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<PRE>


                    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 June 30, 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 June 30, 2002, there were 21,024,394 shares of common stock outstanding.

Transitional Small Business Disclosure Format (Check one):  Yes_____. No_____.





                                      INDEX




                                                                        PAGE
                                                                        ----

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                Condensed Balance Sheets
                      December 31, 2001 (Audited) and
                      June 30, 2002 (Unaudited)                          3

                Condensed Statement of Income (Loss)
                      Three and six months ended
                      June 30, 2002 and 2001                             4

                Condensed Statements of Cash Flows
                      Six months ended June 30, 2002
                      and 2001                                           5

                Notes to Condensed Financial Statements                  6

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations                   7-9

Part II. OTHER INFORMATION

Item 1.         Legal Proceedings                                        10

Item 2.         Changes in Securities                                    10

Item 3.         Defaults Upon Senior Securities                          10

Item 4.         Submission of Matters to a Vote of Security Holders      10

Item 5.         Other Information                                        10

Item 6.         Exhibits and Reports on Form 8-K                         10


SIGNATURES




                                       2


                          PART I. FINANCIAL INFORMATION

Item 1.  Financial statements

                           Americana Publishing, Inc.
                               Condensed Balance Sheet
                               For Periods Ending

                                                 June 30,        December 31,
                                                   2002               2001
Assets                                          (unaudited)

Current Assets
    Cash and cash equivalents                   $    9,849          $     1,992
    Accounts receivable, net of allowance for
      doubtful accounts of $29,316 and $2,500       36,607               43,095
    Accounts receivable - factored                  31,942                    -
    Inventory                                       34,758               20,360
    Prepaid expenses and other current assets        3,234                5,734
                                                -----------       -------------
          Total Current Assets                  $  116,390        $      71,181

Property &amp; Equipment, net                      245,339              297,259
Audio production costs                              52,655                    -

Total Asset                                     $  414,384          $   368,440
                                                ===========       =============
Liabilities &amp; Stockholders Equity

Current Liabilities
    Accounts Payables                           $   66,351          $    37,990
    Accrued expenses                               125,896               25,198
    Note payable - factor                           31,942                    -
    Note payable - related parties                  84,884                    -
    Convertible debt - related parties             387,500              387,500
    Net liabilities available for sale           2,075,129            1,461,458
                                                -----------       -------------
        Total Current Liabilities                2,771,702            1,912,146

Commitments and contingencies

Stockholders' Equity
    Preferred Stock No Par Value
      20,000,000 shares authorized
      0 (unaudited) and 0 issued and outstandin
    Common stock, $0.001 par value
      100,000,000 shares authorized
      21,024,394 (unaudited) and
      14,636,570 issued and outstanding             21,025               14,637
    Committed shares, 6,000,000 shares held in
      trust
    Additional paid-in capital                    9,737,456           8,691,812
    Accumulated deficit                         (12,115,799)        (10,250,155)
                                               ------------         -----------

      Total stockholders' equity                (2,357,318)          (1,543,706)
                                               ------------         -----------

Total Liabilities &amp; Stockholders Equity    $   414,384          $   368,440
                                               ============         ===========



                 See Accompanying Notes to Financial Statements.




                                       3


                           Americana Publishing, Inc.
                      Consolidated Statements of Operations

                                       FOR THE THREE MONTHS         FOR THE SIX MONTHS
                                           ENDED JUNE 30             ENDED JUNE 30
                                       2002            2001          2002         2001
                                   (Unaudited)     (Unaudited)   (Unaudited)  (Unaudited)
                                   ----------      ----------    ----------   ----------
Revenue                            $   60,332      $   69,193    $ 142,759    $ 164,004

Cost of Goods Sold                     10,879          11,910       16,781       42,338
                                   ----------      ----------     ---------    ---------
  Gross Profit                         49,453          57,283      125,978      121,666

Operating expenses
   Compensation expense               267,929         (36,454)     924,844      421,969
   Selling, general and
     administration                   146,351         200,893      268,716      260,382
   Depreciation and amortization       29,960          31,039       51,392       61,802
                                      -------         -------    ----------  ----------
      Total operating expenses        444,240         195,478    1,244,952      744,153

Loss from operations                 (394,787)       (138,195)  (1,118,974)    (622,487)

Other Income (Expense)
  Interest Expense                    (53,930)              -      (59,930)           -
  Other Income                              -               -            -          129
                                       --------        --------    ---------     --------
     Total other income (expense)     (53,930)              -      (59,930)         129
                                       --------        --------    ---------     --------
Loss before provision for
  income taxes and
  discontinued operations            (448,717)       (138,195)  (1,178,904)    (622,358)

Provision for income taxes                  -               -            -            -
                                      --------       ---------   ----------    ---------

Loss before discontinued
  operations                         (448,717)       (138,195)  (1,178,904)    (622,358)

Loss on discointinued
  operations                         (221,248)              -     (686,741)           -
                                     ---------       ---------  -----------    ---------

Net Loss                          $  (669,965)     $ (138,195) $(1,865,645)  $ (622,358)
                                    ==========       =========  ===========    =========

Basic and diluted loss per share:
  From continuting operations     $     (0.02)     $    (0.01) $     (0.06)  $    (0.07)
  From discontinued operations          (0.01)              -        (0.04)           -
                                   -----------      ----------  -----------    ---------
                                 $      (0.03)     $    (0.01) $     (0.10)  $    (0.07)
                                   -----------      ----------  -----------    ---------

Basic and diluted
  weighted-average shares
  outstanding                      20,860,603       10,311,693  18,754,445    9,606,513
                                   ===========      =========== ===========   =========






                See Accompanying Notes to Financial Statements.



                                       4


                           Americana Publishing, Inc.
                        Condensed Statement of Cash Flows
                                  (Unaudited)

                                             Six Months Ended          Six Months Ended
                                              June 30, 2002              June 30, 2001
                                           --------------------      --------------------

Cash Flows From Operating Activities:
   Net Loss from continuing operations             $(1,178,904)           $  (622,358)
   Adjustments to reconcile net loss to net cash
    provided by operating activities
    Activities:
     Depreciation and amortization                      51,920                 61,802
     Issuance of common stock to board members
       and employees for services rendered             750,257                412,703
     Issuance of common stock to board members
       and employees for services rendered              60,025                      -
     Provision for allowance for doubtful accounts      26,816                      -
     (Increase) decrease in
       Accounts receivable                             (20,328)               (17,376)
       Inventory                                         2,477                (11,399)
       Prepaid expenses and other current assets         2,500                 17,999
       Marketable securities                                 -                 25,000
       Audio production costs                           (2,030)                     -
     Increase (decrease) in
       Account payable                                  28,361                 (9,283)
       Accrued expenses                                100,698                      -
                                                   ------------             ----------
      Net cash used in continuing operating
        activities                                    (178,208)              (142,912)
      Net cash used in discontinued operating
        activities                                     (14,957)                     -
                                                   ------------             ----------
Net Cash Used by Operating Activities                 (193,165)              (142,912)

Cash Flows From Investing Activities
   Purchase of property and equipment                        -                (24,646)
                                                   ------------             ----------

Net cash used in continuing activities
   investing activities                                      -                (24,646)
                                                   ------------             ----------

Net cash used in investing activities                        -                (24,646)
                                                   ------------             ----------
Net Cash Used in Investing Activities                  (24,646)              (152,750)

Cash flows from financing activities
  Proceeds from notes payable                          117,725                      -
  Payments on notes payable                            (46,342)                     -
  Proceeds from the sale of common stock               174,250                155,000
                                                   ------------             ----------

Net cash provided by continuing financing
   activities                                          245,633                155,000
Net cash used in discontinued financing
   activities                                          (44,611)                     -
                                                   ------------             ----------

Net provided financing activities                     201,022                 155,000

Net decrease in cash and cash equivalents               7,857                 (12,558)

Cash and cash equivalents, beginning of period          1,992                  20,027
                                                  ------------              ----------

Cash and cash equivalents, end of period           $    9,849               $   7,469
                                                  ============              ==========

Supplemental disclosures of cash flow information

  Interest paid                                    $        -               $       -
                                                  ============              ==========

  Income taxes paid                                $        -               $       -
                                                  ============              ==========








                See Accompanying Notes to Financial Statements.


                                       5



                           AMERICANA PUBLISHING, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1.

The unaudited  internal  condensed  financial  statements and related notes have
been prepared by Americana Publishing,  Inc. (the &#147;Company&#148;),  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 June 30, 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&acute;s  audited financial  statements and
notes  thereto  for the fiscal  year ended  December  31,  2001.  The results of
operations for the three and six months ended June 30, 2002 are not  necessarily
indicative of the operating results for the full year.

NOTE 2.  LIQUIDITY

The Company has historically  financed its operations through the sale of common
stock.  The  proceeds  were  used  for  start-up  activities  including  website
development  as well as other  start-up  activities.  Revenue is not 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 3.  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 six  months  ended  June 30,  2002 and the years  ended
December  31,  2001,  and 2000,  the  Company  incurred  losses  of  $1,865,645,
$5,775,333 and $2,238,437,  respectively.  In addition,  as of June 30, 2002 and
December 31, 2001,  its total  current  liabilities  exceeded its total  current
assets by $2,655,312 and $3,210,940,  respectively and its shareholders' deficit
was $2,357,318 and $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 4.  DISCONTINUED OPERATIONS

During the three months ended June 30, 2002,  the Company  ceased  operations of
Corporate Media Group,  Inc ("CMG").  A vendor of the Company has taken over the
operations,  although  the  Company  has no formal  agreement.  All  assets  and
liabilities of CMG have been reclassified to net liabilities available for sale.
Liabilities  for CMG exceed  assets for CMG by  $2,075,129  as of June 30, 2002.
Furthermore,   all  income  statement  accounts  for  CMG  have  been  shown  as
discontinued operations.


NOTE 5.  ACQUISITION OF INVENTORY

During the six months ended June 30, 2002 the Company  acquired  inventory  from
Sunset Productions, Inc., an entity owned by a related party. The purchase price
was  250,000  shares of common  stock,  valued at the fair  market  value of the
common stock, which was $67,500.

NOTE 6.  CAPITAL LEASE OBLIGATIONS

During the three months ended June 30, 2002 the Company  stopped  making monthly
payments on their capitalized lease obligation, due to cash flow constraints.

NOTE 7.  NOTES PAYABLE

During the six months ended June 30, 2002 the Company, entered into several note
payable  agreements,  with related parties  totaling  $117,725.  All these notes
payable are due upon demand and bear interest at 8% per annum.

NOTE 8.  STOCK TRANSACTIONS

During  the first six  months of 2002 the  Company  issued  4,776,158  shares of
common stock to various employees and consultants.  The fair value of this stock
was booked as compensation  expense and consulting expense,  which was valued at
$877,787.

During the first six 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
shares offered in the six months cannot be sold for a period of one year.

NOTE 9.  CONTINGENCIES

The Company is in negotiations  with an officer of Corporate  Media Group,  Inc.
concerning  the  resolution  of  $170,000  in  expenses  and  reimbursements  of
Corporate  Media group,  Inc. due this officer.  As of June 30, 2002 the Company
has offered  300,000  shares of common  stock of Americana  Publishing,  Inc. in
exchange for any amounts it might owe to the officer.

The Company  maintained a line of credit with a bank,  secured by the  Company's
accounts receivable and inventory.  We are currently in default on the remaining
balance of approximately  $205,000 and have been unable to secure an alternative
line of credit. The Company believes there is a substantial  likelihood that the
bank will attempt to seize the assets covered by the security agreement.

NOTE 10.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2002,  the FASB issued SFAS No. 146 " Accounting  for Costs  Associated
with exit or Disposal Activities." This Statement addresses financial accounting
and  reporting  for  costs  associated  with  exit or  disposal  activities  and
nullifies  Emerging  Issues  Task  Force  (EITF)  Issue  No.  94-3,   "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)."  This Statement
requires  that a  liability  for a cost  associated  with an  exit  or  disposal
activity  be  recognized  when the  liability  is  incurred.  Under Issue 94-3 a
liability for an exit cost as defined, was recognized at the date of an entity's
commitment to an exit plan.  This statement  will not have a material  impact on
the Company's financial statements.


                                       6



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
paper  commodities,  and the availability of natural resources and services from
other  sources.  Forward-looking  statements  are  made by or on  behalf  of the
Company's  knowledge of its business and the  environment  in which it operates,
but because of the factors listed above, as well as other environmental  factors
over which the Company has no control,  actual  results may differ from those in
the  forward-looking  statements.   Consequently,  all  of  the  forward-looking
statements made are qualified in their entirety by these  cautionary  statements
and  there  can  be  no  assurance  that  the  actual  results  or  developments
anticipated by the Company will be realized, or even if substantially  realized,
that they will have the expected effect on the business and/or operations of the
Company.

The Company currently has limited internal and external sources of liquidity. At
this time,  the  Company has no material  commitment  for capital  expenditures.
There are no known trends,  events or uncertainties  that are expected to have a
material  impact  on the  net  sales  and  income  from  continuing  operations.
Americana Publishing is not subject to seasonal aspects.


Site Development

No activity  other than  maintenance of the various web sites has occurred or is
presently  occurring.  However, we are currently evaluating several options, all
of  which  will  result  in the  reconfiguration  of our  websites  in  order to
streamline operations and reduce operating costs.

Audio Book Development

Currently,  we offer  approximately  265  audio  book  titles,  having  recently
acquired over an additional  200 titles as a result of purchasing  audio masters
and finished inventory produced by Sunset Productions, Inc., which are available
for sale on our Web  site,  americanabooks.com.  Our audio  books are  currently
published on audio tapes,  though we have published one audio book in CD format,
and we intend to increase our production of audio books in CD format.  Consumers
who visit the Web site can  listen to a  two-minute  sample of many of our audio
books.  We have also published an "Audio Book Sampler Tape" that  highlights the
first two  minutes of thirty of our audio  books,  enabling a listener  to get a
flavor for the books and our packaging. Unlike many other audio book publishers,
we do not use  cardboard  packaging,  but a more  durable  packaging,  which  we
believe  differentiates our product,  In June 2001 we received an award from the
Audio  Publishing  Association  as the "Best New Audio Book Publisher for 2001".
Additionally,  one of our audio  book  narrators,  Charlie  O'Dowd,  received  a
"Golden  Headset"  award from  Audioworld  as the "Best  Abridged  Reader of the
Year".

We sell our audio books to approximately  17,000 retail stores and approximately
15,000 libraries as well as to large truck stop distributors such as BARJAN, KSG
and Audio Adventures.  We have 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.  We believe that the
quality and quantity of these retailers serves to enhance our sales.

Sales of audio books on hand was  continued  through  June 30,  2002.  The total
amount of $142,759.00 from continuing  operations was in invoiced sales has been
achieved year to date. All two hundred sixty five (265) 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.

Print Book Development.

During  2001,  we  published  our first print book,  entitled  "The  Cowboy",  a
children's book that includes both a print book and an audio tape. Americana has
scheduled for  introduction  during the second  quarter of 2002 four  additional
works:  The Killing  Cards,  Ground  Lions,  Beloved  Leah,  and It Is I Joseph,
appealing to a diverse  audience.  Americana has  approximately  eleven  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.  We expect to sell our print  books by  including  them in the Ingram Book
Company inventory of available books along with our own internet marketing.

Electronic Books

As of the date of this report,  we have not yet published any electronic  books,
though we currently have 12 e-books prepared for publication.  We are developing
software  that  should be  completed  in July 2002 which will  enable us to make
these e-books available for sale and download.

Liquidity and Capital Resources

We have financed our operations primarily through various private financings. We
signed a  securities  purchase  agreement  dated as of  April  1,  2002  with BG
Holdings,  LLC and Gulf Coast  Advisors,  Ltd.  Pursuant to such  agreement,  BG
Holdings,  LLC and Gulf Coast, Ltd., agreed to purchase an aggregate of $200,000
in Principal  amount of our 12% senior  secured  convertible  debentures,  which
mature April,  2003.  Together with such debentures,  BG Holdings,  LLC and Gulf
Coast,  Ltd., were also issued Class A warrants and Class B warrants.  The first
$100,000 in aggregate  principal  amount of our 12% senior  secured  convertible
debentures were issued to BG Holdings, LLC and Gulf Coast, Ltd upon execution of
the  securities  purchase  agreement,  and  the  second  $100,000  in  aggregate
principal amount of our 12% senior secured convertible debentures will be issued
to BG  Holdings,  LLC,  and Gulf  coast,  Ltd.,  upon the  effectiveness  of the
registration statement.

In April  2002,  we issued to certain  investors  an  aggregate  of  $140,000 of
one-year, 12% convertible promissory notes and warrants to purchase an aggregate
of approximately 2,800,000 shares of our common stock.

The Company has achieved  $847,490 in billed sales for the six months ended June
30, 2002. $745,603 or 88% of this revenue is from a subsidiary,  Corporate Media
Group, which has discontinued operations.

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.  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.

We have  discontinued  operations  at Corporate  Media Group,  Inc.,  and Visual
Energy Studio. This action was taken due to the lack of working capital, part of
which  was  to be  generated  by  refinancing  certain  equipment  belonging  to
Corporate  Media Group,  Inc.. The value of this equipment was  insufficient  to
support an  adequate  loan to value  ratio for  lending  purposes.  Furthermore,
Corporate  Media Group sales  continued to decline  causing a situation in which
Corporate Media Group, Inc., was unable to support any increased debt service.

Capital Expenditure

During  the 2nd  quarter  of  calendar  year  2002,  Americana  made no  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 June 30, 2002,  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.

We are presently engaged in evaluating two companies as potential  acquisitions.
One company is a printing company located in Albuquerque,  New Mexico, while the
other is retail  outlet  for audio  books and also a  franchisor  of audio  book
stores located in Austin, Texas.

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.

Results of Operations

Quarter  Ended June 30, 2002  Compared to Quarter  Ended June  30,2001.

Revenue  remained  approximately  the same for the  quarter  ended June 30, 2002
compared to the quarter ended June 30, 2001.  Compensation  expense increased by
$304,000.  The  compensation  expense is a non-cash expense and results from the
issuance of stock to employees  and  consultants  in place of cash.  Selling and
general and administrative expense decreased $54,000.

Year to Date Ended June 30, 2002 Compared to Year to Date Ended June 30, 2001

Revenue decreased $21,000 for six months ended June 30, 2002 compared to the six
months ended June 30, 2001.  Compensation  expense increased $500,000.  Selling,
general and administrative remained constant during this period.

&lt;PAGE&gt;

Part II.  Other Information.

Item 1. Legal Proceedings -

We are co-defendants  with Corporate Media Group, Inc. in a lawsuit commenced in
May 2002 by Digitone Graphics in the Court of General Sessions, Hamilton County,
Tennessee.  Digitone Graphics has alleged that we owe  approximately  $9,900 for
materials purchased from and services performed by them.

Corporate  Media Group,  Inc., and Susan Durand,  a director of Corporate  Media
Group, are  co-defendant in a lawsuit  commenced on May 2002, by First Tennessee
Bank in the Circuit Court of Bradley County, Tennessee.  First Tennessee Bank is
seeking damages of approximately $38,900 with respect to an overdrawn account.

We are co-defendants  with Corporate Media Group, Inc. in a lawsuit commenced on
May 2002, by Eva-Tone, Inc., in the Circuit Court of Bradley County,  Tennessee.
Eva-Tone,  Inc.,  is seeking  damages of $26,350  with respect to an account for
merchandise that is delinquent.

As of June 30, 2002, Cinram, Inc. seized  approximately  $100,000 from Corporate
Media Group,  Inc. in connection  with an agreed  judgement it obtained  against
Corporate  Media Group,  Inc.  for  approximately  $245,000  upon the default by
Corporate  Media  Group,  Inc.  of a  settlement  agreement  with  Cinram,  Inc.
Corporate  Media Group,  Inc.  owes  approximately  $170,000 to Cinram,  Inc. in
connection with the judgment.  Cinram might attempt to seize additional funds or
assets from Corporate Media Group, Inc. in connection with the judgment.

Item 2. Changes in Security
                None

Item 3. Defaults upon Senior Securities
                None

Item 4. Submission of Matters to a Vote of Security Holders
                None

Item 5. Other Information
                None

Item 6. Exhibits and Reports on Form 8-K
        (a) Exhibits
                None
        (b) Reports on Form 8-K

          10.1 Securities  Purchase  Agreement dated as of April 1, 2002 between
               the Company and BG Holdings,  LLC and Gulf Coast  Advisors,  Ltd.
               (Filed herewith)

          10.2 Promissory  note and  warrant  entered  into with the persons who
               purchased the $140,000

          99.1 Certification Pursuant to 18 U.S.C. Section 1350

          99.2 Certification Pursuant to 18 U.S.C. Section 1350



                                   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:  August 16,2002               George Lovato, Jr., CEO/Chairman



                                        By:  /s/  Don White
                                           -----------------------------------
                                             Don White, Chief Financial Officr


                                       10


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                                                                    Exhibit 10.1


16
581034.6



                    12% SENIOR SECURED CONVERTIBLE DEBENTURE


THESE  SECURITIES HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"),  NOR UNDER ANY STATE SECURITIES LAW AND SUCH SECURITIES MAY
NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED, OR OTHERWISE TRANSFERRED UNTIL (1)
A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE  STATE  SECURITIES  LAW OR (2) THE  COMPANY  RECEIVES  AN  OPINION OF
COUNSEL  TO THE  COMPANY OR  COUNSEL  TO THE  HOLDER OF SUCH  SECURITIES,  WHICH
COUNSEL  AND OPINION  ARE  REASONABLY  SATISFACTORY  TO THE  COMPANY,  THAT SUCH
SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED,  HYPOTHECATED, OR TRANSFERRED WITHOUT
AN  EFFECTIVE   REGISTRATION  STATEMENT  UNDER  THE  ACT  AND  APPLICABLE  STATE
SECURITIES LAWS.



                             Albuquerque, New Mexico

                                  April 1, 2002



     FOR VALUE RECEIVED, Americana Publishing, Inc., a Colorado corporation with
offices at 303 San Mateo NE,  Suite  104A,  Albuquerque,  New Mexico  87108 (the
"Obligor"),  promises to pay to the order of and its successors and assigns (the
"Holder")  at such place as the Holder may  designate  by written  notice to the
Company,  in lawful money of the United States of America,  the sum of ($ ) (the
"Principal  Amount")  plus all  accrued and unpaid  interest on the  outstanding
Principal  Amount at the rate of twelve  percent  (12%) per annum.  The  Obligor
shall pay accrued  interest on the outstanding  Principal  Amount on a quarterly
basis,  commencing 90 days from the date hereof, and on payment of the Principal
Amount.  All  principal,  premiums and interest are to be paid without setoff or
counterclaim as set forth below. The Obligor further agrees as follows:





Section 1.        Purchase Agreement.

     This debenture (the  "Debenture")  is being issued in connection with a 12%
Senior Secured Convertible Debenture and Warrant Purchase Agreement, dated April
1, 2002 (the "Purchase  Agreement"),  between the Obligor and certain  Investors
(as  defined  in the  Purchase  Agreement)  in  connection  with the  sale  (the
"Offering")  by the Obligor of an aggregate of $ of  Debentures  and Class A and
Class B  warrants  (collectively,  the  "Warrants")  to  purchase  shares of the
Obligor's common stock, $.001 par value per share (the "Common Stock").

Section 2.        Payments.

(a) Principal and Interest Payments. Unless this Debenture shall be converted in
accordance  with the  provisions of Section 7 or redeemed  earlier in accordance
with Section 2(b) hereof, the Principal Amount shall be due and payable one year
from the date of this Debenture.  All quarterly  interest payments shall be made
by the Obligor by wire  transfer  to an account  designated  by the  Holder,  by
certified check or, at the sole discretion of the Holder, in an amount of shares
of Common Stock determined by dividing such quarterly  interest  payments,  plus
any  Penalty  Interest  (as  hereinafter  defined) by the  Conversion  Price (as
hereinafter defined).

(b) Prepayment Penalty. At any time after the effective date of the registration
statement  covering the shares of Common Stock  issuable upon the  conversion of
the  Debentures  and the exercise of the Warrants upon 180 calendar days' notice
to the Holder  specifying  the date on which payment is to be made,  the Obligor
shall have the right to prepay this Debenture, in full, at any time in an amount
equal to the product of 140% times the unpaid  Principal Amount plus all accrued
but unpaid  interest,  penalty  interest as provided in Section  2(d) hereof and
Liquidated Damages (as hereinafter  defined), if any. If notice of prepayment is
given as provided above,  but the Obligor fails to prepay on the date specified,
the Obligor shall be liable for such an amount,  plus default  interest from the
date  specified,  at the rate of 18% per annum until this  Debenture  is paid in
full. Notice of prepayment having been given, this Debenture shall  nevertheless
continue to be convertible until paid in full.

(c) Usury. The Obligor and the Holder intend that this Debenture comply with any
applicable usury laws from time to time in effect. In furtherance  thereof,  the
Obligor and the Holder stipulate and agree that none of the items and provisions
contained in this  Debenture  shall be construed to create a contract to pay, as
consideration for the use, forbearance or detention of money, interest at a rate
in excess of the highest lawful rate under applicable law.

(d) Penalty Interest. If the Obligor fails to pay any quarterly interest payment
on the date such payment is due, the interest  payable on the  Principal  Amount
and on all accrued and unpaid interest as of that date shall be increased to the
rate of 18% per annum until all accrued interest, including Penalty Interest, is
paid in  full.  Further,  in the  event  that  the  Obligor  fails  to meet  the
requirements of Section 2(a) of the Registration  Rights Agreement,  the Obligor
shall pay to the  Holder a penalty  equal to two  percent  (2%) per month of the
Principal  Amount plus accrued and unpaid interest due on this Debenture for the
period of time the Obligor is in default  with  respect to the  requirements  of
Section 2(a).

Section 3.        Representations, Warranties and Covenants of the Obligor.

The Obligor represents, warrants and covenants to the Holder as follows:

(a) Due Organization,  etc. The Obligor is duly incorporated,  validly existing,
and in good standing under the laws of the jurisdiction of its  incorporation or
organization.

(b) Authority.  The Obligor has all requisite  corporate  power and authority to
own,  lease,  license  and use its  properties  and assets  and to  conduct  the
business in which it is engaged.  The  Obligor has full power and  authority  to
execute  and deliver  this  Debenture  and to grant the  Security  Interest  (as
defined  herein) granted herein and the execution and delivery by the Obligor of
this Debenture,  and the performance of its obligations hereunder, has been duly
authorized by all necessary  corporate or other  action.  This  Debenture is the
legal,  valid and binding  obligation of the Obligor  enforceable  against it in
accordance with the terms hereof.

(c)  Qualification.  The  Obligor  is duly  licensed  or  qualified  and in good
standing as a foreign corporation in each jurisdiction wherein the nature of the
business  transacted  by it or the nature of the property  owned or leased by it
makes such licensing or qualification necessary, the failure of which would have
a material adverse effect on the business,  operations,  properties or condition
(financial or otherwise) of the Obligor.

(d)  Capitalization.  The Company's  authorized capital stock is as set forth in
the Purchase Agreement.

(e) No  Dividends,  Redemptions.  The  Obligor  will not (i)  declare or pay any
dividend or make any other distribution on any equity securities of the Obligor,
except dividends or distributions  payable in equity  securities of the Obligor,
or (ii)  purchase,  redeem or  otherwise  acquire or retire for value any equity
securities  of  the  Obligor,   if,  upon  giving   effect  to  such   dividend,
distribution,  purchase,  redemption, or other acquisition, the net worth of the
Obligor  would  be  reduced  to  less  than an  amount  equal  to the  remaining
indebtedness  outstanding  under this Debenture and all other Debentures  issued
pursuant to the Offering.

(f) Related  Transactions.  The  Obligor  will not,  without  the prior  written
consent  of  the  Majority  Holders  (as  hereinafter  defined),  engage  in any
transaction  of any kind or nature with any affiliate of the Obligor unless such
transaction,  or in the case of a course of related or similar  transactions  or
continuing transactions,  is or are upon terms which are fair to the Obligor, as
the case may be, and which are reasonably  similar to, or more beneficial to the
Obligor  than the terms  deemed  likely to occur in  similar  transactions  with
unrelated persons under the same circumstances.

(g) No Liens.  The Obligor shall not,  without the prior written  consent of the
Holders of at least a majority of the outstanding Principal Amount on all of the
Debentures issued pursuant to the Offering ("Majority  Consent") create,  incur,
assume or suffer to exist (collectively, "incur") any mortgage, pledge, security
interest, assignment, lien (statutory or other), claim, encumbrance of any kind,
license or sublicense or security interest (collectively, "Lien") in or upon any
of the  Collateral  (as  defined  herein),  except  for  (1)  liens  for  taxes,
assessments or similar charges  incurred in the ordinary course of business that
are not yet due and  payable;  (2)  statutory  Liens of  landlords  and Liens of
carriers,  warehousemen,  mechanics,  materialmen and other Liens imposed by law
incurred in the  ordinary  course of business for sums not yet  delinquent,  (3)
Liens incurred or deposits made in the ordinary course of business in connection
with  workers'  compensation,  unemployment  insurance and other types of social
security,  (4)  easements,  rights-of-way,   encroachments,  leases,  royalties,
restrictions and other similar title exceptions or encumbrances provided such do
not,  in the  aggregate,  materially  interfere  with the  ordinary  conduct  of
business of Obligor or materially  reduce or impair the value of the real estate
so encumbered, (5) Liens granted to the Holders of Debentures issued pursuant to
the Offering,  (6) Liens securing any  conditional  sales  agreements,  security
agreements,  equipment  leases in the nature of title  retention  agreements  or
security agreements or other similar title retention  agreements entered into by
Obligor on, prior to the date hereof or after the date hereof in order to secure
the  payment  of the  purchase  price  of any  equipment  purchased,  leased  or
otherwise  acquired by Obligor for use in the  ordinary  course of its  business
having  aggregate  cost of less  than  $25,000,  (7)  Liens  granted  to  secure
indebtedness  incurred  by Obligor if the  proceeds of which are used to prepay,
in-full, any Debenture issued pursuant to the Offering pursuant to the terms and
conditions of Section 2(b) hereof,  which such  indebtedness  shall be senior in
right of payment and preference to this Debenture ("Take-out Indebtedness"), and
(8) Liens listed on Schedule 3(p) hereof.

(h) Indebtedness. Except for the indebtedness incurred to financial institutions
and other individuals  listed and described on Schedule 3(h) annexed hereto, the
Obligor  does not have any  outstanding  indebtedness  (outside of the  ordinary
course of business).

(i)  Maintenance  of  Collateral.  The Obligor will maintain the  Collateral (as
hereinafter defined) in good operating condition and repair.

(j) Sale or  Disposition.  The  Obligor  will  not  sell,  contract  for sale or
otherwise  dispose of any of the  Collateral or any interest  therein  except as
provided in paragraph (t) in this Section 3.

(k) Taxes.  The Obligor will pay promptly when due all taxes due from it, except
for taxes and assessments which are being contested in good faith.

(l)  Further  Assurances.  The  Obligor  will  promptly  execute  and deliver to
____________  as agent for Holders (the  "Agent"),  such  financing  statements,
certificates,  notices and other documents or instruments as may be necessary to
enable the Agent to perfect or from time to time perfect,  renew or continue the
Security  Interest  granted  herein  for  the  benefit  of  the  Holders  of the
Debentures,   including,   without   limitation,   such  financing   statements,
certificates  and other  documents  as may be  necessary  to  perfect a security
interest in any additional  Collateral  hereafter  acquired by the Obligor or in
any replacements or proceeds thereof. The Obligor hereby authorizes the Agent to
take all  action  (including,  without  limitation,  the  filing of any  Uniform
Commercial Code Financing Statements or amendments thereto without the signature
of the  Obligor or the  notification  of any  account  debtor or payor) that the
Agent may deem  necessary  or  desirable  to perfect or  otherwise  protect  the
Security  Interest  described  hereunder  and to  obtain  the  benefits  of this
Debenture.

(m) No Conflict.  Except as provided on Schedule  3(m) which is annexed  hereto,
the  Obligor is not in default  under any  indenture,  mortgage,  deed of trust,
agreement  or other  instrument  to which it is a party or by which it or any of
its assets may be bound;  and (ii) the execution and delivery of this  Debenture
and compliance with the provisions hereof shall not violate any provision of law
applicable  to the  Obligor;  nor  shall the same  conflict  with or result in a
breach of any of the terms, conditions or provisions of, or constitute a default
under, the certificate of incorporation or by-laws of the Obligor,  or result in
the breach of,  constitute any default under,  or conflict with the terms of any
indenture, mortgage, agreement or other instrument to which the Obligor is party
or by which it or any of its  assets may be bound or result in the  creation  or
imposition of any Lien upon any of the  Collateral,  other than for the Security
Interest  granted  pursuant  to the  Debentures  issued in  connection  with the
Offering.

(n) Consents. No consent,  approval,  order,  authorization of, or registration,
qualification or filing with, any  governmental  authority or any other party is
required  on the  part of the  Obligor  in  connection  with the  execution  and
delivery of this  Debenture,  the  granting  of the  Security  Interest  granted
herein,  and the performance and consummation of the  transactions  contemplated
hereby, other than (i) such consents that have been obtained and (ii) the filing
of any  financing  statement or similar  instrument  that is required to perfect
Holder's Security Interest.

(o) Litigation. There are no suits, proceedings or investigations pending or, to
the Obligor's  knowledge,  threatened,  against the Obligor which  questions the
validity  of this  Debenture  or which,  individually  or in the  aggregate,  if
determined adversely,  would have a material adverse effect on the Collateral or
the business, operation or condition (financial or otherwise) of the Obligor.

(p) Title.  Except as  otherwise  disclosed  in Schedule  3(p) which is attached
hereto, the Obligor is the sole owner of, and has good title to, the Collateral,
free and clear of any Lien,  except for the Security Interest granted hereby and
there is no  financing  statement  or  similar  filing now on file in any public
office covering any material part of the Collateral.

(q)  Locations.  The chief  executive  office of the  Obligor  is located at the
address set forth above.  All inventory and equipment held on the date hereof by
the Obligor is located at the locations shown on Schedule 3(q) hereto.

(r) Use of Proceeds. The Obligor shall use the proceeds of the loan evidenced by
this Debenture solely for working capital.  In no event shall any portion of the
proceeds  of the  loan  evidenced  hereby  be  used  for  the  repayment  of any
indebtedness of the Obligor.

(s) Ordinary Course.  While all or any portion of this Debenture is outstanding,
the Obligor  shall  conduct its  operations  according to the ordinary and usual
course of the business  consistent  with past practice,  to preserve  intact its
present business  organization and structure,  to keep available the services of
its present officers,  agents and employees, to preserve and maintain its assets
and  the  goodwill  of  the  business  and to  preserve  its  relationship  with
employees,  customers and others having  business  dealings with them and not to
enter into,  amend,  modify,  terminate,  renew,  extend,  or waive any existing
material right under any material agreements of the Obligor.

(t)  Subsequent  Transactions.  While all or any  portion of this  Debenture  is
outstanding,  the  Obligor  shall  use 50% of the net  proceeds  from any of the
following  transactions to reduce the outstanding Principal Amount,  accrued and
unpaid interest and penalties due on the Debentures held by the Holders on a pro
rata basis:

(i) one or more sales of assets of the Obligor's  assets that, in the aggregate,
exceed  $25,000;  provided,  such sales shall not include  products  sold in the
ordinary course of business;

(ii) funds received by the Obligor from the exercise of  outstanding  options or
warrant; provided, such funds, in the aggregate, total $100,000; and

(iii) any unsecured debt raised by the Obligor.

Notwithstanding the foregoing, all secured debt raised by the Obligor subsequent
to the date hereof shall be used to repay all the Principal Amount,  accrued and
unpaid interest and penalties on the Debenture.

Any  reduction  in  Principal  Amount or the accrued and unpaid  interest on the
Debentures  made  pursuant to this  Section  3(t) shall be made on or before the
15th day  after  the date the  Obligor  receives  any funds  listed  above.  (u)
Reports. The Common Stock of the Obligor is registered pursuant to Section 12(g)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Company  has filed all reports  and other  documents  required to be filed by it
with  the  Securities  and  Exchange   Commission   pursuant  to  the  reporting
requirements of the Exchange Act. The Obligor  covenants that it shall file such
reports and other  documents  required to be filed by it with the Securities and
Exchange  Commission  on a timely  basis,  and it will  provide the Holders with
copies of such reports and other documents,  until such time as the later of the
repayment,  in full, of all of the Principal Amount, accrued and unpaid interest
and penalties  thereon,  or the sale of all of the Conversion Shares (as defined
in the Purchase Agreement).

(v) Reservation of Common Stock.  There have been reserved and the Obligor shall
at all times keep reserved,  out of the authorized but unissued  Common Stock of
the Company free from any  preemptive  rights,  rights of first refusal or other
restrictions  (other  than  pursuant  to the Act),  a number of shares of Common
Stock sufficient to provide for the rights of Holders to convert the Debentures.
The transfer agent, if any, for the Common Stock, and every subsequent  transfer
agent for any Common  Stock  issuable  upon the exercise of any of the rights of
conversion as set out in this  Debenture,  shall be  irrevocably  authorized and
directed at all times to reserve such number of authorized Common Stock as shall
be requisite for such purpose.  The Obligor shall keep a copy of this  Debenture
on file with any transfer  agent for the Common Stock and with every  subsequent
transfer  agent for the Common Stock issuable upon the exercise of the rights of
conversion  represented  by this  Debenture.  Any transfer  agent for the Common
Stock  and  any  successor  transfer  agent  for  the  Common  Stock  is  hereby
irrevocably  authorized  to  cause to be  issued  from  time to time  the  share
certificates  required to honor this Debenture upon its conversion in accordance
with the terms hereof.  The Obligor  shall supply any such  transfer  agent with
duly executed share certificates for such purpose.

Section 4.        Security Interest.

(a) The Obligor hereby grants to the Holder a first priority  security  interest
in and lien (the  "Security  Interest") on the  Collateral,  subject to superior
priority of that  certain  lien  granted by Obligor to All Tex  Financial,  Inc.
which is the subject of a UCC-1 filing dated March 2, 2001, and further  subject
to superior priority of any UCC-1 filings securing leases, to secure performance
and  payment  of  (i)  this  Debenture,  and  (ii)  all  other  obligations  and
indebtedness  of the Obligor to Holder of whatever  kind and whenever or however
created or  incurred,  whether  absolute or  contingent,  matured or  unmatured,
direct or indirect (all of the foregoing being the "Secured Indebtedness").  The
Security  Interest granted herein shall continue in full force and effect until,
and  Holder  shall  release  the  Security  Interest  when  all of  the  Secured
Indebtedness  has been  discharged or converted  into Common Stock in accordance
with the terms hereof.

(b) As used  herein,  the term  "Collateral"  shall mean and  include all of the
Obligor's right, title and interest in and to all real,  tangible and intangible
property of the Obligor  whether now or  hereafter  existing,  of every kind and
description,  now owned or  hereafter  acquired  and  wherever  located  and the
proceeds (including any insurance  proceeds),  products and accessions of and to
any thereof,  and all books and records pertaining to all of the foregoing,  all
of which are and shall at all times be and remain, free and clear of any and all
Liens.

Section 5.        Events of Default.

     It shall be an event of default  ("Event of Default")  with respect to this
Debenture upon the occurrence and, where applicable,  continuation  uncured,  of
any of the following events:

(a) Default in Payment, etc.

(i) A default  in the  payment of the  Principal  Amount or  quarterly  interest
payment on this  Debenture,  when and as the same shall  become due and payable,
either by the terms hereof or upon redemption or otherwise,  which default shall
continue  uncured for a period of five (5) days after  receipt by the Obligor of
written notice of such default; or

(ii) A default in the performance, or breach, of any representation, warranty or
covenant  of the  Obligor  in  this  Debenture  or the  Purchase  Agreement  and
continuance  of such  default or breach shall  continue  uncured for a period of
five (5) days after receipt by the Obligor of written notice as to such breach.

(b) Bankruptcy, Insolvency, etc. The Obligor becoming insolvent (however defined
or evidenced)  or the entry of a decree or order by a court having  jurisdiction
adjudging  the Obligor  bankrupt or insolvent,  or approving a petition  seeking
reorganization,  arrangement, adjustment, or composition of or in respect of the
Obligor,  under federal or other applicable  bankruptcy law, as now or hereafter
constituted,  or any other applicable  federal or state bankruptcy,  insolvency,
dissolution,  liquidation or other similar law, or the  commencement  by it of a
voluntary or involuntary case under federal or other applicable  bankruptcy law,
as now or  hereafter  constituted,  or any  other  applicable  federal  or state
bankruptcy,  insolvency,  dissolution,  liquidation or other similar law, or the
consent by it to the  institution  of  bankruptcy,  dissolution,  liquidation or
insolvency  proceedings  against it, or the filing by it of a petition or answer
or consent seeking  reorganization  or relief under federal or other  applicable
bankruptcy  law or any other  applicable  federal,  state or other  law,  or the
consent  by it to  the  filing  of  such  petition  or to the  appointment  of a
receiver, liquidator,  assignee, trustee, sequestrator, or similar official for,
it or of any  substantial  part  of its  property,  or  the  making  by it of an
assignment  for the benefit of  creditors,  or the admission by it in writing of
the  inability  to pay it debts  generally  as they become due, or the taking of
corporate action by it in furtherance of any such action.

(c) Default on Other  Indebtedness.  The default in payment of  principal  of or
interest on any other  indebtedness  for  borrowed  money owed by the Obligor or
default in the performance or observance of the terms of any instrument pursuant
to which such  indebtedness was created or secured,  the effect of which default
is to cause any holder of any such  indebtedness to cause the same to become due
prior to its stated  maturity  (and whether or not such default is waived by the
holder thereof).

Section 6.        Remedies Upon Default.

(a)  Acceleration  and Liquidated  Damages.  Upon an Event of Default and at any
time  during  the  continuation  thereof,  the  Holder,  by notice  given to the
Obligor,  may declare the entire unpaid  Principal  Amount,  and, if applicable,
redemption  premium  or  Penalty  Interest   (collectively,   the  "Acceleration
Amount"),  of this Debenture then outstanding to be due and payable  immediately
together  with  liquidated  damages  payable to the  Holder  equal to 40% of the
Acceleration Amount ("Liquidated  Damages"),  and upon any such acceleration the
same shall become and be due and payable immediately,  anything herein contained
to the contrary  notwithstanding.  After acceleration and until the Acceleration
Amount and all accrued and unpaid  Liquidated  Damages is paid  pursuant to this
Section 6(a), interest shall accrue on such amounts up to and including the date
of the Event of Default at the rate of 18% per annum.

(b) Remedies Regarding  Security Interest in Collateral.  Upon the occurrence of
any Event of Default,  the Holder,  together with Holders of at least a majority
of the  Principal  Amount of  Debentures  issued  pursuant to the Offering  (the
"Majority  Holders")  shall have the following  additional  rights and remedies,
provided  such rights and  remedies  shall be enforced on behalf of the Majority
Holders  solely by the Agent,  such Agent to be identified by written  notice to
the Obligor:

(i) All rights and  remedies  provided by law,  including,  without  limitation,
those provided by the Uniform  Commercial Code as in effect in the states of New
Mexico and Colorado from time to time (the "UCC").

(ii) The right to take  possession of the Collateral  and, in addition  thereto,
the right to enter upon any premises on which the Collateral or any part thereof
may be  situated,  without  notice,  and  remove the same  therefrom.  Agent may
require the Obligor to make the  Collateral (to the extent the same is moveable)
available  to the  Agent  at a place  to be  designated  by the  Agent  which is
reasonably  convenient  to both  parties at the  Obligor's  expense.  Unless the
Collateral  threatens to decline  speedily in value or is of a type  customarily
sold on a  recognized  market,  the Agent will give the Obligor at least two (2)
days' prior written  notice at the address of the Obligor set forth above (or at
such other  address or addresses as the Obligor  shall specify in writing to the
Agent) of the time and place of any  public  sale  thereof  or of the time after
which any private sale or any other intended  disposition thereof is to be made.
Any such notice shall be deemed to meet any  requirement  hereunder or under any
applicable law (including the UCC) that reasonable  notification be given of the
time and place of such sale or other disposition.  After deducting all costs and
expenses of collection, storage, custody, sale or other disposition and delivery
(including   reasonable   legal  costs  and   attorneys'   fees,   expenses  and
disbursements)  and all other  reasonable  charges against the  Collateral,  the
remaining  proceeds  of any such sale or  disposition  shall be  applied  to the
payment of the Secured Indebtedness in such order of priority as the Agent shall
determine  and any surplus  shall be returned to the Obligor or to any person or
party lawfully entitled thereto. In the event the proceeds of any sale, lease or
other disposition of the Collateral  hereunder is insufficient to pay all of the
Secured  Indebtedness  in full,  the Obligor will be liable for the  deficiency,
together with interest thereon at the highest rate of interest  provided in this
Debenture,  and the  costs  and  expenses  of  collection  of  such  deficiency,
including  (to the extent  permitted  by law),  without  limitation,  reasonable
attorneys' fees, expenses and disbursements.

(c)  Proceedings and Actions.  During the  continuation of any Event of Default,
the Holder may  institute  such actions and  proceedings  in law or equity as it
shall deem  expedient  for the  protection  of its rights and may  prosecute and
enforce its claims against all assets of the Obligor, and in connection with any
such action or proceeding  shall be entitled to receive from the Obligor payment
of the Principal  Amount of this Debenture plus any accrued and unpaid  interest
and  penalties,  to the date of payment plus  reasonable  expenses of collection
including,  without  limitation,  reasonable  attorneys' fees and expenses.  All
rights and remedies  available to the Holder  pursuant to the provisions of this
Debenture,  applicable law and otherwise are  cumulative,  not exclusive and are
enforceable alternatively and/or concurrently.

Section 7.        Conversion of the Debenture.

At the option of the  Holder,  all or any portion of the  outstanding  Principal
Amount,  plus all accrued and unpaid  interest and penalty  interest,  including
Liquidated Damages, on the Debenture, shall be convertible into shares of Common
Stock at the  Conversion  Price (as defined in the Purchase  Agreement).  In the
event of any  reclassification,  consolidation,  merger or sale of substantially
all of the Obligor assets or similar  transaction,  the Holder shall be entitled
to  purchase  the kind and  number of shares of stock and other  securities  and
property receivable upon such transaction as if the Holder were the owner of the
Common  Stock  issuable  hereunder  immediately  prior to any such  event at the
Conversion  Price in effect on the date of the  closing  of such  transaction  ;
provided,  however, that in no event shall the Holder be entitled to convert any
portion  of this  Debenture  in excess of that  portion of this  Debenture  upon
conversion  of  which  the sum of (1) the  number  of  shares  of  Common  Stock
beneficially owned by the Holder and its affiliates (other than shares of Common
Stock  which may be deemed  beneficially  owned  through  the  ownership  of the
unconverted  portion of this Debenture or the unexercised or unconverted portion
of any other  security  of the  Borrower  (including,  without  limitation,  the
warrants issued by the Borrower pursuant to the Purchase Agreement) subject to a
limitation  on  conversion or exercise  analogous to the  limitations  contained
herein)  and (2) the  number  of  shares  of  Common  Stock  issuable  upon  the
conversion  of  the  portion  of  this  Debenture  with  respect  to  which  the
determination  of this  proviso  is  being  made,  would  result  in  beneficial
ownership by the Holder and its affiliates of more than 4.9% of the  outstanding
shares of Common Stock. For purposes of the proviso to the immediately preceding
sentence,  beneficial  ownership  shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended,  and Regulations 13D-G
thereunder,  except as  otherwise  provided in clause (1) of such  proviso.  The
Holder of this Debenture may waive the  limitations  set forth herein by written
notice to the Company.

Section 8.        Miscellaneous.

(a) This Debenture may be altered only by prior written  agreement signed by the
party against whom enforcement of any waiver, change, modification, or discharge
is sought.  This  Debenture  may not be modified by an oral  agreement,  even if
supported by new consideration.

(b) Notwithstanding  anything provided herein,  Holder may assign this Debenture
in  whole  or in  part  to one or more  officers  or  partners  of  Holder.  The
obligations  under this Debenture may not be assigned by the Obligor without the
prior Majority Consent.  The covenants,  terms and conditions  contained in this
Debenture apply to and bind the heirs, successors, executors, administrators and
assigns of the parties.

(c) Upon  receipt by the  Obligor of  evidence  reasonably  satisfactory  to the
Obligor of the loss, theft,  destruction or mutilation of this Debenture, and of
indemnity  or  security  reasonably   satisfactory  to  the  Obligor,  and  upon
reimbursement to the Obligor of all reasonable expenses incidental thereto,  and
upon surrender and  cancellation  of this Debenture,  if mutilated,  the Obligor
will make and deliver a new  Debenture of like tenor and of the same series,  in
lieu of this Debenture.

(d) This Debenture constitutes a final written expression of all of the terms of
the agreement  between the parties  regarding  the subject  matter  hereof,  and
supersedes all prior agreements, understandings, and representations between the
parties.  If any  provision  or any word,  term,  clause,  or other  part of any
provision of this Debenture  shall be invalid for any reason,  the same shall be
ineffective, but the remainder of this Debenture shall not be affected and shall
remain in full force and effect.

(e) This  Debenture  shall be governed by and construed in  accordance  with the
laws of the State of New York  without  giving  effect to its  conflicts  of law
principles.  The Obligor agrees that any dispute or  controversy  arising out of
this  Debenture  shall be  adjudicated  in a court located in New York City, and
hereby submits to the exclusive  jurisdiction  of the courts of the State of New
York located in New York,  New York,  and of the federal  courts in the Southern
District of New York, and  irrevocably  waives any objection it now or hereafter
may have  respecting  the venue of such action or  proceeding  brought in such a
court or  respecting  the fact that such  court is an  inconvenient  forum,  and
consents to the service of process in any such action or  proceeding by means of
registered or certified mail, return receipt requested, to the address set forth
below.

(f)  All  notices,  consents,  or  other  communications  provided  for in  this
Debenture or  otherwise  required by law shall be in writing and may be given to
or made upon the respective parties at the following mailing address:

                                    Holder:







                                 With a copy to:

                       Obligor:Americana Publishing, Inc.

                          303 San Mateo NE, Suite 104A

                          Albuquerque, New Mexico 87108

                          Attention: George Lovato, Jr.

     Such  addresses  may be  changed  by  notice  given  as  provided  in  this
subsection.  Notices  shall be  effective  upon the date of  receipt;  provided,
however,  that a notice  (other  than a notice  of a  changed  address)  sent by
certified or  registered  U.S.  mail,  with postage  prepaid,  shall be presumed
received no later than three (3) business days following the date of sending.

     IN WITNESS WHEREOF, the Obligor has executed this Debenture effective as of
the date first set forth above.


                           AMERICANA PUBLISHING, INC.

                      By:_________________________________
                         Name:                  Title:



581034.6
                            DEBENTURE CONVERSION FORM



To:  Americana Publishing, Inc.



The undersigned irrevocably elects to convert:



                  [__]     ALL, or

                  [__]     $_____________



of the accrued and unpaid  interest and principal owed on the 12% Senior Secured
Convertible   Debenture  (the  "Debenture")   which  is  attached  hereto.   The
undersigned  requests that the  certificates  representing  the shares of common
stock as to which this Debenture is being converted (the "Conversion Shares") be
registered as follows and requests  Americana  Publishing,  Inc. to so cause the
registration thereof:



Name:____________________________________________________________________

Social Security or Employer Identification Number:_____________________________

Address:_________________________________________________________________

Deliver to:_______________________________________________________________

Address:_________________________________________________________________



     If only a portion of the principal  amount and accrued and unpaid  interest
owed on the Debenture is converted, please issue a new Debenture for the balance
of the unpaid  principal  amount and  accrued  and unpaid  interest  owed on the
Debenture to the registered  holder thereof and deliver it to the undersigned at
the following address:

Address:_________________________________________________________________

        _________________________________________________________________



Date:  _______________, 20 __



                       ___________________________________

                (Signature must conform to the name of the holder
            of the Debenture specified on the face of the Debenture)





                                  Schedule 3(h)

                              Existing Indebtedness
                [To be provided by the Obligor prior to closing.]


                                  Schedule 3(m)

                             Default on Indebtedness
                [To be provided by the Obligor prior to closing.]



                                  Schedule 3(p)

                    Liens to which the Collateral is Subject
                [To be provided by the Obligor prior to closing.]



                                  Schedule 3(q)

                       Location of Inventory and Equipment
                [To be provided by the Obligor prior to closing.]




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<DESCRIPTION>EXHIBIT 10.2 PROMISSORY NOTE AND WARRANT
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<TITLE>Americana Publishing, Inc. 10-QSB Exhibit 10.2</TITLE>
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<PRE>


                                                   Exhibit 10.2

                    12% SENIOR SECURED CONVERTIBLE DEBENTURE
                         AND WARRANT PURCHASE AGREEMENT


                                  April 1, 2002

     Americana Publishing,  Inc., a Colorado corporation (the "Company") and the
persons listed on Schedule 2 hereto (the "Investors") hereby agree as follows:

1. The  Debentures.  The  Company  has  authorized  the  issuance  and sale,  in
accordance  with  the  terms  hereof,   of  the  Company's  12%  Senior  Secured
Convertible  Debentures in the original  aggregate  principal amount of $200,000
(collectively,  the "Debentures" and individually a "Debenture"). Each Debenture
will be substantially in the form set forth in Exhibit A hereto.

2. The Closing.  Subject to the  execution of this  Agreement by the Company and
all  Investors,  the  Company  agrees to issue and sell to the  Investors,  and,
subject  to and in  reliance  upon the  representations,  warranties,  terms and
conditions contained herein, each Investor, severally and not jointly, agrees to
purchase a Debenture in the principal  amount set forth opposite such Investor's
name on Schedule 2 hereto under the heading "First Tranche  Purchase  Price" (it
being agreed that the aggregate principal amount of the Debentures  purchased by
the investors  shall be $100,000).  Such purchase and sale shall take place at a
closing (the "Closing") to be held at 10 A.M. on April 1, 2002. Thereafter, upon
the  Securities and Exchange  Commission's  declaration  of  effectiveness  (the
"Effective  Date")  of the  Company's  Registration  Statement  (as  hereinafter
defined),  each  Investor,  severally  and not  jointly,  agrees to  purchase  a
Debenture in the principal  amount set forth  opposite such  Investor's  name on
Schedule 2 hereto under the heading  "Second  Tranche  Purchase Price" (it being
agreed that the aggregate  principal  amount of the Debentures  purchased by the
Investors  shall be  $100,000).  Such  purchase  and sale  shall take place at a
closing (the "Second  Closing") to be held at 10 A.M. on the first  business day
after the Effective  Date.  The Closing and the Second  Closing shall be held at
the offices of Bondy &amp; Schloss, LLP, 60 East 42nd Street, New York, New York
(or such other place and time as shall be mutually  agreed upon).  The Investors
have agreed to enter into an escrow  agreement  with an escrow agent,  to govern
the receipt of monies and the issuance of  securities  at the Closing and Second
Closing, the conversion of the Debentures, and the exercise of Warrants (as that
term is defined herein).

3.  Conversion.  A holder of any  Debenture  outstanding  may, at its option and
discretion,  at any time and from time to time,  elect to convert some or all of
the principal,  accrued and unpaid  interest and penalties due on such Debenture
into shares of the Company's common stock, $.001 par value ("Common Stock") at a
conversion price per share (the  "Conversion  Price") that shall be equal to 50%
of the lesser of the  average of the three  lowest  closing bid prices per share
for the Common Stock, as reported on the  over-the-counter  electronic  bulletin
board,  or such other  public  market that the  Company's  Common  Stock is then
traded, during either: (i) the 30 trading days prior to the Closing; or (ii) the
30 trading days prior to the date of conversion.  The Conversion  Price shall be
subject to adjustment for stock splits, stock dividends and the like.

4. Warrants.  In  consideration  of the purchase of the Debentures,  the Company
covenants  and  agrees  to  issue  a  Class A  warrant  and a  Class  B  warrant
(collectively,  the "Warrants") to each Investor in the forms attached hereto as
Exhibit B and Exhibit C, respectfully.

5. Registration Rights. In consideration of the purchase of the Debentures,  the
Company  covenants and agrees to provide for the  registration  of the shares of
Common Stock issuable upon conversion of the Debentures and upon the exercise of
the  Warrants,  plus any shares of Common  Stock  issued as a dividend  or other
distribution  with  respect to, or in exchange for or in  replacement  of, or in
connection  with such  securities,  and any other  shares of Common Stock of the
Company acquired by the Investors (collectively,  the "Registrable Securities"),
pursuant to a  registration  rights  agreement  in the form  attached  hereto as
Exhibit D  (the  "Registration  Rights  Agreement").   The  Registration  Rights
Agreement shall,  among other things,  provide for the terms and conditions upon
which the Company  shall file a  registration  statement on Form SB-2 or similar
form (the "Registration Statement") covering the Registrable Securities with the
Securities and Exchange Commission (the "Commission").

6.  Representations  and Warranties of the Company.  The Company  represents and
warrants to the Investors that,  except as set forth in the Disclosure  Schedule
attached as Schedule 6 (which  Disclosure  Schedule makes explicit  reference to
the particular  representation or warranty as to which exception is taken, which
in each case shall constitute the sole  representation  and warranty as to which
such exception shall apply):

(a) Organization, Qualifications and Corporate Power.

(i) The Company is a corporation duly incorporated, validly existing and in good
standing  under  the  laws of the  State of  Colorado  and is duly  licensed  or
qualified to transact business as a foreign  corporation and is in good standing
in each jurisdiction in which the nature of the business transacted by it or the
character of the  properties  owned or leased by it requires  such  licensing or
qualification,  the failure of which would have a material adverse effect on the
business,  operations,  properties or condition  (financial or otherwise) of the
Company.  The Company has the corporate  power and authority to own and hold its
properties  and to carry on its business as now  conducted and as proposed to be
conducted, to execute,  deliver and perform this Agreement,  and its obligations
under the  Debentures,  the  Warrants,  and the  Registration  Rights  Agreement
(collectively,  the  "Transaction  Documents"),  to issue,  sell and deliver the
Debentures  and Warrants and to issue and deliver the Common Stock issuable upon
conversion of the  Debenture and upon exercise of the Warrants (the  "Conversion
Shares").

(ii) Except as disclosed on Schedule  6(a)(ii),  the Company does not (A) own of
record or beneficially,  directly or indirectly, (1) any shares of capital stock
or securities  convertible into capital stock of any other  corporation,  or (2)
any  participating   interest  in  any  partnership,   joint  venture  or  other
non-corporate  business enterprise or (B) control,  directly or indirectly,  any
other entity.

(b) Authorization of Agreements, Etc.

(i) The execution and delivery by the Company of the Transaction Documents,  the
performance by the Company of its obligations thereunder, the issuance, sale and
delivery of the  Debentures  and  Warrants  and the issuance and delivery of the
Conversion  Shares have been duly authorized by all requisite  corporate  action
and will not  violate  any  provision  of law,  any  order of any court or other
agency of  government,  the  certificate  of  incorporation  of the Company,  as
amended  (the  "Charter")  or the by-laws of the  Company,  (the  "By-Laws")  as
amended,  or any provision of any  indenture,  agreement or other  instrument to
which the Company or any of its properties or assets is bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture,  agreement or other  instrument,  or result in
the  creation  or  imposition  of  any  lien,  charge,  restriction,   claim  or
encumbrance of any nature whatsoever upon any of the properties or assets of the
Company.

(ii) The Debentures and Warrants have been duly  authorized  and, when issued in
accordance  with  this  Agreement,  will  be  validly  issued,  fully  paid  and
nonassessable with no personal liability  attaching to the ownership thereof and
will  be  free  and  clear  of all  liens,  charges,  restrictions,  claims  and
encumbrances  imposed by or through the Company. The Conversion Shares have been
duly  reserved for  issuance  upon  conversion  of the  Debentures  and upon the
exercise of the Warrants and, when so issued,  will be duly authorized,  validly
issued,  fully paid and  nonassessable  shares of Common  Stock with no personal
liability  attaching to the ownership  thereof and will be free and clear of all
liens, charges, restrictions,  claims and encumbrances imposed by or through the
Company.  Neither the issuance,  sale or delivery of the Debentures and Warrants
nor the  issuance  or  delivery  of the  Conversion  Shares  is  subject  to any
preemptive right of stockholders of the Company or to any right of first refusal
or other right in favor of any person.

(c) Validity. This Agreement has been duly executed and delivered by the Company
and  constitutes  the  legal,  valid  and  binding  obligation  of the  Company,
enforceable in accordance with its terms. The other Transaction Documents,  when
executed and delivered in accordance  with this  Agreement,  will constitute the
legal, valid and binding  obligations of the Company,  enforceable in accordance
with their respective terms.

(d) Authorized Capital Stock. A complete,  correct listing of the authorized and
outstanding capital stock of the Company and all outstanding options,  warrants,
convertible  securities or other rights to acquire  securities of the Company is
attached hereto as Schedule 6(d); The designations, powers, preferences, rights,
qualifications, limitations and restrictions in respect of each class and series
of authorized capital stock of the Company are as set forth in the Charter,  and
all such designations, powers, preferences, rights, qualifications,  limitations
and restrictions  are valid,  binding and enforceable and in accordance with all
applicable laws. Except as set forth in the attached Schedule 6(d) (i) no person
owns of  record  or is known to the  Company  to own  beneficially  any share of
Common Stock, (ii) no subscription,  warrant,  option,  convertible security, or
other  right  (contingent  or other) to  purchase or  otherwise  acquire  equity
securities of the Company is authorized  or  outstanding,  and (iii) there is no
commitment by the Company to issue  shares,  subscriptions,  warrants,  options,
convertible securities,  or other such rights or to distribute to holders of any
of its equity  securities  any  evidence  of  indebtedness  or asset.  Except as
provided for in the Charter or as set forth in the attached  Schedule  6(d), the
Company has no obligation (contingent or other) to purchase, redeem or otherwise
acquire  any of its  equity  securities  or any  interest  therein or to pay any
dividend or make any other  distribution in respect thereof.  To the best of the
Company's  knowledge,  there are no voting trusts or  agreements,  stockholders'
agreements,  pledge agreements,  buy-sell  agreements,  rights of first refusal,
preemptive  rights or proxies relating to any securities of the Company (whether
or not the Company is a party thereto). All of the outstanding securities of the
Company were issued in substantial  compliance  with all applicable  federal and
state securities laws.

(e) Financial  Information.  Except as otherwise  disclosed in the Company's SEC
Documents (as hereinafter defined),  (i) there has been no change in the assets,
liabilities  or  financial  condition  of the Company  except for changes in the
ordinary  course of business  which in the  aggregate  have not been  materially
adverse,  and  (ii)  none  of  the  business,  prospects,  financial  condition,
operations,  property or affairs of the Company  disclosed in writing  either in
the Company's SEC Documents or in the business plan or other materials  provided
to the Investors has been  materially  adversely  affected by any  occurrence or
development, individually or in the aggregate, whether or not insured against.

(f)  Subsequent  Events.  Except as otherwise  disclosed in the SEC Documents or
herein,  the  Company  has not (i)  issued any  stock,  bond or other  corporate
security,  (ii)  borrowed  any  amount  or  incurred  or become  subject  to any
liability (absolute, accrued or contingent), except current liabilities incurred
and liabilities under contracts entered into in the ordinary course of business,
(iii)  discharged or satisfied any lien or  encumbrance  or incurred or paid any
obligation or liability  (absolute,  accrued or  contingent)  other than current
liabilities  incurred in the ordinary course of business,  (iv) declared or made
any payment or  distribution  to stockholders or purchased or redeemed any share
of its capital stock or other security,  (v) mortgaged,  pledged,  encumbered or
subjected to lien any of its assets, tangible or intangible, other than liens of
current  real  property  taxes not yet due and payable,  (vi) sold,  assigned or
transferred  any  of its  tangible  assets  except  in the  ordinary  course  of
business,  or cancelled any debt or claim, (vii) sold, assigned,  transferred or
granted any exclusive license with respect to any patent, trademark, trade name,
service mark, copyright, trade secret or other intangible asset, (viii) suffered
any loss of property or waived any right of substantial  value whether or not in
the ordinary  course of business,  (ix) made any change in officer  compensation
except in the ordinary course of business and consistent with past practice, (x)
made any material change in the manner of business or operations of the Company,
(xi) entered into any  transaction  except in the ordinary course of business or
as  otherwise   contemplated  hereby,  or  (xii)  entered  into  any  commitment
(contingent or otherwise) to do any of the foregoing.

(g) Litigation; Compliance with Law. Except as disclosed on Schedule 6(g), there
is no (i) action,  suit, claim,  proceeding or investigation  pending or, to the
best of the Company's knowledge, threatened against or affecting the Company, at
law or in  equity,  or  before  or by any  federal,  state,  municipal  or other
governmental department,  commission,  board, bureau, agency or instrumentality,
domestic or foreign, (ii) arbitration proceeding relating to the Company pending
under  collective  bargaining  agreements  or  otherwise  or (iii)  governmental
inquiry pending or, to the best of the Company's  knowledge,  threatened against
or affecting the Company  (including  without  limitation  any inquiry as to the
qualification of the Company to hold or receive any license or permit),  and, to
the best of the Company's knowledge, there is no basis for any of the foregoing.
The Company has not  received  any opinion or  memorandum  or legal  advice from
legal counsel to the effect that it is exposed, from a legal stand-point, to any
liability  or  disadvantage  which may be material to its  business,  prospects,
financial  condition,  operations,  property or  affairs.  The Company is not in
default with respect to any order, writ, injunction or decree known to or served
upon the  Company  of any court or of any  federal,  state,  municipal  or other
governmental department,  commission,  board, bureau, agency or instrumentality,
domestic  or  foreign.  There  is no  action  or  suit by the  Company  pending,
threatened  or  contemplated  against  others.  The Company has  complied in all
material respects with all laws, rules, regulations and orders applicable to its
business, operations, properties, assets, products and services, the Company has
all necessary permits, licenses and other authorizations required to conduct its
business as conducted and as proposed to be conducted,  and the Company has been
operating its business  pursuant to and in compliance with the terms of all such
permits,  licenses and other  authorizations.  There is no existing  law,  rule,
regulation  or order,  and the  Company  after due  inquiry  is not aware of any
proposed law,  rule,  regulation or order,  whether  federal,  state,  county or
local,  which  would  prohibit  or  restrict  the  Company  from,  or  otherwise
materially  adversely  affect the Company  in,  conducting  its  business in any
jurisdiction  in which it is now conducting  business or in which it proposes to
conduct business.

(h)  Proprietary  Information  of Third  Parties.  To the best of the  Company's
knowledge,  no third  party has  claimed  or has reason to claim that any person
employed by or affiliated  with the Company has (a) violated or may be violating
any  of  the  terms  or  conditions  of  his  employment,   non-competition   or
non-disclosure  agreement  with  such  third  party,  (b)  disclosed  or  may be
disclosing  or  utilized or may be  utilizing  any trade  secret or  proprietary
information  or  documentation  of such third party or (c)  interfered or may be
interfering in the employment  relationship  between such third party and any of
its present or former employees.  No third party has requested  information from
the Company which suggests that such a claim might be contemplated.  To the best
of the Company's knowledge, no person employed by or affiliated with the Company
has  employed  or  proposes  to employ any trade  secret or any  information  or
documentation  proprietary  to any  former  employer,  and to  the  best  of the
Company's  knowledge,  no person  employed by or affiliated with the Company has
violated any confidential  relationship  which such person may have had with any
third party,  in connection  with the  development,  manufacture  or sale of any
product  or  proposed  product  or the  development  or sale of any  service  or
proposed service of the Company,  and the Company has no reason to believe there
will  be any  such  employment  or  violation.  To  the  best  of the  Company's
knowledge,  none of the execution or delivery of this Agreement, or the carrying
on of the  business  of the  Company  as  officers,  employees  or agents by any
officer,  director or key  employee of the  Company,  or the conduct or proposed
conduct of the business of the Company, will conflict with or result in a breach
of the terms,  conditions  or  provisions  of or  constitute a default under any
contract, covenant or instrument under which any such person is obligated.

(i) Patents,  Trademarks,  Etc.  Set forth in Schedule  6(i) is a list and brief
description  of  all  domestic  and  foreign  patents,   patent  rights,  patent
applications,  trademarks,  trademark applications,  service marks, service mark
applications,  trade names and copyrights,  and all  applications for such which
are in the process of being prepared,  owned by or registered in the name of the
Company,  or of which the  Company is a  licensor  or  licensee  or in which the
Company  has any right,  and in each case a brief  description  of the nature of
such  right.  To the  best  of the  Company's  knowledge,  the  Company  owns or
possesses  adequate  licenses  or  other  rights  to  use  all  patents,  patent
applications,  trademarks,  trademark applications,  service marks, service mark
applications, trade names, copyrights,  manufacturing processes, formulae, trade
secrets,  customer lists and know how  (collectively,  "Intellectual  Property")
necessary  or  desirable  to the  conduct of its  business as  conducted  and as
proposed  to be  conducted,  and no  claim  is  pending  or,  to the best of the
Company's knowledge, threatened to the effect that the operations of the Company
infringe upon or conflict with the asserted rights of any other person under any
Intellectual Property, and, to the best of the Company's knowledge,  there is no
basis for any such claim  (whether  or not pending or  threatened).  No claim is
pending or threatened to the effect that any such Intellectual Property owned or
licensed by the Company, or which the Company otherwise has the right to use, is
invalid or  unenforceable  by the  Company,  and, to the best  knowledge  of the
Company,  there is no basis  for any  such  claim  (whether  or not  pending  or
threatened).  All prior art known to the  Company  which may be or may have been
pertinent to the  examination of any United States patent or patent  application
listed in Schedule 6(i) has been cited to the United States Patent and Trademark
Office.  To the  best of the  Company's  knowledge,  all  technical  information
developed by and  belonging to the Company  which has not been patented has been
kept  confidential.  The Company has not granted or assigned to any other person
or entity any right to  manufacture,  assemble or sell the  products or proposed
products or to provide the services or proposed services of the Company.

(j) Title to Properties.  The Company and its subsidiaries  have good, clear and
marketable  title  to  their  respective   properties  and  assets  (other  than
properties and assets disposed of in the ordinary  course of business),  and all
such  properties and assets are free and clear of mortgages,  pledges,  security
interests,   liens,  charges,   claims,   restrictions  and  other  encumbrances
(including without limitation,  easements and licenses), except for liens for or
current taxes not yet due and payable and minor  imperfections of title, if any,
not material in nature or amount and not materially detracting from the value or
impairing the use of the property subject thereto or impairing the operations or
proposed  operations  of the Company  and its  subsidiaries,  including  without
limitation,  the ability of the Company and its subsidiaries to secure financing
using such  properties  and assets as  collateral.  To the best of the Company's
knowledge after due inquiry, there are no condemnation, environmental, zoning or
other  land use  regulation  proceedings,  either  instituted  or  planned to be
instituted,  which would adversely  affect the use or operation of the Company's
and its subsidiaries'  properties and assets for their respective  intended uses
and purposes,  or the value of such properties,  and neither the Company nor any
subsidiary has received notice of any special assessment proceedings which would
affect such properties and assets.

(k) Leasehold Interests. Each lease or agreement to which the Company is a party
under which it is a lessee of any  property,  real or  personal,  is a valid and
existing agreement, duly authorized and entered into, without any default of the
Company  thereunder  and, to the best of the  Company's  knowledge,  without any
default  thereunder  of any other party  thereto.  No event has  occurred and is
continuing  which,  with due notice or lapse of time or both, would constitute a
default or event of default by the Company under any such lease or agreement or,
to the  best  of the  Company's  knowledge,  by any  other  party  thereto.  The
Company's possession of such property has not been disturbed and, to the best of
the Company's  knowledge after due inquiry,  no claim has been asserted  against
the Company adverse to its rights in such leasehold interests.

(l) SEC Documents;  Financial Statements.  Except as disclosed on Schedule 6(l),
the Company has timely filed all reports,  schedules, forms statements and other
documents  required  to be filed by it with the SEC  pursuant  to the  reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act")
(all of the foregoing  filed prior to the date hereof and all exhibits  included
therein and financial statements and schedules thereto and documents (other than
exhibits to such documents) incorporated by reference therein, being hereinafter
referred to herein as the "SEC  Documents").  The Company has made  available to
the Investors  true and complete  copies of the SEC  Documents,  except for such
exhibits and incorporated  documents.  To the Company's  knowledge,  as of their
respective  dates, the SEC Documents  complied in all material respects with the
requirements  of the  1934  Act  and  the  rules  and  regulations  of  the  SEC
promulgated  thereunder  applicable  to the SEC  Documents,  and none of the SEC
Documents,  at the time they  were  filed  with the SEC,  contained  any  untrue
statement of a material  fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the  circumstances  under  which they were  made,  not  misleading.  None of the
statements  made in any such SEC  Documents  is,  or has  been,  required  to be
amended or updated under applicable law (except for such statements as have been
amended or updated in subsequent filings prior to the date hereof).  As of their
respective  dates,  the financial  statements of the Company included in the SEC
Documents  complied  as  to  form  in  all  material  respects  with  applicable
accounting  requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
United States generally accepted accounting  principles,  consistently  applied,
during the periods  involved  (except (i) as may be otherwise  indicated in such
financial  statements  or the notes  thereto,  or (ii) in the case of  unaudited
interim  statements,  to the extent  they may not  include  footnotes  or may be
condensed or summary statements) and fairly present in all material respects the
consolidated  financial  position of the Company as of the dates thereof and the
consolidated  results of their  operations  and cash flows for the periods  then
ended (subject,  in the case of unaudited  statements,  to normal year-end audit
adjustments).  Except as set forth in the  financial  statements  of the Company
included in the SEC  Documents,  the Company has no  liabilities,  contingent or
otherwise,  other  than (i)  liabilities  incurred  in the  ordinary  course  of
business subsequent to December 31, 2001 and (ii) obligation under contracts and
commitments  incurred in the ordinary  course of business and not required under
generally  accepted  accounting  principles  to be reflected  in such  financial
statements,  which,  individually  or in the aggregate,  are not material to the
financial condition or operating results of the Company.

(m) Taxes.  The Company has filed all tax returns,  federal,  state,  county and
local,  required  to be filed by it, and the Company has paid all taxes shown to
be due by such returns as well as all other taxes,  assessments and governmental
charges  which have become due or payable  whether  disputed  or not,  including
without  limitation  all taxes which the Company is obligated  to withhold  from
amounts owing to employees,  creditors and third  parties.  No tax return of the
Company  has ever been  audited  by the  Internal  Revenue  Service or any other
taxing  authority.   No  deficiency  assessment  with  respect  to  or  proposed
adjustment of the Company's federal, state, county or local taxes is pending or,
to the best of the Company's knowledge,  threatened. There is no tax lien (other
than for current taxes not yet due and payable), whether imposed by any federal,
state,  county  or local  taxing  authority,  outstanding  against  the  assets,
properties  or  business  of the  Company.  Neither  the  Company nor any of its
present or former  stockholders  has ever filed an election  pursuant to Section
1362 of the Internal  Revenue Code of 1986,  as amended (the  "Code"),  that the
Company be taxed as an S  corporation.  The Company's  net operating  losses for
federal income tax purposes,  if any, are not subject to any limitations imposed
by Section 382 of the Code and the full amount of such net operating  losses are
available  to offset the taxable  income of the  Company for the current  fiscal
year and, to the extent not so used,  succeeding  fiscal years.  Consummation of
the  transactions  contemplated  by this  Agreement  or by any other  agreement,
understanding or commitment  (contingent or otherwise) to which the Company is a
party or by which it is otherwise bound will not have the effect of limiting the
Company's  ability  to use such net  operating  losses  in full to  offset  such
taxable income.

(n) Other  Agreements.  Except as set forth in the attached  Schedule  6(n), the
Company is not a party to or otherwise  bound by any written or oral  agreement,
instrument,  commitment or restriction  which  individually  or in the aggregate
could materially adversely affect the business, prospects,  financial condition,
operations, property or affairs of the Company or any other written or oral:

(i) distributor, dealer, manufacturer's representative or sales agency agreement
which is not  terminable  on less than ninety (90) days' notice  without cost or
other liability to the Company  (except for agreements  which, in the aggregate,
are not material to the business of the Company);

(ii)  sales  agreement  which  entitles  any  customer  to a rebate  or right of
set-off,  to return any product to the Company  after  acceptance  thereof or to
delay the acceptance  thereof,  or which varies in any material respect from the
Company's standard form agreements;

(iii)  agreement with any labor union (and, to the knowledge of the Company,  no
organizational effort is being made with respect to any of its employees);

(iv) agreement with any supplier  containing any provision  permitting any party
other than the Company to  renegotiate  the price or other terms,  or containing
any pay-back or other similar provision, upon the occurrence of a failure by the
Company to meet its  obligations  under the agreement when due or the occurrence
of any other event;

(v) agreement for the future purchase of fixed assets or for the future purchase
of  materials,   supplies  or  equipment  in  excess  of  its  normal  operating
requirements;

(vi)  agreement  for the  employment  of any  officer,  employee or other person
(whether   of  a  legally   binding   nature  or  in  the  nature  of   informal
understandings)  on a full-time or consulting  basis which is not  terminable on
notice without cost or other liability to the Company,  except normal  severance
arrangements and accrued vacation pay;

(vii) bonus, pension, profit-sharing,  retirement,  hospitalization,  insurance,
stock purchase,  stock option or other plan, agreement or understanding pursuant
to which  benefits are provided to any employee of the Company (other than group
insurance  plans which are not  self-insured  and are  applicable  to  employees
generally);

(viii)  agreement  relating to the  borrowing of money or to the  mortgaging  or
pledging of, or otherwise  placing a lien or security  interest on, any asset of
the Company;

(ix) guaranty of any obligation for borrowed money or otherwise;

(x)  voting  trust or  agreement,  stockholders'  agreement,  pledge  agreement,
buy-sell  agreement or first refusal or pre-emptive rights agreement relating to
any securities of the Company;

(xi) agreement,  or group of related agreements with the same party or any group
of affiliated parties, under which the Company has advanced or agreed to advance
money or has agreed to lease any property as lessee or lessor;

(xii)  agreement or  obligation  (contingent  or  otherwise)  to issue,  sell or
otherwise  distribute or to repurchase or otherwise  acquire or retire any share
of its capital stock or any of its other equity securities;

(xiii)  assignment,  license  or other  agreement  with  respect  to any form of
intangible property;

(xiv) agreement under which it has granted any person any  registration  rights,
other than as contemplated herein;

(xv)  agreement  under which it has limited or  restricted  its right to compete
with any person in any respect;

(xvi)  other  agreement  or  group of  related  agreements  with the same  party
involving more than $25,000 or continuing  over a period of more than six months
from the date or dates thereof (including  renewals or extensions  optional with
another party),  which agreement or group of agreements is not terminable by the
Company  without  penalty upon notice of thirty (30) days or less, but excluding
any  agreement  or group of  agreements  with a customer  of the Company for the
sale, lease or rental of the Company's products or services if such agreement or
group of  agreements  was entered into by the Company in the ordinary  course of
business; or

(xvii) other agreement,  instrument,  commitment, plan or arrangement, a copy of
which  would be  required  to be filed  with the  Commission  as an exhibit to a
registration  statement  on Form  SB-2 (or  similar  form) if the  Company  were
registering  securities  under  the  Securities  Act of 1933,  as  amended  (the
"Securities Act").

The Company, and to the best of the Company's knowledge after due inquiry,  each
other party thereto have in all material respects  performed all the obligations
required  to be  performed  by them to date (or each  non-performing  party  has
received a valid, enforceable and irrevocable written waiver with respect to its
non-performance),  have  received  no notice of  default  and are not in default
(with due  notice or lapse of time or both)  under  any  agreement,  instrument,
commitment,  plan or  arrangement to which the Company is a party or by which it
or its property may be bound. The Company has no expectation or intention of not
fully  performing all its  obligations  under each such  agreement,  instrument,
commitment, plan or arrangement,  and the Company has no knowledge of any breach
or  anticipated  breach  by  the  other  party  to  any  agreement,  instrument,
commitment,  plan or arrangement to which the Company is a party. The Company is
in full  compliance  with all of the terms and  provisions  of its  Charter  and
By-Laws, as amended.

(o) Loans and Advances. Except for the Debentures, the Company does not have any
outstanding  loans or  advances to any person and is not  obligated  to make any
such loans or advances,  except,  in each case, for advances to employees of the
Company in respect of reimbursable  business expenses anticipated to be incurred
by them in connection with their performance of services for the Company.

(p) Assumptions,  Guaranties, Etc. of Indebtedness of Other Persons. The Company
has  not  assumed,   guaranteed,   endorsed  or  otherwise  become  directly  or
contingently liable on any indebtedness of any other person (including,  without
limitation, liability by way of agreement, contingent or otherwise, to purchase,
to provide  funds for payment,  to supply  funds to or  otherwise  invest in the
debtor, or otherwise to assure the creditor against loss), except for guaranties
by  endorsement  of  negotiable  instruments  for deposit or  collection  in the
ordinary course of business.

(q)  Significant  Customers  and  Suppliers.  No customer or supplier  which was
significant to the Company has terminated,  materially  reduced or threatened to
terminate or materially  reduce its  purchases  from or provision of products or
services to the Company, as the case may be.

(r) Governmental  Approvals.  Subject to the accuracy of the representations and
warranties of the Investors set forth herein, no registration or filing with, or
consent  or  approval  of or  other  action  by,  any  federal,  state  or other
governmental  agency or  instrumentality  is or will be necessary  for the valid
execution, delivery and performance by the Company of the Transaction Documents,
the issuance, sale and delivery of the Debentures and Warrants or the Conversion
Shares,  other than (i) filings  pursuant to state securities laws (all of which
filings have been made by the Company, other than those which are required to be
made  after  the  Closing  and  which  will be duly  made on a timely  basis) in
connection with the sale of the Debentures and Warrants and (ii) with respect to
the  registration  of  the  Registrable   Securities  covered  hereby  with  the
Commission and filings pursuant to state securities laws.

(s)  Disclosure.  Neither  this  Agreement,  nor any Schedule or Exhibit to this
Agreement,  nor the SEC  Documents,  contains an untrue  statement of a material
fact or omits a material fact necessary to make the statements  contained herein
or therein not misleading.  None of the statements,  documents,  certificates or
other items prepared or supplied by the Company with respect to the transactions
contemplated  hereby contains an untrue  statement of a material fact or omits a
material fact necessary to make the statements contained therein not misleading.
There is no fact which the Company has not  disclosed to the Investors and their
counsel  in  writing  and of which the  Company is aware  which  materially  and
adversely  affects  or could  materially  and  adversely  affect  the  business,
prospects, financial condition,  operations,  property or affairs of the Company
or any of its  subsidiaries  disclosed in writing  either in the  Company's  SEC
Documents or in the business plan or other materials provided to Investors.  The
financial  projections and other  estimates  contained in the SEC Documents were
prepared by the Company based on the Company's experience in the industry and on
assumptions  of fact and opinion as to future  events which the Company,  at the
date of the issuance of the SEC Documents,  believed to be reasonable, but which
the Company  cannot and does not assure or guarantee  the  attainment  of in any
manner. As of the date hereof no facts have come to the attention of the Company
which  would,  in its  opinion,  require  the  Company to revise or amplify  the
assumptions  underlying such  projections and other estimates or the conclusions
derived there from.

(t) Offering of the Debentures and Warrants.  Neither the Company nor any person
authorized or employed by the Company as agent,  broker,  dealer or otherwise in
connection  with the  offering  or sale of the  Debentures  and  Warrants or any
security of the Company  similar to the  Debentures and Warrants has offered the
Debentures  and Warrants or any such similar  security for sale to, or solicited
any offer to buy the Debentures and Warrants or any such similar  security from,
or otherwise  approached or negotiated  with respect thereto with, any person or
persons,  and neither the Company nor any person  acting on its behalf has taken
or will  take any  other  action  (including,  without  limitation,  any  offer,
issuance or sale of any security of the Company under  circumstances which might
require the  integration of such security with the Debentures and Warrants under
the Securities Act or the rules and  regulations of the Commission  thereunder),
in either case so as to subject the offering, issuance or sale of the Debentures
and Warrants to the registration provisions of the Securities Act.

(u) Brokers.  Except as disclosed on Schedule 6(u), the Company has no contract,
arrangement  or  understanding  with any  broker,  finder or similar  agent with
respect to the transactions contemplated by this Agreement.

(v) Officers.  Set forth in Schedule 6(v) is a list of the names of the officers
of the  Company,  together  with the  title or job  classification  of each such
person and the total  compensation  paid to each such  person by the  Company in
2001. None of such persons has an employment agreement or understanding, whether
oral or written,  with the  Company,  which is not  terminable  on notice by the
Company without cost or other liability to the Company.

(w) Transactions With Affiliates. No director,  officer, employee or stockholder
of the Company,  or member of the family of any such person, or any corporation,
partnership,  trust or other entity in which any such  person,  or any member of
the family of any such  person,  has a  substantial  interest  or is an officer,
director,  trustee, partner or holder of more than 5% of the outstanding capital
stock thereof,  is a party to any  transaction  with the Company,  including any
contract,  agreement  or other  arrangement  providing  for the  employment  of,
furnishing of services by, rental of real or personal property from or otherwise
requiring  payments  to any such person or firm,  other than  employment-at-will
arrangements in the ordinary course of business.

(x) Employees. No officer or key employee of the Company has advised the Company
(orally or in writing) that he intends to terminate employment with the Company.
The Company has  complied in all  material  respects  with all  applicable  laws
relating to the  employment of labor,  including  provisions  relating to wages,
hours,  equal  opportunity,  collective  bargaining  and the  payment  of Social
Security and other taxes.

(y) Benefit Plans.

(i)  The  Company  does  not  currently,  nor at any  time in the  past  did it,
maintain, administer or contribute to any Employee Plan (as hereinafter defined)
that covers any employee of the Company.

(ii)  Schedule  6(y)(ii)  includes  a list of each  benefit  arrangement  of the
Company,  copies or  descriptions  of all of which have been made  available  or
furnished previously to the Investor.

(iii) Each Benefit Plan has been  maintained in substantial  compliance with its
terms and with the  requirements  prescribed  by any and all  statutes,  orders,
rules and regulations which are applicable to such Benefit Plan.

(iv) There is no contract,  agreement, plan or arrangement covering any employee
or former employee of the Company that, individually or collectively, could give
rise to the payment of any amount that would not be  deductible  pursuant to the
terms of Section 280G of the Code.

(v) No employee of the Company  will become  entitled to any bonus,  retirement,
severance  or similar  benefit  or  enhanced  benefit  solely as a result of the
transactions contemplated hereby.

(vi) "Benefit  Arrangement"  means each  employment,  severance or other similar
contract,  arrangement or policy  (written or oral) and each plan or arrangement
(written  or  oral)  providing  for  severance   benefits,   insurance  coverage
(including any self-insured  arrangements),  workers'  compensation,  disability
benefits,  supplemental  unemployment  benefits,  vacation benefits,  retirement
benefits or for deferred compensation,  profit-sharing,  bonuses, stock options,
stock  appreciation   rights  or  other  forms  of  incentive   compensation  or
post-retirement insurance, compensation or benefits which (i) is not an Employee
Plan and (ii) covers any employee or former employee of the Company.

(vii)  "Employee  Plan"  means  each  "employee  benefit  plan," as such term is
defined in Section  3(3) of ERISA,  that (A)(i) is subject to any  provision  of
ERISA and (ii) is  maintained  or  contributed  to by the Company,  or (B)(i) is
subject  to any  provision  of  Title  IV of ERISA  and  (ii) is  maintained  or
contributed to by any of the Company's ERISA Affiliates.

(z) Foreign  Corrupt  Practices  Act. The Company has not taken any action which
would cause it to be in violation of the Foreign Corrupt  Practices Act of 1977,
as  amended,  or any  rules  and  regulations  thereunder.  To the  best  of the
Company's  knowledge  after due  inquiry,  there is not now, and there has never
been, any  employment by the Company of, or beneficial  ownership in the Company
by, any governmental or political official in any country in the world.

(aa) Federal Reserve Regulations.  The Company is not engaged in the business of
extending  credit for the purpose of  purchasing or carrying  margin  securities
(within the meaning of  Regulation  G of the Board of  Governors  of the Federal
Reserve System), and no part of the proceeds of the Registrable  Securities will
be used to purchase or carry any margin  security or to extend  credit to others
for the purpose of  purchasing  or carrying any margin  security or in any other
manner which would involve a violation of any of the regulations of the Board of
Governors of the Federal Reserve System.

(bb) Legends. The Investor understands that the Debentures and the Warrants and,
until such time as the Registrable Securities  (collectively,  the "Securities")
have  been   registered   under  the  Securities  Act  as  contemplated  by  the
Registration  Rights  Agreement or otherwise may be sold pursuant to Rule 144 or
Regulation  S (if  applicable)  without  any  restriction  as to the  number  of
securities  as of a  particular  date  that can then be  immediately  sold,  the
Securities  may bear a restrictive  legend in  substantially  the following form
(and a stop-transfer  order may be placed against  transfer of the  certificates
for such Securities):

     The securities  represented by this  certificate  have not been  registered
     under the Securities  Act of 1933, as amended.  The securities may be sold,
     transferred  or  assigned  in  the  absence  of an  effective  registration
     statement for the securities  under said Act, or an opinion of counsel,  in
     form,  substance and scope  customary for opinions of counsel in comparable
     transactions,  that  registration is not  requiredunder  said Act or unless
     sold pursuant to Rule 144 or Regulation S under said Act.

     The legend set forth above  shall be removed and the Company  shall issue a
certificate without such legend to the holder of any Securities upon which it is
stamped,  if, unless otherwise required by applicable state securities laws, (a)
such  Securities  are  registered  for  sale  under  an  effective  registration
statement  filed under the  Securities  Act or otherwise may be sold pursuant to
Rule 144 or Regulation S without any  restriction as to the number of securities
as of a particular  date that can then be  immediately  sold, or (b) such holder
provides the Company with an opinion of counsel,  in form,  substance  and scope
customary for opinions of counsel in comparable transactions, to the effect that
a public sale or transfer of such  Securities  may be made without  registration
under the Securities Act, which opinion shall be accepted by the Company so that
the sale or transfer is effected or (c) such holder  provides  the Company  with
reasonable  assurances  that such Securities can be sold pursuant to Rule 144 or
Regulation  S.  The  Investors  agree to sell all  Securities,  including  those
represented  by a  certificate(s)  from which the legend  has been  removed,  in
compliance with applicable prospectus delivery requirements, if any.

(cc) No Integrated Offering. Neither the Company, nor any of its affiliates, nor
any person  acting on its or their behalf,  has directly or indirectly  made any
offers or sales in any  security or solicited  any offers to buy any  securities
under circumstances that would require  registration under the Securities Act of
the issuance of the Securities to the Investors.  The issuance of the Securities
to the Investors will not be integrated with any other issuance of the Company's
securities  (past,  current or future) for purpose of any  stockholder  approval
provisions applicable to the Company or its securities.

(dd) Solvency. The Company (after giving effect to the transactions contemplated
by this  Agreement)  is solvent  (i.e.,  its assets have a fair market  value in
excess of the amount  required to pay its probable  liabilities  on its existing
debts as they become  absolute  and matured)  and  currently  the Company has no
information  that would lead it to  reasonably  conclude  that the Company would
not, after giving effect to the transaction contemplated by this Agreement, have
the  ability  to,  nor does it intend to take any action  that would  impair its
ability to, pay its debts from time to time incurred in connection  therewith as
such debts  mature.  The Company did not  receive a qualified  opinion  from its
auditors  with  respect to its most  recent  fiscal year end and,  after  giving
effect to the transactions  contemplated by this Agreement,  does not anticipate
or know of any basis upon which its auditors might issue a qualified  opinion in
respect of its current fiscal year.

(ee) Investment  Company.  The Company is not, and upon the issuance and sale of
the  Securities as  contemplated  by this  Agreement  will not be an "investment
company"  required to be registered under the Investment  Company Act of 1940 as
amended  (an  "Investment  Company").  The  Company  is  not  controlled  by  an
Investment Company.

7. Covenants of the Company.

(a) Reservation of Shares. The Company agrees to use its best efforts to reserve
an adequate  number of Conversion  Shares for  conversion of the  Debentures and
exercise of the Warrants, free of any preemptive rights of any present or future
stockholders  of the  Company,  whether  or not such  securities  are  currently
authorized.

(b)  Additional  Indebtedness.  The Company  agrees not to incur any  additional
indebtedness in excess of $25,000, individually or in the aggregate, without the
written consent of the Investors unless such indebtedness is used solely for the
purpose of  satisfying  the  outstanding  principal,  accumulated  interest  and
penalties due on the Debentures.

(c) Form D; Blue Sky Laws.  The Company  agrees to file a Form D with respect to
the Securities as required  under  Regulation D and to provide a copy thereof to
the Investors  promptly after such filing.  The Company shall,  on or before the
Closing, take such action as the Company shall reasonably determine is necessary
to qualify the  Securities  for sale to the Investor at the  applicable  closing
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States (or to obtain an exemption from such qualification),
and shall  provide  evidence of any such  action so taken to the  Investor on or
prior to the Closing.

(d) Reporting  Status;  Eligibility  to Use Form S-2, S-3, SB-2 or Form S-1. The
Company's  Common Stock is  registered  under Section 12(g) of the 1934 Act. The
Company  represents and warrants that it meets the  requirements  for the use of
Form  SB-2 (or if  Company  is not  eligible  for the use of Form SB-2 as of the
Filing Date (as defined in the Registration  Rights Agreement),  the Company may
use the  form of  registration  for  which  it is  eligible  at that  time)  for
registration  of the sale by the  Investors of the  Registrable  Securities  (as
defined  in the  Registration  Rights  Agreement).  So  long  as  the  Investors
beneficially  own any of the  Securities,  the  Company  shall  timely  file all
reports  required to be filed with the Commission  pursuant to the 1934 Act, and
the Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations  thereunder
would permit such  termination.  The Company further agrees  hereinafter to file
all reports  required to be filed by the Company with the Commission in a timely
manner so as to become eligible, and thereafter to maintain its eligibility, for
the use of Form S-3.  The Company  shall issue a press  release  describing  the
material  terms of the  transaction  contemplated  hereby as soon as practicable
following the Closing, but in no event more than two (2) business days after the
Closing,  which press release shall be subject to prior review by the Investors.
The Company  agrees that such press  release shall not disclose the names of the
Investors  unless  expressly  consented to in writing by the Investors or unless
required by applicable  law or  regulation,  and then only to the extent of such
requirement. For the purposes of this section, a report shall be deemed "timely"
filed if it is filed on the date  due,  or within  any  additional  time  period
provided for in Rule 12b-25 of the rules and regulations  promulgated  under the
Securities Exchange Act of 1934, as amended.

(e) Use of Proceeds.  The Company  shall use the  proceeds  from the sale of the
Debentures  and the  Warrants  for working  capital  and shall not,  directly or
indirectly,  use  such  proceeds  for any  loan to or  investment  in any  other
corporation, partnership, enterprise or other person.

(f) Future  Offerings.  Subject to the exceptions  described  below, the Company
will not conduct any equity financing  (including debt with an equity component)
(individually a "Future Offering" and, collectively, "Future Offerings") for six
months after the date of Closing, and thereafter during the period beginning six
months  after the date of the Closing and ending on the earlier of (y) the first
date that none of the Debentures are outstanding; or (z) two (2) years after the
Effective Date, unless it shall have first delivered to Investors,  at least ten
(10)  business  days  prior to the  closing of such a Future  Offering,  written
notice  describing  the  proposed  Future  Offering,  including  the  terms  and
conditions  thereof (the "Term  Sheet"),  and  providing the Investors an option
during the five (5) business day period following  delivery of the Term Sheet to
purchase the securities  being offered in the Future  Offering on the same terms
as  contemplated by such Future  Offering,  following which initial five (5) day
period, the Investors' option shall expire (the limitations  referred to in this
sentence and the preceding sentence are collectively referred to as the "Capital
Raising  Limitations").  Following  delivery of notice by the  Investors  to the
Company that  Investors  wish to exercise its option to purchase the  securities
being  offered in the Future  Offering,  the Company  shall  provide  definitive
documentation  (the  "Offering  Documents")  to the  Investors and the Investors
shall be provided five (5) days from  delivery of the Offering  Documents to the
Investors  to execute  the  documents  and close such Future  Offering  with the
Company.  Following  this second five (5)  business day period,  the  Investor's
option to  purchase  the Future  Offering  shall  expire.  The  second  five (5)
business  day  period  shall  apply to  successive  amendments  to the terms and
conditions of any proposed  Future  Offering.  The Capital  Raising  Limitations
shall not apply to any  transaction  involving  (i) issuances of securities in a
firm commitment  underwritten  public offering  yielding gross proceeds  greater
than $10,000,000 (excluding a continuous offering pursuant to Rule 415 under the
Securities  Act),  (ii) issuances of securities as  consideration  for a merger,
consolidation  or  purchase  of  assets,  or in  connection  with any  strategic
partnership  or joint  venture  (the  primary  purpose  of which is not to raise
equity  capital),  or in connection  with the  disposition  or  acquisition of a
business,  product or license by the Company, or (iii) the issuance of shares to
consultants  (other than if  registered  or to be registered on Form S-8) in the
reasonable judgment of the Company's management pursuant to bona fide consulting
arrangements with the Company.  Except as provided on Schedule 7(f), the Capital
Raising  Limitations  also shall not apply to the  issuance of  securities  upon
exercise or conversion of the Company's  options,  warrants or other convertible
securities  outstanding  as of the date  hereof  or to the  grant of  additional
options or warrants, or the issuance of additional securities, under any Company
stock  option or  restricted  stock plan  approved  by the  stockholders  of the
Company. In the event that the Company completes a Future Offering on terms more
favorable to another  investor than the  transaction  contemplated  hereby,  the
terms of the  Debentures  and the Warrants  will be amended to reflect such more
favorable terms.

(g) Listing.  The Company shall promptly  secure the listing of the  Registrable
Securities upon each national securities exchange or automated quotation system,
if any, upon which shares of the Company's Common Stock are then listed (subject
to official  notice of issuance)  and, so long as the  Investors  own any of the
Registrable  Securities,  shall maintain,  so long as any other shares of Common
Stock shall be so listed,  such listing of all Registrable  Securities from time
to time issuable upon  conversion of the Debentures or exercise of the Warrants.
The Company will obtain and, so long as any Investor owns any of the Registrable
Securities,  maintain  the listing and trading of its Common Stock on the OTCBB,
the Nasdaq  National  Market  ("Nasdaq"),  the Nasdaq  SmallCap  Market ("Nasdaq
Smallcap"), the New York Stock Exchange ("NYSE"), or the American Stock Exchange
("AMEX") and will comply in all respects  with the Company's  reporting,  filing
and other obligations  under the bylaws or rules of the National  Association of
Securities Dealers ("NASD") and such exchanges, as applicable. The Company shall
promptly  provide to the  Investors  copies of any notices it receives  from the
OTCBB and any other exchanges or quotation  systems on which the Common Stock is
then listed regarding the continued  eligibility of the Common Stock for listing
on such exchanges and quotation systems.

(h)  Corporation  Existence.  So  long  as the  Investors  beneficially  own any
Debentures,  Warrants or Registrable Securities,  the Company shall maintain its
corporate existence and shall not sell all or substantially all of the Company's
assets,  except  in the  event of a merger  or  consolidation  or sale of all or
substantially  all of the  Company's  assets,  where the  surviving or successor
entity in such transaction (i) assumes the Company's  obligations  hereunder and
under the agreements  and  instruments  entered into in connection  herewith and
(ii) is a publicly traded  corporation  whose Common Stock is listed for trading
on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.

(i) Transfer Instructions.  The Company shall issue irrevocable  instructions to
its  transfer  agent  to  issue  certificates,  registered  in the  name  of the
Investors  or its nominee,  for the  Registrable  Securities  in such amounts as
specified  from time to time by the Investors to the Company upon  conversion of
the Debentures or exercise of the Warrants in accordance  with the terms thereof
(the "Irrevocable  Transfer Agent  Instructions").  Prior to registration of the
Registrable  Securities  under  the  Securities  Act or the  date on  which  the
Registrable  Securities may be sold pursuant to Rule 144 or Regulation S without
any  restriction as to the number of  Registrable  Securities as of a particular
date that can then be  immediately  sold, all such  certificates  shall bear the
restrictive  legend  specified in Section 6(bb) of this  Agreement.  The Company
warrants  that  no  instruction  other  than  the  Irrevocable   Transfer  Agent
Instructions  referred to in this Section 7, will be given by the Company to its
transfer agent and that the  Registrable  Securities  shall  otherwise be freely
transferable  on the books  and  records  of the  Company  as and to the  extent
provided in this Agreement and the  Registration  Rights  Agreement.  Nothing in
this Section shall affect in any way the  Investors'  obligations  and agreement
set forth in Section 7 hereof to comply with all applicable  prospectus delivery
requirements,  if  any,  upon  re-sale  of the  Registrable  Securities.  If the
Investors  provide the Company with (i) an opinion of counsel in form  substance
and scope customary for opinions in comparable transactions,  to the effect that
a public sale or transfer of such  Registrable  Securities  may be made  without
registration under the Securities Act and such sale or transfer is effected,  or
(ii) the Investors provide reasonable assurances that the Registrable Securities
can be sold  pursuant to Rule 144 or  Regulation S, the Company shall permit the
transfer  and  promptly  instruct  its  transfer  agent  to  issue  one or  more
certificates,   free  from  restrictive   legend,  in  such  name  and  in  such
denominations  as specified by the Investors.  The Company  acknowledges  that a
breach by it of its  obligations  hereunder will cause  irreparable  harm to the
Investors, by vitiating the intent and purpose of the transactions  contemplated
hereby.  Accordingly,  the  Company  acknowledges  that the  remedy at law for a
breach of its obligations  under this Section 7 may be inadequate and agrees, in
the event of a breach or threatened  breach by the Company of the  provisions of
this  Section,  that the Investors  shall be entitled,  in addition to all other
available  remedies,  to an  injunction  restraining  any breach  and  requiring
immediate  transfer,  without the necessity of showing economic loss and without
any bond or other security being required.

     The  Irrevocable  Transfer  Agent  Instructions,   in  form  and  substance
satisfactory to the Investors,  shall have been delivered to and acknowledged in
writing by the Company's Transfer Agent.

8.  Character of the Warrants.  The Company and the  Investors,  having  adverse
interests and as a result of arm's length bargaining, agree that (i) none of the
Investors nor any of their  affiliates  has rendered or has agreed to render any
services to the Company in connection with this Agreement or the issuance of the
Debentures and Warrants; and (ii) the Warrants, when issued, shall not be issued
as compensation.

9. Representations and Warranties of the Investors. Each of the Investors hereby
severally represents and warrants to the Company that:

(a) The Investors have full power and authority and have each taken all required
action  necessary  to permit  them to execute  and  deliver and to carry out the
terms of this Agreement and all other documents or instruments required hereby.

(b) Each of the  Investor's  present  intention is to acquire its Securities for
the  purpose  of  investment  and not with a view to  distribution.  Each of the
Investors agrees that it will not sell or transfer any of its Securities without
registration  under  applicable  federal  and  state  securities  laws,  or  the
availability  of exemptions  therefrom.  Each of the  Investors  agrees that the
documents  evidencing the Securities will each bear a restrictive legend stating
that  the  Securities   represented  thereby  have  not  been  registered  under
applicable  federal and state  securities  laws and referring to restrictions on
their transferability and sale.

(c)  Each  of  the  Investors  acknowledges  that  it  currently  has,  and  had
immediately  prior to its  receipt of the offer of sale from the  Company,  such
knowledge and experience in financial and business matters that it is capable of
evaluating  the merits and risks of this  investment.  During the course of this
transaction  and prior to the sale to the  Investors of the  Debentures  and the
Warrants hereunder, the Investors acknowledge that they each had the opportunity
to ask  questions  of, and  receive  answers  from,  management  of the  Company
concerning  the terms  and  conditions  of this  investment  and to  obtain  any
additional  information  of the same  kind  that is  specified  in  Rule 502  of
Regulation D of the Securities Act of 1933, as amended,  or that is necessary to
verify the accuracy of the other information obtained. The Investors acknowledge
that they each have received such  information  as they deem necessary to enable
them to make their investment decision.

(d) The Investor  acknowledges  that the Investor,  or the Investor's  attorney,
accountant, or adviser(s),  has/have had a reasonable opportunity to inspect all
documents and records pertaining to this investment.

(e) The security  interest  granted to Investors in connection with the issuance
of the Debentures will be a first priority  security interest in and lien on the
Collateral (as defined in the Debentures).

(f) The Investor  understands  that the offering and sale of the  Debentures and
Warrants is intended to be exempt from registration  under the Securities Act by
virtue of Section 4(2) thereof and the  provisions  of  Regulation D promulgated
thereunder.

(g) The Investor and/or the Investor's  adviser(s)  has/have had the opportunity
to review the SEC Documents,  the Transaction  Documents and all other documents
furnished to Investor in connection  with this  transaction  (collectively,  the
"Offering Documents").

(h) In making a  decision  to invest in the  Securities,  the  Investor  has not
relied on any  information  other than  information  contained  in the  Offering
Documents.

(i) The  Investor  is not  subscribing  for the  Securities  as a  result  of or
subsequent  to  any  advertisement,   article,  notice  or  other  communication
published  in any  newspaper,  magazine,  or  similar  media or  broadcast  over
television or radio, or presented at any seminar or meeting, or any solicitation
of a subscription by a person other than a representative of the Company.

(j) If the  Investor is a natural  person,  the  Investor has reached the age of
majority in the  jurisdiction  in which the Investor  resides;  the Investor has
adequate  means of providing  for the  Investor's  current  financial  needs and
contingencies,  is able to bear the substantial  economic risks of an investment
in the Securities for an indefinite period of time, has no need for liquidity in
such investment,  and, at the present time, could afford a complete loss of such
investment.

(k) The  Investor is not relying on the Company or any agent of the Company with
respect to any legal,  tax or economic  advice  related to an  investment in the
Securities.

(l)  The  Investor   recognizes  that  investment  in  the  Securities  involves
substantial  risks,  including  the risk of loss of the  entire  amount  of such
investment,  and has taken full  cognizance of and  understands all of the risks
related to the purchase of the Securities.

(m) The  Investor's  overall  commitment  to  investments  which are not readily
marketable is reasonable in relation to the Investor's net worth.

(n) The  Investor is an  "accredited  investor"  as that term is defined in Rule
501(a) of Regulation D under the Securities Act.

(o) The Investor  understands  that the Securities are being offered and sold in
reliance on a  transactional  exemption from the  registration  requirements  of
Federal and state securities laws and that the Company is relying upon the truth
and accuracy of the representations,  warranties,  agreements,  acknowledgements
and  understandings  of the  Investor  set forth in this  Agreement  in order to
determine  the  applicability  of such  exemptions  and the  suitability  of the
Investor to acquire the Securities.

(p) The Investor  hereby agrees to provide such  information  and to execute and
deliver  such  documents  as the Company may deem  reasonably  appropriate  with
regard to the  Investor's  suitability  or  otherwise  in  connection  with this
Agreement.

(q) The  execution,  delivery and  performance of this Agreement by the Investor
(i) will not  constitute  a default  under or  conflict  with any  agreement  or
instrument  to which the  Investor  is a party or by which it or its  assets are
bound;  (ii) will not  conflict  with or violate  any order,  judgment,  decree,
statute, ordinance or regulation applicable to the Investor (including,  without
limitation, any applicable laws relating to permissible legal investments);  and
(iii) does not  require  the  consent of any person or entity,  other than those
that will have been obtained prior to the Closing or Second Closing, as the case
may be. This Agreement has been duly  authorized,  executed and delivered by the
Investor  and  constitutes  the  valid and  binding  agreement  of the  Investor
enforceable against it in accordance with its terms.

(r) The Investor has not  retained,  or otherwise  entered into any agreement or
understanding  with, any broker or finder in connection with the purchase of the
Securities by the Investor, and the Company will not incur any liability for any
fee,  commission  or  other  compensation  on  account  of any  such  retention,
agreement or understanding by the Investor.

(s) The Investor understands, acknowledges and agrees that:

(i) In making an investment decision,  the Investor has relied on the Investor's
own  examination  of the Company and the  disclosure in the Offering  Documents,
including  the  merits  and  risks  involved.   The  Securities  have  not  been
recommended  by  any  federal  or  state  securities  commission  or  regulatory
authority.  Furthermore,  the  foregoing  authorities  have  not  confirmed  the
accuracy or determined the adequacy of the Offering Documents or this Agreement.

(ii) The Investor,  if executing this Agreement in a representative or fiduciary
capacity,  has all  requisite  power and  authority  to execute and deliver this
Agreement in such capacity and on behalf of the  subscribing  individual,  ward,
partnership,  trust, estate,  corporation, or other entity for whom the Investor
is executing this Agreement,  and such  individual,  ward,  partnership,  trust,
estate,  corporation,  or other entity has all requisite  power and authority to
enter into this Agreement and make an investment in the Securities.

10.  Conditions To The  Obligations  Of The  Investors.  The  obligation of each
Investor to purchase and pay for the Debentures and Warrants being  purchased by
it at the Closing or the Second Closing,  as the case may be, is, at its option,
subject to the  satisfaction,  on or before such closing  date, of the following
conditions:

(a) Opinion of Company's Counsel. The Investors shall have received from counsel
for the Company, an opinion dated the date of the Closing or the Second Closing,
as the case may be, in form and scope  satisfactory  to the  Investors and their
counsel, to the effect that:

(i) The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its  jurisdiction  of  incorporation.  The Company is
duly licensed or qualified to transact business as a foreign  corporation and is
in good  standing in New Mexico and  Tennessee.  The  Company has the  corporate
power and authority to own and hold its  properties and to carry on its business
as  currently  conducted  and as proposed to be  conducted.  The Company has the
corporate  power and  authority  to  execute,  deliver  and  perform  all of the
Transaction  Documents,  to issue,  sell and deliver the Debentures and Warrants
and, upon conversion thereof, to issue and deliver the Conversion Shares.

(ii) All of the Transaction  Documents have been duly  authorized,  executed and
delivered by the Company and constitute the legal, valid and binding obligations
of the Company,  enforceable in accordance with their respective terms (subject,
as to enforcement of remedies, to the discretion of courts in awarding equitable
relief and to applicable bankruptcy, reorganization,  insolvency, moratorium and
similar  laws  affecting  the rights of creditors  generally),  except that such
counsel need not express any opinion as to the validity or enforceability of the
indemnification provisions of the Registration Rights Agreement.

(iii) The  execution and delivery by the Company of the  Transaction  Documents,
the performance by the Company of its obligations thereunder, the issuance, sale
and delivery of the  Debentures and the Warrants and, upon  conversion  thereof,
the  issuance  and  delivery  of the  Conversion  Shares,  will not  violate any
provision  of law,  the Charter or  by-laws,  as amended,  of the  Company,  any
indenture,  agreement or other instrument listed as an exhibit to the opinion of
Company's  counsel or conflict with,  result in a breach of or constitute  (with
due  notice  or lapse  of time or  both) a  default  under  any such  indenture,
agreement or other  instrument,  or result in the creation or  imposition of any
lien,  charge,  restriction,  claim or encumbrance of any nature whatsoever upon
any of the  properties  or assets of the  Company.  In rendering  the  foregoing
opinion,  such  counsel  may assume  full  disclosure  to the  Investors  of all
material  facts  and,  with  respect  to  performance  by  the  Company  of  its
obligations under the Registration  Rights  Agreement,  may assume compliance by
the Company at such time with the  registration  requirements  of the Securities
Act and with applicable state securities laws and may disclaim any opinion as to
the  validity  or  enforceability  of  the  indemnification  provisions  of  the
Registration Rights Agreement.

(iv) The authorized  capital stock of the Company consists of 20,000,000  shares
of preferred  stock, no par value,  and 100,000,000  shares of common stock, par
value $.001. Immediately prior to the Closing, 18,857,675 shares of Common Stock
will be validly issued,  fully paid and nonassessable with no personal liability
attaching to the ownership  thereof and no (-0-) shares of preferred  stock will
have been issued.  Immediately prior to the Closing,  the stockholders of record
and  holders  of  record  of  subscriptions,   warrants,  options,   convertible
securities,  and other  rights  (contingent  or other) to purchase or  otherwise
acquire  equity  securities  of the Company,  and the number of shares of Common
Stock  and the  number of such  subscriptions,  warrants,  options,  convertible
securities, and other such rights held by each, will be as set forth in Schedule
6(d). The designations, powers, preferences, rights, qualifications, limitations
and restrictions in respect of each class or series of authorized  capital stock
of the  Company  are as set  forth in the  Charter,  and all such  designations,
powers, preferences,  rights,  qualifications,  limitations and restrictions are
valid,  binding and  enforceable  and in  accordance  with all  applicable  laws
(subject,  as to enforcement,  to the discretion of courts in awarding equitable
relief and to applicable bankruptcy, reorganization,  insolvency, moratorium and
similar laws affecting the rights of creditors  generally).  Except as set forth
in Schedule 6(d), to the knowledge of such counsel, (1) immediately prior to the
Closing no subscription,  warrant, option,  convertible security, or other right
(contingent  or other) to purchase or acquire  equity  securities of the Company
will be  authorized  or  outstanding  and (2) there will be no commitment by the
Company  to  issue  shares,   subscriptions,   warrants,  options,   convertible
securities,  or other  such  rights or to  distribute  to  holders of any of its
equity securities any evidence of indebtedness or asset.  Except as set forth in
Schedule  6(d) or as  provided  for in the  Charter,  to the  knowledge  of such
counsel, the Company has no obligation (contingent or other) to purchase, redeem
or otherwise  acquire any of its equity securities or any interest therein or to
pay any dividend or make any other distribution in respect thereof.

(v) The Securities have been duly authorized. The issuance, sale and delivery of
the  Debentures  and Warrants  and the  issuance and delivery of the  Conversion
Shares upon  conversion  of the  Debentures or the exercise of the Warrants have
been duly  authorized  by all required  corporate  action;  the  Debentures  and
Warrants  have been validly  issued,  are fully paid and  nonassessable  with no
personal  liability  attaching to the ownership thereof and, to the knowledge of
such counsel, are free and clear of all liens, charges, restrictions, claims and
encumbrances  imposed by or through the Company;  and the Conversion Shares have
been duly  reserved  for  issuance  upon  conversion  of the  Debentures  or the
exercise of the Warrants and, when so issued, will be validly issued, fully paid
and nonassessable with no personal liability  attaching to the ownership thereof
and,  to the  knowledge  of such  counsel,  will be free and clear of all liens,
charges,  restrictions,  claims  and  encumbrances  imposed  by or  through  the
Company.  Neither the issuance,  sale or delivery of the Debentures and Warrants
nor the  issuance  or  delivery  of the  Conversion  Shares  is  subject  to any
preemptive right of stockholders of the Company arising under law or the Charter
or  by-laws  of the  Company,  each as  amended,  or, to the  knowledge  of such
counsel,  to any  contractual  right of first refusal or other right in favor of
any person.

(vi) Except as described in Schedule  6(g),  to the  knowledge of such  counsel,
there is no (A) action,  suit,  claim,  proceeding or  investigation  pending or
threatened  against or affecting the Company or any of its subsidiaries,  at law
or  in  equity,  or  before  or  by  any  federal,  state,  municipal  or  other
governmental department,  commission,  board, bureau, agency or instrumentality,
domestic or foreign,  (B) arbitration  proceeding relating to the Company or any
of its  subsidiaries  pending  under  collective  bargaining  agreements  or (C)
governmental  inquiry pending or threatened  against or affecting the Company or
any of its subsidiaries  (including,  without limitation,  any inquiry as to the
qualification  of the Company or any of its  subsidiaries to hold or receive any
license or permit).  To the knowledge of such  counsel,  neither the Company nor
any  of its  subsidiaries  is in  default  with  respect  to  any  order,  writ,
injunction  or decree  known to such  counsel  of any  court or of any  federal,
state, municipal or other governmental  department,  commission,  board, bureau,
agency or instrumentality, domestic or foreign.

(vii)  Assuming  the  accuracy  of the  representations  and  warranties  of the
Investors set forth herein,  no  registration  or filing with, and no consent or
approval of, or other action by any federal,  state or other governmental agency
or instrumentality is or will be necessary for the valid execution, delivery and
performance by the Company of the Transaction Documents,  the issuance, sale and
delivery of the Securities, other than filings pursuant to state securities laws
(all of which filings,  other than those which are required to be made after the
Closing, have been made by the Company). In rendering the foregoing opinion with
respect to performance by the Company of its obligations  under the Registration
Rights Agreement, such counsel may assume compliance by the Company at such time
with the  registration  requirements  of the Securities Act and with  applicable
state  securities  laws and may  disclaim  any  opinion  as to the  validity  or
enforceability  of the  indemnification  provisions of the  Registration  Rights
Agreement.

(viii)  All of the  Company's  outstanding  capital  stock  has been  issued  in
compliance  with the  registration  requirements  of the  Securities Act and all
applicable state securities laws.

(ix) The issuance and sale of the Debentures and Warrants do not, and the shares
of the Conversion Shares will not, require registration under the Securities Act
or qualification under any state securities laws.

(x) Except for taxes and assessments that are being contested in good faith, the
Company has paid all taxes.

(xi) Except as disclosed on Schedule 6(l), the Company has filed all reports and
other  documents  required to be filed by it with the  Securities  and  Exchange
Commission pursuant to the reporting requirements of the 1934 Act.

(xii) The security interest granted to Investors in connection with the issuance
of the Debentures will be a first priority  security interest in and lien on the
Collateral (as defined in the Debentures).

(b) Representations  and Warranties to be True and Correct.  The representations
and warranties contained herein shall be true, complete and correct on and as of
the Closing or the Second  Closing,  as the case may be, with the same effect as
though such representations and warranties had been made on and as of such date,
and the  President  and  Chief  Financial  Officer  of the  Company  shall  have
certified to such effect to the Investors in writing.

(c)  Performance.  The  Company  shall  have  performed  and  complied  with all
agreements  contained  herein  required to be performed  or complied  with by it
prior to or at the  Closing or the Second  Closing,  as the case may be, and the
President and Chief Financial Officer of the Company shall have certified to the
Investors  in writing to such effect and to the  further  effect that all of the
conditions set forth in this Section 10 have been satisfied.

(d) All Proceedings to be Satisfactory.  All corporate and other  proceedings to
be taken by the Company in connection with the transactions  contemplated hereby
and all documents  incident  thereto shall be satisfactory in form and substance
to the  Investors and their  counsel,  and the Investors and their counsel shall
have  received all such  counter-part  originals or certified or other copies of
such documents as they reasonably may request.

(e) Supporting Documents. Bondy &amp; Schloss, LLP, on behalf of the Investors,
shall have received copies of the following documents:

(i) (A) the Charter,  certified as of a recent date by the Secretary of State of
the State of Colorado,  and (B) a certificate  of said  Secretary  dated as of a
recent date as to the due  incorporation  and good standing of the Company,  the
payment of all excise  taxes by the Company and  listing  all  documents  of the
Company on file with said Secretary;

(ii) a certificate  of the  Secretary or an Assistant  Secretary of the Company,
dated the date of the Closing Date and the Second  Closing,  as the case may be,
and  certifying:  (A) that  attached  thereto is a true and complete copy of the
by-laws of the Company as in effect on the date of such certification;  (B) that
attached  thereto is a true and complete copy of the resolutions  adopted by the
Board of Directors or the stockholders of the Company (if necessary) authorizing
the  execution,  delivery and  performance  of the  Transaction  Documents,  the
issuance,  sale and delivery of  Debentures  and  Warrants and the  reservation,
issuance and delivery of the Conversion  Shares,  and that all such  resolutions
are in full force and effect and are all the  resolutions  adopted in connection
with the transactions  contemplated by the Transaction  Documents;  (C) that the
Charter has not been amended since the date of the last amendment referred to in
the  certificate  delivered  pursuant  to  clause  (B)  above;  and  (D)  to the
incumbency and specimen  signature of each officer of the Company  executing any
of the Transaction Documents, the stock certificates representing the Debentures
and Warrants and any certificate or instrument  furnished pursuant hereto, and a
certification  by  another  officer  of the  Company  as to the  incumbency  and
signature  of the  officer  signing the  certificate  referred to in this clause
(ii); and

(iii) such additional supporting documents and other information with respect to
the operations and affairs of the Company as Bondy &amp; Schloss, LLP, as counsel
for the Investors, reasonably may request.

(f) Registration Rights Agreement. The Company shall have executed and delivered
the Registration Rights Agreement.

(g)  Security  Agreement;  Financing  Statements.  On the  dates  of each of the
Closing  and the  Second  Closing,  as the case may be, the  Company  shall have
executed and delivered the Security Agreement (as defined in the Debentures) and
an appropriate number of financing  statements on Form UCC-1 to be filed in each
jurisdiction  necessary for the Investors to perfect their security  interest in
the Collateral.

(h) Preemptive  Rights.  All  stockholders of the Company having any preemptive,
first refusal or other rights with respect to the issuance of the Debentures and
Warrants or the  Conversion  Shares  shall have  irrevocably  waived the same in
writing.

(i) Fees of Investors'  Counsel.  The Company shall have paid in accordance with
Section 15 the fees and  disbursements  of Bondy &amp; Schloss,  LLP,  Investors'
counsel, invoiced at the Closing.

All such documents  shall be satisfactory in form and substance to the Investors
and their counsel.

11.  Notices.  Any notices  required or permitted to be given under the terms of
this  Agreement  shall be sent by certified or registered  mail (return  receipt
requested)  or  delivered  personally  or by  courier  (including  a  recognized
overnight  delivery  service) or by facsimile  and shall be effective  five days
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery  service)  or by  facsimile,  in each case  addressed  to a party.  The
addresses for such communications shall be:

                               If to the Company:

                           Americana Publishing, Inc.
                                303 San Mateo NE
                                   Suite 104A
                              Albuquerque, NM 87108
                          Attention: George Lovato, Jr.
                             Telephone: 505.265.6121
                             Facsimile: 505.265.0632
                        Email: george@americanabooks.com

                                  With copy to:

                             Pollett and Richardson
                         10900 Wilshire Blvd., Suite 500
                              Los Angeles, CA 90024
                        Attention: Eric Richardson, Esq.
                             Telephone: 310.208.1182
                             Facsimile: 310.208.1154
                          Email: erichardson@pollet.com

     If to the  Investors:  To the  address  set  forth  immediately  below  the
     Investors' name on the signature pages hereto.

                                  With copy to:

                              Bondy &amp; Schloss, LLP
                         60 East 42nd Street, 37th Floor
                               New York, NY 10165
                        Attention: Jeffrey A. Rinde, Esq.
                            Telephone: (212) 661-3535
                            Facsimile: (212) 972-1677
                           Email: Jrinde@BSchloss.com

Each party shall provide notice to the other party of any change in address.

12.  Publicity.  The  Company  and the  Investors  shall  have right to review a
reasonable period of time before issuance of any press releases, the Commission,
OTCBB or NASD  filings,  or any other  public  statements  with  respect  to the
transactions  contemplated hereby; provided,  however, that the Company shall be
entitled,  without the prior approval of the Investor, to make any press release
or filings with the Commission,  OTCBB (or other  applicable  trading market) or
NASD filings with respect to such  transactions as is required by applicable law
and  regulations  (although the  Investors  shall be consulted by the Company in
connection  with any  such  press  release  prior to its  release  and  shall be
provided with a copy thereof and be given an opportunity to comment thereon).

13. Amendments,  Waivers,  Etc. This Agreement,  the Debentures and the Warrants
may be amended as to all Investors with the unanimous written consent of holders
of Debentures.

14. Choice of Law; Consent to  Jurisdiction.  It is the intention of the parties
that the laws of the State of New York  should  govern  the  enforceability  and
validity of this Agreement, the construction of its terms and the interpretation
of the rights and duties of the parties pursuant to the relationships among them
contemplated herein,  whether or not such rights and duties arise directly under
this Agreement. The Company and the Investors hereby consent to the jurisdiction
of the  courts  of the State of New York,  County  of New York,  and the  United
States District Court situated therein, in connection with any action concerning
the transactions contemplated in the Agreement.

15. Legal Fees. The Company agrees to pay to Bondy &amp; Schloss, LLP, counsel to
the  Investors,  their  fees and  out-of-pocket  expenses  with  respect  to the
transactions  contemplated  herein,  of which  $20,000  shall be  payable at the
Closing and thereafter, any remaining amounts shall be payable on demand.

16. Parties in Interest.  The terms and  provisions of this  Agreement  shall be
binding upon and inure to the benefit of, and be enforceable  by, the respective
successors and assigns of the parties  hereto.  This Agreement  shall not run to
the  benefit  of or be  enforceable  by any  person  other  than a party to this
Agreement and its successors and assigns.

17. Headings. The headings of the sections and paragraphs of this Agreement have
been inserted for convenience and reference only and do not constitute a part of
this Agreement.

18.  Counterparts.  This Agreement may be executed in any number of counterparts
and by different parties hereto in separate  counterparts,  with the same effect
as if all parties had signed the same document.  All such counterparts  shall be
deemed an original, shall be construed together and shall constitute one and the
same instrument.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



     IN WITNESS WHEREOF,  the undersigned have executed this Agreement as of the
date first above written.

                                    COMPANY:

                           AMERICANA PUBLISHING, INC.


                                      By:  ________________________________

                                     Title:________________________________


                                    INVESTOR:

                                     _______________________________________
                                     Name and Title


                                   Schedule 2

                              Schedule of Investors



---------------------------------------- -------------------------------------- ----------------------------------------
Name of Investor                         First Tranche                          Second Tranche
                                         Purchase Price                         Purchase Price
---------------------------------------- -------------------------------------- ----------------------------------------
---------------------------------------- -------------------------------------- ----------------------------------------
Gulf Coast Advisors, Ltd.                $25,000                                $25,000
---------------------------------------- -------------------------------------- ----------------------------------------
---------------------------------------- -------------------------------------- ----------------------------------------
BG Holdings, LLC                         $75,000                                $75,000
---------------------------------------- -------------------------------------- ----------------------------------------
---------------------------------------- -------------------------------------- ----------------------------------------

---------------------------------------- -------------------------------------- ----------------------------------------
---------------------------------------- -------------------------------------- ----------------------------------------

---------------------------------------- -------------------------------------- ----------------------------------------
---------------------------------------- -------------------------------------- ----------------------------------------

---------------------------------------- -------------------------------------- ----------------------------------------
---------------------------------------- -------------------------------------- ----------------------------------------

---------------------------------------- -------------------------------------- ----------------------------------------
---------------------------------------- -------------------------------------- ----------------------------------------

---------------------------------------- -------------------------------------- ----------------------------------------
---------------------------------------- -------------------------------------- ----------------------------------------

---------------------------------------- -------------------------------------- ----------------------------------------
---------------------------------------- -------------------------------------- ----------------------------------------
                                         Total:  $100,000                         $100,000
---------------------------------------- -------------------------------------- ----------------------------------------


                                   Schedule 6

                  Exceptions to Representations and Warranties



                                  Schedule 7(f)

                    Exceptions to Capital Raising Limitations



                                List of Exhibits


Exhibit A - Form of Debenture

Exhibit B - Form of Class A Warrant

Exhibit C - Form of Class B Warrant

Exhibit D - Form of Registration Rights Agreement




                                    EXHIBIT A

                    12% SENIOR SECURED CONVERTIBLE DEBENTURE



                                    exhibit B

                             Form of Class A Warrant



                                    exhibit C

                             Form of Class B Warrant




                                    exhibit D

                          registration rights agreement


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<TYPE>EX-99
<SEQUENCE>5
<FILENAME>exhibit4.htm
<DESCRIPTION>EXHIBIT 99.2 CERTIFICATION
<TEXT>
<HTML>
<HEAD>
<TITLE>Americana Publishing, Inc. 10-QSB Exhibit 99.1</TITLE>
</HEAD>
<BODY>
<PRE>

                                                                    Exhibit 99.1

                Written Statement of the Chief Executive Officer
                          Pursuant to 18 U.S.C. 1350

Solely for the purposes of complying  with 18 U.S.C.  1350,  I, the  undersigned
Chief  Executive  Officer  and  Chairman  of  Americana  Publishing,   Inc.  and
subsidiary  (the  "Company"),  hereby certify,  based on my knowledge,  that the
Quarterly  Report on Form 10-QSB of the  Company for the quarter  ended June 30,
2002 (the "Report") fully complies with the requirements of Section 13(a) of the
Securities  Exchange  Act of 1934 and that  information  contained in the Report
fairly presents,  in all material respects,  the financial condition and results
of operations of the Company.


                 /s/ Don White
                --------------------------
                Chief Financial Officer
                August 16, 2002


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<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>6
<FILENAME>exhibit3.htm
<DESCRIPTION>EXHIBIT 99.1 CERTIFICATION
<TEXT>
<HTML>
<HEAD>
<TITLE>Americana Publishing, Inc. 10-QSB Exhibit 99.1</TITLE>
</HEAD>
<BODY>
<PRE>

                                                                    Exhibit 99.1

                Written Statement of the Chief Executive Officer
                          Pursuant to 18 U.S.C. 1350

Solely for the purposes of complying  with 18 U.S.C.  1350,  I, the  undersigned
Chief  Executive  Officer  and  Chairman  of  Americana  Publishing,   Inc.  and
subsidiary  (the  "Company"),  hereby certify,  based on my knowledge,  that the
Quarterly  Report on Form 10-QSB of the  Company for the quarter  ended June 30,
2002 (the "Report") fully complies with the requirements of Section 13(a) of the
Securities  Exchange  Act of 1934 and that  information  contained in the Report
fairly presents,  in all material respects,  the financial condition and results
of operations of the Company.


                 /s/ George Lovato, Jr.
                --------------------------
                By: George Lovato, Jr.
                Chief Executive Officer
                August 16, 2002



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