USN Corporation Announces Letter of Intent to Acquire The Diamond Channel and Gem Manufacturing, Inc.

USN Corporation Announces Letter of Intent to Acquire The Diamond Channel and Gem Manufacturing, Inc.

Acquisitions Will Add $5.0 Million of Net Current Assets to USN and Create Substantial Opportunity By Allowing USN to Acquire Diamonds Direct

USN Plans to Aggressively Market Certified High Quality Loose Diamonds and Finished Diamond Jewelry Via Its Satellite Television Shopping Network and Via the Internet

LOS ANGELES, April 18 /PRNewswire-FirstCall/ -- USN Corporation (OTC Pink Sheets: USNR) ("USN"), owner of the "Ultimate Shopping Network", which sells upscale consumer products direct to the customer on Direct TV channel 345, Dish Network channel 223, and various cable outlets, has signed a letter of intent to acquire Gem Manufacturing Inc. and The Diamond Channel, Inc. from Eltron LTD. USN will assume no liabilities and will acquire at least $3.1 million in cash and $1.9 million of inventory at cost and a credit facility that will enable USN to purchase up to $3 million of jewelry for resale.

The acquisition of Gem Manufacturing, Inc. will provide USN with a vertical integration whereby USN will be able to directly purchase loose diamonds, gems and finished jewelry and manufacture finished goods thereby bypassing middlemen. Integrating manufacturing under the USN umbrella has the potential to result in significant improvement to both gross margins and operating margins.

The acquisition of The Diamond Channel will allow USN to sell certified diamonds, both loose and in finished settings, via both the Company's wholly- owned television shopping network, Ultimate Shopping Network, as well as the Company's online Internet website (http://www.shopusn.com/ ) which will be launched within the next 30 days. A separate additional online website dedicated strictly to the sale of diamonds and high quality jewelry is planned for a future launch.

Under the terms of the agreement, USN will acquire all of the outstanding shares of Gem Manufacturing, Inc., and The Diamond Channel, Inc. in exchange for approximately 10 million shares of USN stock. Subsequent to closing, USN will have approximately 20 million shares issued and outstanding on a diluted basis. Once closed, The Diamond Channel, Inc. and Gem Manufacturing, Inc. will operate as wholly-owned subsidiaries of USN. The transaction is subject to completion of due diligence and other usual and customary closing conditions. The closing of the transaction is expected to occur on or before June 30, 2005.

Commenting on the announcement, Terry Washburn, CEO of USN Corporation, stated, "We believe these acquisitions will result in a unique and innovative business platform that could substantially improve and accelerate our business prospects. Offering certified diamonds and luxury finished jewelry direct to the consumer through both a live television network as well as an online shopping outlet provides USN with significant differentiation from established online-only diamond retailers such as Blue Nile and Diamonds.com. We believe television's dynamic attributes of live video coupled with on-air expert commentary will better educate consumers about loose diamonds and finished jewelry. Of greater importance will be our ability to offer extremely competitive pricing to consumers due to our ability to source and purchase certified diamonds. These acquisitions will also give us a competitive advantage in the television home shopping space by enabling USN to offer more aggressively priced jewelry than other television shopping competitors."

Mr. Washburn continued, "Our Ultimate Shopping Network subsidiary has been experiencing excellent revenue growth since being launched on the satellite and cable television systems in mid 2004. These two acquisitions give our existing television shopping operations the prospects of both accelerating revenue growth and expanding both gross and operating margins. Lastly, it will significantly strengthen our balance adding $5 million in net cash and inventory."

USN's wholly-owned Ultimate Shopping Network is quickly becoming the luxury brand in television shopping. USN has positioned itself as television shopping's version of high end retailing with a dedication to service, quality, integrity and luxury. Today, the Ultimate Shopping Network is broadcast to more than 30 million aggregated U.S. households through interactive electronic media including direct broadcast satellite (DBS) services, cable television, broadcast television and the Internet. The network was launched in May 2004 on channel 223 on The Dish Network and in September 2004 on channel 345 on Direct TV.

On a preliminary and unaudited basis, for the three months ended March 30, 2005, USN's Ultimate Shopping Network subsidiary recorded net revenues of approximately $5.2 million, a 21% increase as compared to unaudited net revenues of approximately $4.1 million for the three months ended December 31, 2004.

Statements in this news release about anticipated or expected future revenue or growth or expressions of future goals or objectives, including statements regarding whether current plans to grow and strengthen the company's existing network will be implemented or accomplished, are forward- looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements in this release are based upon information available to the Company on the date of this release. Any forward-looking statements involve risks and uncertainties, including the risk that the Company will be unable to consummate the acquisition of The Diamond Channel, Inc. and Gem Manufacturing, Inc., or that the benefits anticipated from the acquisitions will not be realized. Additionally, forward-looking statements are based on current market conditions and risks, which may change as the result of certain regulatory, political or economic events, a shift in consumer preferences, as well as those risks and uncertainties described in the Company's filings with the Securities and Exchange Commission, which could cause actual events or results to differ materially from the events or results described in the forward- looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.

Source: USN Corporation

CONTACT: investors, Robert B. Prag, President of The Del Mar Consulting Group, Inc., +1-858-794-9500, or bprag@delmarconsulting.com , for USN Corporation

Web site: http://www.shopusn.com/

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