U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
------------------ -------------------------
Commission file number 0-25783
AMERICANA PUBLISHING, INC.
(A DEVELOPMENT STAGE COMPANY)
---------------------------------------------------------------
(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)
505-265-5123
------------
(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 X .
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
As of September 30, 1999, there were 3,000,000 shares of common stock
outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes X . No .
----- -----
<PAGE>
AMERICANA PUBLISHING, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets
September 30, 1999 (Unaudited) and
December 31, 1998 ............................... 3
Condensed Statements of Operations
Three and Nine months ended September 30,
1999 and September 30, 1998 ..................... 4
Condensed Statements of Cash Flows
Nine months ended September 30, 1999 and
September 30, 1998 (Unaudited) .................. 5
Notes to Condensed Financial Statements ............... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ...................................... 8 - 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - Press Releases and other Exhibits
(b) Reports on Form 8-K
SIGNATURES
2
<PAGE>
<TABLE>
<CAPTION>
Part 1 Item 1.
AMERICANA PUBLISHING, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
Sept. 30, December 31,
1999 1998
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 16,206 $ 667
Other Assets 7,200 --
----------- -----------
Total Current Assets 23,406 667
PROPERTY AND EQUIPMENT
Database and Circulation List 22,735 18,411
Computer Equipment 28,118 14,629
Furniture and Fixtures 5,726 3,944
Software 3,164 --
Web Site Development and Name -
Americana Books 22,143 --
Less: Accumulated Depreciation
and Amortization (16,886) (7,396)
----------- -----------
Total Property and Equipment 65,000 29,588
TOTAL ASSETS $ 88,406 $ 30,255
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued Liabilities $ 851 $ --
----------- -----------
Total Current Liabilities 851 --
LONG-TERM LIABILITIES
Deferred Federal Income Tax 7,924 2,589
----------- -----------
Total Long-Term Liabilities 7,924 2,589
----------- -----------
STOCKHOLDERS' EQUITY
Preferred Stock 20,000,000 Shares, No
Par Value, Authorized, None Issued
Common Stock 100,000,000 Shares
Authorized $.001 Par Value, 2,535,000
& 3,000,000 Issued and Outstanding
for 1998 and 1999, Respectively 3,000 2,535
Paid-In Capital 1,234,928 510,887
Deficit Accumulated During the
Development Stage (1,158,297) (485,756)
----------- -----------
Total Stockholders' Equity 79,631 27,666
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 88,406 $ 30,255
=========== ===========
See Accompanying Notes to Financial Statements.
3
<PAGE>
AMERICANA PUBLISHING, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPT. 30, ENDED SEPT. 30,
1999 1998 1999 1998
----------- ----------- ----------- ---------
Net Revenues $ 2,128 $ 2,010 $ 12,036 $ 5,010
Operating Expenses
Salaries and Wages 21,949 - 25,038 -
Compensation Expense 87,003 - 312,006 -
Consulting Fees - - 195,247 -
Depreciation and Amortization 3,285 - 9,490 -
Interest Expense - - 142 -
Management Fees 6,000 - 51,000 -
General and Administrative Expense 35,517 883 86,319 15,265
----------- ----------- ----------- ---------
Total Expenses 153,754 883 679,242 15,265
Income Tax - Deferred (3,055) - 5,335 -
----------- ----------- ----------- ---------
Net Income (Loss) $ (148,571) $ 1,127 $ (672,541) $(10,255)
=========== =========== =========== =========
Weighted Average Number of
Common Shares Outstanding 3,000,000 1,270,000 2,916,300 1,270,000
Income (Loss) Per Share - Basic & Diluted $ (.05) $ (.01) $ (.23) $ (.01)
Dividends Per Common Share $ - $ - $ - $ -
See Accompanying Notes to Financial Statements.
4
<PAGE>
AMERICANA PUBLISHING, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Nine Months Ended
Sept. 30, Sept. 30,
1999 1998
------------ -----------
Cash Flows From Operating Activities:
Net Loss $ (672,541) $ (10,255)
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided by Operating Activities:
Depreciation 9,490 -
Capital Transactions 492,003 -
Increase in Accounts Payable 852 8,199
Increase in Income Taxes Payable 5,335 -
Increase in Other Assets (7,200) -
----------- ----------
Total Adjustments 500,480 8,199
Net Cash Used by Operating Activities (172,061) (2,056)
Cash Flows From Financing Activities:
Proceeds From Sale of Common Stock 232,500 -
Proceeds From Borrowings - -
----------- ----------
Net Cash Provided by Financing Activities 232,500 -
Cash Flows From Investing Activities:
Purchase of Property and Equipment (44,900) -
----------- ----------
Net Cash Used in Investing Activities (44,900) -
Net Increase (Decrease) in Cash 15,539 (2,056)
Cash and Cash Equivalents at Beginning of Period 667 2,159
----------- ----------
Cash and Cash Equivalents at End of Period $ 16,206 $ 103
=========== ==========
Supplemental Disclosures:
Interest Paid $ 142 -
Taxes Paid $ 0 -
See Accompanying Notes to Financial Statements.
5
</TABLE>
<PAGE>
AMERICANA PUBLISHING, INC.
(A DEVELOPMENT STAGE COMPANY)
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 "Company"), without 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 September 30, 1999, and for all periods
presented, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these condensed financial statements be
read in conjunction with the Company's audited financial statements and notes
thereto for the fiscal year ended December 31, 1998. The results of operations
for the nine months ended September 30, 1999 are not necessarily indicative of
the operating results for the full year. Of the $12,036 revenue through
September 30, $8,000 is from related party transactions.
NOTE 2. LIQUIDITY
The Company has historically financed its operations through capital infusion by
Mr. George Lovato, Jr., the Chairman of the Board and Chief Executive Officer.
Mr. Lovato has also paid certain expenses on behalf of the Company from other
business, such as B. H. Capital Limited, of which he is sole owner. Mr. Lovato
has provided office space, complete use of his equipment, facilities, and
personnel free of charge up to March 1st, 1999. The Company as of that date
began to pay B. H. Capital Limited the Corporate Finance Consulting Agreement
dated January 1st, 1998. The Company will be obligated to pay B. H. Capital
Limited a monthly retainer/lease payment of $3,000 per month for continued use
of Mr. Lovato's equipment and facility, along with some personnel.
The Company subsequent to September 30, 1999 completed the sale of $700,000 of
securities under 4(2). The use of these proceeds will be for working capital,
including the completion of the website, for an acquisition and advertising.
The Company does not anticipate the need for any additional financing. However,
should the Company require additional capital the Company has identified the
potential need for an asset-based credit facility. Although the Company has not
yet secured a financing commitment from a commercial financing institution or a
letter of intent with an investment banker/underwriter, the Company remains
confident that the financing resources should be available to meet the Company's
future financing needs. There can be no assurance that favorable financing terms
may be available to Americana at the time financing is desired. Further, poor
financial performance may adversely effect Americana's ability to attract a
commercial lending source or investment banker to underwrite any future
financings or stock offering.
6
<PAGE>
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.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
All phases of the Company's operations are subject to influences outside of the
Company's control. Any one, or a combination, of these factors could materially
affect the results of the Company's operations. These factors include
competition pressures, inflation, trade restrictions, interest rate fluctuations
and other capital market conditions, weather, future and options trading or
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 revenue earned in the first two years is low due to the fact that
the Company is in a development stage mode. The compensation expense of $285,913
in 1998 represents the value of stock received by George Lovato over the cost of
the stock. The $95,109 of outside consulting services in 1998 includes $92,750
of expense which represents the value of stock received by the remaining four
(4) directors, plus one additional individual , over their cost in the stock.
The printing cost dropped significantly from 1997 to 1998 due to the use of a
less expensive printing method and the use of less expensive paper. The Company
did purchase assets in 1998, hence the increase in depreciation expense in 1998
over 1997. Other "operating expense" of $39,333 and $33,324 for 1998 and 1997,
respectively, is comprised of miscellaneous expense paid by George Lovato for
the development of the database and circulation list.
The first nine months of 1999 includes compensation expense of $312,006 plus
$195,247 in consulting fees. These two amounts consist of forgiveness of salary
by George Lovato plus the excess of the fair market value of stock options over
their cost, issued to directors and consultants of the Company. The $51,000 in
management fees is paid to the President for use of his equipment, facilities
and certain personnel in the conduct of Company business. Professional fees of
$21,316 were paid to auditors and attorneys in the process of registering
Americana Publishing, Inc. as a public 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, but by selling books it
is expected that the Christmas season will be the busiest part of its fiscal
year.
The fiscal year ended December 31, 1998, was marked by a number of events which
in the opinion of management will strengthen the Company and ensure a continuous
growth pattern.
8
<PAGE>
Year 2000 issues result from the inability of computer programs or computerized
equipment to accurately calculate, store or use a date subsequent to December
31, 1999. The erroneous data can be interpreted in a number of different ways:
typically the year 2000 is represented s the year 1900. This could result in a
system failure or miscalculations causing disruptions of operations, including,
among other things, a temporary inability to process transactions, send invoices
or engage in similar normal business transactions. The Company has reviewed the
majority of its primary Information Technology (IT) systems with the vendors
from whom the systems were purchased and believes these systems were 2000
compliant as of December 31, 1998. The Company is also reviewing its non-IT
systems (such as technology embedded within its operational equipment) and any
material third-party relationships for year 2000 problems that could affect the
Company's operations. The Company expects to complete this review by mid-1999.
The Company believes the potential impact, if any, of those IT, non-IT or
third-party systems not being year 2000 compliant should not materially impact
the Company's ability to continue activities. Based on reviews conducted to date
and other preliminary information, costs of addressing potential problems are
not expected to have a material adverse impact on the Company's financial
position, results of operations or cash flows in future periods. Cost to date
has been immaterial. The Company relies on third part internet providers to
conduct its basic operations. Should any third party with which the Company has
a material relationship fall, the impact could be a significant challenge to the
Company's ability to perform its basic operations. An example of such a
challenge would be the inability of customers to access its website. As part of
the above-mentioned review, the Company will address the most reasonably likely
worst-case year 2000 scenarios and potential costs. The Company will also
develop a year 2000 contingency plan for unknown events. The Company is
scheduled to have these plans completed by June, 1999. Statements in this
section are intended to be and are hereby designated "Year 2000 Readiness
Disclosure" within the meaning of the Year 2000 Information and Readiness
Disclosure Act. Mr. Lovato is the only person dedicated to Y2K compliance
matters.
Liquidity and Capital Resources
- -------------------------------
The Company has historically financed its operations through capital infusion by
Mr. George Lovato, Jr., the Chairman of the Board and Chief Executive Officer.
Mr. Lovato has also paid certain expenses on behalf of the Company from other
business, such as B. H. Capital Limited, of which he is sole owner. Mr. Lovato
has provided office space, complete use of his equipment, facilities, and
personnel free of charge up to March 1st, 1999. The Company as of that date
began to pay B. H. Capital Limited the Corporate Finance Consulting Agreement
dated January 1st, 1998. The Company will be obligated to pay B. H. Capital
Limited a monthly retainer/lease payment of $3,000 per month for continued use
of Mr. Lovato's equipment and facility, along with some personnel.
The Company completed the sale of $700,000 of securities under 4(2)as of
November 4th, 1999. The use of these proceeds will be for working capital,
including the completion of the website(s), for an acquisition and advertising.
The Company does not anticipate the need for any additional financing. However,
should the Company require additional capital the Company has identified the
potential need for an asset-based credit facility. Although the Company has not
9
<PAGE>
yet secured a financing commitment from a commercial financing institution or a
letter of intent with an investment banker/underwriter, the Company remains
confident that the financing resources should be available to meet the Company's
future financing needs. There can be no assurance that favorable financing terms
may be available to Americana at the time financing is desired. Further, poor
financial performance may adversely effect Americana's ability to attract a
commercial lending source or investment banker to underwrite any future
financings or stock offering.
Should the Company require the rapid infusion of capital it would consider the
sale of a land asset it owns. This property was given to the Company by Mr.
Lovato in exchange for common stock for the purpose to either sell or to
leverage and secure future borrowings for the Company. The value of the land is
estimated at $25,000. Although the Company does not anticipate the need for such
a transaction, the land remains available as a potentially liquidatable asset.
The Company does not anticipate the need for any additional financing until
after December 31, 1999, the end of its fiscal year. At which time the Company
may consider the sale of additional common stock in either a private placement
or a secondary public offering.
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
or through the use of factoring any accounts receivables. 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.
The Company proposes to utilize the common stock to acquire other sponsored book
publishing companies and other business enterprises as previously described.
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. The Company plans on using the stock to acquire publishing companies and
other enterprises that benefit growth. If the stock is not actively traded, 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 find financing.
The Company's assets equal $30,255 and $88,601 with equity of $27,666 and
$79,631 as of December 31, 1998 (audited) and September 30, 1999 (unaudited)
respectively. The only liability consisted of a deferred tax payable of $2,589
as of December 31, 1998 and $8,970 as of September 30, 1999. Therefore, the
asset to equity ratio is basically 1:1 for both periods. The Company's total
revenues since inception to December 31, 1998 equals $15,819 and as of September
30, 1999, $32,230. In 1999, the Company projects its revenue per issue of the
AMERICANA CORPORATE FINANCE REPORTER to approximate $10,000 to $45,000 or more.
Capital Expenditure
- -------------------
The Company anticipates the need for additional computer equipment to handle the
integrated website and add new websites such as americanasongs.com. This is
estimated at $20,000 for 1999. These websites are designed to produce an
additional source of revenue as a result of the digital book catalogue, other
product sales and music. The Company has retained the services of Mark Whitman
10
<PAGE>
to develop and administer the website at a cost of $2,500 per month for a period
of one year. Mr. Whitman also has been issued a 100,000 common stock option
agreement under the same terms and conditions as the board of directors. The
Company has added additional computer equipment and office furniture
approximating $8,000.
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 they do not own, 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. The Company entered into
a letter of intent on October 29, 1999 to acquire the assets of an audio book
production company. This transaction differs from the above proposed
transactions in that the company is purchasing the assets only for cash and does
not anticipate in using its common stock in an exchange. The Company is also in
negotiations to purchase a radio program to be nationally syndicated.
Furthermore, the Company intends to acquire a state of the art digital recording
studio, heat set web press company, and book binding company. These enterprises
will vertically integrate production and control of quality audio books as well
as re-print books for its family of over 100 publishers now supplying books
through americanabooks.com, as well as consolidate profitability. The Company
currently has upgraded its existing recording studio to accommodate digital
equipment. This currently serves as the facility to record audio books.
11
<PAGE>
RESULTS OF OPERATIONS
The table below shows (a) the relationship of income and expense items to net
revenues, and (b) the change between comparable prior period and current period,
for the three and nine-month periods ended September 30, 1999 and 1998,
respectively. This table should be read in the context of the Company's
condensed statements of income presented elsewhere herein:
<TABLE>
<CAPTION>
Three Nine
Months Months
Three Months Nine Months Ended Ended
Ended Ended Sept. 30, Sept. 30,
Sept. 30, Sept. 30, 1998 to 1998 to
1999 1998 1999 1998 1999 1999
% % % % % %
--------- ------ ------- ------ --------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Revenues 100.0 100.0 100.0 100.0 (5.8) 140.2
Operating Expenses:
General and
Administrative 7,225.3 43.9 5,643.4 304.7 17,312.7 4,449.7
--------- ----- ------- ----- -------- -------
Operating Income
(Loss) (7,125.3) 56.1 (5,543.4) (204.7) * (6,406.2)
Net Interest
Expense -- -- -- -- -- --
--------- ----- ------- ----- -------- -------
Income (Loss) Before
Income Taxes (7,125.3) 56.1 (5,543.4) (204.7) * (6,406.2)
Federal and State
Income Taxes
(Benefit) 143.6 -- (44.3) -- * *
--------- ----- ------- ----- -------- -------
Net Income (Loss) (6,981.7) 56.1 (5,587.7) (204.7) * (6,458.2)
========= ===== ======= ===== ======== =======
</TABLE>
* Because the data changes from negative to positive, or from positive to
negative, the percentage of change is not meaningful.
Quarter Ended September 30, 1999 Compared to Quarter Ended September 30, 1998
Net revenues were approximately the same. During this quarter, management spent
a large amount of time working with the web site developer in the development of
Americana Publishing Inc.'s web site. No issue of Americana Corporate Reporter
was published and no advertisements were sold.
12
<PAGE>
Total expenses increased from $883 to $153,754. Of this expense, $87,000 was
non-cash expense having to do with the forgiveness of salary by George Lovato
and the fair market value of stock options issued to certain directors. This
non-cash expense was charged to compensation expense. Thee were also $9,000 of
professional fees pertaining to the negotiation of the Company.
Nine Months Ended September 30, 1999 Compared to the Nine Months Ended
September 30, 1998
The revenue increased $7,000 over the same nine month period the previous year.
The increase was mainly due to a related party purchasing $8,000 of advertising
space in the first quarter 1999.
The expenses increased $663,978. Of this expense almost $500,000 was a non-cash
consisting of forgiveness of salary by George Lovato and the fair market value
of stock options issued to certain individuals and directors. A large part of
the remaining expense pertains to the registration of Americana Publishing, Inc.
as a public company.
Part II Other Information
Item 2.
The Company recently sold 908,250 shares of common stock under the 4(2)
exemption of the securities act of 1933, as amended, to five (5) individuals.
416,500 shares were sold at $.50 to a pre-existing shareholder Lowell S. Fixler,
and the balance were sold at $1.00 thus totaling $700,000. The funds will be
used for working capital and various capital expenditures.
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 16,206
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,406
<PP&E> 81,886
<DEPRECIATION> 16,886
<TOTAL-ASSETS> 88,406
<CURRENT-LIABILITIES> 8,775
<BONDS> 0
0
0
<COMMON> 3,000
<OTHER-SE> 76,631
<TOTAL-LIABILITY-AND-EQUITY> 88,406
<SALES> 12,036
<TOTAL-REVENUES> 12,036
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 679,101
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (142)
<INCOME-PRETAX> (667,207)
<INCOME-TAX> (5,335)
<INCOME-CONTINUING> (672,542)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (672,542)
<EPS-BASIC> (0.23)
<EPS-DILUTED> (0.23)
</TABLE>
