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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended March 31, 2004
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 000-25783
AMERICANA PUBLISHING, INC.
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(Exact name of small business issuer as specified in its charter)
COLORADO 84-1453702
------------ --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
303 SAN MATEO NE, SUITE 104A, ALBUQUERQUE, NM 87108
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(Address of principal executive offices)
505-265-6121
(Issuer's telephone number)
- -------------------------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [X] No [ ].
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
As of March 31, 2004, there were 180,827,176 shares of common stock outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [x].
INDEX
PAGE
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
December 31, 2003 (Audited) and
March 31, 2004 (Unaudited) F-1
Condensed Consolidated Statement of Operations
Three months ended March 31, 2004
and 2003 F-2
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 2004
and 2003 F-3
Notes to Condensed Consolidated Financial Statements F-4 - F-5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 1 - 4
Item 3. Controls and Procedures 5
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 5
Item 2. Changes in Securities 5
Item 3. Defaults Upon Senior Securities 6
Item 4. Submission of Matters to a Vote of Security Holders 6
Item 5. Other Information 6
Item 6. Exhibits and Reports on Form 8-K 7
SIGNATURES
PART I. FINANCIAL INFORMATION
Item 1. Financial statements
Americana Publishing, Inc.
Condensed Consolidated Balance Sheets
As of
March 31, December 31,
2004 2003
(unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents $ 12,624 $ 30,790
Accounts receivable, less allowance
for doubtful accounts of $29,316
and $29,316, respectively 316,788 269,344
Inventory 33,350 83,340
Prepaid and other current assets 3,424 4,679
Assets from discontinued operations - 1,519,430
--------------- -------------
Total Current Assets 366,186 1,907,583
Property and Equipment, net 418,818 369,616
--------------- -------------
TOTAL ASSETS $ 785,004 $ 2,277,199
=============== =============
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current Liabilities
Accounts payable 271,898 220,102
Accrued expenses 459,900 392,696
Notes payable 70,000 47,719
Notes payable - Officers and Directors 72,608 68,782
Convertible debt - related parties 387,500 387,500
Liabilities from discontinued operations - 3,686,233
--------------- -------------
Total current liabilities 1,261,906 4,803,032
Commitments and Contingencies
Shareholder's deficit
Preferred stock, no par
20,000,000 shares authorized
0(unaudited)no shares issued and
outstanding - -
Common stock, $0.001 par value
500,000,000 shares authorized - -
180,827,176 (unaudited) and 99,998,212
shares issued and outstanding for
March 31,2004 and December 31,2003,
respectively 180,827 99,998
Additional paid-in capital 14,262,818 12,760,818
Accumulated deficit (14,920,547) (15,386,649)
------------- -------------
Total shareholder's deficit (476,902) (2,525,833)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT $ 785,004 $ 2,277,199
============== =============
See Accompanying Notes to Financial Statements.
F-1
Americana Publishing, Inc.
Consolidated Statements of Operations
For the Period
Three Months Three Months
Ended Ended
March 31, 2004 March 31, 2003
(unaudited) (unaudited)
Revenues $ 299,073 $ 340,640
Cost of goods sold 189,545 102,997
----------- ------------
Gross profit 109,528 237,643
----------- ------------
Operating expenses
Compensation/Consulting Expense 1,536,579 286,500
Depreciation and amortization 33,925 20,424
Selling, general, and administrative 225,443 199,605
----------- ------------
Total operating expenses 1,795,947 506,529
----------- ------------
Loss from operations (1,686,419) (268,886)
----------- ------------
Other Income(Expense)
Other Income - -
Interest Expense - (624)
Interest Income - -
Other Expense 14,282 -
----------- ------------
Total Other Income(Expense) 14,282 (624)
----------- ------------
Net(Loss)before extraordinary item $(1,700,701) $ (269,510)
Extraordinary Item
Net Gain from discharge of bankruptcy
of CMG 2,166,803 -
=========== ============
Net Income after extraordinary item 466,102 (269,510)
Basic and Diluted profit (loss) per share $ 0.003 $ (0.01)
=========== ============
Basic and Diluted weighted-average 134,618,280 38,896,058
shares outstanding =========== ============
See Accompanying Notes to Financial Statements.
F-2
Americana Publishing, Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 2004 March 31, 2003
Cash Flows From Operating Activities:
Net Income $ 466,102 $ (269,510)
Adjustments to Reconcile Net Loss
To Net Cash used in operating activities
Depreciation and amortization 33,925 20,424
Gain from discharge of bankruptcy (2,166,803) -
Allowance for doubtful accounts - -
Capital Transactions - -
Issuance of Common Stock to outside
consultants in exchange for services
rendered 823,079 23,875
Issuance of Common Stock to employees and
members of the Board of Directors for
services rendered 713,500 286,500
(Decrease) Increase in Accounts Receivable (47,444) 4,118
(Increase) Decrease Prepaid Expenses
and Other Assets 1,255 (23,642)
Increase (Decrease)in Accounts Payable 51,796 (31,060)
(Increase) Decrease in Inventory 49,990 52,648
Increase (Decrease) in Accrued expenses 67,204 35,884
------------- -----------
Net Cash Used In Operating Activities (7,396) 99,236
------------- -----------
Cash Flows From Investing Activities:
Purchase of Property and Equipment (83,127) (45,171)
Sale of Marketable Securities - -
------------- -----------
Net Cash provided by Investing Activities: (83,127) (45,171)
------------- -----------
Cash Flows From Financing Activities:
Proceeds from notes payable 26,107 -
Payments on notes payable - (29,878)
Payments on capitalization lease obligations - -
Proceeds from sale of Common Stock 46,250 -
-------------- -----------
Net Cash Provided by Financing Activities 72,357 (29,878)
-------------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents (18,166) 24,188
Cash and Cash Equivalents at
Beginning of Period 30,790 -
-------- -----------
Cash and Cash Equivalents at
End of Period $ 12,624 24,188
============= ===========
Supplemental disclosures of cash flow information
Interest Paid $ - $ 624
============= ===========
Income Tax paid $ - $ -
============= ===========
See Accompanying Notes to Financial Statements.
F-3
AMERICANA PUBLISHING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 2004
NOTE 1. BASIS OF PRESENTATION
The unaudited internal condensed financial statements and related notes have
been prepared by Americana Publishing, Inc., and not subject to an audit
pursuant to the rules and regulations of the Securities and Exchange Commission.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at March 31, 2004 and for all periods
presented, have been made. Certain reclassifications have been made to the prior
year to conform with the current years presentation.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these condensed financial statements be
read in conjunction with the Company's audited financial statements and
notes thereto for the fiscal year ended December 31, 2003. The results of
operations for the three months ended March 31, 2004 are not necessarily
indicative of the operating results for the full year.
NOTE 2. GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, during the year ended December 31, 2003 and the three months ended
March 31, 2004, the company incurred losses of $2,520,972 and $1,700,701,
respectively. In addition, as of March 31, 2004, its total current
liabilities exceeded its current assets by $895,720, and its shareholders'
deficit was $476,902. These factors, among others, raise substantial doubt
about its ability to continue as a going concern.
NOTE 3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
None
F-4
NOTE 4. LIQUIDITY
The Company has historically financed its operations through the sale of common
stock. The Company now supports its operations primarily through sale of its
product and, to a lesser extent, through sale of its common stock. The Company's
revenues have averaged $100,000 per month for 2004. This revenue has not been
adequate to cover current monthly cash expenditures thus requiring the Company to
raise additional capital infusions to support operations. Currently, management
believes revenues will increase to adequate levels to support cash expenditures.
In addition management has implemented a plan to lower cash expenditures and is
actively pursuing additional capital infusions. There is no assurance that
adequate revenues will be achieved to support operations, however, management
believes it will be able to raise additional capital, lower cash expenditures or
a combination of both to maintain operations for the next twelve months.
The Company will require future financing in various forms. The Company proposes
to finance working capital timing differences with an asset-based line of
credit. Capital improvements should be financed by intermediate-term debt. The
Company is not in possession of any commercial bank commitment letters or a
letter of intent from a capable underwriter at this time.
Note 5. Stock Transactions
During the first three months of 2004 the Company issued 76,828,963 shares of
common stock to various employees and consultants. The fair value of this stock
was booked as compensation expense and consulting expense in the amount of
$1,536,579.
Note 6. Extraordinary Item
During the first quarter of 2004 the Chapter 7 Bankruptcy of CMG became final
and a one time extraordinary gain of $2,166,803 was recorded for the forgiveness
of debt. The forgiveness of debt resulted from the elimination of $1,519,430 of
assets and the elimination of $3,686,233 in debt resulting in a net gain of
$2,166,803.
F-5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
GENERAL
Management's discussion and analysis of results of operations and financial
condition are based upon our financial statements. These statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America. These principles require management to make certain
estimates, judgments and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, we evaluate our estimates based on
historical experience and various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
We were incorporated in Colorado in April 1997. We are a multi-media publishing
company. Our primary business is the publication and sale of audio books, but we
also offer print books and electronic books. Thus far, all of our revenues have
been earned from the sale of audio books.
In July 2001 we acquired Corporate Media Group, Inc. in an attempt to vertically
integrate our reproduction and duplication activities as they relate to our
audio book operation. The consideration for the acquisition consisted of 772,000
shares of our common stock that we issued to Richard and Susan Durand and other
key employees. Additionally, we issued 245,827 shares of our common stock,
valued at approximately $98,328 or $0.40 per share, to two creditors of
Corporate Media Group, Inc. in payment of existing debt. After we made this
acquisition, we raised $150,000 through the sale of our common stock in a
private placement, borrowed $385,000 from officers and directors and engaged in
two separate convertible debenture transactions that yielded $240,000. Over 80%
of these funds were contributed to Corporate Media Group, Inc. as working
capital to supplement the purchase of raw materials for ongoing orders and
payroll. We discontinued the operations of Corporate Media Group, Inc. in April
2002. This action was taken due to a lack of working capital, part of which was
to be generated by refinancing certain equipment belonging to Corporate Media
Group, Inc. The value of this equipment was insufficient to support an adequate
loan to value ratio for lending purposes. Furthermore, due to a decline in sales
that we believe was due partially as a result of a decline in quality control
and partially as a result of the terrorist attacks of September 11, 2001,
Corporate Media Group, Inc. was unable to support either increased debt service
or its general day-to-day operating expenses, and, therefore, sought protection
under the provisions of the US Bankruptcy Code, on August 5, 2003. Subsequent
to the filing of the bankruptcy, a creditor's meeting was held and no objections
were filed with respect to the scheduled debts except for the adversary
proceeding filed by Richard Durand, the former president of Corporate Media Group,
Inc. for damages incurred for non-payment of rent. The adversary proceeding is
further described below. Therefore, in accordance with the US Bankruptcy Code
Sections 362, 523, and 727 and Federal Rules of Bankruptcy Procedure 4007,
an adjustment has been made to the current financial statement for the Company
eliminating 2.1 million dollars in Corporate Media Group, Inc., debt from the
Americana Publishing, Inc., consolidated balance sheet. As a result of this
action, the equity of the Company has improved by $2,166,803.
We currently have limited internal and external sources of liquidity. At this
time, aside from what we will spend on the production of audio masters, we have
made no material commitment for capital expenditures. During the quarter ended
March 31, 2004, we spent approximately $83,127 for the production of audio
masters and entered into a lease purchase agreement for reproduction equipment.
Other than the general decline in the economy of the United States, which
affects the discretionary spending of consumers, we do not know of any trends,
events or uncertainties that are expected to have a material impact on our net
sales and income from continuing operations. We do not consider sales of our
books to be seasonal in nature, although we may experience an increase in sales
during the year-end holidays.
1
RESULTS OF OPERATIONS
Quarter Ended March 31, 2004 As Compared To The Quarter Ended March 31, 2003 Our
revenues from operations for the quarter ended March 31, 2004 were $299,073 as
compared to revenues of $340,640 for the quarter ended March 31, 2003, a
decrease of 12%. Revenues decreased due to the increased sales of clearance
inventory which we had available for sale at a lower unit price than our sales
have historically demonstrated.
Cost of goods sold for the quarter ended March 31, 2004 increased by $86,548, to
$189,545 from $102,997 for the quarter ended March 31, 2003. The increase in
cost of goods sold resulted from our increased sales of clearance inventory at a
lower average unit price. Our gross profit from operations decreased to $109,528
for the quarter ended March 31, 2004 as compared to $237,643 for the quarter
ended March 31, 2003, a decrease of $128,115 or 54%. Our gross margin percent
decreased to 36% for the quarter ended March 31, 2004 from 69.7% for the quarter
ended March 31, 2003. The decrease in gross profit from operations and the
decrease in gross margin percentage is attributable to our increased sales of
clearance inventory at reduced prices. Further, Americana negotiated a lease
purchase agreement with B.H. Capital, LLC, to acquire reproduction equipment
capable of reproducing our product on both CD and tape media format. We estimate
that the ability to reproduce product internally will reduce our per unit cost
of goods sold by approximately 50%, thus enhancing our gross margin percent for
the year 2004. However, this reproduction activity did not fully commence until
the middle of the first quarter, 2004.
Selling, general and administrative costs increased by $25,838, to $225,443 for
the quarter ended March 31, 2004 as compared to $199,605 for the quarter ended
March 31, 2003, a 13% increase. General and administrative expenses consist
primarily of recruitment expenses, professional fees and other corporate
expenses, including business development. These expenses increased due to
increased professional fees, accounting fees and carrying cost of accounts
receivable Compensation and consulting expense increased by $1,250,079, to
$1,536,579 for the quarter ended March 31, 2004 as compared to $286,500 for the
quarter ended March 31, 2003, an increase of 436%. Compensation expense was
higher during the first quarter of 2004 due to expenses incurred in connection
with stock issues as compensation and year end bonuses to Directors in lieu of
cash compensation and issuance of stock in lieu of cash compensation to
consultants necessary for expansion of operations.
Our loss from operations was $1,686,419 for the quarter ended March 31, 2004 as
compared to a loss from operations of $268,886 for the quarter ended March 31,
2003, an increase of $1,417,533 or 527%. The increase in net loss from
operations was primarily attributable to the combination of increased sales of
clearance inventory at reduced prices and the increase in compensation expense.
Interest expense decreased for the quarter ended March 31, 2004 by $624 to $ 0
as compared to $624 for the quarter ended March 31, 2003, a decrease of 624%.
The reduction in interest expense during the quarter ended March 31, 2004
resulted from the fact that we did not accrue interest on certain convertible
notes payable to affiliates as reflected in the convertible notes section of our
annual report for the fiscal year ended December 31, 2003. The notes are in
default and no payments have been made; however, each of the notes in default
has , as recourse, the right to convert to payment in stock of the Company, in
lieu of cash payment.
Our net loss for the quarter ended March 31, 2004 was $1,700,701 as compared to
$269,510 in net loss for the quarter ended March 31, 2003, an increase of
$1,431,191 or 531%. The increase in net loss resulted from the increase in our
sales of clearance inventory and the issuance of the Company's stock as
compensation to directors, employees and consultants.
During the quarter ended March 31, 2004 the Chapter 7 Bankruptcy of CMG became
final. Resulting in a one time gain of $2,166,803. This was recorded as an
extraordinary. With this one time gain the Company recorded a profit of
$466,102. The gain of $2,166,803 resulted from the write off of assets in the
amount of $1,519,430 and the write off of debt in the amount of $3,686,233
resulting in the net gain of $2,166,803.
2
GOING CONCERN
Our financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. During the year ended December 31, 2003 and the
quarter ended March 31, 2004, we incurred net operating losses of $2,529,072 and
$1,700,701, respectively. In addition, as of March 31, 2004, our total current
liabilities exceeded our total current assets by $895,720, and our shareholders'
deficit was $476,902. These factors, among others, raise substantial doubt about
our ability to continue as a going concern.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2004 we had cash or cash equivalents of $12,624 on hand, as
compared to $30,790 cash or cash equivalents at December 31, 2003. Our primary
source of cash during the three month period ended March 31, 2004 consisted of
revenues from sales of our products.
Net cash used in operating activities was $7,396 for the quarter ended March 31,
2004 as compared to net cash provided by operating activities of $99,236 for the
quarter ended March 31, 2003. Cash for the quarter ended March 31, 2004 was
decreased primarily as a result of the costs associated with the sale of
clearance inventory. The decrease in inventory related to the Company's
concentration on reduction of inventory through implementation of a strategy
expanding relations with existing sales outlets to encourage the purchase of the
Company's products.
Net cash used by investing activities was $83,127 during the quarter ended
March 31, 2004 as compared to $45,171 net cash used by investing activities
during the quarter ended March 31, 2003. The funds were used for the purchase
of audio masters requiring expenditures for studio time and voice talent.
Net cash provided by financing activities during the quarter ended March 31,
2004 was $72,357 as compared to net cash used by financing activities in
the amount of $29,878 for the quarter ended March 31, 2003. $72,357 was
comprised of sale of common stock at $46,250 and net proceeds from increase in
notes payable of $26,107.
During the quarter ended March 31, 2004 we paid interest expense of $0
as compared to the quarter ended March 31, 2003
during which we paid interest expense of $624.
During 2002, we entered into an asset based line of credit factoring agreement
with Langsam Borenstein Partnership. Pursuant to this agreement, we sell
selected accounts receivable to Langsam Borenstein Partnership in the face
amount of no less than $5,000 per month. Langsam Borenstein Partnership charges
a varying commission on each invoice sold, depending on the number of days
payment is outstanding. The commission may vary from 4% to 10%. This agreement
has no set term and may be cancelled by either party on notice to the other. As
part of this transaction, we granted to Langsam Borenstein a security interest
in our assets, including our receivables. This security interest is subordinate
to the security interest granted to the holders of our 6% Convertible
Debentures.
3
During the next 12 months we will finance our operations primarily through
revenues from sales of our products although, if our revenues are inadequate, we
will be required to seek additional funds through sales of our securities or
from related party loans. We currently have no commitments for future financing,
and we cannot guarantee that we will be successful in raising additional capital
when we need it. If we need money for our operations but we are not successful
in generating sufficient revenues, raising money through the sale of our
securities or borrowing money, we may be required to significantly curtail, or
to cease, our operations.
We plan to increase revenues by continuing to acquire new titles and by looking
for niche markets for our products while contemporaneously reducing our per unit
cost. We recently began placing our products in truck stops throughout the
United States. We may also develop other types of products that are attractive
to purchasers in the truck stop market. In order to reduce our per unit cost,
Americana entered into a lease purchase agreement with B.H. Capital, LLC to
acquire equipment capable of reproducing our product on both CD and tape media.
With the ability to perform the reproduction function internally, the Company
projects a 50% reduction in per unit cost, thus enhancing our profit percentage.
4
ITEM 3. Controls and Procedures
The Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's President and
Chief Executive Officer and the Company's Chief Financial Officer of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures as of the end of the period covered by this report. The
evaluation was undertaken in consultation with the Company's accounting
personnel. Based on that evaluation, the President and Chief Executive Officer
and the Chief Financial Officer concluded that the Company's disclosure controls
and procedures are effective to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their evaluation.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material changes in the legal proceedings reported in our
Form 10-KSB for the fiscal year ended December 31, 2003 and no new legal actions
have been filed by or against us during the three month period ended March 31,
2004.
With respect to the adversary proceeding filed against CMG and Americana by
Richard and Susan Durand during the last quarter of 2003, the Durands sought
monetary compensation. The Bankruptcy Court of the Eastern District of Tennessee
located in Chattanooga, TN, has recommended that the bankruptcy court refrain
from exercising its jurisdiction in most claims contained in the complaint. The
factual and legal considerations have been referred to the District Court for
its confirmation of the Bankruptcy Court's "Proposed Findings of Fact and
Conclusions of Law" relative to the above noted adversarial proceeding. The
District Court's proceeding and proposed findings, insofar as such might
adversely affect Americana, continue to be strenuously contested.
In that more than 60 days has passed since the initial creditors meeting was
scheduled, none of the scheduled debts can be collected in the face of the
prohibition of Section 362, Title 11, US Bankruptcy Code. An adjustment has been
made to the consolidated financial statement removing the assets and liabilities
attributable to Corporate Media Group, Inc.
In the suit filed by Challenge Printing in the State District Court of Minnesota
seeking payment by Americana for a debt incurred by Corporate Media Group, Inc.,
answer has been made denying liability and discovery is being scheduled for the
last week in May, 2004.
Item 2. Changes in Securities
We have sold or issued the following securities not registered under the
Securities Act by reason of the exemption afforded under Rule 506 promulgated
under Regulation D or, in the alternative, Section 4(2) of the Securities Act of
1933, during the three year period ending on the date of filing of this report.
Except as stated below, no underwriting discounts or commissions were payable
with respect to any of the following transactions. The offer and sale of the
following securities was exempt from the registration requirements of the
Securities Act insofar as (1) each of the investors was accredited within the
meaning of Rule 501(a); (2) the transfer of the securities were restricted by
the Company in accordance with Rule 502(d); (3) there were no more than 35
non-accredited investors in any transaction within the meaning of Rule 506(b),
after taking into consideration all prior investors under Section 4(2) of the
Securities Act within the twelve months preceding the transaction; and (4) none
of the offers and sales were effected through any general solicitation or
general advertising within the meaning of Rule 502(c).
o On March 17, 2004 we issued 500,000 shares of restricted common
stock, at a value of $0.02 per share to Chris Knapp in
consideration for services rendered to the Company.
o On March 17, 2004 we issued 500,000 shares of restricted common
stock, at a value of $0.02 per share to Gabriel Rodriguez in
consideration for services rendered to the Company.
o On March 17, 2004 we issued 500,000 shares of restricted common
stock, at a value of $0.02 per share to Acquis Associates in
consideration for services rendered to the Company.
o On March 17, 2004 we issued 2,000,000 shares of restricted common
stock, at a value of $0.02 per share to Research Works in
consideration for services rendered to the Company.
o On March 17, 2004 we sold 1,000,000 shares of restricted common
stock to Anthony Broy in consideration for $10,000.00.
o On March 17, 2004 we sold 500,000 shares of restricted common
stock to Philippe de La Chapelle in consideration for $5,000.00.
o On March 15, 2004 we issued 50,000 shares of restricted common
stock, at a value of $0.02 per share to Flying Point Consulting
in consideration for services rendered to the Company.
o On March 15, 2004 we issued 125,000 shares of restricted common
stock, at a value of $0.02 per share to Sweeny Family Trust in
consideration for services rendered to the Company.
o On March 15, 2004 we issued 125,000 shares of restricted common
stock, at a value of $0.02 per share to Hayde Family Trust in
consideration for services rendered to the Company.
o On March 11, 2004 we issued 100,000 shares of restricted common
stock, at a value of $0.02 per share to Philippe de La Chapelle
in consideration for services rendered to the Company.
o On March 11, 2004 we issued 250,000 shares of restricted common
stock, at a value of $0.02 per share to Henry Langsam in
consideration for services rendered to the Company.
o On March 1, 2004 we issued 900,625 shares of restricted common
stock to Richardson & Patel, LLP in consideration of legal
services rendered to the Company.
o On February 19, 2004 we issued 20,500,000 and 6,000,000 shares of
restricted common stock, at a value of $0.02 per share, to our
President and Chief Executive Officer, Mr. George Lovato, Jr.,
and to our Chief Financial Officer, Mr. Don White, respectively,
in consideration for services rendered to the Company.
o On February 19, 2004 we issued 2,500,000 shares of restricted
common stock to each of David Poling and Jerry Ruther and
1,000,000 shares of restricted common stock to Jerry Ruther, all
at a value of $0.02 per share for their services as directors of
the Company.
o On February 19, 2004 we issued 1,000,000 shares of restricted
common stock, at a value of $0.02 per share to Robert Singer in
consideration for services rendered to the Company.
o On February 19, 2004 we issued 1,022,000 shares of restricted
common stock, at a value of $0.02 per share to Advantage Fund in
consideration for services rendered to the Company.
o On February 19, 2004 we issued 6,000,000 shares of restricted
common stock, at a value of $0.02 per share to SOS Resources in
consideration for services rendered to the Company.
o On February 19, 2004 we issued 1,250,000 shares of restricted
common stock, at a value of $0.02 per share to several employees
of the Company, as a compensation bonus.
o On February 18, 2004 we issued 3,700,000 shares of restricted
common stock, at a value of $0.02 per share to several employees
of the Company, as a compensation bonus.
o On February 18, 2004 we issued 250,000 shares of restricted
common stock, at a value of $0.02 per share to Doug Sanchez in
consideration for services rendered to the Company.
5
Item 3. Defaults upon Senior Securities
We are currently in default in relation to loans of $100,000, $100,000 and
$100,000 made to us in September, October and November 2001 by our director,
Jerome Ruther. The loans were to be repaid one year from the date they were
made. The loans accrue interest at the rate of 30% per year. We have not made
any payments of principle or interest to Mr. Ruther, but the notes contain a
convertible feature permitting the holder to covert the note to stock..
We are also currently in default in relation to a loan of $10,000 made to us in
December 2001 by our Chief Financial Officer and director, Don White. The loan
was to be repaid one year from the date it was made. The loan accrues interest
at the rate of 30% per year. We have not made any payments of principle or
interest to Mr. White, but the note contains a convertible feature permitting the
holder to convert the note to stock.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's shareholders approved and adopted the following actions at the
Company's annual meeting of shareholders held on January 30, 2004:
The shareholders elected George Lovato, Jr. (FOR: 98,617,905 AGAINST:
0 WITHHELD/ABSTAINED/BROKER NON-VOTES: 1,380,307), Don White (FOR:
98,617,905 AGAINST: 0 WITHHELD/ABSTAINED/BROKER NON-VOTES: 1,380,307),
David Poling (FOR: 98,617,905 AGAINST: 0 WITHHELD/ABSTAINED/BROKER
NON-VOTES: 1,380,307), Jay Simon (FOR: 98,617,905 AGAINST: 0
WITHHELD/ABSTAINED/BROKER NON-VOTES: 1,380,307) and Jerome Ruther
(FOR: 98,617,905 AGAINST: 0 WITHHELD/ABSTAINED/BROKER NON-VOTES:
1,380,307)to the Board of Directors of the Company.
The shareholders ratified the appointment of Phillip H. Salchli CPA as
the independent auditor for fiscal years 2002, 2003 and 2004 (FOR:
99,780,222 AGAINST: 214,240 WITHHELD/ABSTAINED/BROKER NON-VOTES:
3,750).
The shareholders also approved the resolution to authorize and empower
its Board of Directors, to amend the Articles of Incorporation to
increase the total number of shares of common stock authorized for
issuance by 400,000,000 to a total authorized of 500,000,000 shares of
common stock (FOR: 96,996,480 AGAINST: 3,001,732
WITHHELD/ABSTAINED/BROKER NON-VOTES: 0).
The shareholders also approved a modification to an anti-takeover
provision in certain director option agreements (FOR: 70,835,695
AGAINST: 3,452,132 WITHHELD/ABSTAINED/BROKER NON-VOTES: 22,000). The
over-all effect of the proposal is to render more difficult the
accomplishment of mergers or the assumption of control by a principal
stockholder, and thus to make difficult the removal of management.
The shareholders also approved a reverse stock split of the common
stock of up to 100:1 conditioned on further approval of the board of
directors prior to the next annual meeting of stockholders (FOR:
96,685,377 AGAINST: 3,278,502 WITHHELD/ABSTAINED/BROKER NON-VOTES:
34,333).
Item 5. Other Information
On February 27, 2004, the Company issued its letter of intent to purchase either
the assets or the outstanding stock of Coreflix, Inc., a corporation domiciled
in the State of California specializing in the rental DVD action sports movies.
The Company is engaged in performing due diligence with respect to the
acquisition in the expectation that this acquisition will enhance the Company's
growth in an expanding market. It is contemplated that upon completion of the
acquisition, the operations of Coreflix, Inc., will be removed to Albuquerque,
the principal facility of the Company, thus reducing overhead and realizing
increased per unit profit. On April 21, 2004, the Company filed a report on Form
8-K to disclose the foregoing transaction with Coreflix.
6
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1(i) Articles of Incorporation (1)
3.2(ii) Bylaws (1)
10.1 - Security Agreement and Power of Attorney to Langsam Borenstein
Partnership, by Americana Publishing, Inc. (2)
10.2 - Agreement with Karim Amiryani, Douglas W. Jordan, Douglas W.
Jordan Defined Benefit Pension Plan, Norman Ross, Tel Pro
Marketing, Stranco Investment and Vestcom for the purchase of 12%
Convertible Debentures. (2)
10.3 - Restructure Agreement between Advantage Fund I, LLC and
Americana Publishing, Inc. (2)
10.4 - 6% Senior Secured Convertible Debenture issued by the
registrant in favor of Advantage Fund I, LLC. (2)
10.5 - Convertible Debenture dated September 13, 2001, in favor of
Jerome Ruther. (2)
10.6 - Convertible Debenture dated October 12, 2001, in favor of Jerome
Ruther. (2)
10.7 - Convertible Debenture dated November 21, 2001, in favor of
Jerome Ruther. (2)
10.8 - Convertible Debenture dated September 27, 2001, in favor of L.
Fixler. (2)
10.9 - Convertible Debenture dated October 21, 2001 ,in favor of Don White. (2)
10.10- Convertible Debenture dated December 6, 2001, in favor of L.
Fixler. (2)
10.11- Promissory Note dated December 5, 2001, in favor of Don White. (2)
10.12- Lease between Americana Publishing, Inc. and B. H. Capital,
Inc. for premises located at 303 San Mateo NE, Suite 104A,
Albuquerque, New Mexico. (2)
10.13- Lease between Americana Publishing, Inc. and Tierra Americana
Real Estate, LLC for premises located at 142 Truman Street,
Albuquerque, New Mexico. (3)
10.14- Lease between Corporate Media Group, Inc. and Rick & Susan Durand for
premises located at 142 Lupton Lane, Cleveland, Tennessee. (2)
10.15- Employment Agreement between Americana Publishing, Inc. and
George Lovato, Jr., dated January 1, 1999. (1)
10.16- Employment Agreement between Americana Publishing, Inc. and
Don White, dated November 1, 1999. (3)
10.17- Americana Publishing, Inc. 2000 Stock Purchase and Option
Plan. (4)
10.18- Americana Publishing, Inc. 2003 Equity Incentive Plan. (5)
10.19- Corporate Finance Consulting Agreement between the registrant
and B. H. Capital Ltd. (1)
10.20- Form of 12% Senior Secured Convertible Debenture. (2)
10.21- Form of Class A Warrant issued to BG Holdings, LLC and Gulf
Coast Advisors, Ltd. (2)
10.22- Form of Class B Warrant issued to BG Holdings, LLC and Gulf
Coast Advisors, Ltd. (2)
10.23- Form of Class A Warrant issued to Toscana Group, Inc. (2)
10.24- Form of Class B Warrant issued to Toscana Group, Inc. (2)
10.25 - 6% Senior Secured Convertible Debenture issued to Addison Adams,
dated December 18, 2003. (6)
10.26 - 6% Senior Secured Convertible Debenture issued to Nimish Patel,
dated December 18, 2003 (6)
10.27 - 6% Senior Secured Convertible Debenture issued to Erick Richardson,
December 18, 2003. (6)
10.28 - Equipment lease between Americana Publishing, Inc. and B.H.
Capital Limited, LLC. (6)
31.1 Certification of Chairman of Board and
Chief Executive Officer pursuant to Section 302.
31.2 Certification of Vice President and Chief
Financial Officer pursuant to Section 302.
32. Certification of Chief Executive Officer
and Chief Financial Officer pursuant to 18
USC Section 1350.
____________________________________
(1) Previously filed as an exhibit to our report on Form 10-SB filed with the SEC on April 15, 1999.
(2) Previously filed as an exhibit to our report on Form 10-KSB/A filed with the SEC on October 24, 2003.
(3) Previously filed as an exhibit to our report on Form 10-KSB (File No. 000-25783) filed with the SEC on February 25, 2000.
(4) Previously filed on Form S-8 with the SEC on October 23, 2000.
(5) Previously filed on Form S-8 with the SEC on May 21, 2003.
(6) Previously filed as an exhibit to our report on Form 10-KSB filed with the SEC on March 30, 2004.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 2003
7
SIGNATURES
In accordance with 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.
Americana Publishing, Inc.
By: /s/ George Lovato, Jr.
------------------------
Date: May 11, 2004 George Lovato, Jr., Chief Executive Officer/Chairman
By: /s/ Don White
----------------------------
Don White, Chief Financial
Officer
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO RULES 13a-14 AND 15d-14
OF THE SECURITIES EXCHANGE ACT OF 1934
I, George Lovato, Jr., President and Chief Executive Officer of Americana
Publishing, Inc. (the "Company"), certify that:
I have reviewed this quarterly report on Form 10-QSB of Americana Publishing,
Inc.
Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report.
Based on my knowledge, the financial statements, and other financial information
included in the report, fairly present in all material respects the financial
condition, results of operations and cash flows of the Company as of, and for,
the periods presented in the report.
The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and have:
(a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under my supervision, to
ensure that material information relating to the Company, 32including its
consolidated subsidiaries, is made known to me by others within those
entities, particularly during the period in which the periodic report is
being prepared;
(b) evaluated the effectiveness of the Company's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this quarterly report based on such evaluation; and
(c) disclosed in this quarterly report any change in the Company's
internal control over financial reporting that occurred during the
Company's most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting; and
The Company's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
Company's auditors and to the audit committee of the board of directors (or
persons fulfilling the equivalent function):
(i) all significant deficiencies in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the Company's ability to record, process, summarize and
report financial information; and
(ii) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal
control over financial reporting.
Dated: May 11, 2004
/s/ George Lovato, Jr.
George Lovato, Jr.
President and Chief Executive Officer
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULES 13a-14 AND 15d-14
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Don White, Chief Financial Officer of Americana Publishing, Inc. (the
"Company"), certify that:
I have reviewed this quarterly report on Form 10-QSB of Americana Publishing,
Inc.
Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report.
Based on my knowledge, the financial statements, and other financial information
included in the report, fairly present in all material respects the financial
condition, results of operations and cash flows of the Company as of, and for,
the periods presented in the report.
The Company's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and have:
(a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under my supervision, to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to me by others within those
entities, particularly during the period in which the periodic report is
being prepared;
(b) evaluated the effectiveness of the Company's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this quarterly report based on such evaluation; and
(c) disclosed in this quarterly report any change in the Company's
internal control over financial reporting that occurred during the
Company's most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting; and
The Company's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
Company's auditors and to the audit committee of the board of directors (or
persons fulfilling the equivalent function):
(i) all significant deficiencies in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the Company's ability to record, process, summarize and
report financial information; and
(ii) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal
control over financial reporting.
Dated: May 11 , 2004
/s/Don White
Don White
Chief Financial Officer
Exhibit 32
CERTIFICATION OF OFFICERS
OF AMERICANA PUBLISHING, INC.
PURSUANT TO 18 USC § 1350
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and
(b) of Section 1350, Chapter 63 of Title 18, United States Code) each of the
undersigned officers of Americana Publishing, Inc. (the "Company") does hereby
certify, to such officer's knowledge, that:
The quarterly report on Form 10-QSB for the quarter ended March 31, 2003 of the
Company fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and the information contained in the Form 10-QSB
fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Dated: May 11, 2004
/s/George Lovato,Jr
George Lovato, Jr.
President and Chief Executive Officer
Dated: May 11, 2004
/s/Don White
Don White,
Chief Financial Officer