<SUBMISSION-INFORMATION-FILE>
<TYPE> 10KSB
<DOCUMENT-COUNT> 3
<SROS> NONE
<FILER>
<CIK> 0001081751
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<PERIOD> 12/31/00
<DOCUMENT>
<TYPE> 10KSB
<DESCRIPTION> ANNUAL REPORT
<TEXT>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(X) Annual Report pursuant to Section 13 or 15(d) of the Securities and Exchange
Act of 1934 for the fiscal year ended December 31, 2000.
( ) Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No Fee Required) for the transition period from to
Commission File Number
Americana Publishing, Inc.
(Exact name of registrant as specified in its charter)
Colorado 84-1453702
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
303 San Mateo NE, Suite 104A
Albuquerque, New Mexico 87108
(Address of principal executive offices)
(505) 265-6121
(Registrant's telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
Common Stock $0.01 per share
Securities registered pursuant to Section 12(g) of the Act:
None
Check whether the issuer: (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 12 months (or such shorter
period that the registrant was required to be file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this form 10-KSB [ ]
State issuer's revenues for its most recent fiscal year:$56,727
State the aggregate market value of the voting and non-voting common equity held
non-affiliates computed by reference to the price at which the common equity
was, or the average bid and asked prices of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act). As of January 15, 2000: $4,888,997 . As of January
15, 2000 there were 7,822,396 shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE If the following documents are incorporated
by reference, briefly describe them and identify the part of the Form 10-KSB
into which the document is incorporated: (1) any annual report to security
holders; (2) any proxy or information statement; and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933 (the "securities
Act"). The listed documents should be clearly described for identification
purposes. None.
Transitional Small Business Disclosure Format (check one): Yes No X
<PAGE>
AMERICANA PUBLISHING, INC. FORM 10-KSB
INDEX
PART I
Item 1. DESCRIPTION OF BUSINESS
Background of the Company
Factors Which May Affect Future Results
Business of Americana Publishing, Inc.
Unique Strategies and Website Development
Development of additional Websites
Possible Acquisitions & Merger Transactions
Employees
Item 2. DESCRIPTION OF PROPERTY
Item 3. LEGAL PROCEEDINGS
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Results of Operations
Liquidity and Capital Resources
Item 7. CONSOLIDATED FINANCIAL STATEMENTS
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE;
PART III
Item 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
REGISTRANT COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Item 10. EXECUTIVE COMPENSATION
Other Non-Cash Compensation
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Stock Options Outstanding
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K
SIGNATURES
<PAGE>
PART I
Item 1. DESCRIPTION OF BUSINESS
This report on Form 10-KSB contains forward-looking statements that involve
risks and uncertainties. Americana's actual results may differ significantly
from the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed in Item
1a the section entitled "Factors Which May Affect Future Results."
Forward-Looking Information-General
This report contains a number of forward-looking statements, which reflect
Americana's current views with respect to future events and financial
performance including statements regarding Americana's strategy, product under
development and plans for operations. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from historical results or those anticipated. In this report,
the words "anticipates," "believes," "expects," "intends," "future," "plans,"
"targets" and similar expressions identify forward-looking statements. Readers
are cautioned to consider the risk factors described below under the heading
"Factors Which May Affect Future Results," and not to place undue reliance on
the forward-looking statements contained herein, which speak only as of the date
hereof. Americana undertakes no obligation to publicly revise these
forward-looking statements, to reflect events or circumstances that may arise
after the date hereof.
Additionally, these statements are based on certain assumptions that my prove to
be erroneous and are subject to certain risks including, but not limited to,
Americana's ability to introduce new products, Americana's dependence on limited
cash resources, and its dependence on certain key personnel within Americana.
Accordingly, actual results may differ, possibly materially, from the
predictions contained herein.
BACKGROUND OF THE COMPANY
Americana Publishing, Inc. (hereinafter referred to as "Americana") was
incorporated under the laws of the State of Colorado on April 17, 1997. Prior to
that date Americana operated as a division of B.H. Capital Limited for
approximately 18 months as a development stage enterprise. During the
development stage various activities such as publication design research,
industry and competition research, demographic research, and the formation of
the integrated publishing concept were achieved.
In March of 1999, Americana Completed a 504 private placement pursuant to
Regulation D of the Securities Act of 1933 as amended, in the amount of $232,500
or for 465,000 shares of Americana's $.001 par value Common Stock. During 1999,
Americana completed the development of its first e-commerce website
americanabooks.com. On April 15th, 1999 Americana filed its initial Form 10-SB
with the Securities and Exchange Commission to register 3,000,000 shares of
common stock. Americana received a "No Further Comment Response" concerning the
Form 10-SB was declared effective by the Securities and Exchange Commission on
August 6, 1999. Americana completed the sale of common stock on November 2, 1999
and sold 908,250 shares of common stock thus infusing $700,000 into Americana.
On August 30, 1999 Hill, Thompson, Magid and Co., Inc. filed a Form 211 with the
National Association of Securities Dealers and received clearance to trade
Americana's common stock on November 5th, 1999. Throughout this period Americana
continued the final phase of development of the americanabooks.com and opened
the website on October 15, 1999. The common stock of Americana (OTCBB:APBH)
began trading at $2.00 per share on November 8th, 1999. Americana began actively
promoting the americanabooks.com website and the development of audio books and
other media product e-commerce websites.
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Item 1a. Factors Which May Affect Future Results
Americana is still in a developmental stage and the common stock involves a high
degree of risk. In addition to other information contained in this Form 10-KSB,
prospective investors should carefully consider the following risk factors,
which may affect future results:
1. Continuing Losses. During fiscal year 2000, Americana's most recent
fiscal year, Americana's losses were $2,238,437 compared to losses of $1,750,629
1998 and $431,080 in 1997. Americana faces all the risks inherent in a new
business. Sales for 2000 were $56,727 and were not significant for 1999. There
can be no assurance that any of the business activities will result in any
significant operating revenues or earnings. Investors should be aware that they
may lose all or substantially all of their investment.
2. Lack of Revenues. Americana Currently generates revenues from audio book
sales and sales generated from four websites. These websites generate sales from
books, art, textbooks, music and the ELECTRONICAGENT. There can be no assurance
that Americana will ever generate sufficient revenues from these activities to
support Americana's overhead. Furthermore, Americana may continue to incur
losses and any investor who purchases or acquires shares of Americana's Common
stock will likely incur further substantial dilution and or loss in the value of
their investment.
3. Current Financing and Capital May be Insufficient. Americana Has
received a financing commitment from Al Tex Financial. This commitment allows
Americana to factor accounts receivable invoices. There can be no assurance that
this credit facility will be sufficient to finance the timing difference of
Americana's outgoing payables versus its incoming receivable payments. As of
December 31, 2000, Americana had $80,323 in net working capital. There can be no
assurance that these cash reserves will be sufficient to support Americana's
continuing operating overhead. Any adverse performance of Americana's
receivables or sudden demands on Americana's cash reserves may result in an
investor losing all or substantially all of their investments.
4. Lack of Secondary Underwriting Commitment. Americana's management
recognizes that additional capital from the sale of Common Stock may be required
in order to continue to fulfill Americana's growth and development demands.
While Americana may attempt to obtain a commitment from an underwriter for a
private placement or secondary public offering, there can be no guarantee that a
commitment can be obtained or furthermore that if a commitment is obtained that
the underwriter will be successful in raising funds. Should Americana not be
successful in raising additional capital, Americana may suffer continuing losses
and financial difficulties and, thus may result in an investor losing all or
substantially all of their investment.
5. Significant Dilution From Stock Options and Future Stock Sales.
Americana has unexercised Stock Options totaling 1,700,000 of Common Stock which
if purchased would infuse $511,000 in capital into Americana, at $.30 per share
through December 2000. As a result of these Stock Options, in addition to
others, that may be issued from time to time in the future, the investor may
suffer substantial dilution and reduce significant value of their investment.
Americana may be required to sell additional preferred and common stock in order
to infuse additional capital into Americana. Should Americana be successful in
obtaining additional capital through the sale of its stock, existing
shareholders will incur substantial dilution.
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6. Lack of Independent Market Study. Americana's management has performed
limited market surveys and studies. However, no independent third party has
performed any surveys or studies that substantiate or validate Americana's
business plan. There can be no assurance that the marketing and or vertically
integrated publishing strategy will prove successful and therefore the investor
may lose all or substantially al of their investment.
7. Lack of Dividends. Americana has never paid any cash dividends on its
Common Stock. Americana's board of directors intends to retain profits, if any,
to finance Americana's business.
8. Limited Market for Common Stock. Americana's Common Stock is traded on
the Electronic Bulletin Board (OTC) and has experienced limited liquidity and
reduced pricing may become highly price sensitive and volatile in the future.
There can be no assurance that a meaningful trading market for Americana's
Common Stock will be established or if established if it can be maintained for
any significant period.
9. Possible Rule 144 Stock Sales. As of December 31, 2000, Americana had
6,257,396 shares of Americana's outstanding common stock as "restricted
securities" which may be sold only in compliance with Rule 144 adopted under the
Securities Act of 1933, as amended, or other applicable exemptions from
registration. Rule 144 provides that persons classified or affiliates, 5% or
more shareholders, officers and directors, and statutory underwriters holding
restricted securities must wait a period of two years and then may sell in a
brokerage transaction, an amount not exceeding in any three month period the
greater of either (i) 1% of Americana's outstanding common stock or (ii) the
average weekly trading volume during a period of four calendar weeks immediately
proceeding any sale. Persons who are not affiliates, 5% or more shareholders,
officers and directors and statutory underwriters must hold the stock for one
year and are not subject to the volume limitation. Possible or actual sales of
Americana's Common Stock by present shareholders under Rule 144 may have a
depressive effect on the price of Americana's Common Stock if any liquid trading
market develops.
10. Risks of Low Priced Stocks. Trading in Americana's Common Stock is
limited. Consequently, a shareholder may find it more difficult to dispose of,
or to obtain accurate quotations as to the price of, Americana's securities. In
the absence of a security being quoted on NASDAQ, or Americana having $2,000,000
in net tangible assets, trading in the Common Stock is covered by Rule 3a51-1
promulgated under the Securities Exchange Act of 1934 for non-NASDAQ and
non-exchange listed securities.
Under such rules, broker/dealers who recommend such securities to persons other
than established 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 an annual income exceeding $200,000 or $300,000 jointly with their
spouse) must make a special written suitability determination for the purchaser
and receive the purchaser's written agreement to a transaction prior to sale.
Securities are also exempt from this rule if the market price is at least $5.00
per share, or for warrants, if the warrants have an exercise price of at least
$5.00 per share. The Securities Enforcement and Penny Stock Reform Act of 1990
requires additional disclosure related to the market for penny stocks and for
trades in any stock defined as a penny stock.
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<PAGE>
The Commission has recently adopted regulations under such Act, which define a
penny stock to be any NASDAQ, or non-NASDAQ equity security that has a market
price or exercise price of less than $5.00 per share and allow for the
enforcement against violators of the proposed rules.
In addition, unless exempt, the rules require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule prepared by the
Commission explaining important concepts involving a penny stock market, the
nature of such market terms used in such market, the broker/dealer's duties to
the customer a toll-free telephone number for inquiries about the
broker/dealer's disciplinary history, and the customer's rights and remedies in
case of fraud or abuse in the sale.
Disclosure also must be made about commissions payable to both the broker/dealer
and the registered representative current quotations for the securities and if
the broker/dealer is the sole market maker the broker/dealer must disclose this
fact and its control over the market.
Monthly statements must be sent disclosing recent price information for the
penny stock held in the account and information on the limited market in penny
stocks. While many NASDAQ stocks are covered by the proposed definition of penny
stock, transactions in NASDAQ stock are exempt from all but the sole
market-maker provision for (i) issuers who have $2,000,000 in tangible assets
($5,000,000 if the issuer has not been in continuous operation for three years),
(ii) transactions in which the customer is an institutional accredited investor
and (iii) transactions that are not recommended by the broker/dealer. In
addition, transactions in a NASDAQ security directly with the NASDAQ market
maker for such securities are subject only to the sole market-maker disclosure,
and the disclosure with regard to commissions to be paid to the broker/dealer
and the registered representatives.
Finally, all NASDAQ securities are exempt if NASDAQ raised its requirements for
continued listing so that any issuer with less than $2,000,000 in net tangible
assets or stockholder's equity would be subject to delisting. These criteria are
more stringent than the proposed increase in NASDAQ's maintenance requirement.
Americana's securities are subject to the above rules on penny stocks and the
market liquidity for Americana's securities could be severely affected by
limiting the ability of broker/dealers to sell Americana's securities.
11. Competition. Americana's engaged in a series of business activities,
which are characterized, by intense competition, rapid technological change and
state of the art marketing and advertising strategies. Many of Americana's
existing and potential competitors have substantially greater financial,
research and development, marketing and production resources than those of
Americana and may be better equipped than Americana to develop, manufacture and
market competitive e-commerce, media and publishing products. These companies
may develop and introduce products and services competitive with, superior to,
or less costly than those of Americana, thereby rendering some of Americana's
technologies and products and services under development less competitive or
obsolete.
BUSINESS OF Americana Publishing, Inc.
Americana has developed an integrated multimedia strategy. This strategy
incorporates the roll-up or acquisition of various interrelated publishing
enterprises; the introduction of a host of independent websites that sell
various published products and services as the primary point of sales while
exploiting a drop shipment/fulfillment strategy, and providing a series of
services to the publishing and media industries through the newly acquired
assets as a result of its roll up strategy.
The roll-up strategy allows Americana through acquisition to grow both the
balance sheet and increase profit, due to economic efficiencies of combining
small companies into a larger company, as well as provide an array of much
needed services to small and medium sized book publishers. These services range
from audio book products, e-book development, printing, bookbinding sales and
marketing and e-commerce sales and distribution.
4
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Website development focuses on combining the name Americana with a product name
such as books. This branding makes the URL self explanatory to e-commerce
customers. Each product name will represent an independent website. Americana
owns a number of URL's. As an example, Americana owns americanasongs.com,
americanatextbooks.com, americanaartmart.com, americanavideo.com,
americanasoftware.com, americanaaudio.com, americanabroadcast.com and
amercianawarehouse.com. The web customer will be able to access the product
catalogue by use of the specific URL. These individual websites will have links
to other Americana websites thus allowing the e-commerce customer to be
cross-marketed to these complementary sites. Each site proposes to emphasize
simplicity of navigation while exploiting the cost cutting drop
shipment/fulfillment strategy. Since the warehousing and fulfillment facilities
already exist, Americana websites coordinates the shipment of the product
directly to the customer. By acting as an e-commerce conduit, Americana speeds
the delivery, reduces operating expenses, which can be passed along to the
customer and remain price competitive with the competition while avoiding costly
real estate and infrastructure investments that do not yield high returns to
investors.
Ultimately, Americana will set up americanawarehouse.com, which will link all
the independent websites together under an e-commerce shopping mall site.
Therefore, the web customer can be cross-marketed from site to site or from the
americanawarehouse.com umbrella site. This multi website strategy allows
Americana to increase its brand name awareness while expanding its Internet
search engine registration frequency.
Americana also generates sales through the production and distribution of
published products. This strategy provides Americana to market a singe book
title in print, audio and e-book simultaneously. Americana currently has
produced over forty-five (45) audio book titles.
Overall, the integrated plan allows for Americana to generate sales and balance
sheet growth from a multitude of websites, related services, direct sales and
the roll-up strategy. Therefore, Americana can mitigate some of its reliance on
a single source revenue and balance sheet expansion.
E-COMMERCE INDUSTRY BACKGROUND
There are two large web-based book and media product e-commerce companies. They
are amazon.com and BarnesandNoble.com. These two e-commerce companies comprise
the majority of Internet book, music and various other related media product
sales. This is a relatively new industry and the precise percentage of total
Internet sales in these product categories is or cannot be determined
accurately. However, these two companies combined clearly dominate this segment
of E-commerce. These companies have substantially more capital available for
marketing and advertising and are more highly developed with respect to consumer
name identification. These two competitors have established themselves in the
E-commerce marketplace over the past four years. Price of books music and
various other related media products have been the main or primary thrust of the
competition between amazon.com and BarnesandNoble.com. The quantity of books and
availability of various products or in inventory and quick delivery of products
to customers has not been emphasized. Further, the design of these competitor
media seller websites emphasizes the sale of the top product sellers. Therefore,
the consumer has difficulty in utilizing these website search engines to easily
locate the hundreds of other published products listed in each category.
americanabooks.com has eliminated this discriminatory search engine feature
through the development of its own INTELLISEARCH ENGINE and allow for easy
access to all book titles in each category and the same operating system for
americanasongs.com site as well.
5
<PAGE>
UNIQUE STRATEGIES AND WEBSITE DEVELOPMENT
Americanabooks.com focuses on simplifying the book and media product delivery
process by having the publisher drop ship the products to the consumer. The
current americanabooks.com bookseller agreement requires a publisher to drop
ship their product upon receipt of an americanabooks.com order.
americanabooks.com does not intend to warehouse books or other published
products such as the other website booksellers currently do. Should a publisher
or suppliers be unable to fulfill americanabooks.com orders, as the agreement
requires then americanabooks.com may not choose to do business with them. This
procedure avoids having the book shipped from the publisher to
americanabooks.com at the publishers expense and then shipped from
americanabooks.com central warehouse to the consumer. americanabooks.com,
currently at its websites, once the order is made by the customer, faxes or
e-mails a preprinted shipping label with the customers shipping information and
book title(s) or product information. The publisher then receives this
preprinted label, fills the order and ships the order directly to the customer
at the customer's expense. (When ordering, the customer pays for shipping and
handling.) The publisher is being able to lower shipping expenses.
americanabooks.com, therefore, does not incur substantial overhead associated
with fulfillment costs such as warehouse space, labor, inventory handling and
carrying costs. This process also reduces time taken to ship products to the
customer. The publisher by virtue of the publisher agreement is obligated to
fill orders within forty-eight hours or two business days and report available
inventory twice per month. The website software, is designed so that the
customer will not be able to confirm an order of a book(s) if they are not
readily available. The website system is designed to notify the customer that
they will receive a message by e-mail when the book is available for purchase.
This customer ordering feature reduces the customer waiting time for orders and
or left to wonder when an order may arrive.
Management feels that the website design, the order fulfillment and drop ship
features are competitive advantages and unique. Management has been unable to
identify any of these features in the amazon.com and BarnesandNoble.com websites
or other bookseller and media seller websites proposing to offer these order
fulfillment components.
The americanasongs.com site competes with other music sites such as MP3, CD Now,
as well as, the major competitors previously mentioned. The unique difference is
that no one music site incorporates all the download, drop shipment, rare music,
sheet music, customized CD and single song purchase features all in one.
Management feels this is unique and presents a significant developmental
advantage over the competition. americanatextbooks.com, americanaArtmart.com
have similar competition, however, the strategies to market the websites and
drop ship the ordered product remain the same.
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Americana is currently promoting all websites through Internet search engine
registration, e-mail blasts, print media, and an aggressive public relations
campaign and through advertising in the Americana Corporate Finance Reporter.
The advertising thus far has been limited, however, the americanabooks.com site
is seeing sales from the sale of books and through fees generated from the
ELECTRONICAGENT. This first of its kind feature allows authors to submit an
excerpt and synopsis of an unpublished book for consideration for publishing by
Americana as from its family of publishers participating in the
americanabooks.com website. Americana charges the author $25.00 for these
submissions. The americanasongs.com website is now accepting music uploads from
independent record labels, producers and artists. This participation from these
music sources is being produced by a direct mail, print ad and telemarketing
campaign. The americanasongs.com website has two unique features similar to the
ELECTRONICAGENT. They are STARMAKER and RECORDMAKER. These features allow an
artist who does not have a record label to have their music considered for
recording, producing and publishing by Americana. Americana will allow the
artist to upload their music to the site and Americana professionals will listen
and RATE these submissions in the same manner as is same in the ELECTRONICAGENT
process. The americanasongs.com website is scheduled to open on April 1, 2000.
DEVELOPMENT OF ADDITIONAL WEBSITES
Americana is currently developing the americanasoftware.com and
americanavideo.com websites. These websites will sell software and videos and
other related media products to the consumer. These websites will compete with
other major e-commerce websites. These sites will offer as of yet an
undetermined standard discount, unique customer account and book credit features
along with a host of free give a way items.
Americana intends to introduce the following complementary websites over the
next 12 to 24 months; americanasoftware.com, americanavideo.com, and
americanawarehouse.com. These sites as previously described will work in
conjunction with one another to cross-market the customer and increase search
engine registration frequency and brand name awareness of Americana. Ultimately,
the americanawarehouse.com site will act as a centralized digital shopping mall
with each of the other websites linked or housed under this centralized site.
Americana owns scores of other URL's in order to protect it's primary website
development in progress.
EMPLOYEES AND FACALITIES
Americana currently employs eight full time employees. In addition, there are
four independent contractors that are responsible for website programming and
development and various board members and advisors are active in various aspects
of Americana's operation. Currently, the Chairman of Americana leases 2,000
square feet of office space to Americana at a cost of $3,000 per month, which
allows for use of all office equipment, word processing, direct mail processing,
telephone equipment, computers and computer network and use of certain database
processing software, which is owned by the Chairman of Americana. This full
service lease allows for Americana to reduce capital expenditures dramatically.
Mr. White a director and chief financial officer receives $3,000 per month and
provides 80 hours of services to perform his duties and responsibilities. Mr.
Ruther is compensated $2,500 per month for a total of 120 hours various services
and consulting provided concerning audio book publishing and sales development.
Additionally, 5,000 square feet of office space has been remodeled in accordance
with Americana lease specifications. This additional office space allows for
space to house the expanded website development, warehouse and marketing of
audio books, book development and e-book development, CD productions and
expanded marketing efforts. The terms of this lease allow for Americana to pay
rent on an annual escalating basis as follows: The first years monthly lease
payments shall be $2,000/month or $24,000 annually; The second years monthly
lease payments shall be $3,000/month or $36,000 annually; The third years
monthly lease payments shall be $4,000/month or $48,000; The fourth year monthly
lease payments shall be $5,000/month or $60,000 annually, payable in lawful
money of the United States with the first two years lease payments paid in
advance upon execution of the lease and on a per month basis beginning on
January 5, 2002.
This lease allows for Americana to pay its own utilities in addition to the
monthly rent. The first two years of this lease have been prepaid in order to
obtain a lower per square foot rate. The building is owned by a partnership
comprised of certain board members. This lease contains cost and leasehold
improvement features that are commercially favorable to Americana, which
Americana could not obtain otherwise from other commercial lease sources. The
advance lease payment was used to make lease hold improvements required under
the lease.
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Item 2. DESCRIPTION OF PROPERTY
The Company's principal offices are located at 303 San Mateo NE, Suite 104A,
Albuquerque, NM 87108. This leased location encompasses approximately 2,000
square feet. The Lease is between B. H. Capital Limited and the Company at a
cost of $3,000 per month and also provides complete use of B. H. Capital
Limited's up-to-date computing, data management, printing, duplicating and
direct mail processing equipment. This lease/retainer agreement began January 1,
1999 and is for a term of three years. The Company is expanding its operations
and has identified a location near its current offices, where it has leased
additional office and new warehouse space. The Company owns certain assets that
were contributed to the Company by Mr. George Lovato, Jr. in exchange for stock.
(See Exhibit attached herewith) Americana has identified a building near its
current offices and leasehold improvements are currently underway. This office
space is currently under renovation and specific terms of the lease have been
negotiated. (See Employees and Facilities for discussion of this lease.) The
Company currently does not make investments of any kind in real estate or
securities.
Item 3. LEGAL PROCEEDINGS
There are no material lawsuits filed against Americana as of December 31, 2000.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters put to the security holders, for a vote, during the last
quarter of 1999.
Part II
Item 5. MARKET FOR AMERICANA COMMON STOCK
AND RELATED SHAREHOLDER MATTERS
Americana's common stock (OTCBB:APBH) commenced trading on November 8, 1999. The
following tables represent the closing sales as reported by the exchange.
High Bid 1999 $4.12
Low Bid 1999 $2.06
Low Bid 2000 $0.25
High Bid 2000 $3.25
[ GRAPHIC OMITTED ]
There are approximately 80 shareholders of common stock as of December 31, 2000.
The Company has not paid any dividends in the past and currently has no plans to
pay dividends in the foreseeable future.
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Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
General
All phases of the Company's operations are subject to influences outside of the
Company's control. Any one, or a combination, of these factors could materially
affect the results of the Company's operations. These factors include
competition pressures, inflation, trade restrictions, interest rate fluctuations
and other capital market conditions, weather, future and options trading or
paper commodities, and the availability of natural resources and services from
other sources. Forward-looking statements are made by or on behalf of the
Company's knowledge of its business and the environment in which it operates,
but because of the factors listed above, as well as other environmental factors
over which the Company has no control, actual results may differ from those in
the forward-looking statements. Consequently, all of the forward-looking
statements made are qualified in their entirety by these cautionary statements
and there can be no assurance that the actual results or developments
anticipated by the Company will be realized, or even if substantially realized,
that they will have the expected effect on the business and/or operations of the
Company.
The Company currently has limited internal and external sources of liquidity. At
this time, the Company has no material commitment for capital expenditures.
There are no known trends, events or uncertainties that are expected to have a
material impact on the net sales and income from continuing operations.
Americana Publishing is not subject to seasonal aspects.
The fiscal year ended December 31, 2000, was marked by a number of events, which
in the opinion of management will strengthen the Company and ensure a continuous
growth pattern.
In the third quarter of 2000 Ingram Books, who became an equity partner during
the second quarter, provided their database of 530,000 books plus other
enhancements to Americana. By the end of the third quarter, ordering procedures
were refined and placed into operation so that visitors to the
americanabooks.com website could place orders from a combined database which
includes Ingram Books inventory and the individual database of small publishers
Americana.
In May 2000 the Company moved into an 8,000 square foot facility. The rent is
$2,000 per month for the succeeding twenty-four (24) months, which has been paid
through April 2002.
9
<PAGE>
Website Development
The active operating pages for the americanasongs.com website are complete. The
site is now accepting uploads of music from independent record producers, labels
and artists. Further, the Company has uploaded an array of over 3,000 songs it
has licensed for sale from this site. The Company fully intends to pay royalties
to all artists and recording companies. All recordings sold from this site will
be protected as much as possible from unauthorized duplication. Americana has of
installed a commercial database operating system for use from a central server
that queries all databases for all of Americana websites. Americana has
purchased a library of rare music on a non-exclusive basis, of some 3,000 songs
ranging from music of the 30's and 40's all the way to music of the San
Francisco sound of the 70's. John Wagner Studios converted this music to a
digital format so that it may be easily sold and downloaded from the
americanasongs.com website. Furthermore, Americana is currently negotiating with
a major popular CD supplier that can supply a database of over 700,000 popular
CD's and provide drop-ship fulfillment.
Additionally, Americana entered into a contractual relationship with S.P.
Richards Company during the third quarter. As of September 18, 2000, Americana
has uploaded the S.P. Richards database so that sales of S.P. Richards
merchandise from the S.P. Richards catalog can now be made through Americana.
Ann Edenfield has been hired as director of development and marketing for the
americanatextbooks.com website. An employment and stock option agreement was
executed on March 15,2000, which included performance based stock options
totaling 95,000 shares over three years.
The americanatextbooks.com website design and operating pages have been
completed. The site was fully operational on August 15th, 2000, but it has been
determined that the existing website is inadequate due to its limited database.
Therefore, a project to prepare and install an additional database has been
undertaken with a projected completion date in July 2001.
The databases for both the americanasongs.com and americanatextbooks.com
websites are accessed along with the americanabooks.com and americanaArtmart.com
databases from a unified database server and platform.
This programming project was completed on November 22, 2000. This project
includes the installation of book distributor database such as Ingram Books,
with which Americana has executed database licensing and distribution
agreements. Americana has also set up accounts to include database and order
processing agreements with Baker & Taylor, Advanced Marketing Services,
Books-A-Million/American Wholesale Book Co., Anderson News, Audio-Adventures,
Barnes & Noble, Brobart Company, Hastings, Lodes Tone, Penton Overseas,
Professional Media and Recorded Books.
Programming for the Americana artmart.com site has been completed and the site
became operational on December 22, 2000. Staff is presently engaged in testing
of the software associated with the site's order processing.
10
<PAGE>
Audio Book Development
Americana has purchased the audio production rights to over 100 books. In
cooperation with Griffin Recording Studios, Americana is currently producing
recording and duplicating these books in preparation for sale to some 17,000
retail stores and 3,000 libraries around the United States. Americana has
completed production and duplicated for inventory forty-five (45) audio books
and is in various states of production on an additional seventeen (17) titles.
Sale of audio books on hand was initiated during the third quarter. Total amount
of $88,000.00 in invoiced sales have been achieved to through March 29, 2001.
All forty-five (45) titles are available for sale from the americanabooks.com
website in addition to sales of audiotapes. Additionally, in an effort to
increase sales, a catalog of audio books was completed and three thousand of the
catalogs were mailed to potential buyers during the month of November 2000. It
is anticipated that audio book production will continue at the rate of one to
two books weekly.
Liquidity and Capital Resources
The Company has historically financed its operations through the sale of common
stock, since inception the Company has raised $1.5 million in capital. The
proceeds were used for start-up activities including website development as well
as other start-up activities. The Company has a working capital surplus of
approximately $80,323. In addition, the Company's revenues have increased
beginning in December 2000 and are expected to be average at a minimum of
$20,000 per month for 2001. The revenue would not be adequate to cover current
monthly cash expenditures and would have to be supplemented by additional
capital infusions, a reduction in administrative expenses, or a combination of
both. Currently management believes revenues will increase to adequate levels to
support cash expenditures. In addition, management is actively pursuing
additional capital infusion. There is no assurance that adequate revenues will
be achieved to support operations, however, management believes it will have
adequate capital for the next twelve months.
The Company completed the sale of $700,000 of securities under 4(2)as of
November 4th, 1999. The use of the proceeds of the $700,000 in securities was
for working capital, including the completion of the website(s), and for an
acquisition and advertising. Various stock purchase agreements were executed
under 4(2) with accredited investors to purchase common stock. The capital
raised as a result of these agreements was $652,200. In December 2000, Americana
executed a stock purchase agreement with Lowell Fixler to purchase 500,000
shares of common stock at $0.20 per share. Any future capital infused into the
Company is expected to be used to support working capital and for acquisitions.
The Company is currently in discussion with a number of private and corporate
investors concerning a private placement.
The Company purchased the assets of Hollis Books Publishing with common stock of
the Company. These transactions caused the Company to issue 10,000 shares to
acquire these assets.
The Company proposes to utilize the common stock to acquire other book
publishing companies and other business enterprises. Therefore, continued active
trading of the stock will be important to the principals of the target
companies. Americana is very dependent on the active trading of its stock. The
Company plans on using the stock to acquire publishing companies and other
enterprises that benefit growth. If the stock continues to be traded at an
unfavorable price, the ability of Americana to acquire these companies would be
seriously jeopardized. Without financing, it could be difficult to cover working
capital requirements and future capital expenditures. No assurance can be given
that the stock will be actively traded a favorable price or that Americana will
be able to find financing.
Capital Expenditure
During the year Americana made approximately $531,568 in capital expenditures.
The expenditures were for an improved telephone system, computer equipment and
furniture and fixtures, production assets and inventory rights databases.
11
<PAGE>
Acquisition
As part of the "Integrated Publishing Plan" the Company anticipates it will
acquire additional small sponsored book publishing companies and list their book
titles on its website as well as list book titles they do not own, that
complement and enhance the consumer appeal of the website overall. These
enterprises will account for the majority of revenue of the Company in the
future. The Company has identified hundreds of potential targets. These
acquisitions will continue to be transacted with the use of the Company's common
stock. Americana executed a direct mail campaign to over 4,000 book publishers
nationwide to encourage responses concerning interest in selling their companies
to Americana. As of April 15, 2000, Americana had received 12 communications
from various quality publishing enterprises that have expressed interest in a
potential sale transaction. Americana has been actively evaluating these
businesses and has issued five letters of intent. These letters of intent
indicate to the interested party that Americana is interested in pursuing
negotiations and entering into a formal purchase and sale agreement. Although on
June 30, 2000 formal purchase agreements were sent to two publishers which did
not mature into executed purchase agreements, at the close of the third quarter,
Americana had outstanding an offer to purchase selected assets in one closely
held publisher. As of December 15, 2000, negotiations had been completed and a
definitive Purchase and Sale of Assets had been agreed upon with Hollis Books,
LLC.
The Company intends to acquire a heat set web press company, and book binding
company. These enterprises will vertically integrate production and control of
quality audio books as well as re-print books for its family of over 100
publishers now supplying books through americanabooks.com. The Company currently
has upgraded its existing recording studio to accommodate digital equipment.
This currently serves as an additional facility to record audio books.
Results of Operations
Year Ended December 31, 2000 As Compared To The Same Period Of 1999
Revenues increased $47,212 to $56,727 for the year ending December 31, 2000.
This increase was attributable to implementation of audio book sales. In 1999
revenues were primarily derived from advertising in the Americana Corporate
Finance Reporter, which was not issued in 2000. Compensation expense decreased
$33,275 as a result of fewer personnel costs to implement the Company's website
development and audio book sales plan. Marketing expense increased $132,647 to
$188,269 for the year 2000 as a result of the Company utilizing traditional
forms of advertising for its audio book sales. Depreciation expense increased
$47,476 due to the increase in acquisitions of fixed assets. Management fees for
2000 were $9,235 higher than 1999 as a result of B. H. Capital Limited arranging
various financing for the Company.
Professional fees increased by $26,054 from 1999 due to higher accounting
related fees to administrate the Company is higher operational activity. Other
operation expense increased by $324,032 primarily as a result of the Company
writing off approximately $180,000 in prepaid advertising and higher trade
expenses relating to the Company's personnel attending various industrial trade
shows.
Part II. Other Information
Item 1. Legal Proceedings - None
Item 2. Changes in Security - None
Item 3. Defaults upon Senior Securities
12
<PAGE>
Item 7. FINANCIAL STATEMENTS
Independent Auditor's Report
To the Board of Directors
Americana Publishing, Inc.
Albuquerque, New Mexico
We have audited the accompany balance sheet of Americana Publishing, Inc. as of
December 31, 2000 and 1999, and the related statements of income (loss), changes
in stockholder's equity and cash flows for the one year period ended December
31, 2000 and 1999. These 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.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
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 Americana Publishing, Inc. as
of December 31, 2000 and 1999 and the results of its operations and cash flows
for the years ending December 31, 2000 and 1999 in conformity with generally
accepted accounting principles.
/s/ Null Lairson CPA, PC
Houston, TX
March 29, 2001
13
<PAGE>
Americana Publishing, Inc.
Balance Sheet
As of December 31
ASSETS
Current Assets 1999 2000
----------- -----------
Cash $ 308,376 20,027
Certificates of Deposit 199,370 30,000
Accounts Receivable, Net 892 24,747
Prepaid 197,231 56,496
Inventory $ - $ 20,327
----------- -----------
Total Current Assets $ 705,869 $ 151,597
Property and Equipment
Audio Equipment 2,558 160,217
Database and Circulation List 23,881 239,313
Computer Equipment 48,360 128,537
Software 4,014 15,953
Furniture and Fixtures 20,207 47,911
Website Development 36,713 43,463
Other - 31,907
Less:Accumulated depreciation and amortization (26,162) (92,399)
----------- -------------
Total Property and Equipment $ 109,571 $ 574,902
----------- -------------
TOTAL ASSETS $ 815,440 $ 726,499
=========== =============
LIABILITIES AND STOCKHOLER'S EQUITY
Current Liabilities
Account Payable and Accrued Liabilities 3,894 71,274
---------- --------------
Total Liabilities, All Current $ 3,894 $ 71,274
Stockholder's Equity
Preferred Stock 20,000,000 Shares
No Par Value, Authorized, None Issued
Common Stock 100,000,000 Shares Authorized
$.001 Par Value, 4,283,250, 7,822,396
Issued and Outstanding for 1999 & 2000
respectively $ 4,283 $ 7,822
Paid-In Capital 3,043,648 5,122,225
Deficient Accumulated (2,236,385) (4,474,822)
---------- ----------
811,546 655,225
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 815,440 $ 726,499
=========== ============
The Accompanying Notes are an Integrated Part of these Financial Statements
14
<PAGE>
Americana Publishing, Inc.
Statement of Income (Loss)
Year Ending
December 31, 1999 December 31, 2000
----------------- -----------------
Revenues
Book Sales $ - $ 56,727
Publishing Fees 9,515 -
Expenses
Cost of Sales - 47,781
Compensation Expense 1,551,535 1,518,260
Marketing Expense 55,622 188,269
Depreciation 18,766 66,242
Management Fees 33,000 42,235
Professional Fees 46,694 72,748
Other Operating Expenses 59,897 370,795
----------- -----------
Total Expenses 1,765,514 2,306,330
Interest Income 2,781 11,166
Income (Loss) Before Income Taxes $ (1,753,218) $(2,238,437)
Provisions for Income Taxes 2,589 -
------------- ------------
Net Loss $ (1,750,629) $(2,238,437)
============== ============
Basic and Diluted Loss Per Share $ (0.55) $ (0.41)
============== ============
Weight Average Shares Outstanding 3,186,025 5,483,141
============== ============
The Accompanying Notes are an Integrated Part of these Financial Statements
15
<PAGE>
Americana Publishing, Inc.
Statement of Cash Flows
Year Ended Year Ended
December 31, 1999 December 31, 2000
Cash Flows From Operating Activities:
Net Loss $(1,750,629) $(2,238,437)
Adjustments to Reconcile Net Income(Loss)
To Net Cash Provided by Operating
Activities
Depreciation 18,766 66,237
Allowance for Bad Debt - 189,530
Capital Transactions 1,405,875 973,370
Increase in Receivables (892) (23,855)
Increase in Prepaid (2,231) (48,795)
Increase in Accounts Payable 3,894 67,380
Increase in Inventory - (20,227)
Increase in Income Taxes Payable (2,589) -
------------- ------------
Total Adjustments 1,422,823 1,203,640
Net Cash Used by Operating Activities (327,806) (1,034,797)
Cash Flows From Financing Activities:
Proceeds From Sale of Common Stock 933,634 797,500
-------------- -------------
Net Cash Provided by Financing Activities 933,634 797,500
Cash Flows From Investing Activities:
Purchase of Property and Equipment (98,749) (220,422)
Purchase of Marketable Securities (199,370) 169,370
-------------- -------------
Net Cash Used in Investing Activities (298,119) (51,052)
-------------- -------------
Net Increase (Decrease) in Cash 307,709 (288,349)
Cash and Cash Equivalents at Beginning
of Period 667 308,376
Cash and Cash Equivalents at End of Period $ 308,376 $ 20,027
============== =============
Supplemental Disclosures:
Interest Paid $ 0 $ 0
Taxes Paid $ 0 $ 0
Non-Cash Transaction
Contribution of property and equipment in $ 0 $ 311,146
exchange for common stock
Forgiveness of accounts payable in exchange
for common stock $ 0 $ 0
Contribution of advertising prepaids $ 195,000 $ 0
The Accompanying Notes are an Integrated Part of these Financial Statements
16
<PAGE>
Americana Publishing, Inc.
Statement of Changes in Stockholder's Equity
For the Period December 31, 1998
Through December 31, 2000
<TABLE>
<CAPTION>
Common Paid-In
Stock Capital Development Stage Total
<s> <c> <c> <c> <c>
Balance December 31, 1998 $ 2,535 $ 510,887 $ (485,756) $ 27,666
Stock Issued During February and March
1999 Through a Private Offering
Memorandum 465,000 Shares 465 232,035 232,500
Stock Issued During November
1999 Through a Private Offering
Memorandum 908,250 Shares 908 698,851 699,759
Stock Issued During November
1999 in exchange for services
Rendered 375,000 Shares 375 374,625 375,000
Deficit Accumulated During the
year ended December 31,1999 (1,750,629) (1,750,629)
Stock Options 863,250 863,250
Capital Contribution - 364,000 - 364,000
-------- ----------- ------------ -----------
Balance December 31, 1999 $ 4,283 $ 3,043,648 $(2,236,385) $ 811,546
=== ==== ======== =========== ============ ===========
Stock Issued for the Year 2000
Through a Private Offering
Memorandum 655,000 Shares 655 651,845 652,500
Stock Options Exercised 600,000 Shares 600 144,400 145,000
Stock Issued During Year
In exchange for Services
Rendered 201,000 Shares 201 201,299 201,500
Stock Issued to Employees For Services
Rendered January through December
2000, 608,000 Shares 1,773 674,327 676,100
Stock Issued in Exchange for Book
Inventory Rights and Audio
Equipment in July 2000,
310,146 Shares 310 310,936 311,146
Stock Option Expense - 95,770 95,770
Net Loss - - (2,238,437) (2,238,437)
--------- ----------- ----------- -----------
Balance December 31, 2000 7,822 5,122,225 (4,474,822) 655,225
========= =========== =========== ==========
</TABLE>
The Accompanying Notes are an Integrated Part of these Financial Statements
17
<PAGE>
Americana Publishing, Inc.
Notes to Financial Statements
December 31, 2000
Note 1. Summary of Significant Accounting Policies Background and Nature of
Operations
Americana Publishing, Inc. (the Company) was organized as a Colorado corporation
on April 17, 1997 for the purpose of publishing books, audio books and
periodicals, and to utilize the Internet as its primary distribution channel to
prospective customers. Additionally the Company will utilize the latest
technology to download audio files directly to customers who desire to purchase
books and music and other audio materials immediately.
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 primarily consists of computer, furniture and equipment
and site development cost. A portion of the property and equipment were
contributed to the Company by the Company's chairman and majority stockholder in
exchange for common stock. This property and equipment is carried at the
contributors cost basis. Depreciation of property and equipment is provided
using the straight-line method for financial reporting purposes at rates bases
on their estimated useful lives. The estimated useful life for most property and
equipment is amortized over three to ten years.
Revenue Recognition
Revenue from sales of services is recognized when the service is performed and
billable. Revenue from sales of services to related parties was approximately
54% and 18% for the one-year period ending December 31, 1999 and 2000.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the basis of property and equipment for
financial and income tax reporting. The deferred tax assets and liabilities
represent the future tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities are recovered or
settled. Deferred taxes are also recognized for operating losses that are
available to offset future federal income taxes.
Advertising
The Company expenses advertising in the period the service was incurred. For the
years ending December 31, 2000 and 1999 advertising expense was approximately
$58,000 and $2,000.
18
<PAGE>
Americana Publishing, Inc.
Notes to Financial Statements
December 31, 2000
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates. The most significant estimate made during
2000 was its valuation of the fair market value of non-monetary stock
transaction.
Reclassifications
Certain reclassifications were made to the 1999 financial statements to conform
to the current year presentation.
Recent Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133, as amended is effective for
fiscal years beginning after June 15, 2000 and establishes accounting and
reporting standards for derivative instruments and for hedging activities. The
Company did not have any derivative instruments at December 31, 2000.
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principals to revenue recognition in financial statements.
The Company adopted SAB 101, as amended in the fourth quarter of fiscal 2000.
The SAB 101 did not have a material effect on its financial position or results
of operations.
Note 2: Liquidity
The Company has historically financed its operations through the sale of common
stock, since inception the Company has raised $1.5 million in capital. The
proceeds were used for start-up activities including website development as well
as other start-up activities. The Company has a working capital surplus of
approximately $80,323. In addition, the Company's revenues have increased
beginning in December 2000 and are expected to be average at a minimum of
$20,000 per month for 2001. The revenue would not be adequate to cover current
monthly cash expenditures and would have to be supplemented by additional
capital infusions, a reduction in administrative expenses, or a combination of
both. Currently management believes revenues will increase to adequate levels to
support cash expenditures. Management is actively pursuing additional capital
infusion. There is no assurance that adequate revenues will be achieved to
support operations, however, management believes it will have adequate capital
for the next twelve months.
Note 4: Related Party Transactions
In January 2000 the Company entered into a four-year agreement with a
partnership comprised of certain board members to lease 3,000 square feet of
office space, which is currently being built out in accordance with the
Company's lease specifications. Annual lease payments will be $36,000, $48,000
and $60,000 for 2001, 2002 and 2003 respectively. The year 2000 or lease
payments were paid in advance.
19
<PAGE>
Americana Publishing, Inc.
Notes to Financial Statements
December 31, 2000
Financial Consulting Agreement
On January 1, 1999, the Company entered into a non-cancelable Corporate
Financial Consulting Agreement with BHCL, a related party. The agreement calls
for the Company to pay BHCL a monthly fee of $3,000 for a period of five years
in consideration for BHCL providing general assistance in identifying
credit/capital resources as well as providing office, personnel and facilities
to the Company. In addition, the agreement calls for the Company to pay BHCL a
1% success fee for any gross amount of debt financing or net worth of any entity
merged or acquired on behalf of the Company by BHCL and a 1% renewal fee of the
amount of such financial arrangements for a period of five years. Management
believes that the monthly fee approximates the value of these services had the
Company obtained these services from an unaffiliated party.
Employment Agreement
On January 1, 1999, the Company entered into an employment agreement with its
chairman and majority stockholder. Under the terms of the one year agreement,
which shall be automatically be renewed for a period of three years provided
that either party has not elected to terminate the agreement as provided for
therein, the employee shall receive a salary of $250,000 per year or 5% of gross
revenue of the Company, whichever is greater. The Company may not terminate the
agreement for any reason as it relates to the employee's disability, illness or
incapacity. Should the employee die during the term of employment, the Company
shall pay the employee's estate $500,000 in fifty monthly installments of
$10,000. Subject to certain events, including the sale of substantially all of
the Company's assets to a single purchaser and bankruptcy, among others, the
Company may terminate the agreement upon 90 days written notice and pay the
employee $500,000 in twelve consecutive monthly installments. With cause, the
Company may terminate the agreement with twelve months written notice. During
the notice period, the employee shall be paid full compensation and, receive a
severance allowance of $250,000 in twelve consecutive monthly installments
beginning on the date of termination. Without cause, the employee may terminate
employment upon twelve months written notice to the Company. During that period
the employee may be required to perform his duties and will be paid the full
compensation described herein up to the termination date and shall receive a
severance allowance of $250,000 which shall be paid in twelve equal and
consecutive monthly installments beginning on the date of termination. Due to
the Company's limited liquidity, the employee has waived compensation of
$184,000 for the year ended December 31, 1999. This compensation was treated as
a cash capital contribution. This same employee received common stock in lieu of
$101,000 in cash compensation during 2000.
Note 5: Stock Purchase Options
On January 1, 1999, the Company granted to ten individuals, five of who are
directors, options to purchase a total of 1,950,000 shares of common stock for a
purchase option cost of $250 per individual. In addition, on December 1, 1999,
the Company granted to seven individuals including one director and one employee
option to purchase 705,000 shares of common stock. In March 2001 the Company
issued one individual approximately 98,000 shares. The purchase price for the
1998 and 1999 grants is $.10 per share if exercised on or before December 31,
1999, $.20 per share if exercised on or before December 31, 2000 and, $.30 per
share if exercised on or before December 31, 2001. No options were exercised or
cancelled in 1999. In 2000, 600,000 shares were purchased at the $0.20 stock
option price.
20
<PAGE>
Americana Publishing, Inc.
Notes to Financial Statements
December 31, 2000
1999 2000
--------- ---------
Options outstanding 2,655,000 2,153,000
Weighted average exercise price $0.20 $0.20
Weighted average fair value $0.23 $0.23
Weighted average contract term 3 3
(in years)
Options exercisable 2,655,000 2,153,000
Weighted average exercise price $0.20 $0.20
For the options relating to Directors and employees, the Company applies APB
Opinion 25 and related interpretations in accounting for its stock option plan.
As a result of their plan, although no stock options were exercised, the Company
recognized $270,626 and $95,770 of compensation expense for the year ended
December 31, 1999 and 2000, respectively. Had compensation cost for the
Company's purchase option plan been determined based on the fair value at the
grant date for such options consistent with the method of Financial Accounting
Standards Board 123 (FAS123), the Company's net loss for the twelve months ended
December 31, 1999 and would have increased by approximately $90,000 for each
year. The effects of applying FAS 123 in this pro forma disclosure are not
indicative of future amounts. The fair value of each option grant is estimated
on the date of grant using a present value calculation, risk free interest of
4.6%, no dividends and expected life of 3 years.
In the event of a merger, sale of the Company, a hostile take over attempt or
other sales of the Company's asset, each Director previously granted options
will have the option to purchase 300,000 additional shares for $1. The Company
recognized $117,250 of expense relating to options granted to non-employees or
directors in 1999. No such grants were made in 2000.
Stock options available for future grant amounted to 7,247,000 shares at
December 31, 2000. Exercisable stock options amounted to 2,153,000 shares at
December 31, 2000.
Note 6: Earnings Per Share
Basic earnings per share are computed by dividing net loss available to common
stockholders by the weighted average number of common shares. Diluted earnings
per share are determined on the assumption that the outstanding stock options
have been converted using the average price for the quarter. Common stock
options have been excluded from the computation of diluted earnings per share as
in loss years it is anti-dilutive.
Note 7: Income Taxes
The following is a reconciliation of the income tax provision computed by
applying the federal statutory income tax rate to net loss before income taxes.
21
<PAGE>
Americana Publishing, Inc.
Notes to Financial Statements
December 31, 2000
Year Ended Year Ended
December 31, 1999 December 31, 2000
Income Tax (Benefit) Computed
At the federal statutory rate of 35% $(612,720) $(783,453)
Permanent Differences 481,703 349,533
Valuation Allowance 128,428 433,920
Tax Expense $ (2,589) $ 0
Net deferred income tax liability consists
of the following at December 31,
1999 2000
Deferred Tax Asset
Net operating loss carry forward $ 128,428 $ 599,320
Less: valuation allowance (128,428) (562,348)
Deferred Tax Liability $ 0 $ 36,972
Depreciation and amortization $ 0 $ (36,972)
Deferred tax liability $ 0 $ (36,972)
--------- ----------
Net $ 0 $ 0
========= ==========
The Company has generated approximately $1,712,343 in net operating costs carry
forward which $13,825, $13,000, $340,175 and $1,345,406 expire in 2018, 2019,
2020 and 2021 respectively.
Note 8: Stock Issuances
On February 10, 1999, the Company issued a Confidential Private Offering
Memorandum pursuant to Rule 504 of Regulation D of the Securities Act of 1933,
as amended, for 465,000 shares of $.001 par value common stock at $.50 per
share. The offering was totally subscribed in the total amount of $232,500. Of
the total 465,000 shares sold, 59,000 shares were sold to related parties.
On November 1, 1999, the Company issued a Confidential private Offering
Memorandum pursuant to Rule 144 4(2) of the Securities Act of 1933, as amended,
for 908,000 shares of $.001 par value common stock at $.50 to $1.00 per share.
The offering was totally subscribed in the total amount of approximately
$700,000.
During the year 2000 the Company sold 655,000 of common shares for $652,500
under regulation 4(2). Regulation 4(2) provides for the sale of restricted
shares of common stock without the preparation of a prospectus. The shares
offered cannot be sold for a period of one year.
22
<PAGE>
Americana Publishing, Inc.
Notes to Financial Statements
December 31, 2000
During 2000 the Company granted 1,773,000 shares of common stock to employees
for services rendered. These shares were valued at their estimated value of the
shares issued ranged from $1.00 to $0.10 per share. Approximately $676,000 was
recorded as compensation with an offset to additional paid in capital during
2000.
In 2000 and 1999 the Company issued 201,000 and 375,000 shares of common stock
to outside consultants and companies for services rendered. These shares were
recorded at the fair market value at the time of issuance. Approximately
$201,000 and $375,000 was recorded as an expense with an offset to additional
paid in capital for 2000 and 1999, respectively.
Note 9: Reserve for Bad Debt
In 1999 the Company's president contributed approximately $180,000 of prepaid
advertising space in a New Mexico magazine. This company has incurred financial
difficulties and declared bankruptcy. The Company has reserved 100% of their
prepaid advertising, as management believes any recovery is doubtful.
Additionally, the Company has reserved $2,500 for uncollectible receivables.
Note 10: Subsequent Events
Subsequent to year-end the Company entered into an accounts receivable factoring
agreement. The Company will receive a predetermined percentage of elgible
receivables. Either party can cancel this agreement with thirty days notice.
Note 11: Other Matters
Management's Estimate of Value (Unaudited)
The balance sheet presents property and equipment at the contributor's cost.
Management believes that certain assets have a significantly higher fair market
value than reflected on the financial statements. Management's estimate of such
value is set forth below.
Database Circulation 485,000
Audio Equipment 106,000
Audio Book Development 368,000
Song Writer 52,500
Websites 1,724,000
Land 25,000
Stock Registration 325,000
-----------------
$3,079,500
=================
These estimates reflect management's judgment as to the fair market value of
certain assets as of December 31, 2000.
23
<PAGE>
Americana Publishing, Inc.
Notes to Financial Statements
December 31, 2000
Management's determination of the fair market value for the database,
circulation list and website development was based on estimated cost of
contractors and outside parties to compile and develop such information and
technology. The computers and audio equipment, publication library and furniture
are based on their appropriate replacement cost. The value of the land was based
on the appraised value as set by a real estate professional. The value placed on
the cost to create a public company is based on the actual comparable selling
price of a public shell, and the estimated cost of taking a private company
public.
There will usually be differences between the estimated market value and the
market value ultimately realized and the differences may be material.
Quarterly Financial Summary (Unaudited)
March 31, June 30, September 30, December 31,
2000 2000 2000 2000
Revenues 16,098 $ 4,093 $ 10,931 $ 25,605
Operating Income (784,506) (829,217) (336,511) (288,563)
Net Income (784,506) (829,217) (336,511) (288,563)
Earnings per share Basic
and Diluted (0.18) (0.13) (0.06) (0.04)
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There are no disagreements between Americana and the auditors.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Directors and Executive Officers and Advisors to the Board of Directors
Name Age Position
George Lovato, Jr. 43 CEO/Chairman/President
Don White 49 Director/Vice President
David Poling 72 Director/Vice President
Jay Simon 42 Director/Secretary/Treasurer
Jerome Ruther 67 Director
Lowell S. Fixler 67 Advisor to the Board
Philippe de La Chapelle 59 Advisor to the Board
Stedman Walker, Ltd. N/A Advisor to the Board/Consultant
*These persons may be deemed "promoters" of the Company as that term is defined
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder. Jay Simon is Secretary/Treasurer of Americana.
24
<PAGE>
Officers and Directors
All Directors of the Company will hold office until the next annual meeting of
shareholders of the Company or until their successors are duly elected and
qualified.
The Officers of the Company are elected by the Board of Directors at the first
meeting after each annual meeting of the Company's shareholders, and hold office
until their death, or until they shall resign or have been removed.
George Lovato, Jr. Mr. Lovato is founder and has been a Director and Chairman
and President since inception, and has extensive management experience with
startup companies, corporate finance, computer system and software development,
international trade and relations, strategic planning, and sales and marketing
development over the last 15 years. He has been employed by and associated with
companies engaged in business management, public relations, advertising,
corporate finance, agriculture, automotive industry consulting, travel, auto
rental and leasing, and insurance.
Mr. Lovato was educated in New Mexico and has founded and developed several
nationally recognized companies ranging from local financial firms such as CEO
and President of TRVLSYS, Inc. to international travel and
communications-related businesses. His expertise in marketing, management and
corporate finance, in addition to numerous international contacts, coupled with
his service on the Governor Business Advisory Board of New Mexico, offer a
diverse alternative resource not often found in the marketplace. His
accomplishments have been featured in several national publications and books
such as Venture, Inc., The Wall Street Journal, New Mexico Business Journal, and
The New Mexico Experience. He devotes substantially full time necessary to the
management and general affairs of Americana. Mr. Lovato is the principal and
sole owner of B. H. Capital Limited, a successful 14-year-old Merchant Banking
and corporate finance consulting enterprise, located in Albuquerque, New Mexico
with branch offices in Denver, Colorado and Houston, Texas.
Don White
Mr. White is a Director/Vice President of Americana, and is a CPA in Houston,
Texas, and has operated a successful accounting practice for over 20 years. Mr.
White was educated at Sam Houston State University and received his degree in
accounting in 1972. Mr. White has broad expertise in the development of market
value financial statements. He currently advises the company on general
financial matters and corporate development and oversees the audit and
acquisition committee. Mr. White will fulfill the duties and responsibilities of
the Chief Financial Officer of Americana when it requires his expertise. He
devotes 20 to 40 hours per month to oversee the audit and acquisition committees
and general management affairs of Americana. Mr. White has served on the board
as director and vice president since inception of the company, April 17,1997 and
serve on the board for a period of one year until otherwise re-elected at the
next annual shareholders meeting.
25
<PAGE>
Dr. David Poling
Chairman, Sierra Publishing Group. Author of a dozen books; nationally
syndicated columnist, 600 newspapers. As New York publisher headed The Christian
Herald, half million monthly circulation. Also, President of the Family
Bookshelf, largest religious book club in the U.S. Poling, a Presbyterian
clergyman educated at College of Wooster, Ohio and Yale University. Special
interests: ecumenical, inter-faith expressions of life. He devotes 20 to 40
hours per month to oversee the acquisition committee and general management
affairs of Americana and is also Director/Vice President of Americana. Dr.
Poling has served on the board as director and vice president since inception of
the company, April 17,1997 and serve on the board for a period of one year until
otherwise re-elected at the next annual shareholders meeting.
Jay Simon
Mr. Simon graduated from UNM in 1986 with a BS in Pharmacy. Mr. Simon is
currently employed as Executive Director of International Business Development
of Syncor International Corporation, the worlds largest nuclear pharmaceutical
companies. His duties with Syncor International Corporation involve
international business development. Mr. Simon involved in corporate finance
matters and international sales operations and vendor relations development and
is Secretary/Treasurer and Director of Americana. Mr. Simon has served on the
board as director and secretary/treasurer since inception of the company, April
17,1997 and serve on the board for a period of one year until otherwise
re-elected at the next annual shareholders meeting.
Jerome Ruther
Mr. Ruther graduated from Northwestern University in 1954 with a degree in
accounting. Later Mr. Ruther attended Northwestern University Law School and
graduated with jurist doctorate and practiced law for approximately 20 years.
Mr. Ruther was involved in various media business, real estate developments and
was a controlling shareholder of Sunset Productions, Inc., audio book production
company.
Advisor to the Board of Directors is Lowell S. Fixler
Mr. Fixler graduated from Northwestern University in 1954. Mr. Fixler was
president and controlling shareholder in NEEDLECRAFT Corporation of America.
NEEDLECRAFT was later purchased by Quaker Oats Co., and Mr. Fixler was the
president of the division. Mr. Fixler has been an investor in various start-up
companies and has been an investor in numerous business enterprises over his
lifetime.
Advisor to the Board of Directors is Philippe de La Chapelle
Mr. de La Chapelle formally Managing Director of Hill Thompson Capital Markets,
Inc., an investment banking firm founded in 1932. De La Chepelle concentrates on
business development of U.S. and offshore corporate finance opportunities. A
graduate of Georgetown Law School, he has been international counsel for W.R.
Grace & Co. Currently, he is Executive Vice President of Warnaco.
Advisor to the Board of Directors is Stedman Walker, Ltd.
Stedman Walker, Ltd. is a corporate finance and investor relations consulting
firm with over 100 years of experience in these fields. The principals of this
firm have served a variety of clientele from a variety of different industries.
26
<PAGE>
Item 10. EXECUTIVE COMPENSATION
On January 1, 1999, the Company entered into an employment agreement with its
chairman and majority stockholder. Under the terms of the one year agreement,
which shall be automatically be renewed for a period of three years provided
that either party has not elected to terminate the agreement as provided for
therein, the employee shall receive a salary of $250,000 per year or 5% of gross
revenue of the Company, whichever is greater. Mr. Lovato will not receive any
back pay from Americana and Americana is not responsible for such. The Company
may not terminate the agreement for any reason as it relates to the employee's
disability, illness or incapacity. Should the employee die during the term of
employment, the Company shall pay the employee's estate $500,000 in fifty
monthly installments of $10,000. Subject to certain events, including the sale
of substantially all of the Company's assets to a single purchaser and
bankruptcy, among others, the Company may terminate the agreement upon 90 days
written notice and pay the employee $500,000 in twelve consecutive monthly
installments. With cause, the Company may terminate the agreement with twelve
months written notice. During the notice period, the employee shall be paid full
compensation and, receive a severance allowance of $250,000 in twelve
consecutive monthly installments beginning on the date of termination. Without
cause, the employee may terminate employment upon twelve months written notice
to the Company. Directors of Americana do not currently receive any form of cash
compensation for their participation in Americana's activities. Don White, CFO
and Director, is being paid $3,000 per month for his services. Mr. White
oversees the accounting and is on the acquisition committee. Jerry Ruther,
Advisor to the Board, is compensated $2,500 per month. Mr. Ruther is assisting
Americana in the set-up and development of its audio book division.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Other Restricted- Securities All
Name Annual
Other
And Compen Stock Underlying LTIP Other
Principal Salary Bonus sation Award(s) Options Payouts Compen
Position Year ($) ($) ($) ($) SAR(#) sation
George Lovato 1998 0 0 0 285,913 0 0 0
CEO/Director 1999 81,000 0 0 0 0 0 0
2000 147,000 0 0 280,000 0 0 0
Jay Simon 1998 0 0 0 8,750 0 0 0
Sec/Treas/Director 1999 0 0 0 0 0 0 0
2000 0 0 0 50,000 0 0 0
David Poling 1998 0 0 0 17,500 0 0 0
V. President/Director 1999 0 0 0 75,000 0 0 0
2000 0 0 0 150,000 0 0 0
Jerome Ruther 2000 0 0 45,000 0 0 0
Director
</TABLE>
27
<PAGE>
Non-Cash Compensation:
1. Stock Compensation
In 2000 and 1999 the Company issued 201,000 and 375,000 shares of common stock
to outside consultants and companies for services rendered. These shares were
recorded at the fair market value at the time of issuance. Approximately
$201,000 and $375,000 was recorded as an expense with an offset to additional
paid in capital for 2000 and 1999, respectively.
2. Other Non-Cash Compensation
Non-applicable
3. Stock Option Compensation
On January 1, 1999, the Company granted to ten individuals, five of who are
directors, options to purchase a total of 1,950,000 shares of common stock for a
purchase option cost of $250 per individual. In addition, on December 1, 1999,
the Company granted to seven individuals including one director and one employee
option to purchase 705,000 shares of common stock. In March 2001 the Company
issued one individual approximately 98,000 shares. The purchase price for both
grants is $.10 per share if exercised on or before December 31, 1999, $.20 per
share if exercised on or before December 31, 2000 and, $.30 per share if
exercised on or before December 31, 2001. No options were exercised or cancelled
in 1999. In 2000, 600,000 shares were purchased at the $0.20 stock option price.
1999 2000
1999 2000
--------- ---------
Options outstanding 2,655,000 2,153,000
Weighted average exercise price $0.20 $0.20
Weighted average fair value $0.23 $0.23
Weighted average contract term 3 3
(in years)
Options exercisable 2,655,000 2,153,000
Weighted average exercise price $0.20 $0.20
For the options relating to Directors and employees, the Company applies APB
Opinion 25 and related interpretations in accounting for its stock option plan.
As a result of their plan, although no stock options were exercised, the Company
recognized $270,626 and $95,770 of compensation expense for the year ended
December 31, 1999 and 2000, respectively. Had compensation cost for the
Company's purchase option plan been determined based on the fair value at the
grant date for such options consistent with the method of Financial Accounting
Standards Board 123 (FAS123), the Company's net loss for the twelve months ended
December 31, 1999 and would have increased by approximately $90,000 for each
year. The effects of applying FAS 123 in this pro forma disclosure are not
indicative of future amounts. The fair value of each option grant is estimated
on the date of grant using a present value calculation, risk free interest of
4.6%, no dividends and expected life of 3 years.
Stock options available for future grant amounted to 7,247,000 shares at
December 31, 2000. Exercisable stock options amounted to 2,153,000 shares at
December 31, 2000.
All Directors/Advisors/Employees
Options exercisable at December 31, 2000 for named executives were as follows:
George Lovato, Jr. 300,000
Jay Simon 300,000
Don White 200,000
Jerome Ruther 50,000
Total 650,000
28
<PAGE>
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, the stock ownership of each person known by the
Company to be a beneficial owner of five percent (5%) or more of the Company's
equity securities, each Director individually and all, Directors and Officers of
the Company as a group. Each person has sole voting and investment power with
respect to the Shares shown unless otherwise indicated.
<TABLE>
<CAPTION>
Shares
Name and Address of Beneficial Owner Title of Class Amount Owned Beneficially
Owned % of
Class
- -----------------------------------------------------------------------------------------------------------
<s> <c> <c> <c>
George Lovato, Jr Common 2,554,000 33%
12310 Claremont NE
Albuquerque, NM 87112
Don White Common 860,000 11%
8106 Devonwood
Huston, TX 77070
Jerome Ruther Common 345,000 4%
1208 North Summit Drive
Santa Fe, NM 87501
Jay Simon Common 100,000 1.3%
5528 E. Cheryl Drive
Paradise Valley, AZ 85253
David Poling Common 555,000 7.1%
3616 San Rio Place NW
Albuquerque, NM 87107
Lowell Fixler Common 1,395,000 18%
1081 Sheridan Rd
Highland Park, IL 60035
Total Shares of Officers and
Directors as a Group Common 5,809,000 74.4%
</TABLE>
29
<PAGE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Americana has executed a Corporate Finance Consulting Agreement with B. H.
Capital Limited as of January 1, 1999. This agreement calls for among other
things for a 1% success fee to be paid by Americana to B. H. Capital Limited of
the gross amount of financing for a period of five years. This transaction was
approved by the board of directors and was considered to be within fair
standards, which would be offered to or by any third party in an arms length
transaction.
Americana will also pay B. H. Capital Limited a $3,000.00 monthly facility use
fee for use of B. H. Capital Limited's office, personnel, and facilities for a
period of five years.
The Directors of Americana have each been issued stock option agreements dated
January 1, 1999 that allows for the purchase of 300,000 shares of stock over a
period of three years. Should the purchase be exercised by December 31, 1999,
the cost per share is $.10 cents; by December 31, 2000, $.20 cents; and by
December 31, 2001, $.30 cents. The directors may purchase all or a portion of
the shares at any time in any of the denomination described therein. Directors
also are allowed out-of-pocket expenses reimbursements of up to $400.00 per
meeting. Stock option agreements dated January 1, 1999, have been issued to each
Sarah Moyers and Robert Cochnar whereby 100,000 shares may be purchased over the
next three years under the same terms and conditions as the directors stock
option agreements allow for inclusive of the additional purchase of stock as a
poison pill caveat for 100,000 shares each. Similar stock options have been
issued to Mr. Ruther, Mr. Fixler, Mr. de La Chapelle, Mr. Wagner, Mr. Rodriquez,
Mr. Bromberg, Mr. Whitman, Stedman Walker, Ltd., and Mr. Cherepkahov.
Mr. Lovato contributed all of the assets of Americana and provided services and
use of the B. H. Capital Limited facility and paid certain cash expenses on
behalf of Americana for a period of eighteen months in exchange for common stock
in Americana. Mr. Lovato provided a total of $71,309 in cash and equipment. In
addition, he provided $287,863 worth of services and received 2,000,000 shares
covering the period from inception to December 31, 1998.
A poison pill is also incorporated into the option agreement, whereby all the
directors may purchase 300,000 additional shares for $1.00 should any of the
following occur:
a) The sale of substantially all of the Company's assets to a single purchaser
or group of associated purchasers; or b) The purchase of substantially all of
the Company's issued and outstanding stock in an effort to take the Company
Private; or c) The attempt by an individual or associated group of individuals
or corporation or entity to purchase stock in the Company for the purposes of a
hostile take over; or d) The sale, exchange, or other disposition, in one
transaction of the majority of the Company's outstanding corporate shares; or e)
The Company's decision to terminate its business and liquidate its assets; or f)
The merger or consolidation of the Company with another company where by the
directors of the Company as a whole are no longer majority shareholders.
Americana hired additional personnel, which includes Mr. Don White and Mr. Jerry
Ruther and these employment agreements are similar to that of Mr. Lovato's.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
3.1 (i) Articles of Incorporation
3.1 (ii)By-Laws
10.1*Employment Agreement dated January 1, 1999 between George Lovato, Jr. and
the Company
10.2*Employment Agreement dated November 1, 1999 between Don White and the
Company
10.3 Accounts Receivable Financing Line dated January 18, 2000 between All Tex
Financial and the Company
10.4* Lease Agreement between Tierra Americana Real Estate, LLC and the Company
27.1 Financial Data Schedule
* These Exhibits have been previously filed.
30
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE> EX-10.3
<DESCRIPTION>ACCOUNTS RECEIVABLE>
<TEXT>
Exhibit 10.3
PURCHASE AND SALE AGREEMENT
AS PER ARTICLE 5069-1.14 OF THE REVISED CIVIL STATUTES
STATE OF TEXAS
THIS AGREEMENT IS MADE BY AND BETWEEN ALL TEX FINANCIAL, INC. (ALLTEX),
WHOSE ADDRESS IS 221 W. CANINO, HOUSTON, TEXAS 77037, AND AMERICANA PUBLISHING,
INC., (SELLER), WHOSE ADDRESS IS 303 SAN MATEO NE #104A ALBUQUERQUE, NM 87108.
RECITALS
WHEREAS, ALLTEX IS ENGAGED IN THE BUSINESS OF PURCHASING ACCOUNTS
RECEIVABLE AND OTHER RIGHTS TO PAYMENT FROM PERSONS OR FIRMS SELLING GOODS OR
RENDERING SERVICES TO OTHERS, AND SELLER DESIRES FROM TIME TO TIME TO SELL
ACCOUNTS RECEIVABLE AND OTHER RIGHTS TO ALLTEX PURSUANT TO THE TERMS OF THIS
AGREEMENT;
DEFFNITIONS
"ACCOUNT DEBTOR" SHALL MEAN THE PARTY OR PARTIES OBLIGATED TO PAY A
RECEIVABLE.
"AGREEMENT" SHALL MEAN THIS PURCI-LKSE AND SALE AGREEMENT, TOGETHER WITH
THE SCHEDULES ATTACHED HERETO.
"COLLATERAL" SHALL MEAN THE ITEMS SET FORTH IN SECTION 8(A)-10(F) OF THIS
AGREEMENT.
"DISPUTE" SHALL MEAN ANY DISPUTE. DEDUCTION, CLAIM, OFFSET, DEFENSE OR
COUNTERCLAIM OF ANY KIND ASSERTED BY AN ACCOUNT DEBTOR AND PERTAINING TO-A
RECEIVABLE OR THE GOODS OR SERVICES GIVING RISE THERETO.
"LEGAL HOLIDAY" SHALL HAVE THE MEANING AS DEFINED IN SECTION 6 OF THIS
AGREEMENT.
"PURCHASE PRICE" SHALL HAVE THE MEANING AS DEFINED IN SECTION 6 OF THIS
AGREEMENT.
"RECEIVABLES" SHALL MEAN THE ACCOUNTS RECEIVABLE OR OTHER FORMS OF RIGHTS
TO PAYMENT DESCRIBED ON THE SCHEDULE OF ACCOUNTS ATTACHED HERETO OR AS SET FORTH
ON A SUPPLEMENT OF THE SCHEDULE OF ACCOUNTS TO BE ATTACHED IN THE FUTURE AND
SIGNED BY ALLTEX AND THE SELLER.
"RESERVE ACCOUNT" SHALL HAVE THE MEANING AS DEFINED IN SECTION 7 OF THIS
AGREEMENT.
"RESERVE PAYMENT WORKSHEET" SHALL HAVE THE MEANING AS DEFINED FORTH IN
SECTION 12 OF THIS AGREEMENT.
"SELLER" SHALL NIEAN THE ENTITY OR INDIVIDUAL EXECUTING THIS AGREEMENT AS
THE "SELLER" ON THE SIGNATURE PAGE HEREOF
"ALLTEX" SHALL MEAN ALL TEX FINANCIAL, INC., A TEXAS CORPORATION. "UCC"
SHALL MEAN THE TEXAS UNIFORM COMMERCIAL CODE. AGREEMENT FOR AND IN CONSIDERATION
OF THE MUTUAL PROMISES HEREIN CONTAINED, AND OTHER GOOD AND VALUABLE
CONSIDERATION. THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED.
ALLTEX AND SELLER HEREBY AGREE AS FOLLOWS:
1
<PAGE>
1. PURCHASE AND SALE OF ACCOUNTS RECEIVABLE AND OTHER RIGHTS. SELLER HEREBY
SELLS. ASSIGNS. TRANSFERS, CONVEYS AND DELIVERS TO ALLTEX, AS AN OUTRIGHT
CONVEYANCE AND NOT AS A SECURITY INTEREST, AND ALLTEX HEREBY PURCHASED AND
ACCEPTS DELIVERY FROM SELLER, ALL RIGHTS, TITLE AND INTERESTS OF SELLER IN THE
RECEIVABLES AND OTHER FORMS OF RIGHTS TO PAYMENT DESCRIBED ON SCHEDULE OF
ACCOUNTS ATTACHED HERETO AND MADE A PART HEREOF. SELLER REPRESENTS AND WARRANTS
THAT TRUE AND CORRECT COPIES OF THE INVOICES FOR THE RECEIVABLES ARE ATTACHED TO
SCHEDULE OF ACCOUNTS. FUTURE PURCHASES AND SALES OF ACCOUNTS RECEIVABLE AND
OTHER RIGHTS WILL BE BASED ON THE COMPLETION AND EXECUTION OF ADDITIONAL
SCHEDULES IN FORM SIMILAR TO SCHEDULE OF ACCOUNTS. UPON EXECUTION BY BOTH ALLTEX
AND SELLER OF SUCH A SCHEDULE, THE ACCOUNTS RECEIVABLE DESCRIBED THEREIN SHALL
BECOME RECEIVABLES SUBJECT IN ALL RESPECTS TO THE TERMS OF THIS AGREEMENT.
2. RETURNED RECEIVABLES. SELLER HAS HEREIN REPRESENTED AND WARRANTED TO
ALLTEX THAT ALL RECEIVABLES ARE FREE AND CLEAR OF ANY DISPUTES. SELLER HEREBY
ACKNOWLEDGES THAT ALLTEX WOULD NOT PURCHASE ANY RECEIVABLE IF ALLTEX HAD
KNOWLEDGE THAT THE SAME WAS SUBJECT TO A DISPUTE. ALTHOUGH ALL RECEIVABLES ARE
PURCHASED WITHOUT RECOURSE, SELLER AGREES THAT SHOULD SELLER OR ALLTEX DISCOVER
ANY RECEIVABLES ARE SUBJECT TO A DISPUTE, ALLTEX SHALL HAVE THE RIGHT TO RETURN
SUCH RECEIVABLES TO SELLER IN ACCORDANCE WITH THIS SECTION 2 AND OTHER
APPLICABLE SECTIONS OF THIS AGREEMENT. SELLER MUST IMMEDIATELY NOTIFY ALLTEX OF
ANY DISPUTES UPON RECEIPT OF ITS KNOWLEDGE THEREOF. UPON ALLTEX'S ELECTION TO
RETURN AND CHARGE-BACK A RECEIVABLE SUBJECT TO A
DISPUTE, SELLER SHALL PAY TO ALLTEX THE FACE AIVIOLTNT OF THE INVOICE LESS ANY
PAYMENTS THERETOFORE RECEIVED ON SUCH INVOICE BY ALLTEX. ALSO UPON RETURN,
ALLTEX MAY, AT ITS OPTION, TAKE ANY ONE OR MORE OF THE FOLLOWING ACTIONS: (A)
CHARGE THE RESERVE ACCOUNT FOR SUCH AMOUNT, (B) SUBTRACT SUCH AMOUNT FROM THE
PURCHASE PRICE FOR THE NEXT RECEIVABLF SOLD BY SELLER TO ALLTEX, OR (C)
OTHERWISE INVOICE SELLER FOR SUCH AMOUNT, WITH SUCH INVOICE BEING PAYABLE UPON
RECEIPT. UPON PAYMENT TO ALLTEX OF SUCH AMOUNT, ALLTEX SHALL ASSIGN, TRANSFER,
CONVEY, AND DELIVER SUCH RECEIVABLE TO SELLER WITHOUT RECOURSE.
2
<PAGE>
3. TRANSFER OF RELATED INTERESTS. IN ADDITION TO THE RECEIVABLES, SELLER
HEREBY SELLS, ASSIGNS, TRANSFERS, CONVEYS AND DELIVERS TO ALLTEX ALL OTHER
RIGHTS, TITLE AND INTTERESTS (BUT NOT OBLIGATIONS) NOW OR HEREAFTER EXISTING IN
CONNECTION WITH THE RECEIVABLES, INCLUDING, BUT NOT LIMITED TO, LIENS, SECURITY
INTERESTS AND GUARANTEES SECURING PAYMENT OF THE RECEIVABLES, SELLER'S INTEREST
IN RETURNED GOODS ARISING WITH RESPECT TO THE RECEIVABLES, AND ALL OTHER RIGHTS
REMEDIES OF SELLER RELATED TO THE RECEIVABLES SUCH AS RIGHTS OF STOPPAGE IN
TRANSIT, REPLEVIN, RECLAMATION AND LAWSUITS TO COLLECT THE RECEIVABLES. IF ANY
RECEIVABLES EVER REPRESENTED BY A PROMISSORY NOTE OR OTHER WRITTEN EVIDENCE OF
OBLIGATION, SELLER SHALL ENDORSE AND DELIVER THE SAME TO ALLTEX AND TAKE ANY
OTHER ACTION REQUESTED BY ALLTEX TO EFFECTUATE SUCH TRANSFER.
4. FURTHER ASSURANCES. SELLER AGREES TO EXECUTE AND DELIVER TO ALLTEX SUCH
NOTICES OF ASSIGNMENT AND OTHER DOCUMENTS AS ALLTEX INLAY REQUEST FROM TIME TO
TIME TO FURTHER DOCUMENT THE SALE AND ASSIGNMENT OF RECEIVABLES HEREUNDER.
5. TERMS - SELLER'S CUSTOMERS. EXCEPT AS MAY OTHERWISE BE AGREED TO FROM
TIME TO TIME. THE TERMS OF ALL RECEIVABLES SHALL BE AS FOLLOWS: AS NEGOTIATED
SELLER SHALL NOT VARY TERMS OF SALE, TERMS OF PAYMENT. OR LOCATION OF PAYMENT
SET FORTH IN THE INVOICE RELATING TO ANY RECEIVABLE WITHOUT ALLTEX'S PRIOR
WRITTEN CONSENT, IT BEING UNDERSTOOD THAT ANY RECEIVABLE IS THE PROPERTY OF
ALLTEX.
6. PURCHASE PRICE: DISCOUNTS. THE PURCHASE PRICE (HEREIN- SO CALLED) FOR
THE RECEIVABLES SHALL BE THE GROSS AMOUNT OF THE INVOICE, INCLUDING ANY
MISCELLANEOUS CHARGES SUCH AS SALES TAXES, DELIVERY CHARGES, AND INSTALLATION
CHARGES, LESS ANY EARLY PAYMENT OR SPECIAL DISCOUNTTS OFFERED TO SELLER'S
CUSTOMERS AS PREVIOUSLY DISCLOSED TO ALLTEX. ALLTEX SHALL DEDUCT FROM THE
PURCHASE PRICE A DISCOUNT EQUAL TO 12% OF SUCH GROSS AMOUNT OF THE INVOICE. AS
AN INDUCEMENT FOR SELLER TO SELL ONLY INVOICES FROM WHICH PROMPT PAYMENT CAN BE
EXPECTED, ALLTEX WILL REMIT A REBATE AS FOLLOWS. IF ALLTEX RECEIVED PAYMENT OF
AN INVOICE WITHIN 39 DAYS OF THE PURCHASE THEREOF, A REBATE OF 8% WILL BE
REMITTED TO SELLER; IF ALLTEX RECEIVES PAYMENT OF AN INVOICE WITH 49 DAYS OF THE
PURCHASE THEREOF. A REBATE OF 7% WILL BE REMITTED TO SELLER; IF ALL
TEX RECEIVES PAYMENT OF AN INVOICE WITHIN 59 DAYS OF THE PURCHASE DATE THEREOF,
A REBATE OF 6% WILL BE REMITTED TO SELLER AND TO CONTINUE AS FOLLOWS:
DAYS REBATE
69 5%
79 4%
89 3%
99 2%
109 1%
119 0%
THE PURCHASE PRICE, LESS SUCH DISCOUNT AND LESS THE DEDUCTION FOR THE RESERVE
ACCOUNT DESCRIBED BELOW. SHALL BE PAID ONLY AFTER EXECUTION BY SELLER AND ALLTEX
OF A SCHEDULE COVERING SUCH RECEIVABLE.
7. PAYMENTS ON ACCOUNTS PURCHASED- RESERVE ACCOUNT. IN ADDITION TO THE
DISCOUNT SET FORTH IN SECTION 6 HEREOF, ALLTEX SHALL DEDUCT FROM THE PURCHASE
PRICE OF EACH RECEIVABLE AN AMOUNT EQUAL TO 18% OF THE GROSS AMO@I T OF THE
RECEIVABLE TO BE PLACED IN A RESERVE ACCOUNT(HEREIN SO CALLED) UNDER THE
EXCLUSIVE CONTROL OF ALLTEX. THE BALANCE IN THE RESERVE ACCOUNT SHALL AT ALL
TIMES BE MAINTAINED IN A MINIMUM ACCOUNT EQUAL TO NO LESS THAN 18% OF THE
AGGREGATE GROSS AMOUNT OF ALL RECEIVABLES OUTSTANDING AT A PARTICULAR TIME, AND
THE 18% DEDUCTION FROM THE PURCHASE PRICE DESCRIBED IN THE IMMEDIATELY PRECEDING
SENTENCE MAY BE INCREASED AS NECESSARY TO MAINTAIN SUCH MINIMUM BALANCE. UPON
PREPARATION OF THE RESERVE PAYMENT WORKSHEET )AS SUCH TERM IS DEFINED IN SECTION
12 HEREOF) ALLTEX SHALL RELEASE TO SELLER AMOUNTS, IF ANY IN THE RESERVE ACCOUNT
IN EXCESS OF THE BALANCE REQUIRED PURSUANT TO THIS SECTION 7. THE RESERVE
ACCOUNT SHALL ACCRUE NO INTEREST.
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8. OFFSET; SECURITY INTEREST. ALLTEX IS AUTHORIZED TO OFFSET AND CHARGE
AGAINST THE RESERVE ACCOUNT ANY AMOUNT FOR WHICH SELLER MAY BECOME OBLIGATED TO
ALLTEX AT ANY TIME UNDER THIS AGREEMENT OR OTHERWISE. IN ADDITION TO SUCH RIGHT
OF OFFSET AND FOR THE PURPOSE OF SECURING ALLTEX IN THE PAYMENT OF ANY AND ALL
SUMS OF MONEY THAT MAY BECOME DUE AND OWING TO ALLTEX FROM SELLER. SELLER HEREBY
GRANTS A FIRST PRIORITY LIEN AND SECURITY INTEREST TO ALLTEX IN ALL OF THE
FOLLOWING, NOW OWNED OR HEREAFTER ACQUIRED BY SELLER:
(A) ALL ACCOUNTS, CONTRACT RIGHTS AND GENERAL INTANGIBLES AS THEY
RELATE TO SUCH ACCOUNTS OWNED BY SELLER, WHETHER LIQUIDATED OR UNLIQUIDATED
(B) THE BALANCE OF ANY DEPOSIT ACCOUNTS, RESERVE ACCOUNTS, CREDIT
BALANCES OR OTHER RESERVES OF ANY KIND MAINTAINED BY SELLER WITH OR BY
ALLTEX FOR THE BENEFIT OF SELLER.
(C) ALL PRESENT AND FUTURE ACCOUNTS, GENERAL INTANGIBLES, CHATTEL
PAPER, DOCUMENTS, INSTRUMENTS, CASH AND NONCASH PROCEEDS, JUDGMENTS, CLAIMS
LAWSUITS AND OTHER RIGHTS ARISING FROM OR BY VIRTUE OF, OR FROM THE
VOLUNTARY OR INVOLUNTARY SALE OR OTHER DISPOSITION OF, OR COLLECTIONS WITH
RESPECT TO, OR INSURANCE PROCEEDS PAYABLE WITH RESPECT TO, OR CLAIMS
AGAINST ANY OTHER PERSON OR ENTITY WITH RESPECT TO, ALL OR ANY PART OF THE
COLLATERAL.
(D) THE RESERVE ACCOUNT.
(E) ALL PRESENT AND FUTURE SECURITY FOR THE PAYMENT TO SELLER OF ANY
OF THE COLLATERAL AND GOODS WHICH GAVE OR WILL GIVE RISE TO ANY SUCH
COLLATERAL OR ARE EVIDENCED, IDENTIFIED, OR REPRESENTED THEREIN OR THEREBY.
(F) PROCEEDS AND PRODUCTS OF ANY OF THE FOREGOING, IN ANY FORM FOR
SECURED PARTIES.
(G) ALL INVENTORY NOW OWNED OR HEREAFTER OWNED BY SELLER, INCLUDING
RAW MATERIALS AND GOODS IN PROCESS.
TERMS USED IN CLAUSES (A) THROUGH (F) ABOVE HAVE MEANINGS AS DEFINED
IN THE UCC. ALLTEX SHALL HAVE ALL THE RIGHTS AND REMEDIES PROVIDED UNDER
THE UCC. UPON THE SALE TO ALLTEX OF ANY COLLATERAL, THE SECURITY INTEREST
HEREIN GRANTED SHALL AUTOMATICALLY TERMINATE AND BE OF NO FURTHER FORCE AND
EFFECT. THE TERMS OF THE PRIOR SENTENCE TO THE CONTRARY NOTWITHSTANDING, IN
THE EVENT A RECEIVABLE IS CHARGED-BACK AS PROVIDED IN SECTION 2 HEREOF,
SUCH ACCOUNT SHALL THEN CONSTITUTE COLLATERAL AND BE THEN SUBJECT TO A NEW
SECURITY INTEREST IN FAVOR OF ALLTEX. SELLER AGREES TO EXECUTE FINANCING
STATEMENTS FROM TIME TO TIME TO PERFECT ALLTEX'S SECURITY INTEREST IN THE
COLLATERAL. ALLTEX AGREES TO EXECUTE UCC-3 STATEMENTS EVIDENCING THE
TERMINATION OF SUCH SECURITIES INTEREST UPON PAYMENT OF SUCH RECEIVABLE OR
UPON TERMINATION OF THIS AGREEMENT, AS REQUESTED BY SELLER.
9. VERIFICATION AND COLLECTION OF ACCOUNTS. SELLER HEREBY AUTHORIZES ALLTEX
TO CONTACT ANY ACCOUNT DEBTORS AT ANY TIME FOR PURPOSES OF VERIFICATION OR
COLLECTION OF RECEIVABLES. SELLER SHALL COOPERATE WITH ALLTEX TO THE MAXIMUM
EXTENT POSSIBLE TO PROVIDE INFORMATION NECESSARY FOR ALLTEX TO ACCOMPLISH
VERIFICATION OR COLLECTION OF ANY RECEIVABLE. SELLER SHALL PROVIDE THE ORIGINAL
INVOICE AND ANY NECESSARY COPIES REQUIRED BY THE ACCOUNT DEBTOR AND ONE COPY TO
ALLTEX READY FOR MAILING WITH THE REQUIRED POSTAGE TO THE ACCOUNT DEBTOR. ALL
INVOICES SHALL DIRECT THAT PAYMENT BE MADE TO 221 W. CANINO, HOUSTON, TX 77037.
IF REQUESTED BY ALLTEX, SELLER AGREES TO FURNISH EVIDENCE OF SHIPMENT OF THE
RELATED MERCHANDISE, PERFORMANCE OF SERVICES RENDERED AND A WRITTEN ASSIGNMENT
AND BILL OF SALE OF SUCH RECEIVABLE, ALL IN A FORM SATISFACTORY TO ALLTEX,
INCLUDING THE ORIGINAL PURCHASE ORDER FROM THE ACCOUNT DEBTOR. IF REQUESTED BY
ALLTEX, ALL INVOICES FOR RECEIVABLES SHALL PLAINLY STATE ON THEIR FACES IN
LANGUAGE ACCEPTABLE TO ALLTEX THAT THE AMOUNTS PAYABLE THEREUNDER HAVE BEEN SOLD
TO AND ARE PAYABLE DIRECTLY TO ALLTEX. ALLTEX IS HEREBY AUTHORIZED, IRREVOCABLY
AS LONG AS ANY RECEIVABLE REMAINS UNCOLLECTED, TO OPEN, CASH, ENDORSE AND
OTHERWISE COLLECT ALL CHECKS AND OTHER FORMS OF PAYMENT TENDERED IN PAYMENT FOR
EACH RECEIVABLE, IN THE NAME OF AND AS ATTORNEY-IN-FACT FOR SELLER IN THE EVENT
THAT SUCH PAYMENT IS NOT MADE PAYABLE TO ALLTEX. THIS POWER OF ATTORNEY IS
IRREVOCABLE AND COUPLED WITH AN INTEREST. IF PAYMENT IS MADE TO SELLER UNDER ANY
CIRCUMSTANCES, SUCH PAYMENT SHALL BE HELD IN TRUST BY SELLER FOR ALLTEX AND
SHALL NOT BE NEGOTIATED OR COMMINGLED IN ANY WAY WITH ANY OF SELLER'S FUNDS.
SELLER SHALL, WITHIN 24 HOURS AFTER RECEIPT, DELIVER ANY SUCH PAYMENTS TO ALLTEX
IN THE ORIGINAL FORM AS RECEIVED BY SELLER. IN THE EVENT THE FORM OF SUCH
PAYMENT IS MADE PAYABLE TO SELLER, SELLER SHALL ENDORSE SUCH INSTRUMENT TO THE
ORDER OF ALLTEX. SELLER AGREES TO FURNISH ALLTEX. UPON REQUEST ANY AND ALL
PAPERS, DOCUMENTS OR RECORDS OF WHATEVER NATURE RELATED DIRECTLY OR INDIRECTLY.
TO ANY RECEIVABLES.
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10. COLLECTION BY ALLTEX. ALLTEX IS AUTHORIZED, BUT NOT OBLIGATED, TO
COLLECT, SUE FOR AND GIVE RELEASES FOR ALL MONIES OR OTHER ITEMS OF VALUE DUE ON
ALL RECEIVABLES. ALLTEX IS HEREBY SPECIFICALLY AUTHORIZED TO ENDORSE ALL CHECKS,
DRAFTS OR OTHER FORMS FOR TRADEACCEPTANCES TENDERED IN PAYMENT OF RECEIVABLES
AND MADE PAYABLE TO SELLER. SELLER HEREBY WAIVES NOTICE OF NON-PAYMENT OF ANY
RECEIVABLES AS WELL AS ALL OTHER NOTICES, DEMANDS OR PRESENTATIONS FOR PAYMENT
HEREINUNDER, AND SELLER EXPRESSLY AGREES THAT ALLTEX MAY EXTEND OR RENEW FROM
TIME TO TIME THE PAYMENT OF ANY RECEIVABLE WITHOUT NOTICE TO OR CONSENT BY
SELLER. IN THE EVENT IT BECOMES NECESSARY FOR ALLTEX TO EMPLOY AN ATTORNEY AND
INCUR OTHER EXPENSES TO COLLECT ANY RECEIVABLE OR TO ENFORCE ANY OF THE TERMS OF
THIS AGREEMENT BY REASON OF A BREACH OR DEFAULT BY SELLER, SELLER AGREES TO PAY
TO ALLTEX AN AMOUNT EQUAL TO ALL REASONABLE ATTORNEYS' FEES, EXPENSES AND COSTS
INCURRED BY ALLTEX. IN THE EVENT ANY MERCHANDISE REPRESENTED BY RECEIVABLE SHALL
BE RETURNED TO OR REPOSSESSED BY THE SELLER, SUCH MERCHANDISE SHALL BE HELD BY
THE SELLER IN TRUST FOR ALLTEX, SEPARATE AND APART FROM THE SELLER'S OWN
PROPERTY, AND SUBJECT TO ALLTEX'S DIRECTIONS AND CONTROL. WITH RESPECT TO ANY
RETURNED OR REPOSSESSED MERCHANDISE, SELLER SHALL, AT ITS SOLE COST AND EXPENSE,
(A) PROVIDE PROPER STORAGE THEREFORE, (B) MAINTAIN ADEQUATE INSURANCE COVERAGE
THEREON, (C) PREPARE THE SAME FOR SALE,(D) DEFEND TITLE THERETO, (E) TAKE ANY
OTHER ACTION NECESSARY FOR THE PROTECTION THEREOF, (F) FREIGHT AND RELATED
SHIPPING COSTS, AND (G) BE RESPONSIBLE FOR ANY OTHER COSTS OR EXPENSES INCURRED
IN CONNECTION WITH THE FOREGOING, INCLUDING, WITH LIMITATION, ATTORNEYS' FEES.
11. REPRESENTATIONS AND WARRANTIES OF SELLER: SELLER HEREBY REPRESENTS,
WARRANTS AND GUARANTEES TO ALLTEX THAT THE INFORMATION CONTAINED IN THE
APPLICATIONS PREVIOUSLY SUBMITTED BY SELLER, SELLER'S FINANCIAL STATEMENTS AND
ANY OTH ER MATERIALS PREVIOUSLY SUBMITTED IN TAX RETURNS AND PAYMENTS OF ANY
KIND DUE OR OWING HAVE BEEN FILED OR PAID, AND NO PART OF THE PURCHASE PRICE FOR
ANY RECEIVABLE SHALL BE SUED TO PAY ANY WAGE OR SALARY UNLESS APPROPRIATE
WITHHOLDINGS HAVE BEEN DEPOSITED; THAT ASSIGNMENT OF EACH RECEIVABLE WILL
THEREBY INVEST IN ALLTEX'S OWNERSHIP OF EACH RECEIVABLE FREE FROM ANY LIENS,
CLAIMS OR EQUITIES OF THIRD PARTIES; THAT SELLER IS THE SOLE OWNER OF AND HAS
GOOD, FREE AND UNENCUMBERED TITLE TO EACH RECEIVABLE; THAT EXECUTION AND
PERFORMANCE OF THIS AGREEMENT HAS BEEN FULLY AUTHORIZED BY ALL NECESSARY
ACTIONS; THAT NO ASSIGNMENT, PLEDGE, SECURITY INTEREST OR ENCUMBRANCE EXISTS
WITH RESPECT TO ANY RECEIVABLE; THAT EACH RECEIVABLE IS BASED UPON A BONA FIDE
SALE OF GOODS OR SERVICES AND REPRESENTS A COMPLETED DELIVERY OR COMPETED
FURNISHING OF PROPERTY OF SERVICES IN FULFILLMENT OF ALL THE TERMS AND
PROVISIONS OF A FULLY EXECUTED AND UNEXPIRED CONTRACT WITH THE ACCOUNT DEBTOR
AND IS A VALID AND ENFORCEABLE OBLIGATION OF THE ACCOUNT DEBTOR; THAT EACH
ACCOUNT DEBTOR HAS ACCEPTED GOODS OR SERVICES COVERED BY THE APPLICABLE
RECEIVABLE; THAT ALL RECEIVABLES ARE CURRENT, ARE NOT PAST DUE, HAVE NOT BEEN
PAID IN WHOLE OR IN PART, ARE OUTSTANDING IN THE AMOUNTS REFLECTED IN THE
SCHEDULE OF ACCOUNTS AND ARE NOT AND WILL NOT BE SUBJECT TO ANY DISPUTE OR CLAIM
AS TO PRICE, QUALITY, QUANTITY, PHYSIC-AL CONDITION, WORKMANSHIP, DELAY IN
SHIPMENT. SET OFF, COUNTERCLAIM OR OTHER DEFENSE AND THAT NO PRODUCT OR SERVICE
WAS PROVIDED ON A GUARANTEED-SALE BASIS OR BUY-BACK AGREEMENT, AND THE ACCOUNT
DEBTOR HAS NOT AND WILL NOT CLAIM ANY DEFENSE OF ANY KIND OR CHARACTER OR OBJECT
FOR ANY REASON WHATSOEVER AGAINST PAYMENT OF SUCH RECEIVABLE; THAT SELLER'S
CHIEF EXECUTIVE OFFICE AND THE LOCATION WHERE ALL BOOKS AND RECORDS PERTAINING
TO EACH RECEIVABLE ARE KEPT ARE AT THE ADDRESS SHOWN BELOW FOR NOTICE TO SELLER;
AND NO RECEIVABLE IS SUBJECT TO A DISPUTE. SELLER FURTHER REPRESENTS AND
WARRANTS THAT SELLER IS SOLVENT, PROPERLY LICENSED AND AUTHORIZED TO OPERATE THE
BUSINESS UNDER THE TRADE NAME REPRESENTED WITHIN THE MEANING OF ANY AND ALL
APPLICABLE FEDERAL, STATE OR LOCAL LAWS; THAT NO PETITION IN BANKRUPTCY HAS BEEN
FILED BY OR AGAINST SELLER NOR HAS SELLER FILED ANY PETITION SEEKING AN
ARRANGEMENT OF ITS DEBTS OR FOR ANY OTHER RELIEFUNDER THE BANKRUPTCY CODE OF THE
UNITED STATES; THAT NO APPLICATION FOR APPOINTMENT OF A RECEIVER OR TRUSTEE FOR
ALL OR A SUBSTANTIAL PART OF SELLER'S PROPERTY IS PENDING; AND THAT SELLER HAS
MADE NO ASSIGNMENT FOR THE BENEFIT OF CREDITORS. SELLER FURTHER REPRESENTS AND
WARRANTS THAT SELLER IS SOLVENT, PROPERLY LICENSED AND AUTHORIZED TO OPERATE THE
BUSINESS UNDER THE TRADE NAME REPRESENTED WITHIN THE MEANING OF ANY AND ALL
APPLICABLE FEDERAL, STATE OR LOCAL LAWS; THAT NO PETITION IN BANKRUPTCY HAS BEEN
FILED BY OR AGAINST SELLER NOR HAS SELLER FILED ANY PETITION SEEKING AN
ARRANGEMENT OF ITS DEBTS OR FOR ANY OTHER RELIEF UNDER THE BANKRUPTCY CODE OF
THE UNITED STATES; THAT NO APPLICATION FOR APPOINTMENT OF A RECEIVER OR TRUSTEE
FOR ALL OF A SUBSTANTIAL PART OF SELLER'S PROPERTY IS PENDING; AND THAT SELLER
HAS NIADE NO ASSIGNMENTS FOR THE BENEFIT OF CREDITORS. SELLER FURTHER WARRANTS
THAT SELLER DOES NOT OWN, CONTROL OR EXERCISE DOMINION OVER, IN ANY WAY
WHATSOEVER, THE BUSINESS OF ANY ACCOUNT DEBTOR AND THAT THE ACCOUNT DEBTOR IS
SOLVENT TO THE BEST KNOWLEDGE AND INFORMATION OF SELLER. SELLER WILL NOT SELL OR
FACTOR ACCOUNTS EXCEPT TO ALLTEX FOR THE PERIOD OF THIS AGREEMENT. ALL
WARRANTIES MADE BY SELLER IN THIS PARAGRAPH OR ELSEWHERE IN THIS AGREEIVIENT
SHALL BE DEEMED REAFFIRMED BY SELLER UPON EXECUTION OF SUCH SUPPLEMENTAL
SCHEDULE OF ACCOUNTS HERETO. SELLER ACILNOWLEDGES THAT ANY KNOWING OR RECKLESS
ERROR OR OMISSION MADE BY SELLER IN THE REPRESENTATIONS AND WARRANTIES MADE
HEREIN MAY SUBJECT SELLER TO CIVIL AND CRIMINAL PENALTIES, IN ADDITION TO CIVIL
LIABILITY.
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12. RESERVE-PAYMENT WORKSHE@T ALLTEX SHALL PREPARE AND MAIL TO SELLER
MONTHLY RESERVE PAYMENT WORKSHEETS (HEREIN SO CALLED) SHOWING AGGREGATE
OUTSTANDING RECEIVABLES AS OF THE END OF THE APPLICABLE PERIOD, TOTAL
COLLECTIONS DURING THE PERIOD, DEBITS AND CREDITS TO THE RESERVE ACCOUNT,
PRESENT BALANCE OF THE RESERVE ACCOUNT AND DISCOUNTS CHARGED.
13. DISPUTES: NO ASSUMPTION OF LIABILITY ALLTEX, INDEMNIFICATION. SELLER
SHALL IMMEDIATELY NOTIFY ALLTEX OF THE ASSERTION BY ANY ACCOUNT DEBTOR OF ANY
DISPUTE. SELLER HAS HERETOFORE REPRESENTED TO ALLTEXTHAT NO RECEIVABLE IS
SUBJECT TO A DISPUTE. THEREFORE, SELLER SHALL SETTLE, AT ITS OWN EXPENSE, ALL
DISPUTES, SUBJECT TO ALLTEX'S APPROVAL BUT ALLTEX SHALL HAVE THE RIGHT, IN ITS
DISCRETION, TO SETTLE ANY DISPUTE DIRECTLY WITH THE ACCOUNT DEBTOR INVOLVED UPON
SUCH TERMS AS ALLTEX MAY DEEM ADVISABLE AND AT SELLER'S EXPENSE. SELLER
SPECIFICALLY ACKNOWLEDGES AND AGREES THAT ALLTEX IS NOT ASSUMING ANY LIABILITY
OR OBLIGATION OF ANY KIND TO ANY ACCOUNT DEBTOR OR IN ANY WAY RELATING TO THE
RECEIVABLES. SELLER HEREBY REPRESENTS AND WARRANTS TO ALLTEX THAT NO RECEIVABLE,
OR ANY INVOICE, CREDIT APPLICATION, BILL, BILLING MEMORANDUM, CORRESPONDENCE, OR
ANY OTHER DOCUMENTS RELATING TO A RECEIVABLE CONTRACTS FOR OR CHARGES ANYTHING
OF VALUE THAT CONSTITUTES INTEREST IN EXCESS OF THE MAXIMUM NON-USURIOUS RATE
ALLOWED TO BE CHARGED SUCH ACCOUNT DEBTOR PURSUANT TO APPLICABLE LAW. SELLER
ACKNOWLEDGES THAT ALLTEX, AS THE OWNER OF A RECEIVABLE, MAY BE SUBJECT TO A
CLAIM OF USURY BY AN ACCOUNT DEBTOR IN THE EVENT AN INVOICE, CREDIT APPLICATION,
BILL BILLING MEMORANDUM CORRESPONDENCE OR OTHER DOCUNIENT PROVIDES FOR THE
PAYMENT OF INTEREST OR ANY OTHER CHARGE OR FEE WHICH MAY BE DEEMED TO BE
INTEREST, WHICH IS IN EXCESS OF THE MAXIMUM NON-USURIOUS RATE ALLOWED BY
APPLICABLE LAW. IN THE EVENT AN ACCOUNT DEBTOR RAISES A CLAIM OF USURY IN
CONNECTION WITH A RECEIVABLE, SUCH RECEIVABLE SHALL E DEEMED TO BE SUBJECT TO A
DISPUTE AND SUBJECT TO THE CHARGE-BACK PROVISIONS OF THIS AGREEMENT. SELLER
SHALL PROMPTLY INDEMNIFY AND HOLD HARMLESS ALLTEX FROM AND AGAINST ANY AND ALL
CLAIMS, CAUSES OF ACTION COUNTERCLAIMS AND OTHER LIABILITIES AND COSTS OF ANY
KIND (INCLUDING ATTORNEYS' FEES INCURRED BY ALLTEX IN CONNECTION THEREWITH) THAT
MAY BE ASSERTED AGAINST ALLTEX BY ANY ACCOUNT DEBTOR OR OTHERWISE ARISING IN
CONNECTION WITH THE RECEIVABLES, EXCEPT AS MAY BE BASED ON THE ACTS OR OMISSIONS
OF ALLTEX.
14. BOOKS AND RECORDS. SELLER AGREES TO PERMIT ALLTEX ACCESS TO ALL BOOKS
AND RECORDS OF THE SELLER DURING NORMAL BUSINESS HOURS THAT RELATE TO THE
COLLATERAL.
15. TAXES. ALL TAXES AND GOVERNNIENTAL CHARGES IMPOSED WITH RESPECT TO THE
SALES OF THE RELATED MERCHANDISE SHALL BE CHARGED TO SELLER, AND SELLER SHALL BE
LIABLE TO ALL SALES TAXES AND OTHER TAXES DUE IN CONNECTION WITH ANY SALE OR
RENDERING OF SERVICES RESULTING IN A RECEIVABLE.
16. TERMINATION. THIS AGREEMENT SHALL BECOME EFFECTIVE UPON FULL EXECUTION
HEREOF AND SHALL CONTINUE IN FULL FORCE AND EFFECT UNLESS TERMINATED BY SELLER
AS TO RECEIVABLES NOT YET PURCHASED BY DELIVERING WRITTEN NOTICE OF TERMINATION
TO ALLTEX AT LEAST THIRTY (30) DAYS PRIOR TO SUCH TERNIINATION. NOTICE OF
TERMINATION GIVEN TO ALLTEX BY THE SELLER SHALL NOT BE EFFECTIVE UNTIL THIRTY
(30) DAYS AFTER ANY OBLIGATIONS OWING BY THE SELLER TO ALLTEX SHALL HAVE BEEN
PAID IN FULL, WHETHER OR NOT SUCH OBLIGATION IS DUE OR IS TO BECOME DUE IN THE
FUTURE. ALLTEX MAY IMMEDIATELY TERMINATE THIS AGREEMENT AS TO FUTURE
TRANSACTION, WITHOUT NOTICE AND WITHOUT CAUSE WITHIN ITS SOLE DISCRETION, AND
NOTHING CONTAINED IN THIS AGREE\,,IENT SHALL CONSTITUTE AN AGREEMENT OF
COMMITMENT TO PURCHASE ANY ACCOUNTS UNTIL SUCH ACCOUNTS HAVE BEEN APPROVED BY
ALLTEX AND A SUPPLEMENTAL SCHEDULE DESCRIBING SUCH RECEIVABLES HAS BEEN EXECUTED
BY ALLTEX AND SELLER. IN THE EVENT SELLER SHALL HAVE BREACHED ANY PROVISION OF
THIS AGREEMENT OR ANY OTHER AGREEMENT WITH ALLTEX, OR IF THIS AGREEMENT SHALL
HAVE BEEN TERMINATED, THE RESERVE ACCOUNT AND ANY OTHER MONIES, BALANCES OR
CREDITS OTHERWISE DUE BY ALLTEX TO THE SELLER MAY BE RETAINED AND APPLIED BY
ALLTEX FROM TIME TO TIME TO REDUCE SUCH OBLIGATIONS. THE BALANCE IN THE RESERVES
ACCOUNT SHALL NOT BE RELEASED TO SELLER UNLESS ALL OF SELLER'S OBLIGATIONS
HEREUNDER HAVE BEEN PAID IN FULL. SELLER ACKNOWLEDGES THAT IT HAS THE OBLIGATION
HEREUNDER TO SELL TO ALLTEX ONLY RECEIVABLES THAT ARE FREE AND CLEAR OF ANY
DISPUTE. AS PROVIDED IN SECTION 2 (A) HEREOF, ALLTEX HAS THE RIGHT TO CHARGE THE
RESERVE ACCOUNT FOR ANY RECEIVABLES THAT ARE RETURNED AND CHARGED-BACK TO SELLER
AS A RESULT OF A DISPUTE.
ACCORDINGLY, IN THE EVENT ANY RECEIVABLE REMAINS UNCOLLECTED BY ALLTEX AT THE
DATE OF TERMINATION HEREOF,, THE RESERVE ACCOUNT SHALL NOT BE RELEASED TO SELLER
UNTIL SUCH TIME AS ALLTEX HAS DETERMINED, IN ITS SOLE DISCRETION, THAT THERE ARE
NO UNCOLLECTED RECEIVABLES SUBJECT TO A DISPUTE. LIKEWISE, THE SECURITY INTEREST
GRANTED TO ALLTEX BY SELLER PURSUANT TO SECTION 8 HEREOF SHALL BE RELEASED BY
ALLTEX UPON DETERMINATION BY ALLTEX, IN ITS SOLE DISCRETION, THAT NO UNCOLLECTED
RECEIVABLE IS SUBJECT TO A DISPUTE. TERMINATION OF THIS AGREEMENT SHALL NOT
EFFECT THE RIGHTS AND OBLIGATIONS OF THE PARTIES ACCRUING WITH RESPECT TO PRIOR
TRANSACTIONS.
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17. WAIVER. ANY FAILURE BY ALLTEX TO EXERCISE ANY OF ITS RIGHTS HEREUNDER,
SHALL NOT BE DEEMED TO BE A WAIVER BY ALLTEX OF SUCH OR ANY OTHER RIGHTS, NOR IN
ANY MANNER IMPAIR THE SUBSEQUENT EXERCISE OF THE SAME OR ANY OTHER RIGHT, AND
ANY WAIVER BY ALLTEX OF ANY DEFAULT SHALL NOT CONSTITUTE A WAIVER OF ANY
SUBSEQUENT DEFAULT.
18. CHOICE OF LAW. THIS AGREEMENT SHALL CONSTRUED ACCORDING TO THE LAWS OF
THE STATE OF TEXAS.
19. ENTIRE AGREEMENT. THIS AGREEMENT REPRESENTS THE ENTIRE AGREEMENT
BETWEEN THE PARTIES, AND MAY NOT BE AMENDED OR MODIFIED EXCEPT BY WRITTEN
INSTRUMENT EXECUTED BY ALLTEX AND SELLER. THIS AGREEMENT SUPERSEDES AND REPLACES
ANY PRIOR AGREEMENT AMONG THE PARTIES, ORAL OR WRITTEN.
20. SUCCESSOR AND ASSIGNS. THIS AGREEMENT SHALL BE BINDING UPON AND INURE
TO THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE ADMINISTRATORS. LEGAL
REPRESENTATIVES. SUCCESSORS AND ASSIGNS.
21. SEVERABILITY. IF ANY PROVISION OF THIS AGREEMENT SHALL, FOR ANY REASON,
BE HELD TO VIOLATE AND APPLICABLE LAW, THEN THE REMAINING PORTION OF THIS
AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT.
22. HEADINGS, CONSTRICTION. THE HEADINGS CONTAINED IN THIS AGREEMENT ARE
FOR REFERENCE PURPOSES ONLY AND SHALL NOT MODIFY OR AFFECT THE TERMS OF THIS
AGREEMENT IN ANY MANNER.
23. SATURDAY, SUNDAY OR LEGAL HOLIDAY. IF ANY DAY PROVIDED IN THIS
AGREEMENT FOR THE PERFORMANCE OF ANY OBLIGATION SHOULD FALL ON A SATURDAY,
SUNDAY OR LEGAL HOLIDAY. THE COMPLIANCE WITH SUCH OBLIGATION OR DELIVERY SHALL
BE DEEMED ACCEPTABLE ON THE NEXT BUSINESS DAY FOLLOWING SUCH DAY.
24. NOTICES. - ANY NOTICE, DEMAND OR REQUEST PERMITTED, REQUIRED OR DESIRED
TO BE GIVEN UNDER THIS AGREEMENT SHALL BE IN WRITING AND SHALL BE DEEMED
EFFECTIVELY GIVEN WHEN ACTUALLY HAND DELIVERED OR WHEN SENT BY UNITED STATES
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, OR SENT
BY PRIVATE, RECEIPTED CARRIER GUARANTEEING SAME DAY OR NEXT-DAY DELIVERY,
ADDRESSED AS FOLLOWS:
IF TO ALLTEX:
ALL TEX FINANCIAL, INC.
221 W. CANINO
HOUSTON, TEXAS 77037
IF TO SELLER:
AMERICANA PUBLISHING, INC.
303 SAN MATEO NE #104A
ALBUQUERQUE, NM 87108
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25. DETERMINATION OF PURCHASE PRICE. THE PURCHASE PRICE OF THE RECEIVABLES
HAS BEEN DETERMINED BY THE SELLER AND REPRESENTS THE FAIR MARKET VALUE THEREOF,
AFTER DUE CONSIDEI;LATION HAS BEEN GIVEN TO THE NATURE OF THE RECEIVABLE, THE
PROBABILITY OF PROMPT COLLECTION THEREOF, THE CREDIT WORTHINESS OF THE ACCOUNT
DEBTOR, THE PAYMENT HISTORY OF THE ACCOUNT DEBTOR AND OTHER ECONOMICAL FACTORS
RELATIVE TO THE RECEIVABLES. FURTHER, IN ARRIVING AT THE PURCHASE PRICE,
CONSIDERATION HAS BEEN GIVEN TO SERVICES RENDERED AND SERVICES THAT WILL BE
RENDERED IN THE FUTURE BY ALLTEX IN CONNECTION WITH CREDIT INVESTIGATIONS OF
ACCOUNT DEBTOR, SUPERVISING AND ASSUMPTION OF CERTAIN CREDIT RISKS. THE PARTIES
HERETO ACKNOWLEDGE THAT THE PURCHASE OF THE RECEIVABLES BY ALLTEX CONSTITUTES AN
OUTRIGHT CONVEYANCE BY THE SELLER TO ALLTEX. NOTHING CONTAINED HEREIN, NOR ANY
COURSE OF DEALING IN THE FUTURE, SHALL BE CONSTRUED TO BE ANYTHING OTHER THAN AN
OUTRIGHT PURCHASE AND SALE OF SUCH RECEIVABLES. ALL RIGHT, TITLE AND INTEREST OF
THE SELLER HAS BEEN CONVEYED TO ALLTEX AND SUCH TRANSACTION IS NOT SUBJECT TO A
SECURITY INTEREST IN THE RECEIVABLES AND THE PURCI-LASE PRICE PAID TO SELLER BY
ALLTEX CONSTITUTES CONSIDERATION FOR THE ACQUISITION OF THE RECEIVABLES AND
UNDER NO CIRCUMSTANCES SHALL BE CONSTRUED AS A LOAN AND NO CONSIDERATION HEREIN
SET FORTH IS FOR THE USE, FORBEARANCE OR DETENTION OF MONEY. NOTHING CONTAINED
HEREIN SI-LKLL BE CONSTRUED AS TO REQUIRE THE PAYMENT OF INTEREST; HOWEVER,
SHOULD A COURT OF COMPETENT JURISDICTION RULE THAT ANY CONSIDERATION PAID
HEREUNDER ARE IN FACT OR IN LAW TO BE TREATED AS INTEREST, IN NO EVENT SHALL
SELLER BE OBLIGATED TO PAY THAT INTEREST AT A RATE IN EXCESS OF THE NL@IMUM
AMOUNT PERMITTED BY LAW, AND ALL AGREEMENTS, CONDITIONS OR STIPULATIONS
CONTAINED HEREIN, IF ANY, WHICH MAY IN ANY EVENT OR CONTINGENCY WHATSOEVER
OPERATE TO BIND, OBLIDAGE, OR COMPEL SELLER TO PAY A RATE OF INTEREST EXCEEDING
THE MAXIMUM RATE OF INTEREST PERMITTED BY LAW SHALL BE WITHOUT BINDING
FORCE OR EFFECT AT LAW OR IN EQUITY TO THE EXTENT ONLY OF THE EXCESS OF INTEREST
OVER SUCH MAXIMUM RATE OF INTEREST PERMITTED BY LAW. ALSO IN SUCH EVENT, ALLTEX
MAY "SPREAD" ALL CHARGES CHARACTERIZED AS INTEREST OVER THE ENTIRE TERM OF ALL
TRANSACTIONS WITH SELLER AND WILL REFUND TO SELLER THE EXCESS OF ANY PAYMENTS
MADE OVER THE HIGHEST LAWFUL RATE. IT IS THE INTENTION OF THE PARTIES HERETO
THAT IN THE CONSTRUCTION AND INTERPRETATION OF THIS AGREEMENT, THE FOREGOING
SENTENCE SHALL BE GIVEN PRECEDENCE OVER ANY OTHER AGREEMENT, CONDITION OR
STIPULATION HEREIN CONTAINED WHICH IS IN CONFLICT WITH SAME.
26 JOINT AND SEVERAL OBLIGATIONS. IF MORE THAN ONE PARTY IS EXECUTING THIS
AGREEMENT AS SELLER, EACH PARTY AGREES THAT ITS OBLIGATIONS HEREUNDER ARE JOINT
AND SEVERAL, AND THAT ITS OBLIGATIONS SHALL BE NOT RELEASED, DIMINISHED,
IMPAIRED OR AFFECTED BY THE OCCURRENCE OF ANY ONE OR MORE OF THE FOLLOWING
EVENTS, ALL OF WHICH MAY OCCUR WITH OUT NOTICE TO OR CONSENT OF ANY OTHER
SELLER:
(A) ANY RELEASE, PARTIAL RELEASE, SUBORDINATION OR LOSS OF ANY
SECURITY, GUARANTY OR COLLATERAL AND ANY TIME EXISTING IN CONNECTION WITH
THE OBLIGATIONS CONTAINED HEREIN;
(B) THE DEATH, INSOLVENCY, BANKRUPTCY, DISABILITY OR INCAPACITY OF ANY
SELLER GUARANTOR, OR ANY OTHER PARTY NOW OR HEREAFTER OBLIGATED HEREON;
(C) ANY RENEWAL, EXTENSION, AND/OR REARRANGEMENT OF ANY PORTION OF THE
OBLIGATIONS CONTAINED HEREIN;
(D) ANY NEGLECT, DELAY, OMISSION, FAILURE OR REFUSAL BY ALLTEX TO TAKE
OR PROSECUTE ANY ACTION FOR THE COLLECTION OF THE OBLIGATIONS PROVIDED
HEREIN;
(E) THE UNENFORCEABILITY FOR ANY REASON OF ALL OR ANY PART OF THE
OBLIGATIONS CONTAINED HEREIN AGAINST SELLER, OR OTHER PARTY;
(F) THE FINDING OF ANY PAYMENT BY ANY SELLER TO CONSTITUTE A
PREFERENCE UNDER BANKRUPTCY OR SIMILAR DEBTOR RELIEF LAW
(G) ANY RELEASE OR PARTIAL RELEASE OF LIABILITY OF ANY SELLER, OR
OTHER PARTY; AND
(H) ANY OTHER ACTION THAT MIGHT IMPAIR RIGHTS IN THE NATURE OF
CONTRIBUTION OR SUBROGATION THAT ANY SELLER MIGHT OTHERWISE HAVE.
8
<PAGE>
27. TEXAS LAW TO APPLY - VENUE. THIS AGREEMENT HAS BEEN EXECUTED AND
DELIVERED IN AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE GOVERNED BY THE LAWS
OF THE STATE OF TEXAS AND OF THE UNITED STATES OF AMERICA. FOR PURPOSES OF ANY
SUIT RELATING TO THIS AGREEMENT, ALLTEX AND SELLER SUBMIT THEMSELVES TO THE
@SDICTION OF ANY COURT SITTING IN THE STATE OF TEXAS AND FURTHER AGREE THAT
VENLTE IN ANY SUIT ARISING OUT OF THIS AGREEMENT OR ANY VENUE SHALL BE FIXED IN
HARRIS COUNTY, TEXAS. FINAL JUDGMENT IN ANY SUIT SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN ANY JURISDICTION WITH IN OR WITHOUT THE UNITED STATES OF AMERICA, BY
SUIT ON THE @MENT, A CERTIFIED OR EXEMPLIFIED COPY OF WHICH SHALL BE CONCLUSIVE
EVIDENCE OF SUCH LIABILITY.
28. GUARANTEED MINIMUM VOLUME. SELLER SPECIFICALLY AGREES TO, ANYTHING TO
THE CONTRARY NOTWITHSTANDING, FACTOR RECEIVABLES IN TOTAL DOLLAR VALUE EQUAL TO
OR GREATER THEN $50,000.00(HEREAFTER REFERRED TO AS "MINIMI-TM VOLUME") DURING
THE TERM OF THIS AGREEMENT AS DEFINED IN PARAGRAPH 16. SHOULD SELLER FACTOR LESS
THAN THE MIND" VOLUME, THE DISCOUNT RATE APPLICABLE TO 20% PAYABLE TO ALLTEX
SHALL APPLY.
29. NO OBLIGATION TO PURCHASE FURTHER RECEIVABLES. SELLER SPECIFICALLY
ACKNOWLEDGES AND AGREES THAT, ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING,
ALLTEX HAS THE RIGHT TO APPROVE OR REJECT ANY OR ALL FUTURE ACCOUNTS RECEIVABLE
PROPOSED FOR SALE UNDER THIS AGREEMENT IN ITS SOLE DISCRETION, AND NO COURSE OF
CONDUCT OR PRIOR COURSE OF DEALING SHALL ESTABLISH ANY COMMITMENT, OBLIGATION OR
AGREEMENT TO PURCHASE FUTURE ACCOUNTS RECEIVABLE.
EXECUTED THIS 9th Day of February, 2001.
ALL TEX FINANCIAL, INC.
BY: /s/ George R. Speaks
NAME: GEORGE R. SPEAKS
TITLE: PRESIDENT
AMERICANA PUBLISHING, INC.
BY: /s/ George Lovato, Jr.
NAME: George Lovato, Jr.
TITLE: PRESIDENT
SUBSCRIBED AND SWORD TO BEFORE ME THIS 12 DAY OF FEBRUARY 2001
/S/ Dora R. Esquibel
SEAL
NOTARY PUBLIC FOR THE STATE OF TEXAS
9
<PAGE>
ALL TEX FINANCIAL, INC., AND AMIERICANA PUBLISHING, INC.
Paragraph 8 of the aforementioned Purchase and Sale Agreement dated February 9,
200 1, by and between All Tex Financial, Inc., and Americana Publishing, Inc.,
shall be amended to reflect the addition of subparagraph (H) to paragraph 8, to
read as follows:
"(H) Fifty Thousand (50,000) shares of Rule 144 Restricted common stock in
Americana Publishing, Inc."
ALL TEX FINANCIAL, INC.
BY: /s/ George R. Speaks
George R. Speaks, President
AMERICANA PUBLISHING, INC.
By: /s/ George Lovato, Jr.
George Lovato, Jr., Chairman and CEO
10
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE> EX-27
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>
<ARTICLE> 5
<TABLE>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> JAN-01-2001
<CASH> 20,027
<SECURITIES> 30,000
<RECEIVABLES> 24,747
<ALLOWANCES> 0
<INVENTORY> 20,327
<CURRENT-ASSETS> 151,597
<PP&E> 667,301
<DEPRECIATION> 92,399
<TOTAL-ASSETS> 726,499
<CURRENT-LIABILITIES> 71,274
<BONDS> 0
<PREFERRED-MANDATORY> 0
<PREFERRED> 0
<COMMON> 7,822
<OTHER-SE> 647,403
<TOTAL-LIABILITY-AND-EQUITY> 726,499
<SALES> 56,727
<TOTAL-REVENUES> 56,727
<CGS> 47,781
<TOTAL-COSTS> 2,306,330
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (11,166)
<INCOME-PRETAX> (2,238,437)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,238,437)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,238,437)
<EPS-BASIC> 0.410
<EPS-DILUTED> 0.410
</TABLE>
</TEXT>
</DOCUMENT>
</SUBMISSION>