<SUBMISSION-INFORMATION-FILE>
<TYPE> 10KSB/A
<DOCUMENT-COUNT>
<SROS> NONE
<FILER>
<CIK> 0001081751
<CCC> #MD7FUEK
</FILER>
<PERIOD> 12/31/01
<DOCUMENT>
<TYPE> 10KSB/A
<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, 2001.
( ) 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 $0.001 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:$2,450,971
State the aggregate market value of the voting and non-voting common equity held
by 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 March 1, 2002: $9,324,955. As of March 1, 2002
there were 15,521,571 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
AMERICANA PUBLISHING, INC. FORM 10-KSB
INDEX
PART I
Item 1. DESCRIPTION OF BUSINESS
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
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
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K
SIGNATURES
PART I
This Annual Report on Form 10-KSB contains "forward-looking statements". These
forward-looking statements are based on our current expectations, assumptions,
estimates and projections about our business and our industry. Words such as
"believe," "anticipate," "expect," "intend," "plan," "will," "may," and other
similar expressions identify forward-looking statements. In addition, any
statements that refer to expectations, projections or other characterizations of
future events or circumstances are forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those reflected in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, the following:
* whether or not we can raise the capital necessary to implement our business
plan and fund future operations,
* whether or not the market for our products continues to grow,
* whether or not the acquisitions we have made will be profitable,
* improvements in the products of our competitors,
* changing economic conditions, and other factors, some of which will be outside
our control. You are cautioned not to place undue reliance on these
forward-looking statements, which relate only to events as of the date on which
the statements are made. We undertake no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that arise after
the date hereof. You should refer to and carefully review the information in
future documents we file with the Securities and Exchange Commission.
Item 1. DESCRIPTION OF BUSINESS
THE COMPANY
From October 1996 until April 1997, the predecessor of Americana Publishing,
Inc. ("Americana" or the "Company") operated as a development stage division of
B.H. Capital Limited engaging in publication design research, industry and
competition research and demographic research. During this period, the concept
of integrated publishing was developed. Americana was incorporated under the
laws of the State of Colorado on April 17, 1997.
Americana is a vertically integrated multi-media publishing company whose
primary business is publishing and selling audio books, print books and
electronic books. Americana believes that consumers today desire audio books,
e-books, CD-ROMs or a downloadable digital file in addition to traditional print
books. Americana believes that of the approximately 17,000 publishers in the
United States, many are unable or choose not to publish manuscripts in
alternative formats. Through Americana's owned and operated websites, consumers
are offered approximately 500,000 multimedia products.
Americana publishes books in a variety of genres, including mystery, western,
business development, personal development, spiritual and children's
publications. Americana also sells textbooks, music, and artwork and jewelry.
Americana's products are sold to consumers primarily through telemarketing and
via the Internet through a series of linked websites. Although each freestanding
website is specifically designed for the sale of a highly defined group of
products, the websites are identified by a common denominator, the word
"Americana", and each website offers a link to Americana's other websites.
Americana currently maintains four linked websites, americanabooks.com,
americanasongs.com, americanatextbooks.com, and americanaartmart.com. Americana
believes that its website design encourages consumers to visit the linked sites,
which increases the possibility of sales, and also allows each site to be
registered with various search engines, resulting in the possibility of
increased traffic. The Company also publishes a catalog of its audio books,
which is continuously mailed to potential wholesale book buyers, bookstores and
libraries.
Through its division, Corporate Media Group, Inc., Americana packages,
duplicates, replicates and fulfills orders for audio cassettes, VHS tapes, CDs
and DVDs for sale to distributors, wholesalers, retailers and the general
public. Corporate Media Group, Inc. also provides studio space for pre and post
production audio and video recording.
AUDIO BOOKS
Americana currently has 65 audio book titles available for sale.
All 65 Americana audio book titles are available for sale on the
americanabooks.com website. Consumers can listen to a 2-minute sample of many of
the Company's audio books on it's website, and the Company has also published an
"AUDIO BOOK SAMPLER TAPE" that highlights the first 2-minutes of 30 of its audio
books. The sampler tape enables listeners to get a flavor for the books as well
as to see a sample of the Company's packaging. Americana believes that it
produces the finest audio book capsule available. The packaging is different
from that of many of it's competitors because it is not made of cardboard and
is, therefore, extremely durable.
In June 2001 during Book Expo America, Americana was chosen by the Board members
of the Audio Publishing Association as the Audie Award Recipient for the "Best
New Audio Book Publisher for 2001". Also in 2001, Americana narrator Charlie
O'Dowd was honored as the recipient of the 2001 Audioworld Golden Headset Award
"Best Abridged Reader of the Year". Other well-known nominees for this award
were actors Burt Reynolds, Tony Roberts, and Arte Johnson.
Americana sells its audio books in the United States to approximately 17,000
retail stores and approximately 15,000 libraries as well as to large truck stop
distributors including BARJAN, KSG, and Audio Adventures. Americana has also
established accounts to include database and order processing agreements with
Baker and Taylor, Advanced Marketing Services, Ingram Book Company, Anderson
News Company, Books-A-Million/American Wholesale Book Company, Barnes and Noble,
BJ's, Brodart Company, Hastings, Lodes Tone, Penton Overseas, Professional
Media, and Recorded Books. Management believes that the quality and quantity of
these retailers serves to enhance Americana's sales. Currently, Americana's
audio books are published on audio tapes, however, the Company has published one
audio book in CD format and intends to increase its production of books in CD
form.
Invoiced sales of audio books during 2001 totaled $56,000 .
PRINT BOOK DIVISION
During 2001, Americana published and introduced its first print book, The
Cowboy. The Cowboy is a childrens book that includes both a print book and audio
tape. Four additional works of fiction, The Killing Cards, Ground Lions, Beloved
Leah, and It Is I Joseph, were available for shipping in January 2002. Americana
expects to publish and introduce a total of approximatley 10 titles during
2002.Further Americana also is developing its first e-book.
ELECTRONIC BOOKS
Americana is currently developing its first electronic book.
DUPLICATION SERVICES
Americana acquired Corporate Media Group, Inc. in June 2001. Corporate Media
Group, Inc. duplicates the Company's audiocassette tapes and/or CDs, assembles
and shrink-wraps the product and ships the product directly to the customer.
COMPETITION
Currently, Amazon.com and BarnesandNoble.com dominate sales of multimedia
publications over the Internet. Americana believes that price, rather than
delivery speed or product availability, sets the parameters for competition
between these retailers. Their websites emphasize popular products, leaving the
consumer to search for unadvertised and lesser known authors.
At this time Americana does not represent a significant competitive presence in
the book publishing and selling industry. Americana is seeking to raise its
profile in a number of ways, including giving higher visibility to lesser known
authors, providing easier ways to find products on its websites by use of its
specially designed search engine, providing faster delivery of products sold,
and providing competitive pricing whenever possible. Americana is also seeking
niche markets. The Company has produced an audio drama of the NIV New Testament,
which it intends to make available for rent or purchase at truck stops.
Americana is also focusing on publishing book series, which the Company believes
are popular with audio book customers. The Company currently publishes series
works by authors Elaine Viets, Leslie Glass, Cynthia Davis and Lou Campanozzi.
EMPLOYEES
Americana employs 8 full time employees and its subsidiary, Corporate Media
Group, Inc. presently employs 20 employees.
Item 2. DESCRIPTION OF PROPERTY
The Company's principal offices are located at 303 San Mateo NE, Suite 104A,
Albuquerque, New Mexico 87108. The premises are leased and the condition of the
premises is good. The lease is for a term of 3 years, and will expire on
December 31, 2002. The rent is $3,000 per month. The Company is expanding its
operations and has leased additional office and new warehouse space. Leasehold
improvements are currently underway. The term of the lease is 4 years, and
monthly rent starts at $2,000 per month, escalating over the term of the lease
to $5,000 a month. Corporate Media Group, Inc. occupies approximately 45,000
square feet in Cleveland, Tennessee, which is rented from Rick Durand, a member
of the Company's board of directors. Mr. Durand is reimbursed by the Company for
the rental costs. The monthly rent for this facility is $23,000.00. The
condition of the leased premises is good.
Item 3. LEGAL PROCEEDINGS
On occasion, Americana may be named as a party to various claims and legal
proceedings arising out of the normal course of its business. The Company is not
currently a party to any legal proceedings, with the exception of an action
filed by the Company in the United States District Court for the district of New
Mexico during the first quarter of 2001 against Mr. Raul Rodriguez, its former
securities counsel. The action was filed to recover certain shares of restricted
common stock issued to Mr. Rodriguez in connection with his representation of
the Company. The controversy was settled favorably for the Company during the
1st quarter of 2002, permitting the Company to recover a substantial number of
shares.
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 2001.
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 table represents the closing high and low bid information of sales of
the Company's common stock during the last two fiscal years. The quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.
2001 High Low
First Quarter .63 .28
Second Quarter .50 .22
Third Quarter .55 .32
Fourth Quarter .54 .18
2000
First Quarter 3.56 3.00
Second Quarter 3.38 2.81
Third Quarter 3.19 1.31
Fourth Quarter 2.00 .38
There were approximately 148 holders of common stock as of December 31, 2001.
The Company has not paid any dividends in the past and currently has no plans to
pay dividends in the foreseeable future.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
PLAN OF OPERATION
The Company currently has limited internal and external sources of liquidity.
Over the next 12 months, the Company plans to satisfy its cash requirements from
revenues earned through sales of its products, sales of its securities and by
obtaining, if it is able to do so, a long-term loan. Without financing, it may
not be possible for the Company to meet working capital requirements and future
capital expenditures.
During 2001, the Company privately sold convertible notes to two of its existing
shareholders and received $375,000. The Company is currently completing another
private placement of convertible notes pursuant to which it expects to receive
net proceeds of approximately $150,000.
The Company is attempting to refinance equipment owned by Corporate Media Group,
Inc. with a long-term loan in the amount of $600,000 to $800,000 in order to
consolidate some of its current liabilities. The Company is not certain that it
will be able to obtain this financing.
As part of its business plan, the Company plans to use its stock to acquire
other book publishing companies and list their book titles on its website. If it
is successful in doing this, the Company anticipates that these enterprises may
account for substantial future revenues. During the 2001 fiscal year, the
Company acquired Trine Publications, Inc. and Hollis Books, LLC using this
strategy. As of December 31, 2001, Americana had received communications from 20
different publishing enterprises expressing an interest in a transaction of this
nature. Management has been evaluating these candidates and, thus far, has
issued three letters of intent. Because the Company's stock is not actively
traded, however, it may not be possible to complete these acquisitions as
planned.
At this time, the Company has no material commitment for capital expenditures
and does not expect a significant change in the number of its employees.
There are no known trends, events or uncertainties that are expected to have a
material impact on the net sales and income from Americana's continuing
operations.
The Company's sales are not seasonal.
RESULTS OF OPERATIONS
2001 Fiscal Year Compared to 2000 Fiscal Year
Revenues for the year ended December 31, 2001 were $2,451,000 million,
representing an increase of over 43x the $56,000 thousand in revenues for the
year ended December 31, 2000. The increase in revenues resulted primarily from
the acquisition of Corporate Media Group, Inc.
Cost of sales were $1,981,098 or 80% of revenue for the year ended December 31,
2001 compared to $47,781 or 85% of revenue for the year ended December 31, 2000.
The increase in cost of sales resulted from the acquisition of Corporate Media
Group, Inc.
Compensation expense increased from $1,685,000 for the year ended December 31,
2000 to $3,531,000 for the year ended December 31, 2001. This increase resulted
from the issuance of stock for services and professional fees.
Also during 2001 the decision was made to expense the development cost of the
production of audio books. This amounted to $188,000. Of the total operating
expense of $5,680,000, a majority of it, $3,952,000 was for non-cash expense
(Compensation, depreciation, goodwill and audio production cost).
Capital Expenditures
During 2001, Americana spent approximately $11,734 for capital equipment
including audio equipment, computer equipment, computer software, and
furnishings.
Acquisition
As part of the "Integrated Publishing Plan" the Company anticipates it will
acquire small sponsored book publishing companies and list their book titles on
its website as well as list book titles not owned by Americana or any of its
subsidiaries, that complement and enhance the consumer appeal of the catalogue
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 be transacted with the use of the Company's common
stock. As of December 31, 2001, Americana had received 20 communications from
various quality publishing enterprises that had expressed interest in a
potential sale transaction. Americana has been actively evaluating these
businesses and issued three 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. As of December 31, 2001,
negotiations had been completed and a definitive Purchase and Sale of Assets had
been agreed upon with Hollis Books, LLC, Trine Publications, Inc., Corporate
Media Group, Inc., and Visual Energy Studios. These acquisitions were completed
during the calendar year 2001.
The Company began negotiations in May 2001 to acquire by purchase a privately
held company located in Chattanooga, Tennessee, engaged in the business of
duplicating video and audiotapes on a contract basis. Negotiations were
successful and a definitive agreement for Americana Publishing, Inc., to
purchase all of the outstanding shares of Corporate Media Group, Inc., was
executed by both parties on July 16, 2001. All documentation was prepared
relating to the share purchase and Articles of Exchange were filed with the
Secretary of State of the State of Colorado finalizing the transaction on August
28, 2001.
The Company additionally intends to acquire a heat set web press company and
book binding company. The Company is in negotiation with three potential
candidates. These enterprises will continue to complete the 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. The Company also has access to Visual Energy Studios and is
actively utilizing their capabilities and facilities.
MARKET VALUE
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
----------
3,085,500
==========
Part II. Other Information.
Item 1. Legal Proceedings
The Company is involved in certain legal proceedings and claims which arise in
the normal course of business. Management does not believe that the outcome of
these matters will have a material effect on the Company's financial position or
results of operations.
Item 2. Changes in Security - None
Item 3. Defaults upon Senior Securities - None
Item 7. FINANCIAL STATEMENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Americana Publishing, Inc. and subsidiary
We have audited the accompanying consolidated balance sheet of Americana
Publishing, Inc. and subsidiary as of December 31, 2001, and the related
consolidated statements of operations, shareholder's equity (deficit), and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Americana
Publishing, Inc. and subsidiary as of December 31, 2001, and the results of
their operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations,
and its total current liabilities exceed its total current assets. This raises
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Singer Lewak Greenbaum and Goldstein LLP
Los Angeles, CA
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Americana Publishing, Inc.
Albuquerque, New Mexico
We have audited the accompanying statements of operations, shareholder's
deficit, and cash flows of Americana Publishing, Inc. for the year ended
December 31, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial 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 results of Americana Publishing, Inc.'s operations
and its cash flows for the year ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of America.
NULL LAIRSON CPA, PC
Houston, TX
March 29, 2001
Americana Publishing, Inc. and Subsidiary
Consolidated Balance Sheet
As of December 31, 2001
ASSETS
Current Assets 2001
-------------
Cash and cash equivalents $ 48,208
Accounts Receivable, less allowance for doubtful
accounts of $98,500 53,512
Accounts Receivable - factored 702,075
Inventory 389,528
Prepaid and other current assets 5,734
Total Current Assets $ 1,199,057
Property and Equipment, net 1,945,413
-------------
TOTAL ASSETS $ 3,144,470
=============
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current Liabilities
Book overdraft $ 56,248
Line of Credit 203,449
Accounts Payable 2,635,990
Accrued expenses 127,709
Note Payable - factor 702,075
Notes payable - related party 96,397
Convertible debt - related parties 387,500
Current portion of capital lease obligations 200,629
-------------
Total current liabilities 4,409,997
Capital lease obligations, less current portion 278,179
-------------
Total liabilities 4,688,176
Commitments and Contingencies
Shareholder's deficit
Preffered stock, no par
20,000,000 shares authorized
no shares issued and outstanding -
Common stock, $0.001 par value
100,000,000 shares authorized -
14,636,570 shares issued and outstanding 14,637
Additional Paid-In Capital 8,691,812
Accumulated deficit (10,250,155)
-------------
Total shareholder's deficit (1,543,706)
-------------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICT $ 3,144,470
=============
The Accompanying Notes are an Integrated Part of these Financial Statements
Americana Publishing, Inc. and Subsidiary
Consolidated Statement of Operations
Year Ending Year Ending
December 31, 2001 December 31, 2000
----------------- -----------------
Revenues $ 2,450,971 $ 56,727
Cost of goods sold 1,981,098 47,781
---------------- -----------------
Gross Profit 469,873 8,946
---------------- -----------------
Operating Expenses
Compensation 3,531,159 1,685,302
Depreciation and Amortization 250,794 66,242
Selling, general, and administrative 804,547 506,630
Impairment of goodwill 905,733 -
Impairment of audio production costs 188,215 -
----------- -----------
Total Operating Expenses 5,680.448 2,258,174
----------- -----------
Loss from operations (5,210,575) (2,249,228)
Other income (expense)
Loss on sale of automobile (16,838) -
Financing expense related to
convertible debt (385,000) -
Other expense (24,252) -
Interest expense (138,996) (375)
Interest Income 328 11,166
----------- -----------
Total other income (expense) (564,758) 10,791
----------- -----------
Net Loss $ (5,775,333) $ (2,238,437)
=========== ===========
Basic and diluted loss per share $ (0.52) $ (0.41)
=========== ===========
Basic and diluted weighted- average
shares outstanding 11,159,259 5,483,141
=========== ===========
The Accompanying Notes are an Integrated Part of these Financial Statements
Americana Publishing, Inc.and Subsidiary
Consolidated Statement of Shareholder's Equity (Deficit)
For the Years Ended December 31, 2000
and December 31, 2001
<TABLE>
<CAPTION> Additional
Common Stock Paid-In Retained
Shares - Amount Capital Earnings Total
<s> <c> <c> <c> <c>
Balance December 31, 1999 4,283,250 $ 4,283 $ 3,043,648 $ (2,236,385) $ 811,546
Issuance of common stock in
exchange for cash 655,000 655 651,845 652,500
Exercise of stock options 600,000 600 144,400 145,000
Issuance of common stock to outside
consultantsin exchange for services
rendered 201,000 201 201,299 201,500
Issuance of common stock to
employees and members of the Board
of Directors for services rendered 1,773,000 1,773 674,327 676,100
Issuance of common stock in
exchange for book inventory
rights and audio equiptment 310,146 310 310,936 311,246
Stock option expense 95,770 95,770
Net Loss (2,238,437) (2,238,437)
------------ ---------- ------------ -------------- -----------
Balance, December 31,2000 7,822,396 $ 7,822 $ 5,122,225 $ (4,474,822) $ 665,225
============ ========== ============ ============== ===========
Issuance of common stock in
exchange for cash 837,647 838 174,162 175,000
Issuance of common stock in
exchange for book rights 10,000 10 1,490 1,500
Issuance of common stock for
accquisition of CMG 1,017,827 1,018 406,113 407,131
Issuance of common stock to outside
consultants in exchange for services
rendered 1,331,500 1,332 429,383 430,715
Issuance of common stock to
employees and members of the
Board of Directors for services
rendered 3,659,200 3,659 1,459,951 1,463,610
Compensation expense to members
of the Board of Directors relating
to stock options granted below
the fair market value 461,250 461,250
Compensation expense to non-employees
relating to stock options granted below
the fair market value 294,196 294,196
Financing expense relating to
beneficial conversion feature 385,000 385,000
Cancellation of common stock
issued to employees (42,000) (42) (41,958) (42,000)
Net Loss (5,775,333) (5,775,333)
------------ ------------ ------------ ------------ ------------
Balance, December 31, 2001 14,636,570 $ 14,637 $ 8,691,812 $ (10,250,155) $ (1,543,706)
============ ============ ============ ============ ============
Americana Publishing, Inc. and Subsidairy
Consolidated Statement of Cash Flows
Year Ended Year Ended
December 31, 2001 December 31,2000
Cash Flows From Operating Activities:
Net Loss $ (5,775,333) $ (2,238,437)
Adjustments to Reconcile Net Loss to
net cash used in operating activities
Depreciation and amortization 250,794 66,242
Allowance for doubtful accounts 96,000 189,530
Issuance of common stock to outside
consultants in exchage for services
rendered 430,715 -
Issuance of common stock to employees
and members of the Board of Directors
in exchange for services rendered 1,463,610 973,370
Compensation expense to members of the
Board of Directors relating to stock
options granted below the fair market
value 461,250 -
Compensation expense to non-employees
for stock options issued below the
fair market value 294,196 -
Cancellation of common stock issued to
employees (42,000) -
Impairment of goodwill 905,733 -
Impairment of audit production costs 188,215 -
Financing expense related to convertible
debt 385,000 -
Loss on sale of automobile 16,838
(Increase) Decrease in
Accounts Receivables 134,305 (23,855)
Inventory 2,760 (20,227)
Prepaid and other current assets 51,262 (48,795)
Income tax receivable 249,300 -
Audio Production costs (30,071) -
Increase in
Accounts Payable 48,310 -
Accrued expenses 99,458 67,375
------------- ------------
Net Cash used in operating activities (769,658) (1,034,797)
------------- -------------
Cash Flows from Investing Activities
Proceeds from sale of marketable securities - 169,370
Proceeds from certificate of deposit 30,000 -
Purchase of property and equipment (11,734) (220,422)
------------- -------------
Net Cash provided (used in) Investing
Activities 18,266 (51,052)
------------- -------------
Cash Flows From Financing Activities:
Increase in book overdraft $ 56,248 $ -
Net payments on line of credit (96,174) -
Proceeds from notes payable 467,675 -
Borrowings from notes payable (9,287) -
Payments on capitalized lease
obligations (90,956) -
Proceeds from sale of common stock 175,000 797,500
-------------- -------------
Net cash provided by Financing Activities 502,506 797,500
-------------- -------------
Net Decrease in Cash and Cash Equivalents (248,886) (288,349)
-------------- -------------
Cash acquired in acquisition of CMG 277,067 -
Cash and Cash Equivalents, Beginning of
year 20,027 308,376
-------------- -------------
Cash and Cash Equivalents, End of year $ 48,208 $ 20,027
============== =============
Supplemental Disclosures of cash flow
information
Interest Paid $ 135,996 $ -
============== =============
Income Taxes Paid $ - -
============== =============
Supplemental Schedule of Non-Cash Investing and Financing Activities
During the year ended December 31, 2001, the Company received book rights valued
at $1,500 in exchange for the issuance of 10,000 shares of common stock.
During the year ended December 31, 2001, the Company acquired CMG in exchange
for 1,017,827 shares of common stock valued at $407,131.
During the year ended December 31, 2000, the Company received property and
equipment valued at $311,246 in exchange for the issuance of 310,146 shares of
common stock.
The Accompanying Notes are an Integrated Part of these Financial Statements
Americana Publishing, Inc.and Subsidairy
Notes to Consolidated Financial Statements
December 31, 2001
NOTE 1 - ORGANIZATION AND LINE OF BUSINESS
General
Americana Publishing, Inc. ("API") 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. In addition, API will utilize the latest technology to
download audio files directly to customers who desire to purchase books and
music and other audio materials immediately.
Corporate Media Group, Inc.
On July 15, 2001, API acquired certain assets and liabilities of Corporate Media
Group, Inc. ("CMG"). The purchase price was $407,131, which was paid by issuing
1,017,827 shares of API's common stock. API recorded $905,733 in excess of cost
over fair value of net assets acquired, identified as goodwill. The acquisition
was accounted for by the purchase method. On December 31, 2001, it was
determined the goodwill was impaired; therefore, the full amount of goodwill was
written off, which is included in the statement of operations for the year ended
December 31, 2001.
For financial statement purposes, the acquisition occurred on August 1, 2001.
The assets acquired were as follows:
Cash $ 277,067
Accounts receivable 259,570
Inventory 371,961
Income tax receivable 249,300
Property and equipment 1,827,541
Liabilities assumed (3,484,041)
Excess of cost over fair value 905,733
-------------
Total $ 407,131
=============
CMG provides an array of services, including audio and video duplication,
packaging, fulfillment, storage, and marketing, to various customers throughout
the nation.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, during the years ended December 31, 2001 and 2000, the Company (as
defined in Note 3) incurred losses of $5,775,333 and $2,238,437, respectively.
In addition, as of December 31, 2001, its total current liabilities exceeded its
total current assets by $3,210,940, and its shareholders' deficit was
$1,543,706. These factors, among others, raise substantial doubt about its
ability to continue as a going concern.
Recovery of the Company's assets is dependent upon future events, the outcome of
which is indeterminable. The Company's attainment of profitable operations is
dependent upon the Company obtaining adequate debt and equity financing and
achieving a level of sales adequate to support the Company's cost structure.
Management plans to raise additional equity capital, continue to develop its
products, and look for acquisition candidates.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of API and its wholly
owned subsidiary, CMG (collectively, the "Company"). All significant
inter-company accounts and transactions are eliminated in consolidation.
Development Stage Enterprise
During the year ended December 31, 2001, the Company ceased to be a development
stage company as defined in Statement of Financial Accounting Standards ("SFAS")
No. 7, "Accounting and Reporting by Development Stage Enterprises." The
Company's planned principal operations have commenced, and there have been
revenues from those operations.
Revenue Recognition
Revenue from sales of services is recognized when the service is performed and
billable.
Comprehensive Income
The Company utilizes SFAS No. 130, "Reporting Comprehensive Income." This
statement establishes standards for reporting comprehensive income and its
components in a financial statement. Comprehensive income as defined includes
all changes in equity (net assets) during a period from non-owner sources.
Examples of items to be included in comprehensive income, which are excluded
from net income, include foreign currency translation adjustments, minimum
pension liability adjustments, and unrealized gains and losses on
available-for-sale securities. Comprehensive income is not presented in the
Company's financial statements since the Company did not have any of the items
of comprehensive income in any period presented.
Cash and Cash Equivalents
For the purpose of the statements of cash flows, the Company considers all
highly liquid investments purchased with original maturities of three months or
less to be cash equivalents.
Inventory
Inventory, consisting principally of videocassettes, is valued at the lower of
cost (first-in, first-out) or market.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation and
amortization. During the year ended December 31, 2000, a portion of the property
and equipment was contributed to the Company by the Company's Chairman/majority
shareholder in exchange for common stock. This contributed property and
equipment are carried at the contributor's cost basis. Depreciation and
amortization are provided using the straight-line method over estimated useful
lives as follows:
Production equipment 7 years
Database and circulation list 5 years
Computer equipment 5 years
Vehicles 5 years
Office furniture and fixtures 5 -7 years
Web site development 5 years
Assets under capital leases 3 - 6 years
Leasehold improvements estimated useful life or
lease term, whichever is shorter
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance with
generally accepted accounting principles. For certain of the Company's financial
instruments, including cash and cash equivalents, accounts receivable, accounts
payable, and accrued expenses, the carrying amounts approximate fair value due
to their short maturities. The amounts shown for line of credit, note payable -
factor, notes payable - related parties, convertible debt - related parties, and
capital lease obligations also approximate fair value because current interest
rates offered to the Company for debt of similar maturities are substantially
the same.
Stock-Based Compensation
SFAS No. 123, "Accounting for Stock-Based Compensation," defines a fair value
based method of accounting for stock-based compensation. However, SFAS No. 123
allows an entity to continue to measure compensation cost related to stock and
stock options issued to employees using the intrinsic method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees." Entities electing to remain with the accounting
method of APB No. 25 must make pro forma disclosures of net loss and loss per
share as if the fair value method of accounting defined in SFAS No. 123 had been
applied. The Company has elected to account for its stock-based compensation to
employees under APB No. 25.
Advertising Expense
The Company expenses advertising in the period the service was incurred. For the
years ended December 31, 2001 and 2000, advertising expense was approximately
$26,000 and $58,000, respectively.
Income Taxes
The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred income taxes are recognized for the
tax consequences in future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts at each period end based
on enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
Loss Per Share
The Company utilizes SFAS No. 128, "Earnings per Share." Basic loss per share is
computed by dividing loss available to common shareholders by the
weighted-average number of common shares outstanding. Diluted loss per share is
computed similar to basic loss per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. Common equivalent shares are excluded from the
computation if their effect is anti-dilutive. The Company does not have any
common stock equivalents.
Estimates
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Concentrations of Risk
Revenue from sales of services to related parties was 18% for the year ended
December 31, 2000. During the year ended December 31, 2001, the Company had net
sales to five major customers that represented 26%, 18%, 16%, 12%, and 11% of
net sales.
Recently Issued Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
141, "Business Combinations." This statement addresses financial accounting and
reporting for business combinations and supersedes APB Opinion No. 16, "Business
Combinations," and SFAS No. 38, "Accounting for Pre-Acquisition Contingencies of
Purchased Enterprises." All business combinations in the scope of this statement
are to be accounted for using one method, the purchase method. The provisions of
this statement apply to all business combinations initiated after June 30, 2001.
Use of the pooling-of-interests method for those business combinations is
prohibited. This statement also applies to all business combinations accounted
for using the purchase method for which the date of acquisition is July 1, 2001
or later. The Company does not expect adoption of SFAS No. 141 to have a
material impact, if any, on its financial position or results of operations.
In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." This statement addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB Opinion No. 17,
"Intangible Assets." It addresses how intangible assets that are acquired
individually or with a group of other assets (but not those acquired in a
business combination) should be accounted for in financial statements upon their
acquisition. This statement also addresses how goodwill and other intangible
assets should be accounted for after they have been initially recognized in the
financial statements. It is effective for fiscal years beginning after December
15, 2001. Early application is permitted for entities with fiscal years
beginning after March 15, 2001, provided that the first interim financial
statements have not been issued previously. The Company does not expect adoption
of SFAS No. 142 to have a material impact, if any, on its financial position or
results of operations.
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." This statement applies to legal obligations associated with the
retirement of long-lived assets that result from the acquisition, construction,
development, and/or the normal operation of long-lived assets, except for
certain obligations of lessees. This statement is not applicable to the Company.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. This
statement replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of," the accounting and
reporting provisions of APB No. 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual, and Infrequently Occurring Events and Transactions," for the disposal
of a segment of a business, and amends Accounting Research Bulletin No. 51,
"Financial Statements," to eliminate the exception to consolidation for a
subsidiary for which control is likely to be temporary. The Company does not
expect adoption of SFAS No. 144 to have a material impact, if any, on its
financial position or results of operations.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment at December 31, 2001 consisted of the following:
Production equipment $ 276,591
Database and circulation list 239,314
Computer equipment 130,722
Vehicles 70,974
Office furniture and fixtures 337,166
Web site development 44,663
Assets under capital leases 448,479
Leasehold improvements 701,561
Other 31,324
-----------------
2,280,794
Less accumulated depreciation and amortization 335,381
-----------------
Total $ 1,945,413
=================
Depreciation and amortization expense was $250,794 and $66,242 for the years
ended December 31, 2001 and 2000, respectively.
NOTE 5 - LINE OF CREDIT
The Company maintained a line of credit with a financial institution that
allowed it to borrow a maximum of $210,090. Advances on the line of credit bear
interest at 8.25% per annum, which is payable on a monthly basis. The line of
credit is secured by accounts receivable and inventory and matured on April 1,
2002. The bank has not renewed the line of credit. As of December 31, 2001, the
outstanding balance under the line of credit was $203,449.
NOTE 6 - NOTES PAYABLE - RELATED PARTIES
At December 31, 2001, the Company maintained notes payable to certain officers
of the Company, which are payable upon demand and are non-interest-bearing. As
of December 31, 2001, the amounts due aggregated to $96,397.
NOTE 7 - CONVERTIBLE DEBT - RELATED PARTIES
The Company issued convertible debt, as summarized below, payable to various
individuals, which is convertible at the option of the holder into the Company's
common stock. Interest at 30% per annum is payable on a monthly basis. If the
note holders elect to convert their debt into common stock, the conversion
prices range from $0.05 to $0.10 per share. There were not any conversions to
common stock during the year ended December 31, 2001.
The terms associated with each series for the year ended December 31 are as
follows:
30% notes, due September 2002, convertible at $0.05 per share,
and secured by 750,000 shares of restricted common stock $ 150,000
30% notes, due October 2002, convertible at $0.05 per share,
and secured by 500,000 shares of restricted common stock 100,000
30% notes, due November 2002, convertible at $0.05 per share,
and secured by 500,000 shares of restricted common stock 102,500
30% notes, due December 2002, convertible at $0.05 per share,
and secured by 125,000 shares of restricted common stock 25,000
30% notes, due December 2002, convertible at $0.10 per share,
and secured by 300,000 shares of restricted common stock 10,000
--------------
Total $ 387,500
==============
In accordance with generally accepted accounting principles, the discount on the
conversion feature of the above notes arising from the conversion feature is
considered to be interest expense and is recognized in the statement of
operations during the period from the issuance of the debt to the time at which
the debt becomes convertible. The Company recorded a conversion feature of
$385,000. Since the debt was immediately convertible, the $385,000 was
recognized in the statement of operations during the year ended December 31,
2001.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Leases
The Company leases its office facilities from two different related parties
under operating lease agreements, which require monthly payments of $4,000 and
$23,000 and expire in December 2003 and July 2011, respectively. The Company
also leases production equipment under capital lease agreements. These leases
have initial terms generally ranging from three to seven years and require a
fixed monthly payment.
Future minimum payments under these operating and capital lease agreements at
December 31, 2001 were as follows:
Year Ending Operating Capital
December 31, Leases Leases
2002 $ 324,000 $ 265,136
2003 336,000 183,586
2004 276,000 100,367
2005 276,000 4,228
2006 276,000 -
Thereafter 1,265,000 -
-------------- ----------------
$ 2,753,000 553,317
==============
Less amount representing interest 74,509
----------------
478,808
Less current portion 200,629
----------------
Long-term portion $ 278,179
================
Rent expense was $145,000 and $28,000 for the years ended December 31, 2001 and
2000, respectively.
Financial Consulting Agreement
On January 1, 1999, the Company entered into a non-cancelable, Corporate
Financial Consulting Agreement with its Chairman/majority shareholder. The
agreement calls for the Company to pay the related party a monthly fee of $3,000
for a period of five years in consideration for the related party 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 the related party 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 the related party 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 unrelated party.
Employment Agreement
On January 1, 1999, the Company entered into an employment agreement with its
Chairman/majority shareholder. Under the terms of the agreement, the employee
receives 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 will pay the employee's
estate $500,000 in 50 monthly installments of $10,000. Subject to certain
events, including the sale of substantially all of the Company's assets to a
single purchaser or bankruptcy, the Company may terminate the agreement upon 90
days' written notice and pay the employee $500,000 in 12 consecutive monthly
installments.
With cause, the Company may terminate the agreement with 12 months' written
notice. During the notice period, the employee will be paid full compensation
and receive a severance allowance of $250,000 in 12 consecutive monthly
installments beginning on the date of termination. Without cause, the employee
may terminate employment upon 12 months' written notice to the Company. During
the notice period, the employee may be required to perform his duties and will
be paid his full compensation up to the termination date and will receive a
severance allowance of $250,000, which will be paid in 12 equal and consecutive
monthly installments beginning on the date of termination.
This employee received common stock in lieu of $101,000 in cash compensation
during the year ended December 31, 2000.
Factoring Agreements
In February 1999, the Company entered into a factoring agreement without
recourse that provides all eligible accounts receivable to be factored at a
discount of 12%. In addition, during the year ended December 31, 1999, the
Company issued 50,000 shares of restricted common stock to the factoring
company, which is owned by a shareholder of the Company. The agreement is
secured by all accounts receivable and inventory. Furthermore, the
Chairman/majority shareholder guarantees 20% of the outstanding balance. Either
party can cancel this agreement with 30 days' notice.
In April 2001, the Company entered into a factoring agreement with recourse that
provides all eligible accounts receivable to be factored at a discount of 12% up
to a maximum of $2,000,000. In addition, the Company is required to pay a
service charge of 3% on each invoice factored. These amounts are guaranteed by
an officer of CMG. As of December 31, 2001, the accounts receivable amount and
the amount due to factor was $702,075.
Litigation
The Company is involved in certain legal proceedings and claims which arise in
the normal course of business. Management does not believe that the outcome of
these matters will have a material effect on the Company's financial position or
results of operations.
NOTE 9 - SHAREHOLDERS' DEFICIT
Common Stock
During the years ended December 31, 2001 and 2000, the Company sold 837,647 and
655,000 shares, respectively, of common stock for $175,000 and $652,500,
respectively, 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.
During the years ended December 31, 2001 and 2000, the Company issued 3,659,200
and 1,773,000 shares, respectively, of common stock to employees and members of
its Board of Directors for services rendered. These shares were valued between
$0.20 and $0.55, and $0.10 and $1, respectively, per share, which is equal to
the fair market value on the date of grant. Compensation expense of $1,463,610
and $676,100 was recorded with an offset to common stock and additional paid-in
capital during the years ended December 31, 2001 and 2000, respectively
During the years ended December 31, 2001 and 2000, the Company issued 1,331,500
and 201,000 shares, respectively, of common stock to outside consultants and
companies for services rendered. These shares were recorded at their fair market
value at the time of issuance. Compensation expense of $430,715 and $201,500 was
recorded with an offset to common stock and additional paid-in capital during
the years ended December 31, 2001 and 2000, respectively.
During the year ended December 31, 2001, the Company issued 10,000 shares of
common stock in exchange for book rights valued at $1,500.
During the year ended December 31, 2001, the Company acquired CMG in exchange
for 1,017,827 shares of common stock valued at $407,131.
Stock Option Plan
In June 2000, the Board of Directors approved the adoption of a non-qualified
and incentive stock option plan, the 2000 Stock Purchase and Option Plan (the
"Plan"). The Plan is intended to provide incentive to key employees, officers,
and consultants of the Company who provide significant services to the Company.
There are 5,000,000 options available for grant under the Plan. Options will
vest over a period of time as determined by the Board of Directors for up to 10
years from the date of grant. The Plan expires on June 30, 2010.
The exercise price of options granted under the Plan will be determined by the
Board of Directors, provided that the exercise price will not be less than 85%
of the fair market value on the date of grant. In addition, if the option is
granted to an officer or director of the Company, the exercise price will not be
less than 100% of the fair market value on the date of grant. Furthermore,
incentive stock options may not be granted to a 10% shareholder, unless the
exercise price is 100% of the fair market value on the date of grant.
A summary of the Company's outstanding options and activity is as follows:
Weighted-
Average
Number Exercise
of Options Price
Outstanding, December 31, 1999 2,655,000 $ 0.20
Granted 98,000 $ 0.50
Exercised (600,000) $ 0.20
-----------
Outstanding, December 31, 2000 2,153,000 $ 0.20
Granted 2,375,000 $ 0.23
Cancelled (2,103,000) $ 0.20
-----------
Outstanding, December 31, 2001 2,425,000 $ 0.24
-----------
Exercisable, December 31, 2001 2,425,000 $ 0.24
===========
The weighted-average remaining contractual life of the options outstanding at
December 31, 2001 is 1.46 years. The exercise prices for the options outstanding
at December 31, 2001 ranged from $0.05 to $0.50, and information relating to
these options is as follows:
Weighted- Weighted-
Weighted- Average Average
Average Exercise Exercise
Range of Stock Stock Remaining Price of Price of
Exercise Options Options Contractual Options Options
Prices Outstanding Exercisable Life Outstanding Exercisable
$ 0.05 950,000 950,000 1.02 years $ 0.05 $ 0.05
$ 0.17 - 0.20 625,000 625,000 2.68 years $ 0.17 $ 0.17
$ 0.50 850,000 850,000 1.97 years $ 0.50 $ 0.50
----------- -----------
2,425,000 2,425,000
=========== ===========
The Company has adopted only the disclosure provisions of SFAS No. 123. It
applies APB No. 25 and related interpretations in accounting for its plans and
does not recognize compensation expense for its stock-based compensation plans
other than for restricted stock and options issued to outside third parties. If
the Company had elected to recognize compensation expense based upon the fair
value at the grant date for awards under these plans consistent with the
methodology prescribed by SFAS 123, the Company's net loss and basic loss per
share for the years ended December 31, 2001 and 2000 would be as follows:
2001 2000
Net loss
As reported $ (5,775,333) $ (2,238,437)
Pro forma $ (6,040,104) $ (2,328,437)
Basic loss per common share
As reported $ (0.52) $ (0.41)
Pro forma $ (0.54) $ (0.42)
For purposes of computing the pro forma disclosures required by SFAS No. 123,
the fair value of each option granted to employees and directors is estimated
using the Black-Scholes option-pricing model with the following weighted-average
assumptions for the years ended December 31, 2001 and 2000: dividend yields of
0% and 0%, respectively; expected volatility of 175% and N/A, respectively;
risk-free interest rates of 3.6% and 4.6%, respectively; and expected lives of
two and three years, respectively. The weighted-average fair value of options
granted during the year ended December 31, 2001 for which the exercise price was
greater than the market price on the grant date was $0.34, and the
weighted-average exercise price was $0.50. The weighted-average fair value of
options granted during the year ended December 31, 2001 for which the exercise
price was less than the market price on the grant date was $0.46, and the
weighted-average exercise price was $0.05.
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
In the event of a merger, sale of the Company, a hostile takeover attempt, or
other sales of the Company's assets, each director previously granted options
will have the option to purchase 300,000 additional shares of common stock at $1
per share.
NOTE 10 - INCOME TAXES
A reconciliation of the expected income tax computed using the federal statutory
income rate to the Company's effective rate for the years ended December 31,
2001 and 2000 was as follows:
2001 2000
Income benefit computed at federal
statutory tax rate (34.0)% (34.0)%
State taxes, net of federal benefit (5.0) (5.0)
Permanent differences 6.0 -
Valuation allowance 33.0 39.0
---------- ----------
Total - % - %
Significant components of the Company's deferred tax assets for income taxes
consisted of the following at December 31, 2001:
Deferred tax assets
Net operating loss carryforward $ 1,606,000
Bad debt 40,000
Non-qualified stock option expenses 185,000
--------------
1,831,000
Less valuation allowance 1,831,000
--------------
Net deferred tax assets $ -
==============
As of December 31, 2001, the Company had net operating loss carryforwards for
federal and state income tax purposes of approximately $2,447,000 and
$1,220,000, respectively. The net operating loss carryforwards begin expiring in
2017 and 2002, respectively.
NOTE 11 - RELATED PARTY TRANSACTIONS
Revenue from sales of services to related parties was 18% for the year ended
December 31, 2000.
The Company issued notes payable to related parties of $96,397 (see Note 6).
The Company issued convertible debt to an officer/Board member, a Board member,
and a major shareholder totaling $387,500 (see Note 7).
The Company leases its office facilities from two officers/Board members (see
Note 8).
The Company entered into a financial consulting agreement with its
Chairman/majority shareholder (see Note 8).
The Company entered into an employment agreement with its Chairman/majority
shareholder (see Note 8).
During the year ended December 31, 2001, the Company issued a total of 2,965,000
shares of common stock to various Board members, various officers/Board members,
and the Chairman/majority shareholder valued at $1,156,000, which represents the
fair market value.
NOTE 12 - SUBSEQUENT EVENTS
In January and February 2002, the Company sold 1,216,668 shares of common stock
through a private placement in exchange for cash of $132,500. For each share of
common stock purchased, the shareholder received one warrant to purchase one
share of common stock at an exercise price of $0.40 per share. In total, the
Company issued 1,216,668 warrants, which expire through February 2004 and carry
piggyback registration rights.
In January 2002, the Company granted 1,400,000 stock options to members of its
Board of Directors. The stock options vest immediately and expire in December
2003. The exercise price is $0.40 during 2002 and $0.50 in 2003.
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. 45 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
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 appointed 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 the founder of Americana and has been a Director, Chairman and
President since the Company's inception. Over the past 15 years Mr. Lovato has
acquired extensive management experience with startup companies, corporate
finance, computer system and software development, international trade and
relations, strategic planning, and sales and marketing development. Mr. Lovato
has rendered services to 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. He is the principal and sole owner of B.
H. Capital Limited, a 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 and Vice President of Americana. Mr. White is a CPA in
Houston, Texas, and has operated an 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 committees. Mr. White fulfills the duties and responsibilities of
the Company's Chief Financial Officer, as necessary. Mr. White has served as a
director and as Vice President of the Company since its inception.
Dr. David Poling
Dr. Poling is a Director and Vice President of Americana. He is also Chairman of
Sierra Publishing Group, the author of a dozen books and a nationally syndicated
columnist whose column is published in 600 newspapers. Formerly, Dr. Poling was
in charge of The Christian Herald, a publication with a half million monthly
circulation. Dr. Poling is also the President of the Family Bookshelf, the
largest religious book club in the United States. Dr. Poling is a Presbyterian
clergyman educated at College of Wooster, Ohio and Yale University. Dr. Poling
has served on the board as a Director and as a Vice President since the
Company's inception.
Jay Simon
Mr. Simon is a Director and the Company's Secretary/Treasurer. Mr. Simon
graduated from the University of New Mexico in 1986 with a BS in Pharmacy. Mr.
Simon is currently employed as Executive Director of International Business
Development of Syncor International Corporation, a nuclear pharmaceutical
company. Mr. Simon has served as a Director and as the Company's
Secretary/Treasurer since its inception.
Jerome Ruther
Mr. Ruther is a Director of the Company. Mr. Ruther graduated from Northwestern
University in 1954 with a degree in accounting. Later Mr. Ruther attended
Northwestern University Law School and practiced in the legal profession for
approximately 20 years. Mr. Ruther has had business experience with various
media businesses and real estate developments. He was also a controlling
shareholder of Sunset Productions, Inc., an audio book production company. Mr.
Ruther has been a Director of the Company since January 2001.
Lowell S. Fixler, Advisor to the Board of Directors
Mr. Fixler graduated from Northwestern University in 1954. Mr. Fixler was
president and controlling shareholder of Needlecraft Corporation of America,
which was purchased by Quaker Oats Co. After its purchase by Quaker Oats Co.,
Mr. Fixler remained as president of the division. Mr. Fixler has been an
investor in various start-up companies and in numerous business enterprises.
Philippe de La Chapelle, Advisor to the Board of Directors
Mr. de La Chapelle formerly was the Managing Director of Hill Thompson Capital
Markets, Inc., an investment banking firm founded in 1932. Mr. de La Chepelle
specializes in the development of United States and offshore corporate finance
opportunities. A graduate of Georgetown Law School, he has been international
counsel for W.R. Grace and Co. Currently, he is Executive Vice President of
Warnaco.
Stedman Walker, Ltd., Advisor to the Board of Directors
Stedman Walker, Ltd. is a corporate finance and investor relations consulting
firm with over 100 years of experience.
Item 10. EXECUTIVE COMPENSATION
The following table shows the compensation paid over the past three fiscal years
with respect to: (i) the Company's President as of the end of the 2001 fiscal
year; (ii) the four other most highly compensated executive officers (in terms
of salary and bonus) serving at the end of the 2001 fiscal year whose annual
salary and bonus exceeded $100,000; and (iii) up to two additional individuals
who would be in category (ii) but for the fact that the individual was not
serving as an executive officer of the Company at the end of the last completed
fiscal year (the "named executive officers"):
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Other Restricted- Securities All
Name Annual
Other
And Compen Stock Underlying LTIP Other
Principal Salary Bonus sation Award(s) Options Payouts Compen
Position Year ($) ($) ($) ($) 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
2001 141,000 0 0 264,000
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
2001 0 0 0 138,000
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
2001 0 0 0 94,000
Jerome Ruther 2000 0 0 45,000 0 0 0
Director 2001 15,000 205,500 328,000
Don White 2001 22,500 0 329,000 0
CFO/Director
(1) No SARs were granted or exercised by any named executive officer in 2001,
nor did any named executive officer hold any unexercised SARs at the end of
the 2001 fiscal year.
(2) The dollar values are calculated by determining the difference between the
fair market value of the securities underlying the options and the exercise
price of the options at exercise. The dollar value provided represents the
cumulative difference in the fair market value of the common stock underlying
all in-the-money options as of the last day of the 2001 fiscal year and the
exercise prices for such options. Options are "in-the-money" if the fair market
value of the underlying Common Stock as of the last day of the 2001 fiscal year
exceeds the exercise price of such options.
On January 1, 1999 the Company entered into an employment agreement with Mr.
George Lovato, its President. The term of the agreement is one year, but the
agreement may automatically be renewed each year for a period of three years
unless either party elects to terminate it. Mr. Lovato is to receive
compensation at the rate of $250,000 per year or 5% of the Company's gross
revenue, whichever is greater. Mr. Lovato will not receive any deferred
compensation from Americana. The Company may not terminate the agreement if Mr.
Lovato becomes disabled, ill or incapacitated. If Mr. Lovato dies during the
term of employment, the Company must pay his estate the sum of $500,000 in fifty
monthly installments of $10,000 each. 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 if it pays Mr. Lovato the sum of $500,000 in twelve consecutive
monthly installments. The Company may terminate the agreement with cause with
twelve months written notice. During the notice period, the Company must
continue to pay Mr. Lovato the full amount of his compensation. Mr. Lovato will
also receive a severance allowance of $250,000 made in twelve consecutive
monthly installments beginning on the date of termination. Mr. Lovato may
terminate his employment upon twelve months written notice to the Company.
Mr. Don White is paid $3,000 per month for his services as Chief Financial
Officer. Mr. Jerry Ruther receives $2,500 per month for consulting services
rendered by him relating to the Company's set-up and development of its audio
book division.
Directors do not currently receive any form of cash compensation for their
participation on the Company's Board of Directors.
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.
Name and Address of Amount Own Shares
Beneficial Owner Title of Class Beneficially owned % of
--------------------------------------------------------------------------------
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%
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 1, 1999 Americana entered into a Corporate Finance Consulting
Agreement with B. H. Capital Limited. The term of the agreement is for 5 years.
This agreement requires Americana to pay a success fee to B. H. Capital Limited
for any financing obtained for Americana by B. H. Capital Limited. The success
fee is calculated as 1% of the gross amount of financing raised.
Americana also pays B. H. Capital Limited a $3,000.00 monthly facility use fee
for use of B. H. Capital Limited's office, personnel, and facilities. This
agreement was also entered into on January 1, 1999 and has a term of 5 years.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 2.1 Agreement of Purchase and Sale of Assets - Trine Publications, Inc.
Exhibit 2.2 Stock Purchase and Share Exchange Agreement - Corporate Media Group
Exhibit 99.1 Convertible Debenture September 13, 2001- Jerome Ruther
Exhibit 99.2 Convertible Debenture October 12, 2001 - Jerome Ruther
Exhibit 99.3 Convertible Debenture November 21, 2001 - Jerome Ruther
Exhibit 99.4 Convertible Debenture September 27, 2001 - Lowell Fixler
Exhibit 99.5 Convertible Debenture December 6, 2001 - Lowell Fixler
Exhibit 99.6 Convertible Debenture December 5, 2001 - Don White
Exhibit 2.2
AGREEMENT OF PURCHASE AND SALE OF ASSETS
THIS AGREEMENT is dated January 31, 2001 by and among, Trine Publications, Inc.,
a corporation organized and existing under the laws of the State of California
and having its principal office in Santa Cruz, California (Seller"), and
Americana Publishing, Inc., a Colorado corporation having its principal office
in Albuquerque, New Mexico ("Purchaser"), and the party(ies) executing this
Agreement as holder(s) of an interest in Seller (hereinafter collectively called
the ["Interest Holder(s)"]).
RECITAL
In consideration of the mutual covenants and agreements hereinafter set forth,
the parties hereby agree as follows:
1.1 Purchase and Sale of Assets.
Subject to and upon the terms and conditions set forth in this Agreement, Seller
will sell, transfer, convey, assign and deliver to Purchaser, and Purchaser will
purchase, at the Closing hereunder, assets referred to in the form Bill of Sale
to be attached hereto as Exhibit "A" consisting of book inventory and author
contracts and the assets reflected on the balance sheet to be attached hereto as
Exhibit "B", with only such disposition of such assets reflected on the balance
sheet as shall have occurred in ordinary course of Seller's business as of the
date of this agreement. Seller's assets shall be conveyed free and clear of all
liabilities, obligations, liens and encumbrances excepting only those
liabilities and obligations which are expressly assumed by Purchaser and
disclosed in writing herein on the Closing Liability Undertaking to be attached
hereto as Exhibit "C".
1.2 Physical Possession of the Assets.
It is specifically agreed that physical delivery of any and all rights of
possession, control and use of all of the assets shall transfer as of the date
of the execution of this agreement.
2. Purchase Price.
A. In consideration of the sale, transfer, conveyance, assignment and
delivery of the Seller's assets by Seller to Purchaser, and in reliance
upon the representations and warranties made herein by Seller and Interest
Holder, Purchaser, in full payment thereof, pay to Seller at the Closing a
total purchase price of Ten Thousand (10,000) shares of Rule 144 restricted
stock in Americana Publishing, Inc..
B. In addition to the foregoing, Purchaser will execute and deliver to
Seller at the Closing a Liabilities Undertaking in the form of Exhibit "C"
to be annexed hereto.
C. In the event that between the date of this agreement and the
Closing, Seller shall make any payment or payments outside of the ordinary
course of Seller's business to any person, firm or entity in respect of any
matter (including, without limitation, any and all expenses in respect of
this Agreement) other than the reduction or elimination of liabilities or
obligations which Purchaser would otherwise have assumed under the
aforesaid Liabilities Undertaking, then Seller shall pay to Purchaser at
the Closing, by cashier's or certified check, an amount equal to the
aggregate amount of all such payments.
3.1 Closing.
Subject to the Provisions of Sections 8.8 and 10.0, the Closing of the Asset
Purchase shall take place on or before , 2001 at such place and time as the
parties may mutually agree in writing. The date on which the Closing occurs is
sometimes hereinafter referred to as the "Closing Date."
3.2 Deliveries at Closing
A. At the Closing, the Seller and its Interest Holders will deliver to
Purchaser:
(i) A Bill of Sale duly executed by Seller in the form of Exhibit
"A" to be attached hereto;
(ii) Such other good and sufficient instruments of conveyance,
assignment and transfer, in form and substance satisfactory to
Purchaser's counsel, as shall be effective to vest in Purchaser good
and marketable title to Seller's Assets.
(iii) All contracts, files and other data and documents
pertaining to Seller's Assets transferred hereby, except Seller's
minute books and stock ledger records, and (iv) All other documents
required to be delivered to Purchaser under the provisions of this
Agreement.
B. At any time and from time to time after the Closing, at Purchaser's
request and without further consideration, Seller and Interest Holders will
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation and take such action as Purchaser may
reasonably deem necessary or desirable in order to more effectively
transfer, convey and assign to Purchaser, and to confirm Purchaser's title
to all of Seller's assets, to put Purchaser in actual possession and
operating control thereof and to assist Purchaser in exercising all rights
with respect thereto.
4. Representations and Warranties.
As an inducement to the Purchaser to enter into this Agreement and consummate
the transactions contemplated hereby, each Interest Holder, jointly and
severally, represents and warrants to Purchaser that:
4.1 Organization, Standing and Qualification.
Trine Publications, Inc. and each of Trine Publications, Inc., Interest Holders
(defined below) is a corporation duly organized, validly existing and in good
standing under the laws of the State of California, and they have the corporate
power and lawful authority to own, lease and operate their assets, properties,
subsidiaries and businesses and to carry on their business, all as now
conducted.
4.2 Ownership.
The Trine Publications, Inc. Interest Holder owns all of the interest in Hollis
Books, LLC, beneficially and of record, free and clear of all liens of any
nature. The Interest Holder of Trine Publications, Inc., has the full right and
power to consummate this Asset Purchase Agreement without obtaining the consent
of any other person or governmental authority. The Asset Purchase is not subject
to registration under applicable state and/or federal securities laws.
4.3. No Violations/Consents.
Except as set forth on Schedule 4.3 attached hereto or any other schedule to
this Agreement, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not violate any
provision of or result in the breach of or accelerate or permit the acceleration
of the performance required by the terms of any applicable law, rule or
regulation of any governmental body, the Articles of Incorporation, or By-laws
of Trine Publications, Inc., or any lease, bond, mortgage, note, loan agreement,
credit agreement or facility, indenture or any other material agreement to which
any Trine Publications, Inc., Interest Holder or Trine Publications, Inc.,or its
subsidiaries is a party or by which they may be bound, or of any order, judgment
or decree applicable to it or them, or resulting the creation of any claim,
lien, charge or encumbrance upon any of the property or assets of any of
Seller's interest, or terminate or result in the termination of any such
agreement, or in any material way affect or violate the terms of conditions of,
or result in the cancellation, modification, revocation, or suspension of, any
of the licenses, franchises, approvals, certificates, permits or authorization
held by Trine Publications, Inc., or any of its subsidiaries. Schedule 4.3 also
sets forth the name of any third party from whom any Interest Holder in Seller
or Seller or any of its subsidiaries must obtain consent in order for any Trine
Publications, Inc., Interest Holder to validly and lawfully perform his, her or
its obligations hereunder.
4.4. Financial Statements.
The Interest Holder has furnished to the purchaser true and correct copies of
any of the financial statements and financial forecasts as may be requested by
Buyer's auditors.
4.5. Conduct of Busines. No Adverse Changes.
Since the 31st day of December, 2000, except as set forth in Schedule 4.5:
A. The respective businesses of Seller and its subsidiaries have been
conducted in the ordinary course.
B. There has been no damage, destruction or loss, or other occurrence or
development (whether or not insured against), which either singly, or in the
aggregate, materially, adversely affect the properties or assets, or the
business, operations or affairs of Seller or any subsidiary.
4.6. Absence of Other Events.
Since 15 December, 2000, and except as set forth on Schedule 4.6, attached
hereto or elsewhere in this agreement, neither Seller nor any subsidiary has,
except as contemplated by or expressed in this Agreement:
A. Created or incurred any material liability (absolute or contingent)
except for:
(i) unsecured current liabilities incurred for other than money
borrowed and
(ii) liabilities under contracts entered into in the ordinary course
of business;
B. Loaned any money or otherwise pledged the credit of Seller or any
subsidiary, or mortgaged, pledged or subjected to any lien or otherwise
encumbered any of its assets, tangible or intangible;
C. Made any expenditures or capital additions or improvements that, with
respect to a particular project, exceed $1,000.00 or exceed $2,000.00 in the
aggregate;
D. Sold or otherwise disposed of, or contracted to sell or dispose of any
of its assets, tangible or intangible; or canceled any debts or claims in an
amount for any debt or claim in excess of $1,000.00 or,for all debts and claims
not listed on Schedule 4.7, in excess of $2,000.00 in the aggregate, except, in
each case, in the ordinary course of business.
E. Declared or paid any dividends or made any other distribution on or in
respect of, or directly or indirectly purchased, retired, redeemed or otherwise
acquired any interest in Seller;
F. Suffered any labor disputes or organizational activity by its employees;
G. Made or became a party to any contract or commitment yet to be performed
which in any one case involved an amount in excess of $2,000.00 or a term in
excess of ninety (90) days;
H. Issued or sold any interest in Seller or rights, options or warrants to
purchase any interest in Seller, or any securities convertible into any interest
in Seller;
I. Paid or agreed to pay, conditionally or otherwise, any bonus, extra
compensation, pension or severance pay to any director, officer or employee,
whether under any existing pension or other plan or otherwise or increased the
compensation, including salaries, fees, commissions, bonuses, profit sharing,
incentive, pension, retirement or other similar payments, to any of its
directors, officers or employees;
J. Become bound by or entered into any contract, commitment or transaction
other than in the ordinary course of business; or
K. Entered into any contract or agreement to do or perform any of the
foregoing activities.
4.7. Undisclosed Liabilities.
Except as set forth on Schedule 4.7 attached hereto, neither Seller nor any
subsidiary has incurred or suffered any debt, liability or other obligation of a
material nature, whether accrued, absolute, contingent or otherwise, and whether
due or to become due, which is not reflected or reserved against in Seller's
Financial Statements, except for debts, liabilities or other obligations
incurred in the ordinary course of business which are usual and normal in amount
both individually and in the aggregate.
4.8. Title to Assets.
Except as set forth on Schedule 4.8 attached hereto, Seller and its subsidiaries
have good and marketable title to all their respective assets and properties,
including the assets and properties reflected in Seller's Financial Statements
whether real, personal or mixed and whether tangible or intangible, free and
clear of restrictions on, or conditions to, transfer or assignment, and of
mortgages liens, pledges, charges, encumbrances, security interests, equities,
claims, easements, rights of way, covenants, conditions and restrictions except:
A. As otherwise expressly indicated in Seller's Financial Statements
provided to the auditors; and
B. The lien of current taxes not yet due and payable;
There are no outstanding rights or options in any third party to acquire any of
such assets or properties or any interest therein.
Americana Publishing, Inc. will not incur or pay any expenses to the seller for
distribution of shares issued to seller in payment of purchase money obligation
to individual Interest Holders.
4.9 Building and Structures.
All of the buildings and structures leased by Seller or its subsidiaries or used
or employed by them in their business, are in a satisfactory operating condition
as required for the proper operation and use thereof in the ordinary course of
business free from any known defects except (A) such defects as require routine
maintenance and (B) such defects as do not substantially therefore with the
continued use thereof in the conduct of the business conducted in connections
therewith and conform in all material respects to all applicable ordinances,
regulations and other laws relating thereto and the use thereof.
4.10 Real Property.
A. Since the inception of Trine Publications, Inc., or its subsidiaries,
neither Trine Publications, Inc., nor any of its subsidiaries has owned or
operated any real property except for commercial office space described in
Schedule 4.10.
B. Seller owns no real property. Schedule 4.10 sets forth all real property
leased to Seller or its subsidiaries and specifying the general location of each
such property, the names of the lessor and the lessee, the term of lease and the
rent payable thereunder. Seller's Interest Holder has made available to
Purchaser a copy of each lease by which Seller or such subsidiary acquired the
leased real property described in Schedule 4.10. Except as set forth in Schedule
4.10, neither the Seller's Interest Holder, Seller nor any subsidiary has
received any written notice from any governmental agency, board, bureau, body,
department or authority of any United States or foreign jurisdiction with
respect to the use or occupancy of any of the real property described in
Schedule 4.10. Each lease pursuant to which Seller or any subsidiary leases any
real property is in full force and effect and is valid and enforceable in
accordance with its terms. There is not, under any such lease, any default of
which the Seller's Interest Holder has knowledge by Seller or any subsidiary or
any event of which the Seller's Interest Holder has knowledge that with notices
or lapse of time or both would constitute such a default by Seller or any
subsidiary.
4.11 Litigation.
Except as set forth on Schedule 4.11, Seller is not party to, or to the
knowledge of the Seller's Interest Holders, threatened with, any litigation or
judicial, administrative or arbitration proceedings, or any unasserted claims
reasonably possible of assertion.
4.12.Material Agreements.
Schedule 4.12 sets forth all of the material agreement, contracts, licenses,
commitments or binding arrangements, express or implied (collectively, "Material
Agreements") to which Seller or any of it subsidiaries are a party, including,
without limitation;
A. agreement with any current or former Interest Holder, director, officer
or employee;
B. agreements with any consultant or advisor;
C. agreements with any labor union or association representing any
employee;
D. benefit plans (as hereinafter defined);
E. continuing agreements for the purchase or acquisition of materials,
supplies, equipment, or services, sales agency distributorship materials,
supplies, equipment, or services, sales agency distributorship marketing or
management agreements;
F. agreements for the sale of any of its assets, properties or business
other than in the ordinary course of business or for the grant to any person of
any preferential rights to purchase any of its assets, properties or business;
G. joint venture agreements;
H. financing agreement;
I. loan, credit facility and factoring agreements;
K. construction agreements;
L. non-compete agreements;
M. agreements not terminable by Seller or the subsidiary without penalty,
within ninety (90) days, or
N. any other material agreement whether or not made in the ordinary course
of business.
Except as set forth on Schedule 4.12, all of the Material Agreements are in full
force and effect and Seller has paid in full or accrued all amounts due
thereunder and has satisfied in full or provided for all of its liabilities and
obligations thereunder, and is not in default under any of them, nor to the
knowledge of the Interest Holders is any other party to any Material Agreement
in default thereunder.
4.13 Accounts Receivable.
Except as set forth in Schedule 4.13, all notes and accounts receivable shown on
Seller's financial statements or thereafter acquired by it have been collected
or are to the knowledge of the Seller and its Interest Holders, current and
collectible in accordance with their terms. Subject to returns and allowances in
the ordinary course of business at the aggregate recorded amounts thereof and
are subject to no counterclaims or set-offs or challenges after audit by any
customer or client. Except as set forth on Schedule 4.13, the reserve for
doubtful accounts appearing on Seller's Financial Statements (or in Seller's
Financial Statements to be provided) will be consistent with the past practices
of Seller and is (or will be) a sufficient reserve in light of the past
practices of Seller and its subsidiaries.
4.14 Governmental Authorizations and Regulations.
Schedule 4.14 lists all licenses, franchises, permits and other governmental
authorizations held by Seller which are necessary to operate and to conduct its
businesses. Such licenses, franchises, permits and other governmental are valid,
and Seller has not received any notice that any governmental authority intends
to cancel, terminate or not renew any license, franchise, permit or other
governmental authorization.
4.15 Compliance with Laws.
Except as set forth on Schedule 4.15, there does not exist any basis for any
claim of default under or violation of any federal, state, local or foreign
statute, law, ordinance, regulation, rule permit, judgment, order or decree that
would have a materially adverse impact upon Seller or any subsidiary and their
respective properties, assets, operation and/or businesses.
4.16 Patents and Trademarks.
Set forth in Schedule 4.16 is complete list of all patents, patent applications,
trademarks or trademark applications owned by Seller or any subsidiary. Seller
and its subsidiaries own, free and clear of all liens and encumbrances all
right, title, and interest in and to and possesses adequate license or other
rights to use all patents, trademarks, trade names, copyrights, inventions,
for-mule, methods and processes presently utilized by it in conduct of its
businesses generally, and the same are valid and un good standing and are
adequate and sufficient to permit Seller and its subsidiaries to conduct their
businesses as now operated, and no other rights of any kind enumerated are
utilized or required by Seller or any subsidiary in its operations. The Seller's
Interest Holders have no knowledge of the invalidity or conflict of any of the
same with the asserted rights of others. No claim is pending nor, to the
knowledge of the Seller, that activities of Seller or any subsidiary of its
businesses or the manufacture or sale of any of its products or services or any
formulae, method or process, part or material it employs, infringes in any way
upon any rights of the type enumerated above owned by others. No claims are
pending nor, to knowledge of the Seller are threatened or have been made within
the past five (5) years for interference, opposition, re-examination or
cancellation of the patents described on Schedule 4.16 hereto. The execution and
delivery of this agreement will not alter or impair the rights in or the
validity of the intellectual property described on Schedule 4.16 and does not
infringe on or misapply any intellectual property agreements pertaining to such
intellectual property. To the knowledge of the Seller, no other party has been
infringing on or misapplying the intellectual property described on Schedule
4.16 hereto which shall be irrevocably transferred to Buyer free and clear under
this agreement.
4.17 Labor Relations.
Schedule 4.17 attached hereto lists all collective bargaining agreements to
which either Seller or any subsidiary is a party, copies of which have
previously been delivered to Purchaser. As used in this Section 4.17,
"collective bargaining agreements" includes written basic agreements between a
labor organization and either Seller or any subsidiary, including all material
amendments thereto. Except as described in Section 4.17; (A) neither Seller nor
any subsidiary is a party to any collective bargaining agreement; (B) neither
Seller nor any subsidiary has been notified by written charge, complaint,
citation or claims that it is in violation of applicable federal, state or local
laws concerning the safety and health of employees, discrimination in employment
or employment practices, the payment of wages, hours of work or terms and
conditions of employment, or the commission of unfair labor practices which
violations individually or in the aggregate would have a substantial likelihood
of materially adversely affecting the business of Seller or its subsidiaries
taken as a whole; (C) there is no labor strike, or other work stoppage of
employees of Seller or its subsidiaries currently in effect and to the best
knowledge of Seller or any subsidiary none threatened except as may occur at the
expiration of existing collective bargaining agreements; (D) there is no
slowdown which has a substantial likelihood of materially adversely affecting
the business of Seller and its subsidiaries taken as a whole; (E) to the
knowledge of the Seller's Interest Holders, no question concerning
representation (as such term is used in the context of proceedings before the
National Labor Regulations Board) exists respecting the employees of Seller or
any subsidiary; (F) no grievances nor any arbitration proceeding arising out of
or under any collective bargaining agreement of Seller or its subsidiaries is
pending nor to the knowledge of the Seller's Interest Holders, threatened, and
(G) neither seller nor its subsidiaries have in the past three years experienced
a work stoppage by their employees which work stoppage caused a significant
interruption of normal operations.
4.18 Taxes, Tax Returns and Audits.
The Seller has timely filed, or caused to be timely filed, all federal, state
and local tax returns (including, without limitation, payroll tax returns) as to
the operations of Seller or any subsidiary which are required by law to be filed
and all such tax returns are complete and accurate in all material aspects in
accordance with all legal requirements applicable thereto insofar as they relate
to the operations of Seller or any subsidiary. Except as set forth on Schedule
4.18 attached hereto, the Seller has paid (or caused to be paid) all taxes which
have become due pursuant to said tax returns, or pursuant to any assessment.
True and correct copies of the Federal income tax returns and state and local
income tax returns filed by Seller for its fiscal years ending 1996 through
1999, have been delivered to Purchaser. Except as set forth on Schedule 4.18,
attached hereto, there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any tax return (whether federal,
state or local) for or including Seller for any period.
4.19 Tax Liability.
Except as set forth on Schedule 4.19, the amount recorded on Seller's Financial
Statements for Seller and its subsidiaries as a current liability for taxes is
sufficient for the payment of all unpaid federal, state and local taxes
(including, without limitation, payroll taxes) payable by Seller and all
interest and penalties in respect thereof, accrued or applicable (whether or not
now asserted or determined) for the period ended December 31, 2000 and all years
and periods prior thereto.
4.20 Brokers.
No finder, broker, agent or similar intermediary has acted for or on behalf of
Seller or any subsidiary in connection with this agreement or the transactions
contemplated hereby, and no finder, broker, agent or similar intermediary is
entitled to any finder's, broker's or similar fee or other commission in
connection therewith based on any agreement, arrangement or understanding with
the Seller Shareholders or any action taken by Seller, or any subsidiary or the
Seller's Interest Holders.
4.21 Bank Accounts, Offices and Employees .
Schedule 4.21 attached hereto contains: (A) a list of all banks (with account
numbers) in which Trine Publications, Inc., or any Subsidiary has an account or
safe deposit box and the names of all persons authorized to draw thereon or have
access thereto; (B) the names of all incumbent directors or officers of Seller
or any Subsidiary; (C) the names and locations of all employees, together with,
for salaried employees monthly, each of their current salaries; and (D) the
names of all persons holding powers of attorney from Seller and a summary
statement of the terms thereof.
4.22 Foreign Corrupt Practices Act.
Neither Seller nor its Subsidiaries nor any director, officer, agent, employee
or other person associated with Seller or its Subsidiaries acting on behalf of
Seller or any Subsidiary has used any corporate funds for any unlawful
contribution, gift, entertainment or other expense relating to political
activity or made any direct or indirect unlawful payment to any United States or
foreign government official or employee from corporate funds or violated or is
in violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended, or paid or made any bribe, rebate, payoff, influence payment, kickback,
or other unlawful payment.
4.23 Accounting Practices.
Seller and each Subsidiary makes and keeps accurate books and records reflecting
its assets and maintains internal accounting controls that provide reasonable
assurance that (A) transactions are executed with management's authorization,
(B) transactions are recorded as necessary to permit preparation of financial
statements and to maintain accountability for the assets of and each Subsidiary
permitted only in accordance with management authorization, and (C) the
accounting methods used for purposes of financial accounting and reporting by
Seller and each Subsidiary for all periods up to and including the taxable
period in which the Closing Date occurs, have been and will be in accordance
with Generally Accepted Accounting Principles consistently applied.
4.24 Disclosure.
No representation, warranty or covenant made by the Seller's Interest Holders in
the Agreement or any Schedule, statement, list or certificate furnished or to be
furnished to Purchaser pursuant thereto, or in connection with the transaction
contemplated hereby, contain any untrue statement of a material fact, or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading.
4.25 Closing.
At Closing, all of the representations and warranties contained herein will be
true and accurate.
5. Representations and Warranties of Purchaser.
The Purchaser represents and warrants to the Shareholders as follows:
5.1 Corporate Organization, Standing.
The Purchaser corporation is duly organized, validly existing and in good
standing under the laws of the State of California.
5.2 Authorization or Agreement.
This Agreement has been duly authorized, executed and delivered by Purchaser
and, subject to the due authorization, execution and delivery by the other
parties hereto, constitutes a legal, valid and binding obligation of Purchaser.
The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereto and the fulfillment and compliance with the
terms and conditions hereof do not and will not after the giving of notice, or
the lapse of time, or otherwise; (A) violate any provisions of any judicial or
administrative order, award, judgment or decree applicable to Purchaser, or (B)
conflict with any of the provisions of the Certificate of Incorporation or
By-Laws of Purchaser, or(C) conflict with, result in a breach of or constitute a
default under any agreement or instrument to which Purchaser is a party or by
which it is bound.
5.3 Brokers.
No finder, broker, agent or similar intermediary has acted for or on behalf of
Buyer in connection with this Agreement or the transactions contemplated hereby,
and no finder, broker, agent or similar intermediary is entitled to any
finder's, broker's or similar fee or other commission in connection therewith
based on any agreement, arrangement or understanding with Purchaser or any
actions taken by Purchaser.
5.4 Litigation.
Except as set forth on Schedule 5.5, the Purchaser is not party to, to the
knowledge of the Purchaser's Shareholders, or threatened with, any litigation or
judicial, administrative or arbitration proceedings, or any unasserted claims
reasonably possible.
5.5 Compliance with Laws.
Except as set forth on Schedule 4.16 or 4.18, there does not exist any basis for
any claim of default under or violation of any federal, state . local or foreign
statute, law ordinance, regulation, rule, permit, judgment , order or decree
that would have a materially adverse impact upon the Purchaser or any subsidiary
and their respective properties, assets, operation and/or businesses.
5.6 Tax Liability.
Except as set forth on Schedule 4.21, the amount recorded on the Purchaser's
Financial Statements for the Purchaser and its Subsidiaries as a current
liability for taxes is sufficient for the payment for all unpaid federal, state
and local taxes( including, without limitation, payroll taxes) payable by the
Purchaser and all interest and penalties in respect thereof, accrued or
applicable (whether or not now asserted or determined) for the period ended
December, 1999, and all years and periods prior thereto.
5.7 Certain Transactions.
Except for the transactions contemplated by this Agreement and as set forth in
Section 4.23, there is no transaction, and no transaction now proposed, to which
Americana Publishing, Inc. or its Subsidiaries was or is to be a party and in
which any director or officer of the Purchaser or its Subsidiaries or any person
owning of record or beneficially more than 10% of the outstanding capital stock
of any class of the Purchaser or its Subsidiaries or any associate (as defined
in 17 C.F.R. Sec. 240.14(a)-la) of any such person had or has a direct or
indirect material interest.
5.8 Foreign Corrupt Practices Act.
Neither the Purchaser nor its Subsidiaries nor any director, officer, agent,
employee or other person associated with or acting on behalf of the Purchaser or
any Subsidiary has used any corporate funds for any unlawful contribution, gift,
entertainment or other expense relating to political activity or made any direct
or indirect unlawful payment to any United States or foreign government official
or employee corporate funds or violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977, as amended, or paid or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment.
5.9 Accounting Practices.
The Purchaser and each Subsidiary makes and keeps accurate books and records
reflecting its assets and maintains internal accounting controls that provide
reasonable assurance that (A) transactions are executed with management's
authorization, (B)transactions are recorded as necessary to permit preparation
of Purchaser's financial statements and to maintain accountability for the
assets of Purchaser and each Subsidiary permitted only in accordance with
management authorization, and (C) the accounting methods used for purposes of
financial accounting and reporting by the Purchaser and each Subsidiary for all
periods up to and including the taxable period in which the Closing Date occurs,
have been and will be in accordance with Generally Accepted Accounting
Principles consistently applied.
5.10 Disclosure.
No representation, warranty or covenant by the Purchaser's Shareholders in the
Agreement nor any Schedule, statement, list or certificate furnished or to be
furnished to Purchaser pursuant thereto, or in connection with the transaction
contemplated hereby, contain any untrue statement of a material fact, or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading.
5.11 Closing.
At Closing, all of the representations and warranties contained herein will be
true and accurate.
6.0 Covenants of the Interest Holders of Seller.
The Interest Holders of Seller covenant and agree with Purchaser that they will
perform, or will cause Seller and its Subsidiaries to perform, the following
covenants between the date hereof and the Closing Date (which covenants shall
survive the Closing);
6.1 Access to Information and Corporate Records.
The Interest Holder covenants and agrees that he will cause the Seller and its
Subsidiaries to provide Purchaser, and its counsel, accountants and other
representatives full access during normal business hours to all of the
properties, books, accounts, records, contracts and documents of and relating to
Seller. The Interest Holder shall cause Seller and its Subsidiaries to furnish
to Purchaser and their counsel, accountants and representatives all documents
and other information concerning the business, finances and properties of and
each Subsidiary which Purchaser may reasonably request from time to time and
hereby authorizes and directs the accountants and auditors of and each
Subsidiary to make available to Purchaser and their representatives all
financial information concerning Seller and each Subsidiary which is in its
possession, including their work papers. Nothing contained in this Section 6.1
shall in any way affect the survival of the representations and warranties of
the Shareholders as hereinafter provided.
6.2 Corporate Matters.
The Interest Holders shall not permit Seller or any Subsidiary to:
(A) Amend its Certificate of Organization or By-Laws;
(B) Sell any of its interest;
(C) Issue or create any warrants, obligations, subscriptions, options,
convertible securities or other commitments for the issuance of transfer of any
ownership interest.
(D) Enter into any merger, consolidation, reorganization or
re-capitalization or reclassification other than as necessary to perform this
Agreement;
(E) Declare or pay any dividend on or make any distribution in respect of
its ownership interest;
(F) Directly or indirectly purchase, redeem, or otherwise acquire any
shares of its ownership interest; or
(G) Agree to do any of the foregoing acts.
6.3 Conduct of Business.
Between the date of this Agreement and Closing, except as otherwise permitted by
the prior written consent of Purchaser, which will not be unreasonably withheld
or delayed, the Interest Holders agree that:
A. Purchaser will assume responsibility for the conduct Seller's business
and operations, and, will maintain all of Seller's properties and assets in a
manner consistent with prior practice and will perform all material obligations
under all agreements binding upon Seller;
B. Neither Seller nor any of its Subsidiaries shall become party to any
agreement, which, if it existed on the date hereof, would be required to be
listed in Schedule 4.12 hereto;
C. Neither Seller nor any of its Subsidiaries will do any of the acts
listed in Section 4.6 hereof.
D. Neither Seller nor any of its Subsidiaries will take any actions that
would detrimentally affect the policies of insurance referred to in Section 4.23
hereof,
E. Neither Seller nor any of its Subsidiaries will enter into any
compromise or settlement of any litigation, proceeding or governmental
investigation relating to it or its properties or business and involving a
payment of commitment by it exceeding, in the aggregate, $2,000.00.
F. Neither Seller nor any of its Subsidiaries will borrow any money or
acquire or guarantee any debt for borrowed money except in the ordinary course
of business;
G. Neither Seller nor any of its Subsidiaries will lend any money or
otherwise pledge the credit of either Seller or its Subsidiaries except in the
ordinary course of business; and
H. Neither Seller nor any of its Subsidiaries will knowingly fail in any
material respect to comply with any laws, ordinances, regulations or
governmental restrictions applicable to either or any of its Subsidiaries.
6.4 Business Organization.
The Interest Holders shall cause Seller and its Subsidiaries to use their best
efforts, without making any commitments on behalf of Purchaser, to preserve its
respective business organization intact, to keep available to Seller and its
Subsidiaries the services of their present officers and employees and to
preserve and maintain its present relationships with suppliers, customers,
lessor and others having business relationships with them.
7.0 Covenants of the Buyers.
The Purchaser covenants and agrees that it will perform the following covenants
between the date hereof and the Closing Date (which covenants shall survive the
Closing):
7.1 Access to Information and Corporate Records.
Purchaser is a publicly held company and all financial, management and business
affairs information required in public filings is publicly displayed on the
Securities Exchange Commission Website.
7.2 Corporate Matters.
The Purchaser shall not:
A. Amend its Certificate of Incorporation or By-Laws;
B. Issue or create any warrants, obligations, subscriptions, options,
convertible securities or other commitments for the issuance or transfer of
shares of its capital stock,
C. Enter into any merger, consolidation, reorganization or recapitalization
or reclassification of its stock other than as necessary to perform this
Agreement;
D. Declare or pay any dividend on or make any distribution in respect of
its capital stock;
E. Directly or indirectly purchase, redeem, or otherwise acquire any shares
of its capital stock; or agree to do any of the foregoing acts.
7.3 Conduct of Business.
Between the date of this Agreement and Closing, except as otherwise permitted by
the prior written consent of Purchaser, which will not be unreasonably withheld
or delayed:
A. The Purchaser and its Subsidiaries will conduct their respective
business and operations only in the ordinary course, will maintain all of their
properties and assets in a manner consistent with prior practice and will
perform all material obligations under all agreements binding upon them;
B. Neither the Purchaser nor any of its Subsidiaries shall become party to
any agreement which, if it existed on the date hereof, would be required to be
listed in Schedule 4.12 hereto;
C. Neither the Purchaser nor any of its Subsidiaries will do any of the
acts listed in Section 4.6 hereof;
D. Neither the Purchaser nor any of its Subsidiaries will take any actions
that would detrimentally affect the policies of insurance referred to in Section
4.23 hereof;
E. Neither the Purchase nor any of its Subsidiaries will enter into any
compromise or settlement of any litigation, proceeding or governmental
investigation relating to it or its properties or business and involving a
payment of $5,000.00 or a commitment by it exceeding, in the aggregate,
$10,000.00.
F. Neither the Purchaser nor any of its Subsidiaries will borrow any money
or acquire or guarantee any debt for borrowed money except in the ordinary
course of business;
G. Neither the Purchaser nor any of its Subsidiaries will lend any money or
otherwise pledge the credit of either Purchaser or its Subsidiaries except in
the ordinary course of business; and
H. Neither the Purchaser nor any of its Subsidiaries will knowingly fail in
any material respect to comply with any laws, ordinances, regulations or
governmental restrictions applicable to either the Purchaser or any of its
Subsidiaries.
7.4 Business Organization.
The Purchaser's Shareholders shall cause the Purchaser and its Subsidiaries to
use their best efforts, without making any commitments on behalf of Seller, to
preserve its respective business organization(s) intact, to keep available to
the Purchaser and its Subsidiaries the services of their present officers and
employees and to preserve and maintain its present relationships with suppliers,
customers, lessors and other having business relationships with seller.
8.0 Conditions to Closing - Purchaser.
8.1 Representations and Warranties of the Seller's Interest Holders.
The representations and warranties (whether or not so captioned) of the Seller's
Interest Holders made in this Agreement or in any schedule, document or
certificate delivered to Purchaser pursuant hereto shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date.
8.2 Covenants of the Seller's Shareholders and Seller.
The Seller's Interest Holders, Seller, and each of its Subsidiaries shall each
have fully performed and complied with all material covenants, terms and
agreements (whether or not so captioned) to be performed and complied with by
them or it on or before the Closing Date.
8.3 Good Standing.
The Purchaser shall have delivered to Seller a good standing certificate as to
Purchaser and each of its Subsidiaries issued by the Secretary of State, of any
jurisdiction under which they are organized, dated as of a date within thirty
(30) days of the Closing Date.
8.4 Proceeding and Instruments Satisfactory.
All proceedings taken in connection with the transactions contemplated shall be
satisfactory in form and substance to Purchaser and their counsel. hereby and
all instruments and documents incident thereto shall be satisfactory in form and
substance to Purchaser and their counsel.
8.5. Access to Corporate Records, etc.
Purchaser and their counsel, auditors and other representatives shall have had
free access to the corporate and financial records, title deeds and other
documents of Seller and each of its Subsidiaries, and to the working papers of
the auditors of Seller and each of its Subsidiaries used in the preparation of
the Financial Statements and the Forecast described in Section 4.4, or any other
financial statements or forecasts, and shall have obtained such information and
assistance from the officers, directors and employees of Seller and its
Subsidiaries and from their auditors in connection with its investigations as
Purchaser or their counsel, auditors or other representatives shall have
reasonable requested.
8.6 No Adverse Change.
No material adverse change shall have occurred in the assets, liabilities,
business, operations, properties, prospects or condition (financial or
otherwise) of Trine Publications, Inc. and/or its Subsidiaries including, but
not limited to, the following:
A. Any material change on the financial statements of Seller between the
date of audit and the Closing;
B. Any material loss of customers;
C. Any material loss of key employees; and
D. Any material loss of other personnel including engineers and research
personnel.
8.8 Absence of Litigation.
No action, suit or proceeding arising out of or related to this Agreement or the
transactions contemplated hereby, shall have been instituted or threatened
against Seller or any of its Subsidiaries or shall have become reasonably
possible against Seller or its Subsidiaries before or by any court,
administrative agency or body or governmental authority or any arbitration panel
which in the sole discretion of Purchaser renders it inadvisable to proceed with
the consummation of transactions contemplated by this Agreement.
8.9 Corporate Resolutions.
The Seller's Interest Holders shall have delivered to Purchaser fully executed
resolutions of the Interest Holders and Managing Member of Seller in proper form
under the laws of their respective jurisdictions, authorizing the execution and
delivery of this Agreement, the closing, and all things reasonably incident
thereto.
8.10 Revisions.
Any Schedule to this Purchase Agreement revised or supplemented by the
Shareholders between the date hereof and Closing pursuant to Section 4 hereof
shall not reflect or indicate any material adverse change in the assets,
liabilities, business operations, properties, prospects or conditions,
(financial or otherwise) of or any of its Subsidiaries.
8.11 Delivery of Documents.
Seller and its Interest Holders have delivered to the Purchaser all
documentation required under this Agreement, including all such documents
transferring or reasonably related to transferring the assets sold hereunder.
9.0 Conditions to Closing - Seller and its Shareholders.
9.1 Representations and Warranties of the Purchaser.
The representations and warranties (whether or not so captioned) of the
Purchaser made in this Agreement or in any schedule, document or certificate
delivered to Purchaser pursuant hereto shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
such representations and warranties had been made on and as of the Closing Date.
9.2 Covenants of the Purchaser.
Purchaser shall have fully performed and complied with all material covenants ,
term, and agreements (whether or not so captioned) to be performed and complied
with by them or it on or before the Closing Date.
9.3 Corporate Resolutions.
Purchaser shall have delivered to the Seller's Interest Holders, the fully
executed resolutions of Purchase's Shareholders and directors, in proper form
under the laws of their respective jurisdictions, authorizing the execution and
delivery of this Agreement, the closing, and all things reasonably incident
thereto.
9.4 Material Adverse Effect.
Except as disclosed by the SEC Documents, there shall not have been any material
adverse change in the business, assets, financial condition or prospects of
Purchaser and its Subsidiaries, taken as a whole.
9.6 Purchase Consideration.
Purchaser has delivered to the Seller and its Interest Holders a written debt
satisfaction agreement wherein it has paid the indebtedness set forth in this
Agreement.
10.0 Termination Prior to Closing.
1O.1 Termination.
This Agreement may be terminated at any time prior to the Closing by;
A. the mutual written consent of the parties hereto; or
B. Purchaser in writing if the Seller's Interest Holders shall have
breached this Agreement in any material respect; or
C. By the Seller's Interest Holders in writing if Seller shall have
breached this Agreement in any material respect.
10.2 Effect on Obligations.
Termination of this Agreement pursuant to this Article 1O. 1.(A) shall terminate
all obligations of the parties hereunder; provided, however, that termination
pursuant to clauses (B) or (C) of Section 10.1 shall not relieve any breaching
party from any liability to the other parties hereto.
11.0 Survival of Representations and Warranties.
11.1 Purchaser's Reliance.
The parties agree that, notwithstanding any right of Purchaser to fully
investigate the affairs of Seller or any Subsidiary, or matters relating to this
Agreement, and notwithstanding any knowledge of facts determined or determinable
by Purchaser pursuant to such investigation or right or investigation, Purchaser
has the right to rely fully upon the representations and warranties of the
Shareholders, and any of its Subsidiaries, and on the accuracy of any document,
certificate or schedule annexed hereto or delivered to Purchaser pursuant
hereto. Except as otherwise hereinafter set forth, all such representations and
warranties of the Seller's Interest Holders, Seller and any of its Subsidiaries,
or their respective agents, servants, employees or representatives contained in
this Agreement or in any document, certificate or schedule annexed hereto or
delivered pursuant hereto, shall survive the execution and delivery of this
Agreement and the Closing hereunder for a period of 18 months from the Closing
Date.
11.2 The Seller's Shareholders Reliance.
A. The parties agree that, notwithstanding any right of Seller's Interest
Holders to fully investigate the affairs of Purchaser, and notwithstanding any
knowledge of facts determined or determinable by Seller's Interest Holders
pursuant to such investigation or right of investigation, the Seller's Interest
Holders have the right to rely fully upon the representations and warranties of
Purchaser, and their agents, servants, employees and representatives, and on the
accuracy of any document, certificate or schedule annexed hereto or delivered to
the Interest Holders pursuant hereto. All such representation and warranties of
Purchaser, or their agents, servants, employees or representatives contained in
this Agreement or in any document, certificate or schedule annexed hereto or
delivered pursuant hereto, shall survive the execution and delivery of this
Agreement and the Closing hereunder for a period of 18 months from the Closing
Date.
B. Purchaser's liability arising under any representation or warranty
contained herein (whether or not so captioned) which representation or warranty
is alleged or proved to be fraudulently made shall survive for a period of time
coincidental with any applicable federal or state statue of limitations for
claims based on intentional misrepresentation, fraud, securities fraud or
similar federal or state law in connection with this Agreement.
12.0 Indemnification.
A. Seller and each Interest Holder, jointly and severely, hereby indemnify
and agree to hold Purchaser harmless from, against and in respect of (and shall
on demand reimburse Purchaser for):
(i) any and all losses, liabilities or damages suffered or incurred by
Purchaser (a) by reason of any untrue representation, breach or warranty or
nonfulfillment or any covenant by Seller or any Interest Holder contained
herein or in any certificate, document or instrument delivered to Purchaser
pursuant hereto or in connection herewith or (b) which would not have been
suffered or incurred if such representation were true and not breached or
if such covenant were fully performed;
(ii) any and all losses, liabilities or damages suffered or incurred
by Purchaser in respect of or in connection with any liabilities of Seller
not expressly assumed by Purchaser pursuant to the terms of the Liabilities
Undertaking;
(iii) Any and all losses, damages, debts, liabilities or obligations
of Seller, direct or indirect, fixed, contingent or otherwise, which exist
at oar as of the date of the Closing hereunder or which arise after the
Closing but which are based upon or arise from any act, omission,
transaction, circumstance, production or sale of goods or services, state
of facts or other condition which occurred or existed on or before the date
of the Closing, whether or not then known, due or payable, except to the
extent (A) reflected or reserved against on the face of the Balance Sheet
(Excluding the notes thereto) or incurred after the Balance Sheet Date in
connection with the purchase of goods services in the ordinary course of
Seller's business and in conformity with the representations, warranties
and covenants of Seller contained in the Agreement and (B) expressly
assumed by Purchaser pursuant to the terms of the Liabilities Undertaking.
(iv) The amount of any and all receivables or the Company which are
not collected in accordance with the provisions contained in Section
hereof,
(v) Any and all losses, liabilities or damages suffered or incurred by
Purchaser by reason of or in connection with any claim for a finder's fee
or brokerage or other commission arising by reason of any services alleged
to have been rendered to or at the instance of Seller or any Shareholder
with respect to this Agreement or any of the transactions contemplated
hereby;
(vi) Any and all losses, liabilities or damages suffered or incurred
by Purchaser (a) by reason of any claim for severance or vacation pay
accruing or incurred or triggered by a discharge at any time on or after
the date hereof or (b) relating to employee benefits attributable to
services performed prior to the Closing, except to the extent set forth on
Schedule annexed hereto; and
(vii) Any and all actions, suits, proceedings, claims, demands,
assessments. Judgments, costs, and expenses, including, without limitation,
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempt into avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
[Not withstanding the foregoing, neither the Seller nor any Interest Holder
shall be liable to Purchaser for any misrepresentations or breaches or warranty
if the aggregate amount of the losses, liabilities, damages, and expenses
suffered by Purchaser based thereon or resulting therefrom is less than
$5,000.00 (the "Liability Exception"); provided, however, that such Liability
Exception shall not apply to or include any losses, liabilities, damages and
expenses in respect of misrepresentations or breaches of warranty contained in
Section 4, as to which Seller and the Shareholders shall be liable in full
hereunder.]
B. Purchaser hereby agrees to indemnify and hold Seller and each
Shareholder harmless from, against and in respect of (and shall on demand
reimburse them for):
(i) Any and all losses, liabilities or damages resulting from any
untrue representation, breach or warranty or nonfulfillment of any covenant
or agreement by Purchaser contained herein or in any certificate, document
or instrument delivered to Seller hereunder;
(ii) Any and all liabilities or obligations of Seller specifically
assumed by Purchaser pursuant to this Agreement; and (iii) Any and all
actions, suits, proceedings, claims, demands, assessments, judgments, costs
and expenses, including, without limitations, legal fees and expenses,
incident to any of the foregoing or incurred in investigating or attempting
to avoid the same or to oppose the imposition thereof, or in enforcing this
indemnity.
13. Miscellaneous.
13.1 Notices.
All notices, requests, consents and other communications required or permitted
to be given hereunder shall be in writing and shall be deemed to be duly given
if delivered personally or sent by telefax or by registered or certified mail
(notices sent by telefax or mailed shall be deemed to have been given on the
date received), as follows (or to such other address as any party shall
designate by notice in writing to the others in accordance herewith:
(i) To Purchaser:
Americana Publishing, Inc.
303 San Mateo NE, Suite 104
Albuquerque, New Mexico 87108
(ii) To Interest Holders
3950 Unit C, Bramble Lane
Santa Cruz, California 95062
(iii) To Seller:
Trine Publications, Inc. 3950 Unit C, Bramble Lane Santa Cruz, California 95062
13.2 Entire Agreement.
This Agreement (including the Exhibits and Schedules) contains the agreement
among the parties with respect to the Purchase of Assets and related
transactions and supersedes all prior arrangements or understanding, written or
oral, with respect thereto.
13.3 Amendments.
Any term or condition of this Agreement may be amended or modified in whole or
in part at any time, to the extent authorized by applicable law, by an agreement
in writing, authorized and executed in the same manner as this Agreement by the
parties hereto.
13.4 Waivers; Remedies.
No delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any right, power or privilege hereunder preclude any other or
further exercise thereof of the exercise of any other right, power or privilege
hereunder. Except as set forth in Section , the rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies which
any party may otherwise waive at law or in equity. The rights and remedies of
any party arising out of or otherwise in respect of any inaccuracy in, or breach
of, any representation, warranty, covenant or agreement contained in the
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or breach on which the right or remedy is based may also be the
subject matter of any other representation, warranty, covenant or agreement
contained in this Agreement (or in any other agreement between the parties
delivered in connection with the Purchase of Assets) as to which there is no
inaccuracy or breach.
13.5 Execution and Delivery.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument. Delivery of an counterpart shall be deemed effective upon
receipt by the other party of telefaxed signature page to this Agreement,
provided that such party shall nonetheless transmit its original executed
signature page to the other party.
13.6 Exhibit and Schedules.
The Exhibits and Schedules and other documents attached to or delivered herewith
are hereby incorporated and made a part of this Agreement as if set forth in
full herein.
13.7 Drafting.
No presumption shall operate in favor of'or against any party in the
construction or interpretation of the Agreement as a consequence of a party's
responsibility for drafting this Agreement.
13.8 Recitals.
The recital clauses of this Agreement are incorporated herein to the body as
though set forth at length.
13.9 Attorney and Professional Fees.
Each party will pay his/her own attorney or professional fees in connection with
this Agreement or discussions leading to this agreement.
13.10 Captions.
The captions of Sections hereof are for convenience only and shall not control
or affect the meaning or construction of any of the provisions of this
Agreement.
13.11 Controlling Law.
The parties hereto agree that this Agreement shall be governed and construed by
the internal, substantive laws of the State of New Mexico (without regard to the
state's choice of law rules or doctrines) and, if applicable, the substitutive
law (statutory administrative or common law) of the United States (without
regard to its choice of law, rules or doctrines).
13.12 Implementing Agreement.
Subject to the other terms and conditions of this Agreement, each of the parties
hereto shall take all action required of him/her or it, utilizing his/her or its
best efforts to consummate the transactions contemplated hereby. Except as
otherwise expressly permitted by this Agreement, each of the parties hereto
agrees that he/she or it will not take any action which has the effect of
preventing or impairing his/her or its performance of his/her or its obligations
under the Agreement.
13.13 Schedules.
The Seller's Interest Holders may revise or supplement the Schedules at any time
at or prior the Closing to reflect information that came into existence or
becomes known to the Seller's Interest Holders after the date hereof and that
would have been required to be disclosed on one or more Schedules if such
information's existence had been known on the date hereof. The information
contained in such revisions and supplements, if any, to the extent they are
materially adverse, shall not limit the ability of Purchaser from concluding
that their closing conditions have not been satisfied; or in the event Purchaser
elects to close, the Schedules, as so revised or supplemented, shall form and
after the Closing replace and supersede the earlier Schedules for all purposes
hereunder.
IN WITNESS WHEREOF, and intending to be legally bound, the parties have duly
executed the Agreement as of the date first above written.
Purchaser: Seller:
Americana Publishing, Inc. Trine Publications, Inc.
by: by:
George Lovato, Jr. Brandi Kroetch-Rafferty, President and CEO
President and CEO
Exhibit 2.2
This STOCK PURCHASE AND SHARE EXCHANGE AGREEMENT (this "Agreement") is made
and entered into as of July 16, 2001, by and among Americana Publishing, Inc., a
Colorado corporation ("Americana"), Corporate Media Group, Inc., a Tennessee
corporation ("CMG"), and each of the CMG shareholders listed on Schedule I
hereto (each, a "CMG Shareholder, collectively, the "CMG Shareholders"), with
reference to the following:
RECITALS
A. This Agreement provides for the acquisition by Americana of all of the
issued and outstanding shares of capital stock of CMG, such that CMG shall
become a wholly owned subsidiary of Americana, and the issuance in exchange
therefore of 772,000 shares of restricted common stock of Americana to the CMG
Shareholders.
B. The board of directors and shareholders of CMG and the board of
directors of Americana have determined, subject to the terms and conditions set
forth in this Agreement, that the transactions contemplated hereby are desirable
and in the best interests of the parties hereto.
C. The parties to this Agreement desire that the transaction contemplated
by the provisions of this Agreement satisfy the requirements of Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated pursuant thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and the mutual benefits to the parties to be derived
herefrom, it is hereby agreed as follows:
ARTICLE I
EXCHANGE PROCEDURE; CLOSING
Section 1.1 Share Exchange/Delivery of CMG Shares. At the Closing, the
holders of the CMG Shares (and any other outstanding security of CMG, including,
but not limited to, options, warrants, conversion rights or other equity
interests) shall deliver to Americana certificates or other documents evidencing
all of the issued and outstanding CMG Shares (as defined in Section 3.2), and
any other outstanding security of CMG, including, but not limited to, options
warrants, conversion rights or other equity interests, duly endorsed in blank or
with executed powers attached thereto in transferable form, such that CMG shall
become a wholly owned subsidiary of Americana at the Closing.
Section 1.2 Issuance of Americana Common Shares. In exchange for all of the
CMG Shares delivered to Americana pursuant to Section 1.1 above, Americana shall
issue an aggregate of 772,000 "restricted" shares of its $0.001 par value per
share common stock (the "Americana Common Shares") to the CMG Shareholders, with
each such CMG Shareholder to receive the number of Americana Common Shares set
forth opposite such CMG Shareholder's name on Schedule 1 hereto. The Americana
Common Shares shall be "restricted" in accordance with Rule 144 of the
Securities Act of 1933.
Section 1.3 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at 4:00 pm Eastern Time at the
offices of Corporate Media Group, Inc., 145 Lupton Lane, Cleveland, Tennessee,
on the date of this Agreement, or on such other date as may be mutually agreed
upon by the parties (the "Closing Date").
Section 1.4 Articles of Exchange. Immediately following the Closing,
Americana shall file Articles of Exchange, in the form of Exhibit A hereto, with
the Secretary of State of the State of Tennessee pursuant to 48-21-107(b) of
the Tennessee Code. The transactions contemplated by this Agreement shall become
effective at such time as the Articles of Exchange is duly filed in the office
of the Secretary of State of the State of Tennessee.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF AMERICANA
As an inducement to and to obtain the reliance of CMG and the CMG
Shareholders, Americana represents and warrants as follows:
Section 2.2 Organization. Americana is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Colorado
and has the corporate power and is duly authorized and qualified under all
applicable laws, regulations, ordinances and orders of public authorities to own
all of its properties and assets and to carry on its business in all material
respects as it is now being conducted.
Section 2.3 Capitalization. The authorized capitalization of Americana
consists of (i) 100,000,000 shares of common stock, $0.001 par value per share,
of which 10,901,896 shares are issued and outstanding as of the date hereof, and
(ii) 20,000,000 shares of no par value preferred stock, none of which are issued
and outstanding as of the date hereof.
Section 2.4 Acquisition for Investment. Americana is acquiring the CMG
Shares for investment, and not with a view to or for sale in connection with any
distribution thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CMG AND CMG SHAREHOLDERS
As an inducement to, and to obtain the reliance of Americana, CMG and the
CMG Shareholders represent and warrant, jointly and severally, as follows:
Section 3.1 Organization. CMG is a corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee and has
the corporate power and is duly authorized and qualified under all applicable
laws, regulations, ordinances and orders of public authorities to own all of its
properties and assets and to carry on its business in all material respects as
it is now being conducted, including qualification to do business as a foreign
corporation in any jurisdiction in which the character and location of the
assets owned by it or the nature of the business transacted by it requires
qualification. Schedule 3.1 sets forth complete and correct copies of the
Articles of Incorporation and Bylaws of CMG as in effect on the date hereof. The
execution, delivery and performance of this Agreement do not and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not, violate any provision of CMG 's Articles of
Incorporation or Bylaws. CMG has full power, authority and legal right and has
taken all action required by law, its Articles of Incorporation and Bylaws or
otherwise to authorize the execution and delivery of this Agreement.
Section 3.2 Capitalization. The authorized capitalization of CMG consists
of 1,000,000 shares of Common Stock, no par value per share, all of which
1,000,000 shares (the "CMG Shares") are presently, and will be immediately prior
to the Closing, issued and outstanding. The CMG Shareholders are the sole
beneficial and record owners of the CMG Shares, and such CMG Shareholders
presently have and at the Closing will have the unqualified right to transfer
and dispose of such CMG Shares. All of the CMG Shares are legally issued, fully
paid and nonassessable and are not issued in violation of the preemptive or
other rights of any person.
Section 3.3 Options and Warrants. There are no outstanding options,
warrants, calls, convertible securities, or rights of any kind to acquire any
securities of CMG.
Section 3.4 Subsidiaries.
(a) Except as set forth in Schedule 3.4(a), CMG does not own directly or
indirectly, any capital stock or have any interest in any corporation, limited
liability company, partnership, joint venture or other form of business
organization (any such organization is referred to as a "Subsidiary").
(b) Schedule 3.4(b) sets forth for each Subsidiary the following
information: its name, type of entity, jurisdiction and date of incorporation or
organization, its authorized capital stock, partnership capital, limited
liability interests or similar ownership interests, the number and type of its
issued and outstanding shares of capital stock, partnership interests, limited
liability interests or similar ownership interests and the current ownership of
such shares, partnership interests, limited liability interests or similar
ownership interests. Annexed to Schedule 3.4(b) are true and complete copies of
the charter, bylaws and other similar organizational documents of each
Subsidiary, as well as any limited liability company agreement, operating
agreement or shareholder agreement relating to such Subsidiary, and any
acquisition agreement relating to any Subsidiary. All corporate or other action
that has been taken by any Subsidiary has been duly authorized and does not
conflict with or violate of any provision of its charter, bylaws or other
organizational documents.
(c) Each Subsidiary (i) is duly organized and validly existing under the
laws of its jurisdiction of organization, (ii) has all requisite and necessary
power and authority to own, operate or lease those assets or properties which
are owned, operated or leased by it and to conduct its business as it has been
and currently is being conducted, (iii) is duly qualified to do business as a
foreign corporation in each jurisdiction where the nature of the business
conducted by it, or the character of the properties owned, leased or otherwise
held by it makes any such qualification necessary, except where the failure to
be so qualified would not have a material adverse effect on such Subsidiary.
(d) All outstanding shares of capital stock or other ownership interests of
each Subsidiary are validly issued, fully paid, nonassessable and free of
preemptive rights and are owned (either directly or indirectly) by CMG without
any encumbrances.
(e) Except as set forth in Schedule 3.4(e), there are no outstanding
securities convertible into or exchangeable for the capital stock of or other
equity interests in any Subsidiary and no outstanding options, rights,
subscriptions, calls commitments, warrants or rights of any character for CMG,
any Subsidiary or any other person or entity to purchase, subscribe for or to
otherwise acquire any shares of such stock or other securities of any
Subsidiary.
(f) Except as set forth in Schedule 3.4(f), there are no outstanding
agreements affecting or relating to the voting, issuance, purchase, redemption,
repurchase or transfer of any capital stock of or other equity interests in any
Subsidiary.
(g) Each Subsidiary's stock register or similar register of ownership has
complete and accurate records indicating the following: (i) the name and address
of each Person owning shares of capital stock or other equity interest of the
Subsidiary and (ii) the certificate number of each certificate evidencing shares
of capital stock or other equity interest issued by the Subsidiary, the number
of shares or other equity interests evidenced by each such certificate, the date
of issuance of such certificate, and, if applicable, the date of cancellation.
Copies of same have been made available to Americana.
Section 3.5 Contracts and Undertakings. Schedule 3.5 sets forth a list of
all of the contracts, agreements, leases, arrangements, commitments or other
undertakings (collectively, the "Contracts") to which CMG or any Subsidiary is a
party or to which GMG or any Subsidiary or their properties are subject. Neither
CMG nor any Subsidiary is in default under any of the Contracts and, to CMG's
and the CMG Shareholders' best knowledge, after due inquiry, no other party to
any Contract is in default thereunder nor, to CMG's or the CMG Shareholders'
best knowledge, after due inquiry, does there exist any condition or event
which, after notice or lapse of time or both, would constitute a default by any
party to any such Contract.
Section 3.6 Financial Statements.
(a) The unaudited consolidated balance sheet of CMG as of May 31 2001 and
the unaudited consolidated statement of operations and cash flows for the period
then ended (the "Financial Statements") are set forth in Schedule 3.6 and were
(a) prepared in accordance with the books and records of CMG and each
Subsidiary; (b) were prepared in accordance with generally accepted accounting
principles consistently applied; and (c) are accurate and fairly present the
financial condition and results of operations of CMG and each Subsidiary as of
the date thereof for the period covered thereby.
(b) The Financial Statements (i) are complete and correct in all material
respects, (ii) have been prepared in accordance with generally accepted
accounting principles, consistently applied throughout the periods indicated,
and (iii) fairly and accurately present in all material respects the financial
position of CMG and each Subsidiary.
Section 3.7 Liabilities. Except as set forth in Schedule 3.7, neither CMG
nor any Subsidiary has any liabilities or obligations (whether known or unknown,
contingent or absolute, matured, unmatured or otherwise) that are not reflected
or reserved against in the Financial Statements, including, without limitation,
any liabilities with respect to the payment of any country, federal, state,
county, local or other taxes (including any deficiencies, interest or
penalties).
Section 3.8 Absence of Certain Changes or Events. Since May 31, 2001
neither CMG nor any Subsidiary has:
(a) amended its Articles of Incorporation or Bylaws;
(b) waived of any rights of value which individually or in the aggregate
are material considering the business of CMG or any Subsidiary;
(c) had any accrual or made any arrangement for or payment of bonuses or
special compensation of any kind or any severance or termination pay to any
present or former officer or employee of CMG or any Subsidiary;
(d) borrowed or agreed to borrow any funds or incurred or become subject
to, any material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business;
(e) become subject to any law or regulation that materially and adversely
affects, or in the future may adversely affect, the business, operations,
properties, assets or financial condition of CMG or any Subsidiary;
(f) suffered any damage, destruction or loss, whether or not covered by
insurance, which could have a material adverse effect on CMG's or any
Subsidiary's business or assets.
Section 3.9 Title and Related Matters.CMG and each Subsidiary have good and
marketable title to and are the sole and exclusive owners of all of their
respective properties, inventory, interests in properties and assets, real and
personal, tangible and intangible, free and clear of all liens, pledges, charges
or encumbrances.
Section 3.10 Litigation and Proceedings. Except as set forth in Schedule
3.10, there are no actions, suits, proceedings or investigations pending or, to
CMG's and the CMG Shareholders' best knowledge, threatened by or against CMG or
any Subsidiary, affecting CMG or any Subsidiary or their respective properties,
at law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign or before any arbitrator of any kind that
would have a material adverse affect on the business, operations or financial
condition of CMG or any Subsidiary.
Section 3.11 No Conflict With Other Instruments. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in the breach of any term or provision of,
or constitute an event of default under, any contract, agreement or instrument
to which CMG, any CMG Shareholder or any Subsidiary is a party or to which any
of them or their properties and/or operations are subject.
Section 3.12 Authorizations; Permits; Licenses. CMG and each Subsidiary
have all licenses, franchises, permits or other governmental authorizations
legally required to enable CMG and each Subsidiary to conduct their respective
businesses as conducted on the date hereof. Except for compliance with federal
and state securities and corporation laws, as hereinafter provided, no
authorization, approval, consent or order of, or registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution, delivery and performance by CMG and the CMG Shareholders of this
Agreement and the consummation by CMG and the CMG Shareholders of the
transactions contemplated hereby.
Section 3.13 Compliance With Laws and Regulations. CMG and each Subsidiary
have complied with all applicable statutes and regulations of any federal, state
or other governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the respective business,
operations, properties, assets or financial condition of CMG or any Subsidiary
or would not result in CMG or any Subsidiary incurring any material liability.
Section 3.14 Authority. Each of CMG and the CMG Shareholders has full power
and authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
and approved by all of the CMG Shareholders and the board of directors of CMG
and no other corporate or other proceedings on the part of CMG, the CMG
Shareholders or any Subsidiary are necessary to authorize this Agreement and the
transactions contemplated hereby.
Section 3.15 Information. The information concerning CMG and each
Subsidiary as set forth in this Agreement is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading.
Section 3.16 Securities Laws. The CMG Shareholders acknowledge that the
Americana Common Shares to be delivered pursuant to this Agreement are not being
registered under the Securities Act of 1933, as amended (the "Securities Act"),
on the ground that the offer and sale of the Americana Common Shares are exempt
from the registration provisions of Section 5 of the Securities Act pursuant to
Section 4(2) thereof, as transactions by an issuer not involving any public
offering, and/or may be deemed not to involve an offer or sale within the
meaning of Section 5 of the Securities Act pursuant to Regulation D promulgated
thereunder, and that the Americana Common Shares being delivered pursuant hereto
may not be resold in any transaction subject to Section 5 of the Securities Act
unless registered or an exemption from registration is available for such sale,
and that the certificates representing such Americana Common Shares will bear
substantially the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY
STATE OR TERRITORY OF THE UNITED STATES, IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION OR QUALIFICATION AFFORDED BY SUCH SECURITIES LAWS, AND HAVE BEEN
ACQUIRED BY THE HOLDER FOR INVESTMENT PURPOSES ONLY. THESE SECURITIES MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED, OR OFFERED FOR SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION, WITHIN THE UNITED STATES OR ANY OF ITS TERRITORIES
OR TO A UNITED STATES PERSON, UNLESS (i) THE SECURITIES ARE REGISTERED UNDER
SECTION 5 OF THE SECURITIES ACT, OR (ii) THE PROPOSED TRANSACTION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT. THE
TRANSFER AGENT (OR THE COMPANY IF THEN ACTING AS ITS TRANSFER AGENT) WILL REFUSE
TO TRANSFER THESE SECURITIES UNLESS PRESENTED WITH A WRITTEN OPINION
SATISFACTORY TO COUNSEL FOR THE COMPANY (OR A NO-ACTION OR INTERPRETIVE LETTER
FROM THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION) TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE CIRCUMSTANCES OF SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION.
Section 3.17 Tax Matters. CMG and each Subsidiary have duly and timely
filed all tax returns and reports required to be filed by each of them prior to
the Closing Date. All of CMG's and each Subsidiary's tax returns and reports are
true and complete in all material respects. CMG and each Subsidiary have paid
all taxes shown to be due on the aforesaid tax returns and reports prior to the
Closing Date.
Section 3.18 Acquisition for Investment. The Americana Common Shares to be
delivered pursuant to this Agreement are being acquired by the CMG Shareholders
for investment and not with a view to or for sale in connection with any
distribution thereof.
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Access to Properties and Records. Prior to the Closing, CMG
shall afford to the officers and authorized representatives of Americana full
access to the properties, books and records of CMG, in order that Americana may
have full opportunity to make such reasonable investigation as it shall desire
to make of the affairs of CMG, and shall furnish Americana with such additional
financial and operating data and other information as to the business and
properties of CMG as Americana shall from time to time reasonably request.
Section 4.2 Third Party Consents. CMG and Americana agree to cooperate with
each other in order to obtain any required third party consents to this
Agreement and the transactions herein contemplated.
Section 4.3 Indemnification. CMG and the CMG Shareholders, jointly and
severally, hereby agree to indemnify Americana and each of the officers, agents
and directors of Americana as of the date of execution of this Agreement and as
of the Closing against any loss, liability, claim, damage or expense (including,
but not limited to, any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened or any claim whatsoever), to which it or they may become subject
arising out of or based on any inaccuracy appearing in or misrepresentation made
in this Agreement. The indemnification provided for in this paragraph shall
survive the Closing and consummation of the transactions contemplated hereby and
termination of this Agreement for a period of 2 years from the Closing Date. In
the event that Americana sustains a claim on the indemnification agreement
contained herein, then that claim shall be paid by the CMG Shareholders by
return to Americana of an amount of stock in Americana sufficient in amount
valued at $.50 per share, to make Americana whole.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF AMERICANA
The obligations of Americana under this Agreement are subject to the
satisfaction, at or before the Closing, of the following conditions:
Section 5.1 Accuracy of Representations. The representations and warranties
made by CMG and the CMG Shareholders in this Agreement shall be true and correct
in all material respects at the Closing, except for representations and
warranties made as of a specific date, which shall be true and correct as of
such date, and each of CMG and the CMG Shareholders shall have performed or
complied with all covenants and conditions required by this Agreement to be
performed or complied with by CMG and the CMG Shareholders prior to or at the
Closing.
Section 5.2 Shareholder and Director Approval. All of the directors and all
of the holders of the issued and outstanding shares of capital stock of CMG
shall have approved this Agreement and the transactions contemplated hereby.
Section 5.3 Directors of CMG. The board of directors of CMG shall be
expanded to consist of no less than three and no more than five directors. At
the Closing, the board of directors of CMG shall consist in its entirety of Rick
Durand, Susan Durand, Don White and Jim Oliver.
Section 5.4 Officers of CMG. The following individuals shall be duly
appointed to the offices of CMG indicated opposite their names below, and any
other individuals occupying such offices prior to the Closing shall have
tendered their resignations to CMG, with such resignations becoming effective at
the Closing:
Rick Durand President
Susan Durand Secretary
Don White Treasurer
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF CMG
The obligations of CMG under this Agreement are subject to the
satisfaction, at or before the Closing (unless otherwise indicated herein), of
the following conditions:
Section 6.1 Accuracy of Representations. The representations and warranties
made by Americana in this Agreement shall be true and correct in all material
respects at the Closing, except for representations and warranties made as of a
specific date, which shall be true and correct as of such date, and Americana
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed or complied with by Americana prior to or at the
Closing.
Section 6.2 Director Approval. The board of directors of Americana shall
have approved this Agreement and the transactions contemplated hereby.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Broker/Finder. Except as set forth in Schedule 7.1, each party
hereto hereby represents and warrants that it is under no obligation, express or
implied, to pay any commission, brokerage or finde's fees in connection with
the bringing of the parties together in the negotiation, execution, or
consummation of this Agreement. Except as to the information set forth in
Schedule 7.1, the parties each agree to indemnify the other against any claim by
any third person for any commission, brokerage or finder's fee or other payment
with respect to this Agreement or the transactions contemplated hereby based on
any alleged agreement or understanding between the indemnifying party and such
third person, whether express or implied from the actions of the indemnifying
party.
Section 7.2 Governing Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of New Mexico.
Section 7.3 Notices. Any notices or other communications required or
permitted hereunder shall be deemed sufficiently given if personally delivered
to it or sent by registered mail or certified mail, postage prepaid, or by
prepaid telegram addressed as follows:
If to Americana: Mr. Forrest Carlton
303 San Mateo NE, Suite 104A
Albuquerque, NM 87108
with a copy to:
Pollet and Richardson
10900 Wilshire Blvd.
Suite 500
Los Angeles, California 90024
Attention: Mr. Kevin Friedmann, Esq.
If to CMG: Mr. Rick Durand
912 South McDonald Road
McDonald, Tennessee 37353
with a copy to:
____________________
____________________
____________________
or such other addresses as shall be furnished in writing by any party in
the manner for giving notices hereunder, and any such notice or communication
shall be deemed to have been given as of the date so delivered, mailed or
telegraphed.
Section 7.4 Attorneys' Fees. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the breaching party or parties shall reimburse the
non-breaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 7.5 Entire Agreement. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof. This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understanding, agreements, representations or warranties, written or oral,
except as set forth herein. This Agreement may not be amended or modified,
except by a written agreement signed by all parties hereto.
Section 7.6 Survival; Termination. The representations, warranties and
covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for a period of 2 years
from the Closing Date.
Section 7.7 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which taken together shall
be but a single instrument.
Section 7.8 Amendment or Waiver. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred herein,
at law, or in equity, and may be enforced concurrently herewith, and no waiver
by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. This Agreement may be amended only by a
written instrument duly executed by all parties hereto, with respect to any of
the terms contained herein, and any term or condition of this Agreement may be
waived or the time for performance hereof may be extended by a writing signed by
the party or parties for whose benefit the provision is intended.
Section 7.9 Incorporation of Recitals. All of the recitals hereof are
incorporated by this reference and are made a part hereof as though set forth at
length herein.
Section 7.10 Expenses. Each party hereto shall bear all of their respective
costs and expenses incurred in connection with the negotiation of this Agreement
and in the consummation of the transactions contemplated hereby and the
preparation hereof.
Section 7.11 Headings; Context. The headings of the sections and paragraphs
contained in this Agreement are for convenience of reference only and do not
form a part hereof and in no way modify, interpret or construe the meaning of
this Agreement.
Section 7.12 Assignment. This Agreement shall not be assigned by any party
without the prior written consent of the other parties.
Section 7.13 Public Announcements. Prior to the Closing, except as may be
required by law, neither party shall make any public announcement with respect
to the transactions provided for herein without the prior written consent of the
other parties hereto.
Section 7.14 Severability. If any term or provision of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
determined to be invalid, illegal or unenforceable under present or future laws
effective during the term of this Agreement, then and, in that event: (A) the
performance of the offending term or provision (but only to the extent its
application is invalid, illegal or unenforceable) shall be excused as if it had
never been incorporated into this Agreement, and, in lieu of such excused
provision, there shall be added a provision as similar in terms and amount to
such excused provision as may be possible and be legal, valid and enforceable,
and (B) the remaining part of this Agreement (including the application of the
offending term or provision to persons or circumstances other than those as to
which it is held invalid, illegal or unenforceable) shall not be affected
thereby and shall continue in full force and effect to the fullest extent
provided by law.
Section 7.15 Construction. The language of this Agreement shall not be
construed for or against any party hereto, regardless of who drafted or was
principally responsible for drafting the Agreement or terms or conditions
hereof.
Section 7.16 Execution Knowing and Voluntary. In executing this Agreement,
the parties severally acknowledge and represent that each: (a) has fully and
carefully read and considered this Agreement; (b) has been or has had the
opportunity to be fully apprized by legal counsel of the effect and meaning of
this document and all terms and conditions hereof; and (c) is executing this
Agreement voluntarily, free from any influence, coercion or duress of any kind.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their authorized representatives as of the date first above
written.
AMERICANA PUBLISHING, INC.
By: ____________________________
George Lavato, Jr., President
CORPORATE MEDIA GROUP, INC.
By: _____________________________
Rick Durand, President
CMG SHAREHOLDERS:
_______________________________
Rick Durand
_______________________________
Susan Durand
Exhibit 99.1
CONVERTIBLE DEBENTURE
Date: September 13, 2001
Maker: Americana Publishing, Inc.
Maker's Mailing Address (including county): 303 San Mateo NE, Suite 104A
Bernalillo County
Albuquerque, NM 87108
Payee: Jerome Ruther
Place for Payment: (including county): 369 Montezuma - 414
Santa Fe County
Santa Fe, New Mexico 87501
Principal Amount: One Hundred Thousand and no/100 Dollars ($100,000.00).
Annual Interest Rate on Unpaid Principal from Date: 30%
Annual Interest Rate on Matured, Unpaid Amounts: 30%
Terms of Payment (principal and interest): Interest shall be paid monthly on the
last day of each month following the execution of this convertible debenture and
on the last day of each month thereafter. Principal shall be payable in full 366
days from date. At the due date, or in the event Maker elects to pay in full
prior to the due date, then Payee shall have the option of accepting either cash
or stock or cash and stock in repayment of this debt. Said stock shall be deemed
to be valued at five cents ($.05) per share for purposes of this provision for
repayment.
Security for Payment: Five Hundred Thousand (500,000) shares of Rule 144
restricted stock in Americana Publishing, Inc.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above.
If Maker defaults in the payment of this note or in the performance of any
obligation in any instrument securing or collateral to it, and the default
continues after Payee gives Maker notice of the default and the time within
which it must be cured, as may be required by law or by written agreement, then
payee may declare the unpaid principal balance and earned interest on this note
immediately due. Maker and each surety, endorser, and guarantor waive all
demands for payment, presentations for payment, notices of intention to
accelerate maturity, notices of acceleration of maturity, protests, and notices
of protest, to the extent permitted by law.
If this note or any instrument securing or collateral to it is given to an
attorney for collection or enforcement, or if suit is brought for collection of
enforcement, or if it is collected or enforced through probate, bankruptcy, or
other judicial proceeding, then Maker shall pay payee all costs of collection
and enforcement including reasonable attorney's fees and court costs, in
addition to other amounts due. Reasonable attorney's fees shall be 10% of all
amounts due unless either party pleads otherwise.
Interest on the debt evidenced by this note shall not exceed the maximum
amount of nonusurious interest that may be contracted for, taken, reserved,
charged, or received under law; any interest in excess of that maximum amount
shall be credited on the principal of the debtor or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this and all other instruments concerning the debt.
Each Maker is responsible for all obligations represented by this note.
When the context requires, singular nouns and pronouns include the plural.
AMERICANA PUBLISHING, INC., Maker
by:
George Lovato, Jr., Chairman
Exhibit 99.2
CONVERTIBLE DEBENTURE
Date: October 12, 2001
Maker: Americana Publishing, Inc.
Maker's Mailing Address (including county): 303 San Mateo NE, Suite 104A
Bernalillo County
Albuquerque, NM 87108
Payee: Jerome Ruther
Place for Payment: (including county): 369 Montezuma - 414
Santa Fe County
Santa Fe, New Mexico 87501
Principal Amount: One Hundred Thousand and no/100 Dollars ($100,000.00).
Annual Interest Rate on Unpaid Principal from Date: 30%
Annual Interest Rate on Matured, Unpaid Amounts: 30%
Terms of Payment (principal and interest): Interest shall be paid monthly on the
last day of each month following the execution of this convertible debenture and
on the last day of each month thereafter. Principal shall be payable in full 366
days from date. At the due date, or in the event Maker elects to pay in full
prior to the due date, then Payee shall have the option of accepting either cash
or stock or cash and stock in repayment of this debt. Said stock shall be deemed
to be valued at five cents ($.05) per share for purposes of this provision for
repayment.
Security for Payment: Five Hundred Thousand (500,000) shares of Rule 144
restricted stock in Americana Publishing, Inc.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above.
If Maker defaults in the payment of this note or in the performance of any
obligation in any instrument securing or collateral to it, and the default
continues after Payee gives Maker notice of the default and the time within
which it must be cured, as may be required by law or by written agreement, then
payee may declare the unpaid principal balance and earned interest on this note
immediately due. Maker and each surety, endorser, and guarantor waive all
demands for payment, presentations for payment, notices of intention to
accelerate maturity, notices of acceleration of maturity, protests, and notices
of protest, to the extent permitted by law.
If this note or any instrument securing or collateral to it is given to an
attorney for collection or enforcement, or if suit is brought for collection of
enforcement, or if it is collected or enforced through probate, bankruptcy, or
other judicial proceeding, then Maker shall pay payee all costs of collection
and enforcement including reasonable attorney's fees and court costs, in
addition to other amounts due. Reasonable attorney's fees shall be 10% of all
amounts due unless either party pleads otherwise.
Interest on the debt evidenced by this note shall not exceed the maximum
amount of nonusurious interest that may be contracted for, taken, reserved,
charged, or received under law; any interest in excess of that maximum amount
shall be credited on the principal of the debtor or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this and all other instruments concerning the debt.
Each Maker is responsible for all obligations represented by this note.
When the context requires, singular nouns and pronouns include the plural.
AMERICANA PUBLISHING, INC., Maker
by:
George Lovato, Jr., Chairman
Exhibit 99.3
CONVERTIBLE DEBENTURE
Date: November 21, 2001
Maker: Americana Publishing, Inc.
Maker's Mailing Address (including county): 303 San Mateo NE, Suite 104A
Bernalillo County
Albuquerque, NM 87108
Payee: Jerome Ruther
Place for Payment: (including county): 369 Montezuma - 414
Santa Fe County
Santa Fe, New Mexico 87501
Principal Amount: One Hundred Thousand and no/100 Dollars ($100,000.00).
Annual Interest Rate on Unpaid Principal from Date: 30%
Annual Interest Rate on Matured, Unpaid Amounts: 30%
Terms of Payment (principal and interest): Interest shall be paid monthly on the
last day of each month following the execution of this convertible debenture and
on the last day of each month thereafter. Principal shall be payable in full 366
days from date. At the due date, or in the event Maker elects to pay in full
prior to the due date, then Payee shall have the option of accepting either cash
or stock or cash and stock in repayment of this debt. Said stock shall be deemed
to be valued at five cents ($.05) per share for purposes of this provision for
repayment.
Security for Payment: Five Hundred Thousand (500,000) shares of Rule 144
restricted stock in Americana Publishing, Inc.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above.
If Maker defaults in the payment of this note or in the performance of any
obligation in any instrument securing or collateral to it, and the default
continues after Payee gives Maker notice of the default and the time within
which it must be cured, as may be required by law or by written agreement, then
payee may declare the unpaid principal balance and earned interest on this note
immediately due. Maker and each surety, endorser, and guarantor waive all
demands for payment, presentations for payment, notices of intention to
accelerate maturity, notices of acceleration of maturity, protests, and notices
of protest, to the extent permitted by law.
If this note or any instrument securing or collateral to it is given to an
attorney for collection or enforcement, or if suit is brought for collection of
enforcement, or if it is collected or enforced through probate, bankruptcy, or
other judicial proceeding, then Maker shall pay payee all costs of collection
and enforcement including reasonable attorney's fees and court costs, in
addition to other amounts due. Reasonable attorney's fees shall be 10% of all
amounts due unless either party pleads otherwise.
Interest on the debt evidenced by this note shall not exceed the maximum
amount of nonusurious interest that may be contracted for, taken, reserved,
charged, or received under law; any interest in excess of that maximum amount
shall be credited on the principal of the debtor or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this and all other instruments concerning the debt.
Each Maker is responsible for all obligations represented by this note.
When the context requires, singular nouns and pronouns include the plural.
AMERICANA PUBLISHING, INC., Maker
by:
George Lovato, Jr., Chairman
Exhibit 99.4
CONVERTIBLE DEBENTURE
Date: September 27, 2001
Maker: Americana Publishing, Inc.
Maker's Mailing Address (including county): 303 San Mateo NE, Suite 104A
Bernalillo County
Albuquerque, NM 87108
Payee: Lowell Fixler
Place for Payment: 2021 St. John's Avenue
Highland Park, IL 60035
Principal Amount: Fifty Thousand and no/100 Dollars ($50,000.00).
Annual Interest Rate on Unpaid Principal from Date: 30%
Annual Interest Rate on Matured, Unpaid Amounts: 30%
Terms of Payment (principal and interest): Interest shall be paid monthly
on the last day of the month following the execution of this convertible
debenture and on the last day of each month thereafter. Principal shall be
payable in full 366 days from date. At the due date, or in the event Maker
elects to pay in full prior to the due date, then Payee shall have the option of
accepting either cash or stock or cash and stock in repayment of this debt. Said
stock shall be deemed to be valued at five cents ($.05) per share for purposes
of this provision for repayment.
Security for Payment: Two Hundred Fifty Thousand (250,000) shares of Rule
144 restricted stock in Americana Publishing, Inc.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above.
If Maker defaults in the payment of this note or in the performance of any
obligation in any instrument securing or collateral to it, and the default
continues after Payee gives Maker notice of the default and the time within
which it must be cured, as may be required by law or by written agreement, then
payee may declare the unpaid principal balance and earned interest on this note
immediately due. Maker and each surety, endorser, and guarantor waive all
demands for payment, presentations for payment, notices of intention to
accelerate maturity, notices of acceleration of maturity, protests, and notices
of protest, to the extent permitted by law.
If this note or any instrument securing or collateral to it is given to an
attorney for collection or enforcement, or if suit is brought for collection of
enforcement, or if it is collected or enforced through probate, bankruptcy, or
other judicial proceeding, then Maker shall pay payee all costs of collection
and enforcement including reasonable attorney's fees and court costs, in
addition to other amounts due. Reasonable attorney's fees shall be 10% of all
amounts due unless either party pleads otherwise.
Interest on the debt evidenced by this note shall not exceed the maximum
amount of nonusurious interest that may be contracted for, taken, reserved,
charged, or received under law; any interest in excess of that maximum amount
shall be credited on the principal of the debtor or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this and all other instruments concerning the debt.
Each Maker is responsible for all obligations represented by this note.
When the context requires, singular nouns and pronouns include the plural.
AMERICANA PUBLISHING, INC., Maker
by:
George Lovato, Jr., Chairman
Exhibit 99.5
CONVERTIBLE DEBENTURE
Date: December 6, 2001
Maker: Americana Publishing, Inc.
Maker's Mailing Address (including county): 303 San Mateo NE, Suite 104A
Bernalillo County
Albuquerque, NM 87108
Payee: Lowell Fixler
Place for Payment: 2021 St. John's Avenue
Highland Park, IL 60035
Principal Amount: Twenty Five Thousand and no/100 Dollars ($25,000.00).
Annual Interest Rate on Unpaid Principal from Date: 30%
Annual Interest Rate on Matured, Unpaid Amounts: 30%
Terms of Payment (principal and interest): Interest shall be paid monthly on the
last day of the month following the execution of this convertible debenture and
on the last day of each month thereafter. Principal shall be payable in full 366
days from date. At the due date, or in the event Maker elects to pay in full
prior to the due date, then Payee shall have the option of accepting either cash
or stock or cash and stock in repayment of this debt. Said stock shall be deemed
to be valued at five cents ($.05) per share for purposes of this provision for
repayment.
Security for Payment: One Hundred Twenty Five Thousand (125,000) shares of Rule
144 restricted stock in Americana Publishing, Inc.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above.
If Maker defaults in the payment of this note or in the performance of any
obligation in any instrument securing or collateral to it, and the default
continues after Payee gives Maker notice of the default and the time within
which it must be cured, as may be required by law or by written agreement, then
payee may declare the unpaid principal balance and earned interest on this note
immediately due. Maker and each surety, endorser, and guarantor waive all
demands for payment, presentations for payment, notices of intention to
accelerate maturity, notices of acceleration of maturity, protests, and notices
of protest, to the extent permitted by law.
If this note or any instrument securing or collateral to it is given to an
attorney for collection or enforcement, or if suit is brought for collection of
enforcement, or if it is collected or enforced through probate, bankruptcy, or
other judicial proceeding, then Maker shall pay payee all costs of collection
and enforcement including reasonable attorney's fees and court costs, in
addition to other amounts due. Reasonable attorney's fees shall be 10% of all
amounts due unless either party pleads otherwise.
Interest on the debt evidenced by this note shall not exceed the maximum
amount of nonusurious interest that may be contracted for, taken, reserved,
charged, or received under law; any interest in excess of that maximum amount
shall be credited on the principal of the debtor or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this and all other instruments concerning the debt.
Each Maker is responsible for all obligations represented by this note.
When the context requires, singular nouns and pronouns include the plural.
AMERICANA PUBLISHING, INC., Maker
by:
George Lovato, Jr., Chairman
Exhibit 99.6
CONVERTIBLE DEBENTURE
Date: December 5, 2001
Maker: Americana Publishing, Inc.
Maker's Mailing Address (including county): 303 San Mateo NE, Suite 104A
Bernalillo County
Albuquerque, NM 87108
Payee: Don White
Place for Payment: (including county): 8203 Willow Place South, Suite 605
Harris County
Houston, Texas 77064
Principal Amount: Ten Thousand no/100 Dollars ($10,000.00).
Annual Interest Rate on Unpaid Principal from Date: 30%
Annual Interest Rate on Matured, Unpaid Amounts: 30%
Terms of Payment (principal and interest): Payable in full one year from date.
Security for Payment: One Hundred Thousand (100,000) shares of Rule 144
restricted stock in Americana Publishing, Inc.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above.
If Maker defaults in the payment of this note or in the performance of any
obligation in any instrument securing or collateral to it, and the default
continues after Payee gives Maker notice of the default and the time within
which it must be cured, as may be required by law or by written agreement, then
payee may declare the unpaid principal balance and earned interest on this note
immediately due. Maker and each surety, endorser, and guarantor waive all
demands for payment, presentations for payment, notices of intention to
accelerate maturity, notices of acceleration of maturity, protests, and notices
of protest, to the extent permitted by law.
If this note or any instrument securing or collateral to it is given to an
attorney for collection or enforcement, or if suit is brought for collection of
enforcement, or if it is collected or enforced through probate, bankruptcy, or
other judicial proceeding, then Maker shall pay payee all costs of collection
and enforcement including reasonable attorney's fees and court costs, in
addition to other amounts due. Reasonable attorney's fees shall be 10% of all
amounts due unless either party pleads otherwise.
Interest on the debt evidenced by this note shall not exceed the maximum
amount of nonusurious interest that may be contracted for, taken, reserved,
charged, or received under law; any interest in excess of that maximum amount
shall be credited on the principal of the debtor or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this and all other instruments concerning the debt.
Each Maker is responsible for all obligations represented by this note.
When the context requires, singular nouns and pronouns include the plural.
AMERICANA PUBLISHING, INC., Maker
by:
George Lovato, Jr., President