreement being executed and the
completion of various conditions being completed before the closing.
One of the conditions is the raising of $3,000,000 by Premier though a
private placement of its securities before the acquisition. Premier
recently issued a private placement memorandum and is currently
attempting to secure private placement funding.
-7-
Supplemental Information
------------------------
CNB ENTERTAINMENT & SPORTS, LLC
-------------------------------
SUPPLEMENTAL INFORMATION
DECEMBER 31, 2000
Selling, General and Administrative
Expenses:
Salaries - office $286,946
Payroll taxes 23,941
Rent expense 86,738
Telephone 19,058
Insurance 14,653
Consulting 12,000
Auto expenses 2,345
Dues and subscriptions 1,838
Management fees 200,000
Office supplies and expense 7,558
Maintenance and repairs 1,260
Postage and messengers 6,696
Outside services 100,171
Travel and entertainment 47,164
Professional fees 26,860
Client relations 14,433
Depreciation expense 10,450
Public Relations 5,240
Taxes 398
--------
Total selling, general and
administrative expenses $867,749
========
See notes to financial statements.
-8-
EXPLOSION PROMOTIONS, INC.
FINANCIAL STATEMENTS
AND SUPPLEMENTAL INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1999
with
INDEPENDENT AUDITORS' REPORT
EXPLOSION PROMOTIONS, INC.
CONTENTS
FOR THE YEAR ENDED DECEMBER 31, 1999
PAGE #
Independent Auditors' Report 1
Financial Statements:
Balance Sheet 2
Statement of Operations 3
Statement of Stockholders' Deficit 4
Statement of Cash Flows 5
Notes to Financial Statements 6-10
Supplemental Information:
Schedule of Cost of Sales 11
Schedule of General and Administrative Expenses 11
The Board of Directors
Explosion Promotions, Inc.
We have audited the balance sheet of Explosion Promotions, Inc. as of December
31, 1999, and the related statements of operations, stockholders' deficit and
cash flows for the year then ended in accordance with Statements on Standards
for Accounting and Review Services issued by the American Institute of Certified
Public Accountants. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we 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 statements
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects the financial position of Explosion Promotions, Inc. as of
December 31, 1999, and the results of its operations and its cash flows for the
year then ended 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 the financial statements, the
Company has suffered losses from operations and has a deficit in stockholders'
equity. This raises substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Liebman Goldberg & Drogin, LLP
May 18, 2001
EXPLOSION PROMOTIONS, INC.
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
Current Assets:
Cash and cash equivalents $ 7,280
Property and equipment, net of accumulated depreciation
of $14,015 22,152
Other Assets:
Security deposits 1,800
---------
Total assets $ 31,232
=========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Loans payable - current $ 450,000
Accrued expenses payable 71,671
---------
Total current liabilities 521,671
---------
Long-Term Liabilities:
Loan payable - officer 38,300
---------
Total long-term liabilities 38,300
---------
Total liabilities 559,971
---------
Commitments and Contingencies
Stockholders' (Deficit):
Common stock, no par value per share, 200 200
issued and outstanding
Deficit (528,939)
---------
Total stockholders' (deficit) (528,739)
---------
Total liabilities and stockholders' (deficit) $ 31,232
=========
See Notes to financial statements.
-2-
EXPLOSION PROMOTIONS, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
Revenues $ 158,107
Cost of sales 265,473
---------
Gross (loss) (107,366)
Expenses:
Selling, general and administrative (206,538)
---------
Loss from operations (313,904)
Interest expense 39,866
Depreciation 7,233
---------
Loss before provision for income taxes (361,003)
Provision for income taxes (374)
---------
Net (loss) $(361,377)
=========
Net (loss) per share (basic and diluted)
based upon 200 weighted average shares
outstanding for December 31, 1999 $ (1,807)
=========
See Notes to financial statements.
-3-
EXPLOSION PROMOTIONS, INC.
STATEMENT OF STOCKHOLDERS' (DEFICIT)
FOR THE YEAR ENDED DECEMBER 31, 1999
Common Stock
-----------------------
Shares Amount (Deficit)
--------- --------- ---------
Balance - January 1, 1999 200 $ 200 $(167,562)
Net (loss) for the year
December 31, 1999 -- -- (361,377)
--------- --------- ---------
Balance - December 31, 1999 200 $ 200 $(528,939)
========= ========= =========
See notes to financial statements.
-4-
EXPLOSION PROMOTIONS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
Cash Flows from Operating Activities:
Net (loss) $(361,377)
Adjustments to Reconcile Net Loss to Net Cash
(Used in) Operating Activities:
Depreciation and amortization $ 7,233
Changes in Assets and Liabilities:
Increase in accrued expenses payable 71,671
---------
Total adjustments 78,904
---------
Net cash (used in) operating activities (282,473)
Cash Flows from Investing Activities:
Acquisition of property and equipment (2,258)
---------
Net cash (used in) investing activities (2,258)
Cash Flows from Financing Activities:
Proceeds from loans payable 280,000
Increase in officer loan payable 6,500
---------
Net cash provided by financing activities 286,500
---------
Increase in cash and cash equivalents 1,769
Cash and cash equivalents - beginning of year 5,511
---------
Cash and cash equivalents - end of year $ 7,280
=========
Supplemental Disclosures:
Income tax $ 374
=========
Interest paid $ 180
=========
See notes to financial statements.
-5-
EXPLOSION PROMOTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 1 - Nature of Business:
- ----------------------------
Explosion Promotions, Inc. was incorporated in New York on January 22,
1997. The Company is a diversified sports entertainment business
currently specializing in the sports field of boxing. The Company
presently operates three divisions that include a licensed boxing
promotions Company (Explosion), a boxing gym and sports center that
trains/teaches professionals, amateurs and others in boxing (Gleasons
Gym of Garden City - a division of Explosion) and a cablevision
televised boxing talk show (Inside the Ring, Inc.). Subsequent to
December 31, 1999, the Company acquired all of the outstanding stock of
Inside the Ring. During 1999, the Company advanced production
expenditures on behalf of Inside the Ring.
Note 2 - Summary of Significant Accounting Policies:
- ----------------------------------------------------
Revenue Recognition and Accounting Policies:
--------------------------------------------
Revenue recognition policies vary for the different business operations
and are as follows:
Boxing Promotions - revenues are recognized when events take
place and income is received from gate receipts and ancillary sales
(food, promotional items, etc.) guaranteed promotions, or sharing of a
fighter's purse.
Gym and Training Facility - revenues are recognized when
customers attend and utilize the facility. Yearly or other than day to
day membership fees are amortized over their life.
Inside the Ring - to date there has been no revenue.
Production costs advanced by the Company on behalf of Inside the Ring
have been expensed. Future revenues will be accrued and reported as
income as they relate to production periods.
Fair Value of Financial Instruments:
------------------------------------
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments",
requires disclosure of the fair value information, whether or not
recognized in the balance sheet, where it is practicable to estimate
that value. The amounts reported for cash, accounts receivable, loans
payable, accounts payable and accrued expenses approximate the fair
value because of their short maturities.
Cash and Cash Equivalents:
--------------------------
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
-6-
EXPLOSION PROMOTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 2 - Summary of Significant Accounting Policies (Continued):
- ----------------------------------------------------------------
Property and Equipment:
-----------------------
Property and equipment are stated at cost, less accumulated
depreciation. Deprecation is computed on a straight-line basis over the
estimated useful lives of the related assets, which range from five to
seven years. Depreciation expense for the year ended December 31, 1999
was $7,233.
Impairment of Long-Lived Assets:
--------------------------------
At December 31, 1999, the Company had not completed its evaluation of
the Adoption of SFAS # 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of".
Intangible and other long-lived assets should be reviewed whenever
indicators of impairment are present and the undiscounted cash flows
are not sufficient to recover the related asset carrying amount.
Concentration of Credit Risk:
-----------------------------
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist primarily of cash and
cash equivalents and accounts receivable. The Company's investment
policy is to invest in low risk, highly liquid investments.
Income Taxes:
-------------
At December 31, 1999, the Company had net operating loss carryforwards
of $528,939. The Company's deferred tax asset relating to the net
operating loss carryforward was approximately $238,000. A valuation
allowance of this asset has been recorded, accordingly, no tax benefit
is reflected in the statement of operations. The net operating loss
carryforwards begin to expire in 2018.
-7-
EXPLOSION PROMOTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 2 - Summary of Significant Accounting Policies (Continued):
- ----------------------------------------------------------------
Loss per Share:
---------------
The Company has adopted Financial Accounting Standards Board (FASB)
Statement No. 128, "Earnings per Share". The statement establishes
standards for computing and presenting earnings per share (EPS). It
replaced the presentation of primary EPS with a presentation of basic
EPS and also requires dual presentation of basic and diluted EPS on the
face of the income statement. The statement was retroactively applied
to the prior loss per share but did not have any effect.
Basic loss per share was computed by dividing the Company's net loss by
the weighted average number of common shares outstanding during the
period. There is no presentation of diluted loss per share as there are
no other anti-dilutive issuances or substantially identical stocks. The
weighted average number of common shares used to calculate loss per
common share during the year ended December 31, 1999 was 200 shares.
Use of Estimates:
-----------------
The preparation of financial statements in conformity with generally
accepted principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could
differ from those estimates and such differences could be material to
the financial statements.
Advertising Expense:
--------------------
Advertising expense is charged to income during the period incurred.
For the year ended December 31, 1999, the Company had $14,990 of
advertising costs.
Going Concern:
--------------
The Company has suffered significant losses and has negative working
capital. This raises substantial doubt about the Company's ability to
continue as a going concern. Although sales increased substantially in
the year 2000, the Company did not operate profitably and required
substantial additional loans.
-8-
EXPLOSION PROMOTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 3 - Property and Equipment:
- --------------------------------
Property and equipment are summarized by major classifications as
follows:
December 31, 1999
-----------------
Machinery and equipment $ 36,167
Less: accumulated depreciation 14,015
---------
$ 22,152
=========
Subsequent to December 31, 1999, the Company terminated its business
relationship in Venice, Florida. Approximately $22,500 of equipment was
abandoned.
Note 4 - Loans Payable:
- -----------------------
During the year ended December 31, 1999, the Company received loans
from a non-related entity. The loans mature at various periods and
accrued interest at 10% per annum. The loans do not require any
principal payments be made. The lender is assisting the Company in its
acquisition by Premier Sports Media and Entertainment Group, Inc. a
newly formed Company whose core business is in various areas of
entertainment. The lender also is participating with Premier in its
private placement. Reference is made to Note 7 regarding the Premier
acquisition.
Note 5 - Stockholders' Equity:
- ------------------------------
The Company issued 200 shares of its common stock to two non-related
shareholders. As discussed in Note 7 and as part of the merger into
Premier Boxing, Inc.; 250,000 shares were issued to the two
shareholders' in exchange for their Explosion shares.
-9-
EXPLOSION PROMOTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 6 - Commitments and Contingencies:
- ---------------------------------------
The Company utilizes office facilities at its lender. Also, it
maintains a facility on Long Island, New York used for Gleasons Gym.
Rent expense for the year ended December 31, 1999 was $45,613. Annual
rental commitments for the years ended December 31, are as follows:
2000 $ 42,000
2001 42,000
2002 42,000
2003 12,000
Note 7 - Subsequent Events:
- ---------------------------
On April 10, 2001, the Company entered into successive mergers with
Premier Boxing, Inc. and Premier Sports Media and Entertainment Group,
Inc. Premier Boxing, Inc. is a wholly-owned subsidiary of Premier
Sports Media and Entertainment Group, Inc. ("PSM & EG"). PSM & EG
issued 250,000 shares of its common stock for all the outstanding
shares of the Company's common stock. Additionally, PSM & EG was to pay
$1,487,158 in cash and or a note payable to the Company. This amount
represented loans advanced to Explosion (including interest) by a
non-related party. This promissory note was to be paid no later than
one month from the closing.
Additionally, as part of the merger, another wholly-owned subsidiary of
PSM & EG acquired a non-related entity. Premier Entertainment Group,
Inc. acquired all the outstanding stock of CNB Sports and
Entertainment, Inc. (formerly CNB Entertainment and Sports, LLC).
PSM & EG intends to become a diverse sports media and entertainment
company, and is involved in a private placement intending to utilize
proceeds to develop and finance its future activities.
See notes to financial statements.
-10-
EXPLOSION PROMOTIONS, INC.
SUPPLEMENTAL INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1999
Cost of Sales:
Advertising and promotional costs $ 15,197
Official fees 8,246
Training 4,221
Fighters purses 152,882
Venue rent 6,230
Production costs 76,122
Commissions 2,575
--------
Total cost of sales $265,473
========
General and Administrative Expenses:
Rent $ 42,000
Salaries 78,626
Travel and entertainment 36,577
Fees and permits 8,386
Telephone 10,357
Professional fees 22,300
Security 1,363
Insurance 3,078
Auto 696
Office 3,155
--------
Total general and administrative expenses $206,538
========
See notes to financial statements.
-11-
EXPLOSION PROMOTIONS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTAL INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2000
with
INDEPENDENT AUDITORS' REPORT
EXPLOSION PROMOTIONS, INC.
CONTENTS
FOR THE YEAR ENDED DECEMBER 31, 2000
PAGE #
Independent Auditors' Report 1
Financial Statements:
Consolidated Balance Sheet 2
Consolidated Statement of Operations 3
Consolidated Statement of Stockholders' Deficit 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6 - 10
Supplemental Information:
Consolidated Schedule of Cost of Sales 11
Consolidated Schedule of General and Administrative Expenses 11
The Board of Directors
Explosion Promotions, Inc.
We have audited the accompanying consolidated balance sheets of Explosion
Promotions, Inc. as of December 31, 2000, and the related consolidated
statements of operations, stockholders' deficit and cash flows for the year then
ended in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as, evaluating the overall consolidated
financial statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects the financial position of Explosion Promotions,
Inc. as of December 31, 2000, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in the notes to the
consolidated financial statements, the Company has suffered losses from
operations and has a deficit in stockholders' equity. This raises substantial
doubt about its ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Liebman Goldberg & Drogin, LLP
May 23, 2001
EXPLOSION PROMOTIONS, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2000
ASSETS
Current Assets:
Cash and cash equivalents $ 20
Prepaid expenses 2,747
Advances 69,000
-----------
Total current assets 71,767
-----------
Property and equipment, net of accumulated
depreciation of $14,015
-----------
Other Assets:
Security deposits 1,800
-----------
Total assets $ 73,567
===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Loans payable - current
$ 1,149,000
Accounts payable 107,085
Accrued expenses payable 236,175
-----------
Total current liabilities
1,492,260
-----------
Long-Term Liabilities:
Loan payable - officer 38,300
-----------
Total long-term liabilities 38,300
-----------
Total liabilities
1,530,560
-----------
Commitments and Contingencies
Stockholders' (Deficit):
Common stock, no par value per share, 200
shares authorized 200 issued and outstanding 200
Deficit
(1,457,193)
-----------
Total stockholders' (deficit)
(1,456,993)
-----------
Total liabilities and stockholders' (deficit) $ 73,567
===========
See notes to financial statements.
-2-
EXPLOSION PROMOTIONS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
Revenues $ 1,113,382
Cost of sales 1,347,534
-----------
Gross (loss) (234,152)
Expenses:
Selling, general and administrative 514,267
-----------
Loss from operations (748,419)
Interest expense (157,266)
Loss on abandonment (22,152)
-----------
Loss before provision for income taxes (927,837)
Provision for income taxes (417)
-----------
Net (loss) $ (928,254)
===========
Net (loss) per share (basic and diluted)
Based upon 200 weighted average shares
Outstanding for December 31, 2000 $ (4,641)
===========
See notes to financial statements.
-3-
EXPLOSION PROMOTIONS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)
FOR THE YEAR ENDED DECEMBER 31, 2000
Common Stock
--------------------------
Shares Amount (Deficit)
----------- ----------- -----------
Balance - January 1, 2000 200 $ 200 $ (528,939)
Net (loss) for the year
December 31, 2000 -- -- (928,254)
----------- ----------- -----------
Balance - December 31, 2000 200 $ 200 $(1,457,193)
=========== =========== ===========
See notes to financial statements.
-4-
EXPLOSION PROMOTIONS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2000
Cash Flows from Operating Activities:
Net (loss) $(928,254)
Loss on abandonment
Adjustments to Reconcile Net Loss to Net Cash
(Used in) Operating Activities:
Depreciation and amortization $ 22,152
Changes in Assets and Liabilities:
Increase in prepaid expenses (2,747)
Increase in accounts payable 107,085
Advances (69,000)
Increase in accrued expenses payable 164,504
---------
Total adjustments 221,994
---------
Net cash (used in) operating activities (706,260)
Cash Flows from Financing Activities:
Proceeds from loans payable 699,000
---------
Net cash provided by financing activities 699,000
---------
Increase in cash and cash equivalents (7,260)
Cash and cash equivalents - beginning of year 7,280
---------
Cash and cash equivalents - end of year $ 20
=========
Supplemental Disclosures:
Income tax $ 417
=========
Interest paid $ --
=========
See notes to financial statements.
-5-
EXPLOSION PROMOTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000
Note 1 - Nature of Business:
- ----------------------------
Explosion Promotions, Inc. was incorporated in New York on January 22,
1997. The Company is a diversified sports entertainment business
currently specializing in the sports field of boxing. The Company
presently operates three divisions that include a licensed boxing
promotions Company (Explosion), a boxing gym and sports center that
trains/teaches professionals, amateurs and others in boxing (Gleasons
Gym of Garden City - a division of Explosion) and a cablevision
televised boxing talk show (Inside the Ring, Inc.). Subsequent to
December 31, 2000, the Company acquired all of the outstanding stock of
Inside the Ring. During 1999, the Company advanced production
expenditures on behalf of Inside the Ring.
Note 2 - Summary of Significant Accounting Policies:
- ----------------------------------------------------
The consolidated financial statements include the accounts of Explosion
Promotions, Inc. and its wholly owned subsidiary; Inside the Ring, Inc.
Significant intercompany account and transactions have been eliminated.
Revenue Recognition and Accounting Policies:
--------------------------------------------
Revenue recognition policies vary for the different business operations
and are as follows:
Boxing Promotions - revenues are recognized when events take
place and income is received from gate receipts and ancillary sales
(food, promotional items, etc.) guaranteed promotions, or sharing of a
fighter's purse.
Gym and Training Facility - revenues are recognized when
customers attend and utilize the facility. Yearly or other than day to
day membership fees are amortized over their life.
Inside the Ring - to date there has been no revenue.
Production costs advanced by the Company on behalf of Inside the Ring
have been expensed. Future revenues will be accrued and reported as
income as they relate to production periods.
Fair Value of Financial Instruments:
------------------------------------
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments",
requires disclosure of the fair value information, whether or not
recognized in the balance sheet, where it is practicable to estimate
that value. The amounts reported for cash, accounts receivable, loans
payable, accounts payable and accrued expenses approximate the fair
value because of their short maturities.
Cash and Cash Equivalents:
--------------------------
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
-6-
EXPLOSION PROMOTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000
Note 2 - Summary of Significant Accounting Policies (Continued):
- ----------------------------------------------------------------
Property and Equipment:
-----------------------
Property and equipment are stated at cost, less accumulated
depreciation. Deprecation is computed on a straight-line basis over the
estimated useful lives of the related assets, which range from five to
seven years. Depreciation expense for the year ended December 31, 2000
was $-0-.
Impairment of Long-Lived Assets:
--------------------------------
At December 31, 2000, the Company had not completed its evaluation of
the Adoption of SFAS # 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of".
Intangible and other long-lived assets should be reviewed whenever
indicators of impairment are present and the undiscounted cash flows
are not sufficient to recover the related asset carrying amount.
Concentration of Credit Risk:
-----------------------------
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist primarily of cash and
cash equivalents and accounts receivable. The Company's investment
policy is to invest in low risk, highly liquid investments.
Income Taxes:
-------------
At December 31, 2000, the Company had net operating loss carryforwards
of $1,375,812. The Company's deferred tax asset relating to the net
operating loss carryforward was approximately $619,000. A valuation
allowance of this asset has been recorded, accordingly, no tax benefit
is reflected in the statement of operations. The net operating loss
carryforwards begin to expire in 2018.
-7-
EXPLOSION PROMOTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000
Note 2 - Summary of Significant Accounting Policies (Continued):
- ----------------------------------------------------------------
Loss per Share:
---------------
The Company has adopted Financial Accounting Standards Board (FASB)
Statement No. 128, "Earnings per Share". The statement establishes
standards for computing and presenting earnings per share (EPS). It
replaced the presentation of primary EPS with a presentation of basic
EPS and also requires dual presentation of basic and diluted EPS on the
face of the income statement. The statement was retroactively applied
to the prior loss per share but did not have any effect.
Basic loss per share was computed by dividing the Company's net loss by
the weighted average number of common shares outstanding during the
period. There is no presentation of diluted loss per share as there are
no other anti-dilutive issuances or substantially identical stocks. The
weighted average number of common shares used to calculate loss per
common share during the year ended December 31, 2000 was 200 shares.
Use of Estimates:
-----------------
The preparation of financial statements in conformity with generally
accepted principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could
differ from those estimates and such differences could be material to
the financial statements.
Advertising Expense:
--------------------
Advertising expense is charged to income during the period incurred.
For the year ended December 31, 2000, the Company had $69,060 of
advertising costs.
Going Concern:
--------------
The Company has suffered significant losses and has negative working
capital. This raises substantial doubt about the Company's ability to
continue as a going concern. Subsequent to December 31, 2000 and as
discussed in Note 7, the Company merged into a successor Company and is
pursuing additional capital resources.
-8-
EXPLOSION PROMOTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000
Note 3 - Property and Equipment:
- --------------------------------
Property and equipment are summarized by major classifications as
follows:
December 31, 2000
-----------------
Machinery and equipment $ 14,015
Less: accumulated depreciation 14,015
--------
$ 0
========
Subsequent to December 31, 2000, the Company terminated its business
relationship in Venice, Florida. Approximately $22,500 of equipment was
abandoned.
Note 4 - Loans Payable:
- -----------------------
During the year ended December 31, 2000, the Company received loans
from a non-related entity. The loans mature at various periods and
accrued interest at 10% per annum. The loans do not require any
principal payments be made. The lender is assisting the Company in its
acquisition by Premier Sports Media and Entertainment Group, Inc. a
newly formed Company whose core business is in various areas of
entertainment. The lender also is participating with Premier in its
private placement. Reference is made to Note 7 regarding the Premier
acquisition.
Note 5 - Stockholders' Equity:
- ------------------------------
The Company issued 200 shares of its common stock to two non-related
shareholders. As discussed in Note 7 and as part of the merger into
Premier Boxing, Inc.; 250,000 shares were issued to the two
shareholders' in exchange for their Explosion shares.
-9-
EXPLOSION PROMOTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000
Note 6 - Commitments and Contingencies:
- ---------------------------------------
The Company utilizes office facilities at its lender. Also, it
maintains a facility on Long Island, New York used for Gleasons Gym.
Rent expense for the year ended December 31, 2000 was $42,000. Annual
rental commitments for the years ended December 31, are as follows:
2001 $ 42,000
2002 42,000
2003 12,000
Note 7 - Subsequent Events:
- ---------------------------
On April 10, 2001, the Company entered into successive mergers with
Premier Boxing, Inc. and Premier Sports Media and Entertainment Group,
Inc. Premier Boxing, Inc. is a wholly-owned subsidiary of Premier
Sports Media and Entertainment Group, Inc. ("PSM & EG"). PSM & EG
issued 250,000 shares of its common stock for all the outstanding
shares of the Company's common stock. Additionally, PSM & EG was to pay
$1,487,158 in cash and or a note payable to the Company. This amount
represented loans advanced to Explosion (including interest) by a
non-related party. This promissory note was to be paid no later than
one month from the closing.
Additionally, as part of the merger, another wholly-owned subsidiary of
PSM & EG acquired a non-related entity. Premier Entertainment Group,
Inc. acquired all the outstanding stock of CNB Sports and
Entertainment, Inc. (formerly CNB Entertainment and Sports, LLC).
PSM & EG intends to become a diverse sports media and entertainment
company, and is involved in a private placement intending to utilize
proceeds to develop and finance its future activities.
See notes to financial statements.
-10-
EXPLOSION PROMOTIONS, INC.
CONSOLIDATED SUPPLEMENTAL INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2000
Cost of Sales:
Advertising and promotional costs $ 69,060
Official fees 31,447
Training 39,040
Fighters purses 893,517
Venue rent 8,198
Production costs 236,172
Commissions 70,100
----------
Total cost of sales $1,347,534
==========
General and Administrative Expenses:
Rent $ 42,000
Salaries 201,300
Payroll taxes 17,111
Employee benefits 14,751
Travel and entertainment 98,353
Fees and permits 40,898
Telephone 11,453
Professional fees 72,496
Insurance 7,101
Office 8,804
----------
Total general and administrative expenses $ 514,267
==========
See notes to financial statements.
-11-
(b) Pro Forma Financial Information of Jaguar and Consolidated
----------------------------------------------------------
Financial Statements (unaudited) of Premier.
-------------------------------------------
JAGUAR INVESTMENTS, INC.
UNAUDITED PROFORMA COMBINED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 2001
HISTORICAL PROFORMA
JAGUAR PREMIER ADJUSTMENTS COMBINED
----------- ----------- ----------- -----------
ASSETS
Cash and Cash Equivalents $ 3,142 $ 3,142
Prepaid Expenses 2,747 2,747
Promotional Advances 94,413 94,413
Fixed Assets - Net 23,769 23,769
Investments 15,000 (1) 3,756,352 15,000
(2) (3,756,352)
Security Deposits 29,837 29,837
Goodwill 299,034 (2) 3,756,151 3,491,762
-- - (4) (563,423) --
----------- ----------- ----------- -----------
-- $ 467,942 3,192,728 $ 3,660,670
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS'
DEFICIT
Loans Payable $ 1,825,883 $ 1,825,883
Advances Affiliates 289,011 289,011
Accounts Payable and Accrued expenses 900 1,735,379 1,736,279
Less: Prepaid Production Cost (714,279) (714,279)
Loans Payable - Officer 38,300 38,300
Common Stock 11,310 3,889 (1) 1,000 12,310
(2) (3,889)
Additional Paid in Capital 13,537 (3,688)(1) 3,755,352 1,062,336
(2) 3,688
(3) (2,706,553)
Retained Earnings - Deficit (25,747) (2,706,553)(3) 2,706,553 (589,170)
-- -- (563,423) --
----------- ----------- ----------- -----------
-- $ 467,942 3,192,728 $ 3,660,670
=========== =========== =========== ===========
JAGUAR INVESTMENTS, INC.
UNAUDITED COMBINED STATEMENT OF OPERATIONS
AS OF SEPTEMBER 30, 2001
HISTORICAL PROFORMA
JAGUAR PREMIER ADJUSTMENTS COMBINED
----------- ----------- ----------- -----------
Revenues $ 599,148 $ 599,148
Cost of Sales 128,942 -- 128,942
----------- ----------- -----------
Gross Profit 470,206 -- 470,206
Expenses:
Selling, general and administrative 1,619,706 (4) 563,423 2,183,129
----------- ----------- -----------
Loss from operations (1,149,500) (563,423) (1,712,923)
Interest Expense (99,860) -- (99,860)
----------- ----------- -----------
Loss before provisions for income taxes (1,249,360) (563,423) (1,812,783)
Provision for income taxes -- -- --
Net (loss) $(1,249,360) (563,423) $(1,812,783)
=========== =========== ===========
Net (loss) per share (basic and diluted)
based upon 12,310,000 weighted
average shares
outstanding at September 30, 2001 $ (0.10) -- $ (0.15)
=========== =========== ===========
JAGUAR INVESTMENTS INC.
PRO-FORMA ADJUSTMENTS
9/30/01
(1)
Investment $3,756,352
Common Stock ((1,000,000 @ $001 $ 1,000
Paid in capital 3,755,352
To record issuance of 1,000,000 shares to acquire Premier
(2)
Goodwill $3,756,151
Common Stock $ 3,889
Paid in capital $ 3,688
Investment 3,756,352
To eliminate investment and equity (Deficit)
(3)
Paid in capital $2,706,553
Retained earnings - Deficit $2,706,553
(4)
Selling general & administration expenses $ 563,423
Goodwill $ 563,423
To amortize over 5 years for 9 months at $62,603 month
JAGUAR INVESTMENTS INC.
NOTES TO UNAUDITED PROFORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
The unaudited proforma combined condensed financial statements reflect the
acquisition of Premier Sports Media and Entertainment Group, Inc. by Jaguar
Investments, Inc. On December 20, 2001, Jaguar issued 1,000,000 shared of its
common stock in exchange for all the outstanding shares of Premier. After giving
effect to the transaction, Jaguar had 12,310,000 common shares outstanding.
Subsequent to the transaction, the following occurred:
1. The majority owner of Jaguar's common stock entered into an
agreement to sell 9,000,000 of his 10,000,000 common shares owned;
for $20,000 to an entity related to Premier. This transaction was
completed December 28, 2001, and the change in control deems the
Jaguar acquisition to be a downstream merger or reverse
acquisition. In a reverse acquisition, the acquired company is the
surviving entity.
2. In October, 2001, the company issued 100,000 shares of its common
stock to various unrelated parties in settlement of unpaid
services. The proforma financials have not reflected the issuance
of the shares regarding this event.
Any acquisition expenses incurred by Jaguar are not expected to be material and
accordingly, have not been included in the unaudited proforma combined condensed
financial statement.
The following is an analysis of Jaguar's acquisition of Premier:
Consideration exchanged consisted of the following:
1. 1,000,000 shares Jaguar common stock at $1.05 per share $1,050,000
2. Liabilities in excess of assets/Premier 2,706,352
----------
Total investment $3,756,352
==========
3. Elimination of Premier common stock and paid in capital (201)
----------
4. Excess Goodwill $3,7561,151
===========
Proforma adjustments giving effect to the acquisition in the unaudited proforma
combined condensed financial statements reflect the following:
1. To record issuance of 1,000,000 shares of common stock by Jaguar
re: acquisition
2. To eliminate investment in Premier and record goodwill
3. To offset Premier's retained earnings deficit to paid in capital
4. To amortize goodwill for 9 months at $62,603/month.
PREMIER SPORTS MEDIA AND ENTERTAINMENT GROUP, INC.
CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTAL INFORMATION
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
PREMIER SPORTS MEDIA AND ENTERTAINMENT GROUP, INC.
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2001
UNAUDITED
ASSETS
Current Assets:
Cash and cash equivalents $ 3,142
Prepaid expenses 2,747
Promotional advances 94,413
-----------
Total current assets 100,302
-----------
Property and equipment, net of accumulated
depreciation of $37,608 23,769
-----------
Other Assets:
Security deposits 29,837
Investment 15,000
Goodwill 299,034
-----------
Total other assets 343,871
-----------
Total assets $ 467,942
===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Loans payable $ 1,825,883
Advances from affiliate 289,011
Accounts payable and accrued expenses 1,735,379
Less: Prepaid productions costs (714,279) 1,021,100
----------- -----------
Total current liabilities 3,135,994
-----------
Long-Term Liabilities:
Loan payable - officer 38,300
-----------
Total long-term liabilities 38,300
-----------
Total liabilities 3,174,294
-----------
Commitments and Contingencies
Stockholders' (Deficit):
Common stock, $.01 value per share, 10,000,000
shares authorized; 388,889 shares issued and outstanding 3,889
Paid in capital (3,688)
Deficit (2,706,553)
-----------
Total stockholders' (deficit) (2,706,352)
-----------
Total liabilities and stockholders' (deficit) $ 467,942
===========
See notes to financial statements.
-2-
PREMIER SPORTS MEDIA AND ENTERTAINMENT GROUP, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
UNAUDITED
Common Stock
-------------------------- Paid-in
Shares Amount Capital (Deficit)
----------- ----------- ----------- -----------
Balance - January 1, 2001 200 $ 200 -- $(1,457,193)
Capital contribution to CNB 1 1 -- --
Issuance of shares re:
Premier Merger 388,889 3,889 (3,889) --
Cancellation of shares re: merger (201) (201) 201 --
Net (loss) for the year
September 30, 2001 -- -- -- (1,249,360)
----------- ----------- ----------- -----------
Balance - September 30, 2001 388,889 $ 3,889 $ (3,688) $(2,706,553)
=========== =========== =========== ===========
See notes to financial statements.
-3-
PREMIER SPORTS MEDIA AND ENTERTAINMENT GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
UNAUDITED
Revenues $ 599,148
Cost of sales 128,942
-----------
Gross profit 470,206
Expenses:
Selling, general and administrative 1,619,706
-----------
Loss from operations (1,149,500)
Interest expense (99,860)
-----------
Loss before provision for income taxes (1,249,360)
Provision for income taxes --
-----------
Net (loss) $(1,249,360)
===========
Net (loss) per share (basic and diluted) based
upon 388,889 weighted average shares
outstanding at September 30, 2001 $ (3.21)
===========
See notes to financial statements.
-4-
PREMIER SPORTS MEDIA AND ENTERTAINMENT GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
UNAUDITED
Cash Flows from Operating Activities:
Net (loss) $(1,249,360)
Depreciation $ 7,850
Increase (Decrease) in Cash Attributable to
Changes in Assets and Liabilities
Accounts receivable 25,500
Other receivables (25,413)
Due from affiliated companies (628,865)
Security deposits (26,937)
Accounts payable and accrued expenses 1,356,337
-----------
Total adjustments 708,472
-----------
Net cash (used in) operating activities (540,888)
Cash Flows from Financing Activities:
Proceeds from loans payable 551,883
-----------
Net cash provided by financing activities 551,883
Cash Flows from Investing Activities:
Purchases of fixed assets (8,120)
-----------
Net cash (used in) investing activities (8,120)
-----------
Increase in cash and cash equivalents 2,875
Cash and cash equivalents - beginning of period 267
-----------
Cash and cash equivalents - end of period $ 3,142
===========
Supplemental Disclosures:
Income tax $ 820
===========
Interest paid $ --
===========
See notes to financial statements.
-5-
PREMIER SPORTS MEDIA AND ENTERTAINMENT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001
UNAUDITED
Note 1 - Nature of Business:
- ----------------------------
Premier Sports Media and Entertainment Group, Inc. (the "Company") was
incorporated in New York on September 18, 2000 as Premier Sports Media
Group, Inc. On January 17, 2001, the Company filed an amendment with
New York State changing its name and increasing its authorized common
stock shares to 10,000,000. The Company's subsidiaries include Premier
Boxing, Inc. (formerly Explosion Promotions, Inc.), Premier
Entertainment Group, Inc. (formerly CNB Sports and Entertainment, Inc.
and now known as same; after merger and name change). The Company
controls all of the outstanding shares of the subsidiaries as a result
of mergers on April 10, 2001 and April 5, 2001 respectively. The
Company is a diverse sports media and entertainment company as a result
of the mergers.
Note 2 - Summary of Significant Accounting Policies:
- ----------------------------------------------------
The consolidated financial statements include the accounts of Premier
Boxing, Inc. and CNB Sports and Entertainment, Inc. Additionally,
Premier Boxing, Inc. has an inactive subsidiary; Inside the Ring, Inc.
Significant intercompany account and transactions have been eliminated.
Revenue Recognition and Accounting Policies:
--------------------------------------------
Revenue recognition policies vary for the different business operations
and are as follows:
Boxing Promotions - revenues are recognized when events take
place and income is received from gate receipts and ancillary sales
(food, promotional items, etc.) guaranteed promotions, or sharing of a
fighter's purse.
Gym and Training Facility - revenues are recognized when
customers attend and utilize the facility. Nine monthly or other than
day to day membership fees are amortized over their life.
Inside the Ring - to date there has been no revenue.
Production costs advanced by the Company on behalf of Inside the Ring
have been expensed. Future revenues will be accrued and reported as
income as they relate to production periods.
Certain expenditures are advanced for various promotional and
production projects. As revenues on these projects are recognized, the
advances will be expensed proportionately. Additionally, if a project
is abandoned or determined to be now recoupable all advances related to
the specific project will be expenses.
Fair Value of Financial Instruments:
------------------------------------
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments",
requires disclosure of the fair value information, whether or not
recognized in the balance sheet, where it is practicable to estimate
that value. The amounts reported for cash, accounts receivable, loans
payable, accounts payable and accrued expenses approximate the fair
value because of their short maturities.
-6-
PREMIER SPORTS MEDIA AND ENTERTAINMENT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001
UNAUDITED
Note 2 - Summary of Significant Accounting Policies (Continued):
- ----------------------------------------------------------------
Cash and Cash Equivalents:
--------------------------
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
Property and Equipment:
-----------------------
Property and equipment are stated at cost, less accumulated
depreciation. Deprecation is computed on a straight-line basis over the
estimated useful lives of the related assets, which range from five to
seven nine months. Depreciation expense for the nine months ended
September 30, 2001 was $7,850.
Impairment of Long-Lived Assets:
--------------------------------
At September 30, 2001, the Company had not completed its evaluation of
the Adoption of SFAS # 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of".
Intangible and other long-lived assets should be reviewed whenever
indicators of impairment are present and the undiscounted cash flows
are not sufficient to recover the related asset carrying amount.
Concentration of Credit Risk:
-----------------------------
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist primarily of cash and
cash equivalents and accounts receivable. The Company's investment
policy is to invest in low risk, highly liquid investments.
Income Taxes:
-------------
At September 30, 2001, the Company had net operating loss carryforwards
of $1,457,193, which begin to expire in 2018. The Company complies with
SFAS 109, "Accounting for Income Taxes", which requires an asset and
liability approach to financial accounting and reporting for income
taxes. Deferred income tax assets and liabilities are computed for
differences between the financial statement and tax basis of assets and
liabilities, that will result in future taxable for deductible amounts,
based on enacted tax laws and rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized. The Company's deferred
tax asset, relating to the net operating loss carryforward was
approximately $655,700. Based upon the Company's ability to continue as
a going concern, the Company has recorded a 100% valuation allowance of
this asset. Accordingly, no tax benefit is reflected in the statement
of operations.
-7-
PREMIER SPORTS MEDIA AND ENTERTAINMENT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001
UNAUDITED
Note 2 - Summary of Significant Accounting Policies (Continued):
- ----------------------------------------------------------------
Loss per Share:
---------------
The Company has adopted Financial Accounting Standards Board (FASB)
Statement No. 128, "Earnings per Share". The statement establishes
standards for computing and presenting earnings per share (EPS). It
replaced the presentation of primary EPS with a presentation of basic
EPS and also requires dual presentation of basic and diluted EPS on the
face of the income statement. The statement was retroactively applied
to the prior loss per share but did not have any effect.
Basic loss per share was computed by dividing the Company's net loss by
the weighted average number of common shares outstanding during the
period. There is no presentation of diluted loss per share as there are
no other anti-dilutive issuances or substantially identical stocks. The
weighted average number of common shares used to calculate loss per
common share during the period ended September 30, 2001 was 388,889
shares.
Use of Estimates:
-----------------
The preparation of financial statements in conformity with generally
accepted principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could
differ from those estimates and such differences could be material to
the financial statements.
Advertising Expense:
--------------------
Advertising expense is charged to income during the period incurred.
For the nine months ended September 30, 2001, the Company had $3,649 of
advertising costs.
Ability to Continue as a Going Concern:
---------------------------------------
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. The Company, as shown
in the accompanying financial statements, has a deficit of $2,706,553
at September 30, 2001. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Subsequent to September 30, 2001, and as discussed in Note 8, the
Company exchanged all of its outstanding stock for 1,000,000 shares of
Jaguar Investments, Inc., a publicly traded shell. The Company has
sustained losses since its inception. As part of its merger, the
Company plans to raise future capital through debt or equity financing
to support its need for positive cash flows.
Note 3 - Investment:
- --------------------
The Company converted a loan receivable from an entity owned by certain
related parties in the amount of $15,000 into a 3% equity ownership
stake. No repayments on the original loan were made prior to
conversion.
-8-
PREMIER SPORTS MEDIA AND ENTERTAINMENT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001
UNAUDITED
---------
Note 4 - Property and Equipment:
- --------------------------------
Property and equipment are summarized by major classifications as
follows:
Machinery and equipment $ 61,377
Less: Accumulated depreciation (37,608)
--------
$ 23,769
========
Note 5 - Loans Payable:
- -----------------------
Loans payable consist of the following:
Various demand promissory notes with interest payable at 10%
per annum from a related party. Loan extensions have been granted $1,416,917
Demand promissory note with interest payable at 10% per annum
from a related party 275,000
Bank line of credit 109,201
Non-interest bearing loans from related parties 24,765
----------
$1,825,883
==========
Note 6 - Advances from Affiliate:
- ---------------------------------
Various advances to a subsidiary of the Company for expenses incurred
were made by a shareholder. There is no specific written agreement
between the shareholder, the Company or the shareholder's company; CNB
Capital regarding allocated expenses. The sole shareholder of CNB
Capital is a minority shareholder of Premier (10%).
Note 7 - Commitments and Contingencies:
- ---------------------------------------
The Company utilizes office facilities at the location of its related
party. Rent expense allocated to the Company in 2000 was $86,738.
Annual rental for the subsequent nine months ended September 30, are as
follows:
2001 $ 42,000
2002 42,000
2003 12,000
Note 8 - Subsequent Events:
- ---------------------------
On May 25, 2001, Premier entered into a non-binding letter of intent to
sell 100% of its outstanding shares to Jaguar Investment. Jaguar; a
publicly traded shell, will issue 1,000,000 shares of its outstanding
common stock to Premier. Jaguar currently trades over the counter on
the bulletin board and has 11,310,000 of common shares outstanding. The
Company anticipates closing the acquisition by Jaguar on December 12,
2001, subject to a definitive agreement being executed and the
completion of various conditions being completed before the closing.
One of the conditions is the raising of $3,000,000 by Premier though a
private placement of its securities before the acquisition. Premier
recently issued a private placement memorandum and is currently
attempting to secure private placement funding.
-9-
Supplemental Information
------------------------
PREMIER SPORTS MEDIA AND ENTERTAINMENT GROUP, INC.
CONSOLIDATED SUPPLEMENTAL INFORMATION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
UNAUDITED
Cost of Sales:
Advertising $ 3,649
Training 1,663
Fighters purses 1,160
Venue rent 56,000
Production costs 50,270
Commissions 16,200
----------
Total cost of sales $ 128,942
==========
Selling, General and Administrative Expenses:
Salaries - office $ 443,712
Payroll taxes 22,866
Employee benefits 45,099
Rent expense 106,357
Telephone 19,906
Insurance 4,348
Consulting 11,345
Auto expenses 8,627
Dues and subscriptions 473
Depreciation expense 7,850
Management fees 50,000
Office supplies and expense 11,176
Printing and reproduction 143,896
Maintenance and repairs 2,099
Postage and messengers 8,169
Outside services 334,685
Travel and entertainment 33,127
Professional fees 202,165
Public relations 137,513
Fees and permits 1,284
Equipment rental 4,919
Utilities 3,770
Taxes 820
Bad debts 15,500
----------
Total selling, general and administrative expenses $1,619,706
==========
-10-
(c) Exhibits.
---------
Listed below are all exhibits to this Current Report on Form 8-K.
Exhibit
Number Description
- ------ -----------
10.1 Agreement and Plan of Share Exchange, dated as of September
24, 2001, by and among Jaguar Enterprises, Inc., Premier
Sports Media and Entertainment Group, Inc. and certain
shareholders of Premier Sports Media and Entertainment Group,
Inc. (omitting all schedules and exhibits.(*)(**)
10.2 Amendment No. 1 to Agreement and Plan of Share Exchange, dated
as of November 8, 2001, by and among Jaguar Enterprises, Inc.,
Premier Sports Media and Entertainment Group, Inc. and certain
shareholders of Premier Sports Media and Entertainment Group,
Inc. (**)
10.3 Amendment No. 2 to Agreement and Plan of Share Exchange, dated
as of November 9, 2001, by and among Jaguar Enterprises, Inc.,
Premier Sports Media and Entertainment Group, Inc. and certain
shareholders of Premier Sports Media and Entertainment Group,
Inc. (**)
10.4 Form of Registration Rights Agreement, dated as of December
21, 2001, by and between Jaguar Enterprises, Inc. and certain
shareholders of Jaguar Enterprises, Inc. (**)
10.5 Consulting Agreement, dated as of May 1, 2001, by and between
Premier Sports Media and Entertainment Group, Inc. and Lori
Musumeci and/or Assigns. (**)
10.6 Consulting Agreement, dated as of June 1, 2001, by and between
Explosion Promotions, Inc., a wholly owned subsidiary of
Premier Sports Media and Entertainment Group, Inc., and Edward
Troiano. (**)
10.7 Promotional Agreement , dated as of July 26, 1999, by and
among Explosion Promotions, Inc., Eric Harding and Lorenzo de
Clemente.
_______________
* The Registrant shall furnish all omitted schedules and exhibits to the
Agreement and Plan of share Exchange, dated as of September 24, 2001,
by and among Jaguar Enterprises, Inc., Premier Sports Media Group, Inc.
and the shareholders thereof, upon request of the Securities and
Exchange Commission.
** Previously filed.
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 hereunto duly authorized.
JAGUAR INVESTMENTS, INC.
By: /s/ GREGORY RICCA
------------------------------
Name: Gregory Ricca
Title: Chief Executive Officer
Dated: January 10, 2002