<SUBMISSION-INFORMATION-FILE>
<TYPE> 10QSB
<DOCUMENT-COUNT> 1
<SROS> NONE
<FILER>
<CIK> 0001081751
<CCC> #MD7FUEK
</FILER>
<PERIOD> 03/31/02
<DOCUMENT>
<TYPE> 10QSB
<DESCRIPTION> Form 10QSB
<TEXT>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended March 31, 2002
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number
AMERICANA PUBLISHING, INC.
---------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1453702
------------ --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
303 SAN MATEO NE, SUITE 104A, ALBUQUERQUE, NM 87108
---------------------------------------------------
(Address of principal executive offices)
505-265-6121
(Issuer's telephone number)
--------------------------------------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X . No .
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes_____. No_____.
APPLICABLE ONLY TO CORPORATE ISSUERS
As of March 31, 2002, there were 19,959,394 shares of common stock outstanding.
Transitional Small Business Disclosure Format (Check one): Yes_____. No_____.
<PAGE>
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
December 31, 2001 (Audited) and
March 31, 2002 (Unaudited) 3
Condensed Consolidated Statement of Operations
Three months ended March 31, 2002
and 2001 4
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 2002
and 2001 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial statements
Americana Publishing, Inc.
Condensed Consolidated Balance Sheets
As of
March 31, December 31,
2002 2001
(unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents $ 33,302 $ 48,208
Accounts receivable, less allowance
for doubtful accounts of $69,093
and $98,500, respectively 158,318 53,512
Accounts receivable - factored 523,629 702,075
Inventory 183,715 389,528
Prepaid and other current assets 2,234 5,734
--------------- -------------
Total Current Assets 901,198 1,199,057
Property and Equipment, net 1,818,146 1,945,413
--------------- -------------
TOTAL ASSETS $ 2,719,344 $ 3,144,470
=============== =============
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current Liabilities
Book overdraft $ 80,495 $ 56,248
Line of credit 201,249 203,449
Accounts payable 2,817,284 2,635,990
Accrued expenses 171,700 127,709
Note payable - factor 523,629 702,075
Notes payable - related party 159,897 96,397
Convertible debt - related parties 372,500 387,500
Current portion of capital lease
obligations 215,534 200,629
--------------- -------------
Total current liabilities 4,452,288 4,409,997
Capital lease obligations,
less current portion 214,655 278,179
------------- -------------
Total liabilities 4,756,943 4,688,176
------------- -------------
Commitments and Contingencies
Shareholder's deficit
Prefered stock, no par
20,000,000 shares authorized
0(unaudited)shares issued and
outstanding - -
Common stock, $0.001 par value
100,000,000 shares authorized - -
19,959,394(unaudited) and 14,636,570
share's issued and outstanding for
March 31,2002 and December 31,2001,
respectively 19,960 14,637
Additional paid-in capital 9,388,276 8,691,812
Accumulated deficit (11,445,835) (10,250,155)
------------- -------------
Total shareholder's deficit (2,037,599) (1,543,706)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICT $ 2,719,344 $ 3,144,470
============== =============
See Accompanying Notes to Financial Statements.
3
<PAGE>
Americana Publishing, Inc.
Consolidated Statements of Operations
For the Period
Three Months Three Months
Ended Ended
March 31, 2002 March 31, 2001
(unaudited) (unaudited)
Revenues $ 697,101 $ 94,811
Cost of goods sold 475,160 30,428
----------- ------------
Gross profit 221,941 64,383
----------- ------------
Operating expenses
Compensation expense 713,823 458,423
Depreciation and amortization 127,268 30,763
Selling, general, and administrative 557,996 59,489
----------- ------------
Total operating expenses 1,399,087 548,675
----------- ------------
Loss from operations (1,177,146) (484,292)
----------- ------------
Other Income(Expense)
Other Income 4,422 -
Interest Expense (22,956) -
Interest Income - 129
----------- ------------
Total Other Income(Expense) (18,534) 129
----------- ------------
Net(Loss) $(1,195,680) $ (484,163)
=========== ============
Basic and Diluted loss per share $ (0.07) $ (0.05)
=========== ============
Basic and Diluted weighted-average 16,600,958 8,893,952
shares outstanding =========== ============
See Accompanying Notes to Financial Statements.
4
<PAGE>
Americana Publishing, Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 2002 March 31, 2001
Cash Flows From Operating Activities:
Net Loss $(1,195,680) $ (484,163)
Adjustments to Reconcile Net Loss
To Net Cash used in operating activities
Depreciation and amortization 127,267 30,762
Capital Transactions - 373,402
Allowance for doubtful accounts (29,407) -
Issuance of Common Stock to outside
consultants in exchange for services
rendered 7,280 -
Issuance of Common Stock to employees and
members of the Board of Directors for
services rendered 520,257 -
(Increase) Decrease in Accounts Receivable (75,399) (33,496)
(Increase) Decrease Prepaid expenses
and other assets 3,500 5,483
Increase (Decrease)in Accounts Payable 181,294 (460)
(Increase) Decreasein Inventory 205,813 (6,141)
Increase (decrease) in Accrued expenses 43,991 -
------------- -----------
Net Cash Used In Operating Activities (211,084) (114,612)
------------- -----------
Cash Flows From Investing Activities:
Purchase of Property and Equipment - (19,148)
Sale of Marketable Securities - 25,000
------------- -----------
Net Cash provided by Investing Activities: - 5,852
------------- -----------
Cash Flows From Financing Activities:
Increase in book overdraft 24,247 -
Net payments on line of credit (2,200) -
Proceeds from notes payable 76,500 -
Payments on notes payable (28,000) -
Payments on Capitalization lease obligations (48,619) -
Proceeds From Sale of Common Stock 174,250 112,500
-------------- -----------
Net Cash Provided by Financing Activities 196,178 112,500
-------------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents (14,906) 3,740
Cash and Cash Equivalents at
Beginning of Period 48,208 20,027
-------- -----------
Cash and Cash Equivalents at
End of Period $ 33,302 23,767
============= ===========
Supplemental disclosures of cash flow information
Interest Paid $ 19,956 $ -
============= ===========
Income Tax paid $ - $ -
============= ===========
See Accompanying Notes to Financial Statements.
5
<PAGE>
AMERICANA PUBLISHING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The unaudited internal condensed financial statements and related notes have
been prepared by Americana Publishing, Inc. (the “Company”), and not
subject to an audit pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at March 31, 2002 and
for all periods presented, have been made. Certain reclassifications have been
made to the prior year to conform with the current years presentation.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these condensed financial statements be
read in conjunction with the Company´s audited financial statements and
notes thereto for the fiscal year ended December 31, 2001. The results of
operations for the three months ended March 31, 2002 are not necessarily
indicative of the operating results for the full year.
NOTE 2. GOING CONCERN
The accompaning financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satifaction of
liabilities in the normal course of business. As shown in the financial
statements, during the year ended December 31, 2001 and the three months ended
March 31, 2002, the company incurred losses of $5,775,333 and $1,195,680,
respectively. In addition to, as of March 31, 2002, its total current
liabilities exceeded its current assets by $2,037,599, and its shareholders'
deficit was $2,037,599. These factors, among others, raise substancial doubt
about its ability to continue as a going concern.
NOTE 3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In April 2002, the FASB issued SFAS No.145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No.13 and Technical Corrections."
SFAS No.145 updates, clarifies, and simplifies exsisting accounting
pronouncements. This statement rescinds SFAS No.4, which required all gains and
losses from extinguishments of debt to be aggregated and, if material,
classified as an extraordinary item, net of related income tax effect. As a
result, the criteria in APB No.30 will not be used to classify those gains and
losses. SFAS No.64 amended SFAS No.4 and is no longer necessary as SFAS No.4 has
been rescinded. SFAS No.44 has been rescinded as it is no longer necessary. SFAS
No.145 amends SFAS No.13 to require that certain lease modifications that have
economic effects similar to sale-leaseback transactions be accounted for in the
same manner as sale-lease transactions. This statement also makes technical
corrections to exsisting pronouncements. While those corrections are not
substantive in nature, in some instances, they may change accounting practice.
The Company does not expect adoption of SFAS No.145 to have a material impact,
if any, on its financial position or results of operations.
NOTE 4. LIQUIDITY
The Company has historically financed its operation1s through the sale of common
stock. The proceeds were used for start-up activities including website
development as well as other start-up activities. The Company´s revenues
have average $232,367 per month for 2002. This revenue has not been adequate to
cover current monthly cash expenditures thus requiring the Company to raise
additional capital infusions to support operations. Currently management
believes revenues will increase to adequate levels to support cash expenditures.
In addition management has implemented a plan to lower cash expenditures and is
actively pursuing additional capital infusions. There is no assurance that
adequate revenues will be achieved to support operations, however, management
believes it will be able to raise additional capital, lower cash expenditures or
a combination of both to maintain operations for the next twelve months.
The Company will require future financing in various forms. The Company proposes
to finance working capital timing differences with an asset-based line of
credit. Capital improvements should be financed by intermediate-term debt. The
Company is not in possession of any commercial bank commitment letters or a
letter of intent from a capable underwriter at this time.
Note 5. Stock Transactions
During the first three months of 2002 the Company issued 3,711,158 shares of
common stock to various employees and consultants. The fair value of this stock
was booked as compensation expense and consulting expense.
During the first three months of 2002 the Company sold 1,611,666 of common
shares for $174,250 under regulation 4(2). Regulation 4(2) provides for the sale
of restricted shares of common stock without the preparation of a prospectus.
The share offered in the first quarter cannot be sold for a period of one year.
Note 6. Subsequent Events 6
On April 1, 2002 the company aquired Audio Book inventory and Master's of Sunset
Publications from an individual in exchange for 250,000 shares of Ristricted
Common Stock of Americana Publishing, Inc. <PAGE>
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
All phases of the Company's operations are subject to influences outside of the
Company's control. Any one, or a combination, of these factors could materially
affect the results of the Company's operations. These factors include
competition pressures, inflation, trade restrictions, interest rate fluctuations
and other capital market conditions, weather, future and options trading or
Site Development
During the third quarter, 2001, an analysis was performed of the web site. It
was determined that the existing code-base was causing intermittent errors. A
determination was made to modify the entire website and database ab initio. It
was further determined that a restructuring of the code to permit Ingram Book
Co., Inc., to automatically receive a copy of each order placed was necessary.
The modification of the website and database and the restructuring of the Ingram
order code were completed during the fourth quarter, 2001.
Audio Book Development
Americana has purchased the audio production rights to over one hundred (100)
books. In cooperation with John Wagner Studios, Americana has produced
twenty(20) audio titles in 2001 for a total inventory of 60 titles as of
December 31, 2001 available for sale to some 17,000 retail stores, 3,000
libraries and dozens of wholesale distributors throughout the United States.
Sales of audio books on hand was continued through the calendar year 2001. The
total amount of 99,567.41 in invoiced sales has been achieved during the 1st
quarter of 2002. All sixty (60) titles are available for sale as a download from
the americanabooks.com website in addition to telephone solicitation of sales of
audiotapes. Additionally, in an effort to increase sales, a catalog of audio
books was completed and is continuously mailed to potential wholesale book
buyers, bookstores and libraries. It is anticipated that audio book production
will continue in the year 2002 to produce a total of twenty (20) new audio book
titles for the calendar year 2002. In order to increase the Company's available
inventory, negotiations have begun with a principal of Sunset Productions, Inc.,
a producer and seller of audio books no longer in business, for the purchase of
Sunset's remaining inventory and their master recordings. It is anticipated that
negotiations will be completed in the second quarter, 2002, thus allowing the
Company to increase its list of titles by approximately seventy (70) items with
a total market value inventory of approximately $160,000.00.
Finally, Americana received the 2001 Audie Award from the Audio Publishers
Association as the best "New Audio Book Publisher" among its 200-member trade
group.
Print Book Development.
Americana has printed and introduced in the market place during the first
quarter of 2002 five printed works: The Killing Cards, Ground Lions, Beloved
Leah, It Is I Joseph, and A Tourist In The Yucatan appealing to a diverse
audience. Americana has approximately three written works in various stages of
production and expects to publish and introduce to the market place
approximately ten additional titles during the calendar year 2002.
Acquisitions.
As of July 16, 2001, Americana purchased Corporate Media Group, Inc. and Visual
Energy Studios. Corporate Media Group, Inc. is a media service company dedicated
to providing duplication, replication of CD's and VHS tapes and media packaging,
distribution and fulfillment services to a wide range of clients. Corporate
Media Group, Inc. is a wholly owned subsidiary of Americana. During the first
quarter, 2002, orders have been solicited from a major buyer of duplication
services expected to result in billings from Corporate Media Group in excess of
$2,000,000.00 for the calendar year 2002.
Liquidity and Capital Resources
In order to enhance the capital position of the Company, Americana has acquired
approval for the sale of additional stock through a private placement
memorandum. This memorandum was responsible for raising approximately One
Hundred Fifty Thousand Dollars ($150,000.00), part of which was received in
calendar year 2002. The Company utilized two hundred forty-five thousand eight
hundred twenty-seven (245,827) shares of Rule 144 restricted common stock in
order to convert certain debt of a subsidiary of the Company. Further, the
Company executed Three Hundred Seventy Five Thousand Dollars ($375,000) in
convertible debentures with two of its major shareholders in order to provide
working capital for American's subsidiary.
The Company proposes to utilize the common stock to acquire other sponsored book
publishing companies and other business enterprises. Therefore, active trading
of the stock will be important to the principals of the target companies.
Americana is very dependent on the active trading of its stock. Currently the
Company's stock has not been actively traded. The Company plans on using the
stock to acquire publishing companies and other enterprises that benefit growth.
If the stock continues to trade flatly, the ability of Americana to acquire
these companies would be seriously jeopardized. The Company is currently
attempting to refinance Corporate Media Group, Inc.'s equipment in order to
consolidate some current liabilities through a long-term loan of between
$600,000-800,000. Without financing, it would be difficult to cover working
capital requirements and future capital expenditures. No assurance can be given
that the stock will be actively traded or that Americana will be able to
complete these financings.
Capital Expenditure
During the calendar year 2002, Americana made approximately $0 in capital
expenditures.
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. During the first
quarter, 2002, the Company issued two letters of intent and has as a result
investigated and completed its due diligence with respect to one letter of
intent and determined that the acquisition was not in the best interest of
Americana. Due diligence with respect to the remaining letter of intent is still
ongoing and is expected to be completed during the second quarter, 2002.
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.
Results of Operations
Quarter Ended March 31, 2002 Compared to Quarter ended March 31, 2001
Revenue increased by $602,320 for the current quarter which was due to the
acquisition of CMG Inc in July of 2001. Cost of Goods sold increased from
$30,428 to 475,160, once again due to the acquisition CMG.
Of the total amount of compensation expense of $713,823 a majority of it,
$527,537 was for the issuance of stock to various employees and consultants,
which was a non-cash transaction.
Part II. Other Information.
Item 1. Legal Proceedings - None
Item 2. Changes in Security - None
Item 3. Defaults upon Senior Securities - None
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934 the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Americana Publishing, Inc.
(Registrant)
By: /s/ George Lovato, Jr.
-----------------------------------
Date: May 20, 2001 George Lovato, Jr., CEO/Chairman
10