SECURITIES AND EXHANGE COMMISSION
Washington, D.C. 20546
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
Small Business Issuers
Under Section 12(b) or 12(g) of the Securities Exchange
Act of 1934
Americana Publishing, Inc.
------------------------------------------------
(Name of Small Business Issuer in its Charter)
Colorado 84-1453702
- --------------------------- ------------------------------
(State or other jurisdiction (IRS Employer Identification Number)
Corporation or organization)
303 San Mateo NE, Suite 104A, Albuquerque, New Mexico 87108
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(505) 265-6121
(Issuer's Telephone Number)
Securities to be registered under Section12(b) of the Act:
Title of each class to be so registered Name of each exchange on which
Each class is to be registered:
N/A N/A
--------------------------- --------------------------
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of Class)
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Americana Publishing, Inc.
FORM 10-SB
TABLE OF CONTENTS
PART I
Item 1 Description of Business
Item 2 Management's Discussion and Analysis of Current Financial
Condition and Plan of Operation
Item 3 Description of Property
Item 4 Security Ownership of Certain Beneficial Owners & Management
Item 5 Directors and Executive Officers
Item 6 Executive Compensation
Item 7 Certain Relationship and Related Transactions
PART II
Item 1 Legal Proceedings
Item 2 Market Price of and Dividends on the Registrants Common
Equity and Other Shareholder Matter
Item 3 Changes in and Disagreements with Accountants
Item 4 Recent Sales of Unregistered Securities
Item 5 Indemnification of Directors and Officers
PART III
Item 1 Index to Exhibits
Item 2 Description of Exhibits
PART IV
Financial Statements (audited)
Financial Statements (unaudited)
Financial Statements Footnotes
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Item 1 - Description of Business
AMERICANA PUBLISHING, INC. (hereinafter referred to as "AMERICANA") was
incorporated under the laws of the State of Colorado on April 17, 1997. Prior to
that date AMERICANA operated as a division of B. H. Capital Limited for
approximately 18 months as a development stage enterprise. During the
development stage various activities such as publication design research,
industry and competition research, demographic research, and the formation of
the integrated publishing concept were achieved.
The integrated publishing concept incorporates acquiring various publishing
enterprises through use of AMERICANA common stock subsequent to becoming a
public company and distribution of business publications and periodicals as well
as entertainment publications of various kinds into the same demographic
profile. Then selected business periodicals and books are converted to a
condensed or, more rarely, an unabridged reading onto audio books and
redistributed through AMERICANA'S Website digital catalogue along with thousands
of non-owned books by other publishing companies and music. Other distribution
vehicles include printed catalogues, the company's own publication (the
AMERICANA CORPORATE FINANCE REPORTER).
The AMERICANA concept sets forth a plan to acquire small business press and
entertainment book publishers, since there are scores of small book publishers
with a multitude of titles that are unable to cost-effectively distribute their
works. AMERICANA proposes to acquire, re-mine, and/or reprint these titles
concomitant with converting them to audio books and redirecting them into
AMERICANA'S marketing and distribution process. To complement this integrated
plan, AMERICANA will also consider acquiring companies with the following
capabilities: audio-book production, state-of-the-art digital recording,
bookbinding, and heat-set web printing.
The AMERICANA CORPORATE FINANCE REPORTER, as a periodical, is a logical
self-fulfilling source to advertise and promote these printed works, audio
books, and music.
The various acquisitions will be accomplished through the exchange of AMERICANA
publicly trading and/or restricted common stock. These transactions should, by
their structure, enhance the balance sheet while not depleting cash reserves.
Thus, a positive effect on the balance sheet will occur from the added value
created as a result of each acquisition transaction. AMERICANA proposes to
acquire the titles, author contracts, and distribution contracts of each book
publisher with their respective authors and not the core going concern.
Therefore, no liabilities will migrate onto the AMERICANA balance sheet, only
the printed book title assets. As a result of the consolidation in acquisition
structure, AMERICANA should be able to realize improvement in various economies
of scale efficiencies.
General Business
The Company's books and records are kept at its executive offices at 303 San
Mateo NE, Suite 104A, Albuquerque, New Mexico 87108. Each prospective investor
or his/her authorized representative may review these documents at any
reasonable time. The Company's officers will answer any questions raised by
prospective investors or their representatives in connection with this Offering
and will provide them with any additional related information available to such
officers, or such additional related information that can be acquired without
unreasonable effort or expense.
The integrated publishing concept incorporates acquiring various publishing
enterprises through use of AMERICANA common stock subsequent to becoming a
public company and distribution of business publications and periodicals as well
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as entertainment publications of various kinds into the same demographic
profile. Then some of these business periodicals and books are converted to a
condensed or more rarely, an unabridged reading onto audio books and
redistributed through AMERICANA'S website digital catalogue. The audio books
will feature original music scores by John Wagner of John Wagner Studios (an
accomplished song writer, producer, and recording artist). Other distribution
vehicles include printed catalogues and the Company's own publication (the
AMERICANA CORPORATE FINANCE REPORTER).
The AMERICANA concept sets forth a plan to acquire small business presses and
entertainment book publishers. There are scores of small book publishers with a
multitude of titles that are unable to cost-effectively distribute their works.
AMERICANA proposes to acquire, re-mine, and/or reprint these titles concomitant
with converting them to a books on cassette and redirecting them into
AMERICANA'S marketing and distribution process, which includes AMERICANA'S World
Wide Web-based digital bookselling catalogue. To complement this integrated
plan, AMERICANA will also consider acquiring companies with the following
capabilities: audio-book production, state-of-the-art digital recording,
bookbinding, and heat-set web printing.
AMERICANA has spent six months developing a retail bookselling website to
complement the company's publishing activities. AMERICANA developed its own
highly customized, technologically advanced promotional systems exclusively for
this website, or "digital catalogue." These promotional programs mimic
hand-selling techniques while stimulating customer patronage and increasing
visits to the website. This digital catalogue has been designed by publishers
exclusively for small book publishers. Thus, the company will promote thousands
of titles it does not own through promotions tailored for the small book
publishers. The digital catalogue will eliminate many of the discriminatory
search engine and key word search features incorporated in other large
bookseller websites. This allows the customer access to all books listed by
title, publisher, author, category, or key word search. AMERICANA will not
utilize a straight download from Books in Print as other bookseller websites do.
AMERICANA will load only books inventoried by the publisher, current books in
circulation, popular books, and books that demonstrate good sales history. All
books listed in the catalogue, not just top sellers, will be easily located.
The digital catalogue features several unique software enhancements that reduce
the need for human intervention while reducing operating and other fulfillment
costs. Among other things, this includes the elimination of transshipment of
book orders. The book publisher, through an advanced electronic connection,
ships directly to the purchaser of the product, after the Company confirms
receipt of payment. This alone speeds the delivery of the product to the
purchaser while eliminating transshipment and fulfillment costs.
Further, the Company has developed the capability to have audio publications
read to the customer as well as to download audio books directly to the
customer's computer. From this point the customer can choose to store the audio
file on their hard drive or print a CD from a CD burner connected to their
computer, as is the case with audio books mentioned previously. This same
capability will be provided for music recordings from the same website. The
instant music download will feature small and independent record labels and
artists attempting to market their latest releases. The customer will be able to
access this catalogue section by the URL americanasongs.com or a combined music
and audio books version of the catalogue by the URL americanamedia.com. These
multiple URL's will enhance search engine placement and recognition. The Company
intends to add the music sales product to the website by year-end.
The various proposed acquisitions will be accomplished through the exchange of
AMERICANA common stock. These transactions should, by their structure, enhance
the balance sheet while not depleting cash reserves. Thus an anticipated
positive effect on the balance sheet should occur from the added value created
as a result of each acquisition transaction. AMERICANA intends to acquire the
titles, author contracts, and distribution contracts of each book publisher with
their respective authors and not the core going concern. Therefore no
liabilities will migrate onto the AMERICANA balance sheet, only the printed book
title assets. As a result of the consolidation in acquisition structure,
AMERICANA will be able to realize improvement in certain economies of scale
efficiencies.
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Website Development
Internet marketing has become the new distribution channel of choice for many
retailers and service providers. AMERICANA proposes to develop websites that
will perform several different functions while presenting a compellingly diverse
access format.
This unique website structure offers five dynamic options for the user to:
1. Purchase a single back issue copy of the AMERICANA CORPORATE FINANCE
REPORTER at $4.00.
2. Subscribe for 1-2-3 years to the magazine.
3. Purchase books, music and videos from AMERICANA'S website digital
catalogue, americanabooks.com, or promoted or reviewed in the
magazine.
4. Purchase and download directly to the customer's computer specific
titles that are converted to audio books, CD titles, and music.
5. Order and pay for re-released, republished, and reformatted books from
backlists.
All products listed above are secured by credit card purchases. AMERICANA has a
Visa-Master Card merchant account in place.
This website will incorporate the most current website tools enhancing simple
user access. This website will also incorporate the most up-to-date marketing
methods to facilitate worldwide user awareness. AMERICANA proposes to market
this website through the AMERICANA CORPORATE FINANCE REPORTER and directly to
the existing controlled circulation base. AMERICANA also will increase awareness
of the AMERICANA CORPORATE FINANCE REPORTER and americanabooks.com through
direct mail, radio, and cable television advertisements. As a result of these
activities and continuing patronage and visits to the website, AMERICANA will
develop a customer/visitor database. This will be an invaluable marketing tool
for future use in other marketing activities. On balance, any other product or
service advertised in the magazine will available for purchase through this
website. AMERICANA will act as a bridge to expand sales for its advertisers in
the magazine and publisher's books on the website.
AMERICANA has contracted these services to Mark Whitman as the principal website
developer and marketing consultant. The following development and marketing plan
outlines various options available to AMERICANA in this endeavor.
AMERICANA'S Digital Catalogue - americanabooks.com
AMERICANA has developed a bookseller website or digital catalogue to complement
publishing activities. This bookseller website better meets the demands of the
small publisher. This is accomplished through better use of technology, more
prominent display of publisher and author profiles, customized and proprietary
hand-selling techniques, elimination of discriminatory search engine or key word
search features and more customer-friendly promotional and pricing programs. The
small publisher's book titles are more easily located and do not compete against
millions of titles, but rather in the tens of thousands.
Other booksellers download the entire Books in Print directory. Some of these
titles may be in print but out of stock. AMERICANA is prepared to list only
books that are in stock by a publisher or where inventory is active. This will
eliminate unfulfilled and delayed orders. AMERICANA will also cooperate with the
small publisher on order fulfillment by avoiding transshipment to the AMERICANA
warehouse. Instead AMERICANA will drop-ship from the publisher to the customer
after AMERICANA electronically notifies shipper and publisher and collects the
customer's payment. This saves unnecessary fulfillment costs and speeds delivery
to the customer.
AMERICANA has developed unique features within the digital catalogue to
stimulate purchase and encourage returns and traffic to the website. Upon entry
onto the website the customer can enter the book category, publisher, author,
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book title or key word he/she seeks. Upon entering this information the customer
is then led to the specific section of the catalogue. Or if the customer wants
to peruse the catalogue, then he/she can click and simply turn catalogue page by
catalogue page just like an ordinary printed catalogue.
Each book cover is digitized onto the catalogue page. The book cover along with
publisher, author, and price is displayed with 5-7 other book covers on the same
page. Once the customer identifies a book, he/she clicks on the digitized cover
and immediately a second page appears displaying a book summary, publisher
profile, author profile, and reviews from AMERICANA and other book review
sources. Should the customer want to read a sample chapter, then they simply
click to turn that page to read a sample chapter or have it read to them in real
time through a streaming audio program. This audio feature is available when the
book has been converted to an audio book. Further, if the customer wants to
purchase the audio book they may choose to download the audio file directly to
their computer after they engage in the purchase procedure.
Further, the Company has developed the capability to "read" publications (audio
samples) to the customer as well as to download audio books directly to the
customer's computer. From this point the customer can choose to store the audio
file on their hard drive or print a CD from a CD burner connected to their
computer. This same capability will be provided for music recordings from the
same website. The Company intends to add the music sales product to the website
by year end 1999.
To enhance the appeal of the Americanabooks.com website and to promote music in
the Americana catalogue, the website will also feature Americana Radio. Working
much like a radio station, the Americana Broadcast continuous webcast will
feature disc jockeys playing songs from the Americana play list. These songs
will be drawn exclusively from the Americana music catalogue. As each customer
accesses the Americanabooks.com home page, a default radio channel will "stream"
to his or her computer and play on its speakers in real time, without any delay
for downloading. The customer may click an Americana Broadcast "button" on the
website to select from a variety of channels, each featuring a specific musical
format. These formats include original recordings in the genres of adult
contemporary, popular music, rock, country and western, instrumental, etc. Far
from being like the Muzak concept, Americana Broadcast is a legitimate
promotional outlet for recording artists on independent labels who often find it
impossible to get their music played on broadcast radio.
Every few songs, the webcast will include advertising in the form of 15-second,
30-second, and 60-second commercials for a variety of products suited to the
website's demographics. These ads serve two functions, generating additional
revenue for Americana and promoting books, audio books, magazines, music, and so
on from the Americana catalogue.
As part of the integrated publishing concept, the Company intends to acquire a
books on cassette production company, state of the art digital recording studio,
a heat set web press, and a book binding company in order to lower overall
production costs of book reprint and conversion of book titles to audio books.
In effect, these integrated business operations will allow the Company to
rapidly convert their own book titles to audio, reprint books, and print its own
periodical publications. Furthermore, the Company will contract the audio
conversions and book reprints from other publishing company's products it does
not own but lists on the Company's digital catalogue. This aspect of the
Company's business plan allows the Company to control all aspects of
reproduction and distribution while capturing profits from the individual
activities.
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There are several pricing and promotional incentives. They are designed to
increase the sale of books, prevent the customer escaping to a competitive
bookseller site for a lower price, and encourage the customer to return to
americanabooks.com. These promotional programs are as follows:
More Money For Your Books
Price Program 1, Cover Price: Americana pays publisher 60% of title when
title is sold for cover price. No discounts apply. Digital Dollars and
Free Books incentives do apply to Customer purchase of these titles.
Americana will also pay 60% if Digital Dollars and other discount
programs do not exceed 20% off cover price.
Programs to Compete on Price with other Online Booksellers
Price Program 2, Standard Discounts and Bidding: Americana pays Publisher
40% of cover price for each title in this program. Americana
establishes price in AMERICANA book catalogue for title. AMERICANA 's
exclusive "Bid on Books" feature enables the customer to make a bid on
the book. Bid option only appears if customer exits book page without
adding title to shopping cart. A bid floor will be established for
each title to prevent underselling by the competition. The rationale
for bidding is to prevent customer from escaping to another Web
bookseller for a better price. Digital dollars still apply at
pre-specified price breaks. AMERICANA reserves the right to sell any
title at any price.
Price Program 3, Books by the Lb.: Publisher designates slow-selling
backlist titles. These titles are literally sold "by the pound" from a
special catalogue page at AMERICANA books.com. Price per pound is
determined by Publisher. Publisher must provide weight of all
Publisher's books listed in Books by the Lb. catalogue. Books by the
Lb. titles may also be eligible for Free Book program (see below).
Price Program 4, Free Book: Customer receives a free book when he/she
purchases from AMERICANA more than $65 (actual sale) in books from
Publisher's titles. This program is offered as an incentive to
encourage Customer to buy multiple titles from Publisher. Publisher is
responsible for identifying books for Free Book program on Book
Profile page. Books identified by Publisher for Free Book program are
to be considered promotional expense by Publisher. These titles may
also be listed in Books by the Lb.
Digital Dollars: Digital Dollars are a customer incentive supported by
AMERICANA , not Publisher. Customers accrue $2 Digital Dollars upon
purchasing $30 in books, $4 for $50 in books, and so forth. The
customer can carry over Digital Dollars from one purchase to the next,
but they expire in 30 days. Digital Dollars are not applicable to
Books by the Free Book program. To obtain Digital Dollars, Customer
must complete a demographic survey.
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Price Program 5: Hot Sellers. Hot sellers will be featured in special
promotions by AMERICANA. This program is designed to penetrate the
market with new releases by combining a shared, deep discount by
Publisher and AMERICANA with featured presentation. AMERICANA will
purchase from the publisher those books meeting specified sales
criteria (high volume sellers). Publisher sells books to AMERICANA for
35% of cover price. AMERICANA offers Customer automatic 50% off cover
price. Digital Dollars can not be applied to purchasing a Hot Seller.
AMERICANA guarantees no books will be returned to publisher. AMERICANA
can in any manner dispose, sell, or discount any books it purchases
from Publisher.
Americanabooks.com will be able to compete on price where price is the sole
concern of the customer. Alternatively, the number of book titles in the
catalogue is far less than the competition. The marketing strategy emphasizes
that quality books are listed in the catalogue free of search feature
impediments. This more personal approach to design pricing and promotional
programs sets americanabooks.com apart from other bookseller websites. The
overall strategy as to how the website is designed, marketed and promoted is the
product of over 100 years of combined publishing and book retailing experience
on the part of management and various consultants to the company. Other major
bookseller websites are deficient in this level of experience. The other large
bookseller website products reflect a more static approach to bookselling.
AMERICANA feels less is better to do justice to the hand-selling techniques
necessary for maximizing every opportunity to sell books. Americanabooks.com
selling strategy is, "you can't do justice to selling 8 million book titles."
Therefore americanabooks.com advertising stresses, "Only the best on
americanabooks.com".
AMERICANA CORPORATE FINANCE REPORTER - Unique Bridge of Information
on the Internet Highway Gathering Tolls in Both Directions
The corporate finance industry in recent times has become increasingly
competitive. Commercial loan demand has leveled off while the number of lenders
has increased. Previously lenders/banks simply waited in their offices for
borrowers to seek loans by calling or visiting directly. Now lenders must
construct uniquely competitive methods to attract the borrower to even apply at
their institution. Therefore lenders need a medium to cost-effectively promote
their products and services to American enterprise.
Conversely, American enterprise wants to survey the corporate finance
marketplace; however, no general guide or directory of sources and methods is
available, except for the AMERICANA CORPORATE FINANCE REPORTER. Business
professionals continually struggle to reach the multitude of financing sources.
The AMERICANA CORPORATE FINANCE REPORTER provides access to the critically
needed corporate finance information that was previously hard to find or
unavailable to the general public. Therefore the AMERICANA CORPORATE FINANCE
REPORTER connects both the corporate finance industry to American enterprise and
vice versa. That is why this publication is a "unique bridge of information on
the internet highway gathering tolls in both directions."
The AMERICANA CORPORATE FINANCE REPORTER regularly discusses issues affecting
the availability of credit and capital, from whom it is available, and proper
application of various financing mechanisms. In other words, it emphasizes the
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"how" of capital formation while directing readers to the "who." As a result of
the publication, business executives of all disciplines now have access to
important real-time information that can affect decisions of expansion
financing, merger and acquisition, refinancing, or general capitalization of a
going concern. The AMERICANA CORPORATE FINANCE REPORTER is a vital resource for
executives who are directly involved and regularly affected by the rapidly
expanding and diverse corporate finance industry. Subjects covered are:
* Asset-based lending
* Long-term financing
* Working capital financing
* Economic conditions and factors affecting commercial financing
* New methods in financial statement presentation
* Legal issues affecting commercial finance
* Dynamic structural techniques used to finance business
* Government regulations affecting the commercial finance industry
* New financing sources
* New financing products
* The cost of money
* Mergers and acquisitions
* Movers and shakers in the commercial finance industry
* Bankruptcy as a financing tool
* General management concepts that improve financing efficiencies
Demographic Development
During the formative months following inception of AMERICANA, the process to
develop a demographic profile for the AMERICANA CORPORATE FINANCE REPORTER
encompassed a survey of the needs of the corporate finance industry and American
enterprise at large. The survey ascertained the needs of information and access
by each of these demographic segments from the other. The survey concluded that
businesses under $50 million in annual sales wanted access to sources and
specific methods of finance. Alternatively, the corporate finance industry
desired a cost-effective medium to reach American enterprise as previously
profiled.
A demographic profile was developed as a result of the aforementioned survey.
The profile is as follows:
Age 45 years
Gender 75% male 25% female
Education 85% College Graduate
47% Post Graduate
Income $138,000 average household
$600,000 average net worth
Position 75% Top/Executive Management
35% CEO's
64% Partners
Readers per Copy 3.08 x
The following represents specific industry and professional readership:
* CEOs, CFOs, COOs of private and public companies ranging in size
between $1 million and $50 million in annual sales.
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* Entrepreneurs and managers of private and public companies ranging in
size between $250,000 and $25 million in annual sales.
* Brokers of securities, loans, and real estate.
* Bankers and alternative lending professionals.
* Lawyers specializing in bankruptcy, transactional, real estate,
general corporate, business litigation, banking, tax, and contract
law.
* Business and finance consultants specialists that have developed a
practice learning toward commercial clientele.
* Venture capital professionals who focus on business development
investments.
* Investment bankers in all disciplines of securities, loans, and real
estate.
* Sophisticated investors with a net worth greater than $5 million.
Current circulation has been developed from scores of different databases that
have been researched and purchased over the past five years. These databases are
analyzed and then specific profile information such as annual sales, number of
employees, type of enterprise, etc. is applied. From this analysis, specific
listings are mined and extracted. This data mining process has been a very
dynamic and useful tool for AMERICANA. Currently, the circulation database
consists of over 100,000 listings and is updated from over 20 master database
resources containing over 10,000,000 individual listings on a monthly basis.
The current circulation reaches across the United States, Mexico, and Canada
with high concentration of distribution in major metropolitan cities. This type
of geographic and demographic distribution is considered in the publishing
industry to be controlled circulation.
Circulation Expansion
Controlled circulation development and data mining will continue in the same
manner the primary database was developed. The goal is to reach controlled
circulation of 250,000 and paid circulation of 250,000 by 2002. Paid circulation
will be accomplished through outsourcing circulation sales. More specifically,
multi-copy subscription sales will be emphasized. There are scores of
circulation sales companies in the U.S. and Canada. To execute this activity
successfully, AMERICANA will select the best company offering the most
competitive commission terms.
This process will require the subscription sales contractor to contact corporate
finance industry and general business associations and large employee-based
enterprises. For example, through contacting an association, the contractor
would sell a 150-multi-unit or -copy magazine subscription to a single
organization. This subscription would be deeply discounted. However, the cost of
sales would be considerably less than selling 150 subscriptions individually. An
added benefit to the organization would be to include the issues as part of the
membership fee. Memberships could conceivably convert to value-added sales for
the association as the member receives something tangible with payment of the
member dues. Alternatively, associations may raise the cost of dues as a money
making proposition when including the magazine issue. AMERICANA will cooperate
with these associations to utilize the magazine to develop membership through
customized subscription discount structure.
Large employee-based enterprises such as banks and other financial institutions
are excellent targets for single subscription, multi-unit sales. Large
organizations typically subscribe to business publications and order multiple
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copies. This is due not only to the number of employees but the number of
locations where such material is viewed by staff as well as customers.
Discounting methods apply to the body of subscribers as well.
Examples of such associations are:
Corporate Finance Industry--National, State and Local Associations
* Banking
* Commercial Finance
* Leasing
* Investment Banking
* Mortgage Banking
* Bar Associations
* Accountants
* Venture Capital
* Investment Corporations
* Real Estate Appraisers
* Real Estate Sales/Brokers
* Asset Based Lenders
General Business Readership--National, State, and Local Associations
* Service
* Government Contractors
* Manufacturing
* Computer Services
* Retailers
* Construction
* Agriculture/Livestock
* Insurance
* Financial Services
* Automotive
* Travel and Leisure
* Hotel/Hospitality
* Food and Beverage
* Food Processing/Packing
* Professional services
* Transportation
Multi-unit subscription sales should approximate the following sales formula:
Each multi-unit subscription sales customer should average 100 units per
subscription. Selling 2,500 individual subscriptions at 50% (or in some
cases 30%) of cover price or $12.50 x 100 units would equal $1,250.00 x
2,500 (250,000 readers) subscriptions would equal $3,125,000.00 in gross
subscription sales over a three year period. Sales commission is estimated
at 20% or $625,000.00 combined with overhead support expenses of another
20% or $625,000.00, less chairman's compensation of 5%; therefore,
estimated profit on multi-unit subscription sales is $1,718,750.00 over a
three year period.
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Advertising Sales
The large number of listings in the existing database under the corporate
finance category are the most logical prospects for advertising sales. It is
rare that a publication can match its demographic to ad sales development. The
AMERICANA CORPORATE FINANCE REPORTER has that unique feature. As the integrated
publishing plan suggests, these financing resources want a cost-effective medium
that can reach businesses matching the AMERICANA CORPORATE FINANCE REPORTER
reader demographic. Ad sales can be generated from advertising in each AMERICANA
CORPORATE FINANCE REPORTER issue. The AMERICANA demographic includes 20,000
finance and banking organizations. These leads can then be turned over to the ad
sales division. Also, direct mail can be utilized to solicit ad sales from this
demographic group. AMERICANA has successfully sold advertising in the first
three issues of the AMERICANA CORPORATE FINANCE REPORTER. AMERICANA has
developed a superior-quality media sales kit that it incorporates into its
currents sales activities.
On the other side of the demographic, public companies may desire to advertise
completion of offerings, investor relations announcements, improvement of stock
trading, pricing, and/or general tombstone advertisements. Part of the AMERICANA
demographic includes over 12,000 public companies. This segment is
well-developed prospecting list for a professional ad sales staff.
Advertising rates are calculated on a per-column-inch basis. Current per column
inch rates are:
BLACK AND WHITE
(per column inch)
Contract Rate
- -------- ----
Open $139.50
50 inches 118.50
100 inches 115.20
200 inches 111.60
500 inches 109.20
1,000 inches contact an account executive
COLOR
2nd color add $300.00
3rd color add $525.00
4th color add $750.00
PREMIUM POSITIONS
(full page only)
Page 3 add $900.00
Inside back cover add $900.00
Back cover add $1,200.00
A column inch in the AMERICANA CORPORATE FINANCE REPORTER is 2 3/8" x 1" deep.
Page Size: 11 3/8" x 17"
Image size: 10 1/4" x 13"
The terms for payment are 50% of the total cost of the ad down and the balance
due when the issue is printed. For multi-issue advertising contracts, 25% of the
total contract is required upon signature of the contract and full payment for
each ad when each issue is printed.
The other prospective advertisers are:
* Accountants
* Long-distance providers
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* Lawyers
* Financial printers
* Office equipment suppliers
* Banks
* Brokerage houses
* Leasing companies
* Non-regulated lenders
* Real estate companies
* Hotels/airlines
* Car rental companies
* Cellular phone companies
* Pager companies
* Overnight mail services
* Courier services
* United State Post Office
* Business software companies
* Telephone equipment companies
* Marketing companies
* Bookkeeping companies
* Consultants
* Office furniture companies
* Computer companies
* Internet suppliers
* Business colleges
* Seminar providers
* Business book publishers
* Temporary personnel services
* Travel agencies
* Commercial finance associations
* Appraisers
* Convention planners
The AMERICANA CORPORATE FINANCE REPORTER will range from 16-32 pages in length.
Advertising will account for 40% to 65% of the printed space, depending upon the
level reached by ad sales.
Other considerations are the quality of the advertisers. No advertising will be
accepted if the company or individual is financially impaired with a poor credit
rating and a negative reputation within the industry. Only one loan broker will
be allowed to advertise; North American Loan Brokers of Houston, Texas. The one
merchant banking and corporate finance consulting firm will be B. H. Capital
Limited. These are currently the only advertising limitations.
Advertising revenues per issue are projected to be $66,960 for a 16-page
publication. Commission to sales personnel will be 20%. Production printing and
general administrative overhead will account for approximately 60%. Chairman's'
compensation is 5%, thus leaving 15% for profit. The gross sales estimate is
based on the following formula:
5 columns per page (x) 15 column inches per page (=) 75 column inches
per page (x) average rate of $111.60 (=) $8,370.00 (x) an average
percentage of total advertising spaces of 50% (x) 8 pages (=) $66,960
in gross advertising sales. Deduction of costs in this formula are
$66,960 (-) 20% sales commission of $13,392 (-) 60% for operating
overhead of $40,176 (-) 5% for chairman's compensation of $3,348.
AMERICANA will not pay commission (20%) on ad accounts generated by
management. Therefore, $10,044 or 15% drops to profit per issue based
on eight pages of advertising.
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1999 publication production will be four issues with a target of the
year 2000 to convert to a monthly publication averaging 32 pages per
issue with 16 pages of advertising. Therefore, revenues from
advertising sales are estimated at $1,607,040. It is anticipated that
profits should increase as a result of economies of scale. Profit is
estimated to equal 32% of sales or $514,252 at year-end 2000 from
advertising only.
Publication Specifics
The AMERICANA CORPORATE FINANCE REPORTER will regularly incorporate specific
sections in each magazine. These magazine sections will be formatted
consistently from issue to issue. The subject matter will be consistent and
specific to the heading. Each issue will emphasize these subject formats and
topics.
The sections are:
Publishers Column
This lead column is written by George Lovato, Jr. Advice, opinions and
observations will focus on current topics affecting finance for American
enterprise. Topics will include banking and finance trends, tips on adding value
to a business, and management systems that enhance a business.
Credit and Capital Index
Major Concern: where can a business go to identify the cost of money besides
listing at prime rate? Yet prime rate can be a misleading cost of commercial
funds. Depending on the type of financing, the current rate may vary. Our Credit
and Capital Index listed on the front page publishes cost of funds depending
upon the type of financing. An average cost of money from five different
financing sources will be displayed. From time to time, the lowest rate from a
specific source, such as leasing, will be presented featuring the source. The
finance source will pay for this front-page advantage.
Book Review
This section will be written by the renowned and well-published Dr. David
Poling. In each issue, business book reviews will be emphasized. In addition, a
small percentage of review books will be of the fiction/non-fiction
entertainment category. Further, the AMERICANA website will allow subscribers to
directly purchase books reviewed here every issue.
Grapevine
This category section emphasizes news releases and personality profiles that are
relevant to the corporate finance industry. Recently completed financing,
professional personnel changes in the finance industry, as well as new finance
products, will be highlighted.
Item 2 - Management's Discussion and Analysis or Plan of Operation
General
The Private Securities Litigation Reform Act of 1995 (the "Reform Act") provides
a safe harbor for forward-looking statements made by or on behalf of the
Company. All statements, other than statements of historical facts, which
address activities, events, or developments that the Company expects or
anticipates will or may occur in the future, including such things as the
anticipated development of revenues, acquisition of additional properties or the
obtaining of capital, business strategy, development trends in the industry
segments in which the Company is active, expansion and growth of the Company's
business and operations and other such matters are forward-looking statements,
whether oral or written, made by or on behalf of the company. Many of these
factors have previously been identified in filings or statements made by or on
behalf of the Company.
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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
competitive pressures, inflation, trade restrictions, interest rate fluctuations
and other capital market conditions, weather, future and options trading of
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 operated,
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 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 an
aggressive continuous growth pattern.
Operations
The Company completed two successful printings of the AMERICANA CORPORATE
FINANCE REPORTER in 1997 and 1998. Various reader polls resulted in design and
editorial changes to better meet the demands of the readership. The major design
change allowed for the AMERICANA CORPORATE FINANCE REPORTER to increase from
9"x12" to 11 3/4"x17" and to utilize newsprint stock paper, and later uncoated
webpress stock with the latest issue of the magazine in 1999. The addition of a
business book review section in the magazine by Dr. David Poling increased the
entertainment value of the publication.
The Company researched the potential marketplace for advertising and completed
work on enhancing and improving the media kit, which aids in advertising sales.
The potential for selling advertising is substantial, in that the same
readership that makes up one half of the magazine distribution are in fact
potential advertisers. The Company is currently interviewing potential ad sales
contractors.
Ad sales leads can be generated from the Companies' own highly developed
database. In addition, the Company intends to contact advertising agencies in
the latter part of 1999 to generate more ad sales. This effort should yield some
national accounts.
The Company spent a considerable amount of time completing the research on
subscription sales to ascertain a price point for annual subscription rates.
Further, the Company researched and identified scores of companies who
specialize in ad sales outsourcing. The Company will continue to develop these
revenue-generating activities.
The Company has identified hundreds of small, sponsored book publishers located
around the U.S. These book publishers normally have the authors, corporations,
or foundations pay for the book to be published. After printing 1,000 to 5,000
copies of a book title the work is usually left in the author's hands to market
or until a major publisher may purchase and re-print the book. These small
publishers do not generally have the resources to market these books to increase
the number of sales. The Company has identified many of these small book
publishers as potential acquisition targets.
The Company has spent the last six months developing a retail bookselling
website to complement the Company's book publishing activities. The Company
developed its own highly customized and technologically advanced promotional
systems exclusively for this website (digital catalogue). These promotional
programs mimic hand-selling techniques while stimulating customer patronage as
well as increasing return site visits.
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The digital catalogue features several unique software enhancements that reduce
the need for human intervention while reducing operating and order fulfillment
costs. This includes among other things the elimination of transshipment of book
orders. The book publisher through an advanced electronic connection ships
directly to the purchaser of the product, after the Company confirms receipt of
payment. This alone speeds the delivery of the product to the purchaser while
eliminating transshipment and fulfillment costs.
Further, the Company has developed the capability to "read" publications (audio
samples) to the customer as well as to download audio books directly to the
customer's computer. From this point the customer can choose to store the audio
file on their hard drive or print a CD from a CD burner connected to their
computer. This same capability will be provided for music recordings from the
same website. The Company intends to add the music sales product to the website
by year end 1999.
To enhance the appeal of the Americanabooks.com website and to promote music in
the Americana catalogue, the website will also feature Americana Radio. Working
much like a radio station, the Americana Broadcast continuous webcast will
feature disc jockeys playing songs from the Americana play list. These songs
will be drawn exclusively from the Americana music catalogue. As each customer
accesses the Americanabooks.com home page, a default radio channel will "stream"
to his or her computer and play on its speakers in real time, without any delay
for downloading. The customer may click an Americana Broadcast "button" on the
website to select from a variety of channels, each featuring a specific musical
format. These formats include original recordings in the genres of adult
contemporary, popular music, rock, country and western, instrumental, etc. Far
from being like the Muzak concept, Americana Broadcast is a legitimate
promotional outlet for recording artists on independent labels who often find it
impossible to get their music played on broadcast radio.
Every few songs, the webcast will include advertising in the form of 15-second,
30-second, and 60-second commercials for a variety of products suited to the
website's demographics. These ads serve two functions, generating additional
revenue for Americana and promoting books, audio books, magazines, music, and so
on from the Americana catalogue.
As part of the integrated publishing concept, the Company intends to acquire a
books on cassette production company, state of the art digital recording studio,
a heat set web press, and a book binding company in order to lower overall
production costs of book reprint and conversion of book titles to audio books.
In effect, these integrated business operations will allow the Company to
rapidly convert their own book titles to audio, reprint books, and print its own
periodical publications. Furthermore, the Company will contract the audio
conversions and book reprints from other publishing company's products it does
not own but lists on the Company's digital catalogue. This aspect of the
Company's business plan allows the Company to control all aspects of
reproduction and distribution while capturing profits from the individual
activities.
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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, 1999. 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 raised the maximum of approximately $232,500 to subsidize future
operations through a private placement under the 504 exemption. These funds are
to be used for:
1) Circulation Development--20% of proceeds--AMERICANA proposes to expand
circulation from 100,000 to 500,000 by the year 2001. More specifically
AMERICANA will purchase and mine more databases while focusing on selling
multi-unit subscriptions. This will involve printing, postage, and
telemarketing expenses.
2) Publication Development--10% of proceeds--The AMERICANA CORPORATE FINANCE
REPORTER will be expanded from 16 pages to 32 pages over the next 3 years
and convert from a quarterly publication to a monthly. The AMERICANA
CORPORATE FINANCE REPORTER will require editorial enhancement and design
improvements. A certain amount of editorial research will be required to
meet the continuing needs of the readership. These expenses will include
labor, direct mail, telemarketing, and editorial subcontract fees.
3) Publishing Company Acquisition Development--20% of proceeds--Various
professionals, such as lawyers and accountants, will be required to
examine, analyze and execute the proposed acquisition. These professional
fees will be allocated from these proceeds.
4) Working Capital--40% of proceeds--In order to operate the publishing
enterprise certain expenses will be incurred. To support these expenses in
addition to funds derived from revenues, these proceeds will be utilized
for general and administrative and working capital costs.
5) Cost of Offering an Investor Relations Program--5% of proceeds--In order to
register the private placement AMERICANA will incur various expenses such
as professional fees, printing, postage, telemarketing, federal and state
offering registration fees, travel, entertainment, and underwriters' fees
and commissions.
Further the company intends to employ an investor relations program. This
will complement the stock trading activities after the company has
completed the public registration process.
6) Miscellaneous Expenses--5% of proceeds--The aforementioned expenses may
vary in type and size.
The Company anticipates ad sales of approximately $35,000+ in 1999. These
revenues would subsidize at least 50% of the operating overhead of the Company.
The Company does not anticipate the need for any additional financing for the
next 12 months for this operation. However, should the Company require
additional capital the Company has planned for an "in-line" asset-based debt
financing credit facility and the registration of an SB-2 with the SEC. 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.
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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 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. All
future expansion and acquisition should be financed by a secondary equity
offering. Although the Company is not in possession of any commercial bank
commitment letters or a letter of intent from a capable underwriter, management
feels with proper structure and use of credit enhancement, funding may be made
available.
The Company is somewhat dependent upon the successful completion of its Form 10
filing with the SEC and active stock trading activity on NASD's Bulletin Board.
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.
The Company's assets equal $30,255 and $244,245 with equity of $27,666 and
$240,736 as of December 31, 1998 (audited) and the stub period March 31, 1999
(unaudited) respectively. The only liability consisted of a deferred tax payable
of $2,588 as of December 31, 1998 and $3,509 as of March 31, 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 $13,815 and as of the
unaudited stub period of March 31, 1999, $23,142. In 1999, the Company projects
ad revenue per issue of the AMERICANA CORPORATE FINANCE REPORTER to approximate
$20,000 to $45,000 or more.
Capital Expenditures
The Company anticipates the need for additional computer equipment to handle the
integrated website. This is estimated at $10,000 for 1999. These websites are
designed to produce an additional source of revenue as a result of the digital
book catalogue and other product sales. The Company has retained the services of
Mark Whitman 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 also 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. Furthermore, the Company
intends to acquire a small book-on-cassette production company, state of the art
digital recording studio, heat set web press company, and book binding company.
These enterprises will vertically integrate production and control quality of
audio conversion and book re-prints as well as consolidate profitability. The
Company proposes the following method and approach:
Accounting Aspects of Business Combinations
A business combination occurs when a company and one or more businesses are
brought together into one accounting entity. Business combinations usually take
one of the following forms:
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* An existing company acquires the stock of another company and liquidates
the acquired company.
* An existing company acquires the stock of another company and retains the
acquired company as a subsidiary.
* A newly formed company acquires the stock of two or more existing companies
and either retains the companies as subsidiaries or liquidates them.
* An existing company acquires the assets of one or more companies and, in
some cases, assumes their liabilities.
Business combinations are accounted for under either the purchase method or the
pooling of interests method. Under the purchase method of accounting, the
acquiring company should record an acquisition on the basis of the fair value of
the consideration given or the fair value of the acquired net assets, whichever
is more clearly evident. The purchase prices should be allocated to the assets
acquired and the liabilities assumed as follows:
1) Assets and liabilities should be recorded at their fair values as of the
acquisition date.
2) If the cost of the acquired company exceeds the sum of the amounts assigned
to the assets and liabilities acquired, the excess should be recorded as
goodwill.
3) If the values assigned to the assets acquired and liabilities assumed
exceed the cost of the acquired company, the amounts assigned to noncurrent
assets acquired (other than long-term investments in marketable securities)
should be reduced by a proportionate part of the excess. After the
noncurrent assets have been reduced to zero, an excess of assigned values
over cost of the acquired company should be recorded as negative goodwill.
Under the pooling of interests method, the historical costs of the separate
companies' assets and liabilities are combined and become the recorded amounts
of the combined company's assets and liabilities. The combining company's
stockholders' equity accounts also are combined.
Determining Whether the Purchase or Pooling of Interests Method Applies
The pooling of interests method should be used to account for a business
combination if certain criteria are met. Otherwise, the purchase method should
be used. To use the pooling of interests method, a business combination must
meet all of the following criteria:
Attributes of the Combining Companies
1. Each of the combining companies is autonomous and has not been a subsidiary
or division of another corporation within two years before the plan of
combination is initiated. (A plan of combination is initiated on the date
the major terms of the plan are formally made known, either by public
announcement or in writing, to the stockholders of one of the combining
companies.)
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2. At the dates the plan of combination is initiated and consummated, the
combining companies are independent of each other. A combining company is
independent if it does not hold more than 10 percent of the outstanding
voting stock of the other combining company excluding shares acquired to
effect the combination after the plan of combination is initiated. A
business combination initiated before November 1, 1970, and completed after
that date need not meet the independence requirement to be considered a
pooling-of-interests.
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Manner of Combining Interests
1. The combination is effected by a single transaction or is completed in
accordance with a specific plan within one year after the plan is
initiated.
2. A corporation offers and issues only common stock with rights identical to
those of the majority of its outstanding voting common stock in exchange
for substantially all of the voting common stock of another company at the
date the plan of combination is consummated. (The requirement essentially
means that the corporation must exchange its voting common stock of the
other company between the date the plan of combination is initiated and the
date the plan is consummated.) In a business combination initiated before
November 1, 1970, and completed after that date, however, 90% of the
interest not held on October 31, 1970, must be acquired.
3. None of the combining companies changes the equity interest of the voting
common stock in contemplation of effecting the combination including
distributions to stockholders (other than normal dividends) and additional
issuance, exchanges, and retirements of securities.
4. A combining company reacquires shares of its voting common stock only for
purposes other than business combinations (such as for stock option plans
or other recurring distributions), and no company reacquires more than a
normal number of its shares between the date the plan of combination is
initiated and the date it is consummated.
5. The ratio of the interest of an individual common stockholder to those of
other common stockholders in a combining company remains the same as a
result of the exchange of stock to effect the combination.
6. The common stockholders in the resulting combined corporation can exercise
their voting rights. A voting trust or other mechanism may not be used to
deprive or restrict stockholders from exercising their voting rights.
7. The combination is resolved at the date the plan is consummated, and no
provisions of the plan relating to the issue of securities or other
consideration are pending. (Thus, for example, the combined corporation may
not agree to continently issue additional shares of stock at a later date
to the former shareholders of a combining company.)
Absence of Planned Transactions
1. The combined corporation does not agree directly or indirectly to retire or
reacquire all or part of the common stock issued to effect the combination.
2. The combined corporation does not enter into other financial arrangements
for the benefit of the former stockholders of a combining company, such as
a guaranty of loans secured by stock issued in the combination, that in
effect negates the exchange of equity securities.
3. The combined corporation does not intend to dispose of a significant part
of the assets of the combining companies within two years after the
combination (excluding disposals in the ordinary course of business of the
formerly separate companies or to eliminate duplicate facilities or excess
capacity).
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As AMERICANA acquires the various companies it has targeted, a decision will
have to be made on a case-by-case basis as to which method is appropriate and in
the best interest of the shareholders.
Tax Aspects of Business Combinations
There are a variety of ways in which one corporation can acquire another
corporation and a variety of issues, legal and otherwise, involved in the
structuring of a corporate acquisition. This section discusses certain tax
issues involved in corporation acquisitions.
There are three key tax issues:
1. Will the transaction be taxable to the corporations, their shareholders or
both?
Absent the reorganization provisions, an acquisition by one corporation of
another corporation may result in taxable gain (or loss) to one or more of
the acquired corporations, its shareholders, and the acquiring corporation.
The reorganization provisions of the Internal Revenue Code allow certain
corporate acquisitions and restructurings to occur fully or partially
tax-free.
In order to qualify for tax-free treatment, the transaction must fit within
the technical definition of a "reorganization." The definition of the term
"reorganization" generally restricts the type of consideration with which
the acquiring corporation may effect the acquisition. The reorganization
definitions also impose other technical requirements with which a
transaction must comply. There are seven types of reorganizations, each
with its own technical definition. Three types (A), (B) and (C)
reorganizations are the principal vehicles for corporate acquisitions.
An (A) reorganization is a statutory merger or consolidation. To qualify as
an (A) reorganization, a merger or consolidation must be effected pursuant
to the laws of the United States, a state (or territory), or the District
of Columbia.
A (B) reorganization is the acquisition of the stock of one corporation by
another corporation in exchange solely for voting stock of the acquiring
corporation (or a parent corporation of the acquiring corporation). A stock
acquisition qualifies as a (B) reorganization only if the acquiring
corporation controls (as specially defined) the target corporation after
the acquisition. The concept of control arises frequently in the
reorganization provisions, and generally means the ownership of 80% or more
of the stock of a corporation.
A (C) reorganization is the acquisition of the assets of one corporation by
another corporation in exchange solely for voting stock (with limited
exceptions) of the acquiring corporation (or a parent corporation of the
acquiring corporation). An asset acquisition qualifies as a (C)
reorganization only if the acquiring corporation acquires substantially all
of the target corporation's assets. Whereas a (C) reorganization allows for
a small amount of consideration other than voting stock in certain cases,
the (B) reorganization does not. The target corporation in a (C)
reorganization must liquidate and distribute to its shareholders the stock
of the acquiring corporation as well as any other assets it holds after the
transaction.
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A transaction that satisfies the statutory definition of a reorganization
must also comply with certain non-statutory requirements. A transaction
must have a bona fide business purpose to qualify as a reorganization. In
addition, the shareholders of the target corporation must maintain a
significant (roughly 50% of the consideration in the acquisition) and
continuing equity interest in the acquiring corporation as a result of the
reorganization. After the reorganization, either the business of the target
corporation must be continued or its historical business assets must be
used in a business.
If the transaction satisfies the definitional requirements of a
reorganization, then certain nonrecognition rules apply to exchanges of
property by corporations that are a party to the reorganization and their
shareholders and security holders. The nonrecognition provisions prescribe
the nonrecognition of gain and loss of exchanges of certain qualifying
property. Qualifying property generally consists of stock and, in some
cases, securities of a party to the reorganization. Depending on the
character of the consideration, gain (but not loss) may be recognized even
if the transaction qualifies as a reorganization.
Taxpayers participating in reorganizations (both corporations and
shareholders) must attach special statements to their income tax returns
for the taxable year that includes the reorganization. Those statements
detail the steps of the reorganization, the basis of the property, if any,
surrendered, and the amount of property received.
2. Will the tax attributes of the target corporation carry over to the
acquiring corporation?
In (A) and (C) reorganizations, the acquiring corporation assimilates the
target corporation's assets and liabilities and the target corporation
ceases to exist as a going concern. In those cases, the tax attributes (net
operating loss deduction, earnings and profits, accounting methods, etc.)
of the target corporation generally carry over to the surviving corporation
subject to certain rules and conditions.
3. Will the transaction trigger the ownership change provisions, which limit
the use of beneficial tax attributes (e.g., net operating loss carryovers,
built-in losses, and excess credits)?
Upon a shift in ultimate beneficial ownership of a corporation by more than
50 percentage points within a 3-year period, the ownership change
provisions limit the corporation's ability to utilize net operating loss
deductions and certain other beneficial tax attributes. The annual
limitation on net operating loss equals the product of an interest rate
(determined monthly by the Internal Revenue Service) and the value of the
corporation at the time of the ownership changes.
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If the former shareholders of the target corporation own less than 50% of
the acquiring corporation after the acquisition, then the beneficial
ownership of the target corporation has shifted by more than 50 percentage
points. Consequently, the acquisition is an ownership change. As a result
the acquiring corporation is able to use the target corporation's net
operating losses only to the extent of the ownership change limitation.
Corporations subject to the ownership change limitation provisions
(generally corporations with net operating loss carryovers) must file
annual statements that describe the beneficial ownership of their stock and
changes in that ownership.
Management is knowledgeable concerning the various tax consequences of
acquisitions and will strive at all times to ensure the interest of the
shareholders is best served.
Item 3 - Description of Property
The Company's principal officers are located at 303 San Mateo NE, Suite 104A,
Albuquerque, NM 87108. This leased location encompasses approximately 2,000
square feet. The Lease is between B. H. Capital Limited and the Company at a
cost of $3,000 per month and also provides complete use of B. H. Capital
Limited's up-to-date computing, data management, printing, duplicating and
direct mail processing equipment. This lease/retainer agreement began January 1,
1999 and is for a term of three years. The Company intends to expand its
operations and has identified a location near its current offices, which it will
lease additional office and new warehouse space when the company can best afford
the added operating expense. The Company owns certain assets that were
contributed to the Company by Mr. George Lovato, Jr. in exchange for stock. (See
Exhibit attached herewith)
Item 4 - Security Ownership of Certain Beneficial Owners & Management
The following table sets forth, the stock ownership of each person known by the
Company to be a beneficial owner of five percent (5%) or more of the Company's
equity securities, each Director individually and all, Directors and Officers of
the Company as a group. Each person has sole voting and investment power with
respect to the Shares shown unless otherwise indicated.
Shares
Name and Address of Beneficially
Beneficial Owner Title of Class Amount Owned Owned % of Class
---------------- -------------- ------------ ----------------
George Lovato, Jr. (2) Common 2,004,000 66.7
12310 Claremont NE
Albuquerque, NM 87112
Don White (2) Common 210,000 6.7
8106 Devonwood
Houston, TX 77070
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Shares
Name and Address of Beneficially
Beneficial Owner Title of Class Amount Owned Owned % of Class
---------------- -------------- ------------ ----------------
Tom Hawkins/Raul Rodriguez Common 100,000 3.3
555 E. 10th Avenue, Suite 101
Denver, CO 80203
Marjorie N. Lovato (2) Common 50,000 1.7
6951 Forest Hills Dr., NE
Albuquerque, NM 87109
Jay Simon (2) Common 50,000 1.7
5528 E. Cheryl Drive
Paradise Valley, AZ 85253
David Poling (2) Common 105,000 2.0
3616 San Rio Place NW
Albuquerque, NM 87107
Sarah Moyers Common 15,000 .5
8523 Brook St.
Albuquerque, NM 87113
Lowell Fixler Common 253,500 8.5
1081 Sheridan Rd.
Highland Park, IL 60035
Total Shares Outstanding 2,687,500 89%
(1) Does not reflect the possibility that the Officers and Director of the
Company may purchase Shares in this Offering.
(2) Officers and Directors as a group beneficially own 2,360,000 shares.
(3) The Company has issues stock option agreements to the directors, management
and certain consultants to the Company, which allows for the purchase of
additional stock for cash on certain dates, which if all options were
exercised could amount in the purchase and issuance of an additional
3,325,000 shares.
Item 5 - Directors and Executive Officers
Name Age Position # of Shares
George Lovato, Jr.* 42 CEO/Chairman/President 2,004,000
Don White* 46 Director/Vice President 200,000
David Poling* 70 Director/Vice President 105,000
Robert Cochnar* 57 Advisor to the Board/Consultant 0
*These persons may be deemed "promoters" of the Company as that term is defined
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder. Jay Simon is Secretary/Treasurer of AMERICANA.
Officers and Directors
All Directors of the Company will hold office until the next annual meeting of
shareholders of the Company or until their successors are duly elected and
qualified.
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The Officers of the Company are elected by the Board of Directors at the first
meeting after each annual meeting of the Company's shareholders, and hold office
until their death, or until they shall resign or have been removed.
George Lovato, Jr.
Mr. Lovato is founder and has been a Director and Chairman and President since
inception, and has extensive management experience with startup companies,
corporate finance, computer system and software development, international trade
and relations, strategic planning, and sales and marketing development over the
last 15 years. He has been employed by and associated with companies engaged in
business management, public relations, advertising, corporate finance,
agriculture, automotive industry consulting, travel, auto rental and leasing,
and insurance.
Mr. Lovato was educated in New Mexico and has founded and developed several
nationally recognized companies ranging from local financial firms to
international travel and communications-related businesses. His expertise in
marketing, management and corporate finance, in addition to numerous
international contacts, coupled with his demonstrated successes, offer a diverse
alternative resource not often found in the marketplace. His accomplishments
have been featured in several national publications and books such as Venture,
Inc., The Wall Street Journal, New Mexico Business Journal, The New Mexico
Experience. He devotes substantially all time necessary to the management and
general affairs of AMERICANA. Mr. Lovato is the principal and sole owner of B.
H. Capital Limited, a successful 14 year old Merchant Banking and corporate
finance consulting enterprise, located in Albuquerque, New Mexico with branch
offices in Denver, Colorado and Houston, Texas.
Don White
Mr. White is a Director/Vice President of Americana, and is a CPA in Houston,
Texas, and has operated a successful accounting practice for over 20 years. Mr.
White was educated at Sam Houston State University and received his degree in
accounting in 1972. Mr. White has broad expertise in the development of market
value financial statements. He currently advises the company on general
financial matters and corporate development and oversees the audit and
acquisition committee. Mr. White will fulfill the duties and responsibilities of
the Chief Financial Officer of AMERICANA when it requires his expertise. He
devotes the time necessary to oversee the audit and acquisition committees and
general management affairs of AMERICANA.
Dr. David Poling
Chairman, Sierra Publishing Group. Author of a dozen books; nationally
syndicated columnist, 600 newspapers. As New York publisher headed The Christian
Herald, half million monthly circulation. Also, President of the Family
Bookshelf, largest religious book club in the U.S. Poling, a Presbyterian
clergyman educated at College of Wooster, Ohio and Yale University. Special
interests: ecumenical, inter-faith expressions of life. He devotes the time
necessary to oversee the acquisition committee and general management affairs of
AMERICANA and is also Director/Vice President of AMERICANA.
Jay Simon
Mr. Simon is currently employed as upper management of Syncor, one of the worlds
largest nuclear pharmaceutical companies. His duties involve international
business development. Mr. Simon advises the chairman on corporate finance
matters and international circulation and acquisition development and is
Secretary/Treasurer and Director of AMERICANA.
Marjorie N. Lovato
Mother of the chairman, Mrs. Lovato is a Director, and has vast experience in
business administration and consumer retail store management. She has worked in
management for major aerospace corporations during her business career. Mrs.
Lovato oversees and advises the chairman in general business matters and
circulation development.
26
<PAGE>
Advisor to the Board of Directors is Robert Cochnar
Sierra Publishing, Inc.'s president and CEO, is a publishing executive who has
edited newspapers in California (including the San Francisco Chronicle, the San
Jose Mercury News, and The Oakland Tribune) and South Carolina and is former
publisher of the World Almanac. He has been vice president and editorial
director of Newspaper Enterprise Association, New York, one of the country's
largest newspaper syndicates, a Scripps Howard subsidiary. Mr. Cochnar provides
design and production services on the AMERICANA CORPORATE FINANCE REPORTER in
exchange for corporate finance, marketing, and management consulting services
that B. H. Capital Limited/Mr. Lovato provides to Sierra Publishing.
Item 6 - Executive Compensation
At January 1, 1999, the Company executed an Employment Agreement for a term of
three (3) years with annual compensation of $250,000 or 5% of sales, whichever
is greater. The Company is unable to pay the current minimum salary therefore,
Mr. Lovato has waived this obligation by the Company and accepts $6,000 per
month until the Company can afford to pay under the terms prescribed in the
Employment Agreement.
Item 7 - Certain Relationships and Related Transactions
AMERICANA has executed a Corporate Finance Consulting Agreement with B. H.
Capital Limited as of January 1, 1999. This agreement calls for among other
things for a 1% success fee to be paid by AMERICANA to B. H. Capital Limited of
the gross amount of financing for a period of five years.
AMERICANA will also pay B. H. Capital Limited a $3,000.00 monthly facility use
fee for use of B. H. Capital Limited's office, personnel, and facilities for a
period of five years.
The Directors of AMERICANA have been issued stock option agreements dated
January 1, 1999 that allows for the purchase of 300,000 shares of stock over a
period of three years. Should the purchase be exercised by December 31, 1999,
the cost per share is $.10 cents; by December 31, 2000, $.20 cents; and by
December 31, 2001, $.30 cents. The directors may purchase all or a portion of
the shares at any time in any of the denomination described therein. Directors
also are allowed out-of-pocket expenses reimbursements of up to $400.00 per
meeting. Stock option agreements dated January 1, 1999, have been issued to
Sarah Moyers and Robert Cochnar whereby 100,000 shares may be purchased over the
next three years under the same terms and conditions as the directors stock
option agreements allow for inclusive of the additional purchase of stock as a
poison pill caveat.
Mr. Lovato contributed all of the assets of AMERICANA and provided services and
use of the B. H. Capital Limited facility and paid certain cash expenses on
behalf of AMERICANA for a period of eighteen months in exchange for common stock
in AMERICANA.
The board of directors receive reimbursement for up to $400.00 for out of pocket
expenses for each directors meeting. These expenses must be approved by the
chairman in advance of their incurrance. As inducement for participation as
directors of AMERICANA, AMERICANA has issued a stock option agreement whereby
each director may purchase a total of 300,000 common shares of stock for $.10
cents per share up to December 31, 1999, $.20 cents per share up to December 31,
2000, and $.30 cents per share up to December 31, 2001. Each stock option
agreement allows for the purchase a total of 300,000 shares in any denomination
($.10 cents, $.20 cents, $.30 cents) over a three year period, but the total
purchase may not exceed 300,000 shares. A poison pill is also incorporated into
the option agreement, whereby all the directors may purchase 300,000 additional
shares for $1.00 should any of the following occur:
27
<PAGE>
a) The sale of substantially all of the Company's assets to a single
purchaser or group of associated purchasers; or
b) The purchase of substantially all of the Company's issued and
outstanding stock in an effort to take the Company Private; or
c) The attempt by an individual or associated group of individuals
or corporation or entity to purchase stock in the Company for the
purposes of a hostile take over; or
d) The sale, exchange, or other disposition, in one transaction of
the majority of the Company's outstanding corporate shares; or
e) The Company's decision to terminate its business and liquidate
its assets; or
f) The merger or consolidation of the Company with another company
where by the directors of the Company as a whole are no longer
majority shareholders.
AMERICANA has entered into a 6 year employment agreement with Mr. Lovato, which
provided for a salary of $250,000 or 5% of the gross sales of AMERICANA
whichever is greater. AMERICANA will attempt to hire additional personnel, which
may include Don White a director and Vice President of AMERICANA and this
employment agreement may be similar to that of Mr. Lovato's.
Sarah Moyers and Robert Cochnar have been issued stock option agreements for
100,000 shares of common stock and a poison pill for 100,000 shares.
Common Stock
The Company is authorized to issue 100,000,000 shares of common stock at .001
per value. The holders of each share are entitled to one vote for each share
held, and are entitled to dividends when and as declared by the Board of
Directors. At March 31, 1999 common shares issued and outstanding totaled
3,000,000.
Preferred Stock
The Company is authorized to issue 20,000,000 shares of no par value per share
preferred stock, which may be issued in classes or series with various rights
and designation by the Board of Directors. No shares were issued and outstanding
as of March 31, 1999. Each share of preferred stock is entitled to dividends
when and if declared by the Board of Directors.
28
<PAGE>
Part II
Item 1 - Legal Proceedings
The Company not aware of any legal proceedings threatened or contemplated
against any of its officers or directors, respectively, in their capacity as
such.
Item 2 - Market Price of and Dividends on the Registrants Common Equity and
Other Shareholder Matters
The Company as of February 15th, 1999, completed the sales of 465,000 shares of
common stock therefore totaling 3,000,000 shares issued and outstanding. These
shares were sold under Section 4(2) and 3(b) and Regulation D of the Securities
Act of 1933 at a price of $.50 per share.
The Company has approximately twenty-four (24) shareholders.
The Company has not paid and does not anticipate to pay dividends in the
foreseeable future.
Item 3 - Changes in and Disagreements with Accountants
None.
Item 4 - Recent Sales of Unregistered Securities
The following securities were sold in reliance upon Section 4(2) and 3(G) of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
<TABLE>
<CAPTION>
Issue No. of Shares
Date Title Shares Issued to Consideration Amount
---- ----- ------ --------- ------------- ------
<S> <C> <C> <C> <C> <C>
February 12, 1999 Common 10,000 Don White Purchase $5,000
February 12, 1999 Common 45,000 David Poling Purchase $22,500
February 12, 1999 Common 20,000 Max A. Sklower Purchase $10,000
February 12, 1999 Common 10,000 Debra Ruther Purchase $5,000
February 12, 1999 Common 4,000 Jean Beth Ruther Purchase $2,000
February 12, 1999 Common 4,000 David Lewis Ruther Purchase $2,000
February 12, 1999 Common 63,000 Jerry & Barbara Ruther Purchase $31,500
February 12, 1999 Common 34,000 Gerald R. Anderson Purchase $17,000
February 12, 1999 Common 5,000 Mark Lounsbury Purchase $2,500
February 12, 1999 Common 6,000 Thomas & Judith Rau Purchase $3,000
February 12, 1999 Common 5,500 Jerry Hall Purchase $2,750
February 15, 2999 Common 253,500 Lowell S. Fixler Purchase $126,750
February 15, 1999 Common 4,000 George Lovato, Jr. Purchase $2,000
</TABLE>
Item 5 - Indemnification of Directors and Officers
The Articles of Incorporation of the Company provide that the company shall:
The Corporation shall indemnify any and all persons who may serve or who have
served any time as directors or officers and their respective heirs,
administrators, successors and assigns, against any and all expenses, including
29
<PAGE>
any amounts paid upon judgements, counsel fees and amounts paid in settlement
(before or after suit is commenced), actually and necessarily incurred by such
persons in connection with the defense or settlement or any claim, action, suit
or proceedings in which they, or any of them, are made parties, or a party, or
which may be asserted against them or any of them, by reason of being or having
been directors or officers or a director or an officer of the Corporation,
except in relation to matters as to which any such director or officer or former
director or officer or person shall be adjudged in any action, suit or
proceedings to be liable for his fraud, gross negligence or gross misconduct
involving the Corporation in the performance of his duties. This paragraph shall
be in addition to and shall in no way limit the power of the Corporation to
indemnify any person by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officers, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
(a) The corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, (other than an action by or in the right of the corporation)
by reason of the fact that he was a director, officer, employee, fiduciary
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust, or other enterprise,
against expenses (including attorney fees), judgements, fines, and amounts
paid in settlement actually and reasonably believed to be in the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suite, or proceeding by judgement, order,
settlement, or conviction or upon a pleas of nolo contendere or its
equivalent shall not of itself create a presumption that the person did not
act in good faith and in a manner which he reasonable believed to be in the
best interests of the corporation and, with respect to any criminal action
or proceeding, had reasonable cause to believe his conduct was unlawful.
(b) The corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action or suit by or in the right of the corporation to procure a judgement
in its favor by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request
of the corporation as a director, officer, employee, fiduciary or agent of
another corporation, partnership, joint venture, trust, or other enterprise
against expenses (including attorney fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit
if he acted in good faith and in a manner he reasonably believed to be in
the best interests of the corporation; but no indemnification shall be made
in respect of any claim, issue, or matter as to which such person has been
adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation unless and only to the extent that the court in
which such action or suit was brought determines upon application that,
despite the adjudication of liability, but in view of all circumstances of
the case, such person is fairly and reasonably entitled to indemnification
for such expenses which such court deems proper.
(c) To the extent that a director, officer, employee, fiduciary or agent of a
corporation has been successful on the merits in defense of any action,
suit, or proceeding referred to in (a) or (b) of this Article VII or in
defense of any claim, issue, or matter therein, he shall be indemnified
against expenses (including attorney fees) actually and reasonably incurred
by him in connection therewith.
(d) Any indemnification under (a) or (b) of this Article VII (unless ordered by
a court) and as distinguished from (c) of this Article shall be made by the
corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee, fiduciary or agent
is proper in the circumstances because he has met the applicable standard
of conduct set forth in (a) or (b) above. Such determination shall be made
by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit, or proceeding, or, if
such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested directors so directs.
(e) Expenses (including attorney's fees) incurred in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding as
30
<PAGE>
authorized in Section (d) of this Article, upon receipt of an undertaking
by or on behalf of the director, officer, employee, or agent to repay such
amount, unless it shall ultimately be determined that he is entitled to be
indemnified by the corporation as authorized in this Article.
(f) The board of directors may exercise the corporation's power to purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this Article
(g) The indemnification provided by this Article shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled
under these Articles of Incorporation, the Bylaws, agreements, vote of the
shareholders or disinterested directors, or otherwise both as to action in
his official capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs and personal representatives of
such a person.
Part III
Item 1 - Index to Exhibits
The following list describes the exhibits filed as part of this Registration
Statement on Form 10-SB:
Exhibit Number Description of Document
- -------------- -----------------------
3.1 Articles of Incorporation filed April 16, 1998
3.2 Amendment of Articles of Incorporation April 6, 1999
3.3 Bylaws
10.1 Employment Agreement dated January 1, 1999
10.2 Form of Stock Option Agreement dated January 1, 1999
10.3 Corporate Finance Consulting Agreement dated January 1, 1999
10.4 Consent of Accountants
23.0 Form of Stock Certificate
* Filed herewith
Item 2 - Description of Exhibits
The required exhibits are attached hereto, as noted in Item 1 above.
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Americana Publishing, Inc.
Date: By:
------------------------- ---------------------------
George Lovato, Jr.
31
3.1
ARTICLES OF INCORPORATION
OF
AMERICANA PUBLISHING, INC.
--------------------------
TO THE SECRETARY OF STATE
STATE OF COLORADO
The undersigned Incorporators, whose names and addresses are shown below,
being legally competent to enter into contracts, the for the purpose of forming
a corporation under the "Colorado Business Corporation Act" of the State of
Colorado, do hereby adopt the following Certificate of Incorporation:
1. Name and Principal Place of Business. The name of the Corporation is
AMERICANA PUBLISHING, INC. The principal place of business is 555 E. IOTH Ave.,
Suite 101, Denver, CO 80203.
2. Registered Office and Agent. The address of the Corporation's registered
office in the State of Colorado is 555 E. IOTH Ave., Suite 101, Denver, CO
80203.
The name of the registered agent at such address is George Lovato, Jr.
3. Purpose and Duration. The purpose of the Corporation is: (1) publishing;
and (2) any other lawful purposes. The duration of the Corporation is perpetual.
4. Capital Stock. The aggregate number of shares of capital stock which the
Corporation shall have authority to allot is one hundred million (100,000,000)
shares of One Dollar ($.001) par value common stock and 20,000,000 of preferred
which shall be no par value stock. The Board of Directors may, from time to
time, fix a consideration for which said shares may be issued and sold, which
consideration shall not be less than .001 cents per share.
5. Directors. The powers of the Incorporators are to terminate upon the
filing of the Certificate of Incorporation, after which such powers shall be
exercised by the Directors who shall serve in such capacity until the first
annual meeting of Shareholders, or until their successors are elected and
qualify. The names and mailing addresses of the persons who are to serve as
Directors until the first annual meeting of Shareholders are as follows:
<PAGE>
Americana Publishing, Inc.
Articles of Incorporation
Directors Mailing Address
--------- ---------------
George Lovato, Jr. 555 E. 10TH Ave., Suite 101, Denver, CO 80203.
Jay Simon 5528 E. Cheryl, Paradise Valley, AZ 85253
Don White 8203 Willow Place South # 605, Houston TX 77070
The number of Directors of the Corporation shall be specified in the
Bylaws, and such number may from time to time be increased or decreased under
the Bylaws of any amendment or change thereto.
6. Bylaws. The Directors of the Corporation shall have the power to adopt,
alter or replace Bylaws for governing the Corporation, the conduct of its
affairs, the management of its property, the transfer of shares and the rights
or powers of the Shareholders, Directors, Officers and employees of the
Corporation. Such power shall be exercised by two-thirds (2/3) majority vote of
the Directors at any regular or special meeting duly convened after proper
notice to such Directors has been given. Provided, however, nothing herein shall
divest the Shareholders of the power, nor limit their power to adopt, amend or
repeal such Bylaws.
7. Preemptive Rights. The holders of shares of common stock of the
Corporation shall have the preemptive right to purchase ratable according to
their respective holdings any shares of the Corporation hereafter issued or
allotted or any securities exchangeable for or convertible into such shares or
other instruments evidencing rights or options to subscribe for, purchase or
otherwise acquire shares.
8. Indemnification. The Corporation shall indemnify any and all persons who
may serve or who have served a any time as directors or officers and their
respective heirs, administrators, successors and assigns, against any and all
expenses, including any amounts paid upon judgments, counsel fees and amounts
<PAGE>
Americana Publishing, Inc.
Articles of Incorporation
paid in settlement (before or after suit is commenced), actually and necessarily
incurred by such persons in connection with the defense or settlement or any
claim, action, suit or proceedings in which they, or any of them, are made
parties, or a party, or which may be asserted against them or any of them, by
reason of being or having been directors or officers or a director or an officer
of the Corporation, except in relation to matters as to which any such director
or officer or former director or officer or person shall be adjudged in any
action, suit or proceedings to be liable for his fraud, gross negligence or
gross misconduct involving the Corporation in the performance of his duties.
This paragraph shall be in addition to, and shall in no way limit, the power of
the Corporation to indemnify any person by reason of the fact that he is or was
a director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officers, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise.
9. Incorporators. The name and mailing address of the Incorporators are as
follows:
Name Mailing Address
---- ---------------
George Lovato, Jr. 555 E. I OTH Ave., Suite 101, Denver, CO 80203.
Gordon H. Rowe III 40 N. Washington St.
Monte Vista, CO 81144
The undersigned Incorporators do make, file and record this Certificate of
Incorporation, and do certify that the facts herein stated are true.
INCORPORATOR:
George Lovato, Jr.
Gordon H. Rowe III
<PAGE>
Americana Publishing, Inc.
Articles of Incorporation
STATE OF )
) SS.
COUNTY OF )
Before me, the undersigned, a notary public in and for said county and
state, personally appeared George Lovato, Jr., the above-named Incorporator, to
me known to be the identical person who executed the foregoing Certificate of
Incorporation, who acknowledged to me that he executed the same as his free and
voluntary act and deed and that the statements contained herein are true, on
this _________ day of ____________ , 199___.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
last above written.
--------------------------
Notary Public
My Commission Expires:
- ---------------------------
STATE OF NEW MEXICO )
)SS.
COUNTY OF BERNALILLO )
Before me, the undersigned, a notary public in and for said county and
state, personally appeared Gordon H. Rowe III, the above-named Incorporator, to
me known to be the identical person who executed the foregoing Certificate of
Incorporation, who acknowledged to me that he executed the same as his free an
act and deed and that the statements contained herein are true, on this ________
day of __________ , 1999.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
last above written.
------------------------
Notary Public
My Commission Expires:
- ---------------------------
SIGNATURE OF REGISTERED AGENT:
- ------------------------------
George Lovato, Jr.
3.2
For Office Use Only
Mail to: Secretary of State
Corporations Section
1560 Broadway, Suite 200
Denver, CO 80202
(303) 894-2251
Fax (303) 894-2242
Please include a typed
self-addressed envelope
MUST BE TYPED
FILING FEE: $60.00
MUST SUBMIT TWO COPIES
RESTATED ARTICLES OF INCORPORATION
WITHOUT AMENDMENTS
Pursuant to the provisions of the Colorado Corporation Code, the undersigned
corporation adopts the following restated Articles of Incorporation. These
articles only restate and integrate and do not further amend the provisions of
the corporation's Articles of Incorporation as theretofore amended or
supplemented. There is no discrepancy between articles. These restated Articles
of Incorporation supersede the original Articles of Incorporation and all
amendments and supplements there to.
FIRST: The name of the Corporation is Americana Publishing, Inc.
SECOND: The following restated Articles of Incorporation were adopted on April
16th, 1997, in the manner marked with an "X" below:
The restated Articles of Incorporation were adopted by the Board of
Directors
- -------
The restated Articles of Incorporation were adopted by the
shareholders. The number of shares voted for the restated Articles of
X Incorporation was sufficient for approval.
- -------
The restated Articles of Incorporation were adopted by the
- ------- Incorporators where no shares have been issued or directors elected.
ATTACH A COPY OF YOUR RESTATED ARTICLES OF INCORPORATION
WITHOUT AMENDMENTS
The Restated Articles of Incorporation are incorporated herein as Exhibit
A, which is attached hereto.
Americana Publishing, Inc.
By
Its
<PAGE>
ARTICLES OF INCORPORATION
OF
AMERICANA PUBLISHING, INC.
--------------------------
TO THE SECRETARY OF STATE
STATE OF COLORADO
The undersigned Incorporators, whose names and addresses are shown below,
being legally competent to enter into contracts, the for the purpose of forming
a corporation under the "Colorado Business Corporation Act" of the State of
Colorado, do hereby adopt the following Certificate of Incorporation:
1. Name and Principal Place of Business. The name of the Corporation is
AMERICANA PUBLISHING, INC. The principal place of business is 555 E. 10TH Ave.,
Suite 101, Denver, CO 80203.
2. Registered Office and Agent. The address of the Corporation's registered
office in the State of Colorado is 555 E. 10TH Ave., Suite 101, Denver, CO
80203.
The name of the registered agent at such address is George Lovato, Jr.
3. Purpose and Duration. The purpose of the Corporation is: (1) publishing;
and (2) any other lawful purposes. The duration of the Corporation is perpetual.
4. Capital Stock. The aggregate number of shares of capital stock which the
Corporation shall have authority to allot is one hundred million (100,000,000)
shares of One Dollar ($.001) par value common stock and twenty million
(20,000,000) of preferred which shall be no par value stock. The Board of
Directors may, from time to time, fix a consideration for which said shares may
be issued and sold, which consideration shall not be less than .001 cents per
share.
5. Directors. The powers of the Incorporators are to terminate upon the
filing of the Certificate of Incorporation, after which such powers shall be
exercised by the Directors who shall serve in such capacity until the first
annual meeting of Shareholders, or until their successors are elected and
qualify. The names and mailing addresses of the persons who are to serve as
Directors until the first annual meeting of Shareholders are as follows:
Directors Mailing Address
--------- ---------------
George Lovato, Jr. 555 E. 10TH Ave., Suite 101, Denver, CO 80203.
Jay Simon 5528 E. Cheryl Drive, Paradise Valley, AZ 85253.
Don White 8203 Willow Place South, #605, Houston, TX 77070.
<PAGE>
The number of Directors of the Corporation shall be specified in the
Bylaws, and such number may from time to time be increased or decreased under
the Bylaws of any amendment or change thereto.
6. Bylaws. The Directors of the Corporation shall have the power to adopt,
alter or replace Bylaws for governing the Corporation, the conduct of its
affairs, the management of its property, the transfer of shares and the rights
or posers of the Shareholders, Directors, Officers and employees of the
Corporation. Such power shall be exercised by two-thirds (2/3) majority vote of
the Directors at any regular or special meeting duly convened after proper
notice to such Directors has been given. Provided, however, nothing herein shall
divest the Shareholders of the power, nor limit their poser to adopt, amend or
repeal such Bylaws.
7. Indemnification. The Corporation shall indemnify any and all persons who
may serve or who have served any time as directors or officers and their
respective heirs, administrators, successors and assigns, against any and all
expenses, including any amounts paid upon judgements, counsel fees and amounts
paid in settlement (before or after suit is commenced), actually and necessarily
incurred by such persons in connection with the defense or settlement or any
claim, action, suit or proceedings in whic they, or any of them, are made
parties, or a party, or which may be asserted against them or any of them, by
reason of being or having been directors or officers or a director or an officer
of the Corporation, except in relation to matters as to which any such director
or officer or former director or officer or person shall be adjudged in any
action, suit or proceedings to be liable for his fraud, gross negligence or
gross misconduct involving the Corporation in the performance of his duties.
This paragraph shall be in addition to and shall in no way limit the power of
the Corporation to indemnify any person by reason of the fact that he is or was
a director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officers, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise.
(a) The corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, (other than an action by or in the right of the corporation)
by reason of the fact that he was a director, officer, employee, fiduciary
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust, or other enterprise,
against expenses (including attorney fees), judgements, fines, and amounts
paid in settlement actually and reasonably believed to be in the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suite, or proceeding by judgement, order,
settlement, or conviction or upon a pleas of nolo contendere or its
equivalent shall not of itself create a presumption that the person did not
act in good faith and in a manner which he reasonable believed to be in the
best interests of the corporation and, with respect to any criminal action
or proceeding, had reasonable cause to believe his conduct was unlawful.
(b) The corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action or suit by or in the right of the corporation to procure a judgement
in its favor by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request
of the corporation as a director, officer, employee, fiduciary or agent of
another corporation, partnership, joint venture, trust, or other enterprise
against expenses (including attorney fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit
if he acted in good faith and in a manner he reasonably believed to be in
the best interests of the corporation; but no indemnification shall be made
in respect of any claim, issue, or matter as to which such person has been
adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation unless and only to the extent that the court in
which such action or suit was brought determines upon application that,
despite the adjudication of liability, but in view of all circumstances of
the case, such person is fairly and reasonably entitled to indemnification
for such expenses which such court deems proper.
<PAGE>
(c) To the extent that a director, officer, employee, fiduciary or agent of a
corporation has been successful on the merits in defense of any action,
suit, or proceeding referred to in (a) or (b) of this Article VII or in
defense of any claim, issue, or matter therein, he shall be indemnified
against expenses (including attorney fees) actually and reasonably incurred
by him in connection therewith.
(d) Any indemnification under (a) or (b) of this Article VII (unless ordered by
a court) and as distinguished from (c) of this Article shall be made by the
corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee, fiduciary or agent
is proper in the circumstances because he has met the applicable standard
of conduct set forth in (a) or (b) above. Such determination shall be made
by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit, or proceeding, or, if
such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested directors so directs.
(e) Expenses (including attorney's fees) incurred in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding as
authorized in Section (d) of this Article, upon receipt of an undertaking
by or on behalf of the director, officer, employee, or agent to repay such
amount, unless it shall ultimately be determined that he is entitled to be
indemnified by the corporation as authorized in this Article.
(f) The board of directors may exercise the corporation's power to purchase and
maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this Article
(g) The indemnification provided by this Article shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled
under these Articles of Incorporation, the Bylaws, agreements, vote of the
shareholders or disinterested directors, or otherwise both as to action in
his official capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs and personal representatives of
such a person.
<PAGE>
8. Incorporators. The name and mailing address of the Incorporators are as
follows:
Name Mailing Address
---- ---------------
George Lovato, Jr. 555 E. 10 TH Ave., Suite 101, Denver, CO 80203
Gordon H. Rowe, III 40 N. Washington St., Monte Vista, CO 81144
The undersigned Incorporators do make, file and record this Certificate of
Incorporation, and do certify that the facts herein stated are true.
INCORPORATOR:
George Lovato, Jr./Registered Agent
3.3
By-laws of Americana Publishing, Inc.
By-laws of Americana Publishing, Inc., a corporation incorporated under the laws
of the State of Colorado.
1. Corporate Office and Registered Agent. The Board of Directors has the power
to determine the location of the corporation's principal place of business and
registered office, which need not be the same location. The Board of Directors
also has the power to designate the corporation's registered agent, who may be
an officer or director.
2. Date and Time of Shareholders Annual Meeting. The annual shareholders meeting
will be held on the 24th of March of every year at 9:00 a.m., or no more than 83
days after the fiscal year end. This meeting is for the purpose of electing
directors and for transacting any other necessary business. If this day is a
legal holiday, the meeting will be held on the next day.
3. Shareholders Special Meetings. Special meetings of the shareholders may be
called at any time and for any purpose. These meetings may be called by either
the president or the Board of Directors or upon request of 51 percent of the
shareholders of the corporation. The request for a special meeting must be made
in writing which states the time, place and purpose of the meeting. The request
should be given to the secretary of the corporation who will prepare and send
written notice to all shareholders of record who are entitled to vote at the
meeting.
4. Place of Shareholders Meetings. The Board of Directors has the power to
designate the place for shareholders meetings, unless a waiver of notice of the
meeting signed by all shareholders designates the place for the meeting. If no
place is designated, either by the Board of Directors or all of the
shareholders, then the place for the meeting will be the principal office of the
corporation.
5. Notice of Shareholders Meetings. Written notice of shareholders meetings must
be sent to each shareholder of record entitled to vote at the meeting. The
notice must be sent no less than 8 days nor more than 10 days before the date of
the meeting. The notice should be sent to the shareholder's address as shown in
the corporate Stock Transfer Book. The notice will include the place, date, and
time of the meeting. Notices for special meetings must also include the purpose
of the meeting. When notices are sent, the secretary of the corporation must
prepare an Affidavit of Mailing of Notices. Shareholders may waive notice of
meetings if done in writing, except that attendance at a meeting is considered a
waiver of notice of the meeting.
6. Shareholders Entitled to Notice, to Vote, or to Dividends. For the purpose of
determining which shareholders are entitled to notice, to vote at meetings, or
to receive dividends, the Board of Directors may order that the corporate Stock
Transfer Books be closed for 30 days prior to a meeting or the issuance of a
dividend. The shareholders entitled to receive notice, vote at meetings, or
receive dividends are those who are recorded in the Stock Transfer Book upon the
closing of the Book. Instead of closing the Books, the Board of Directors may
also set a Record Date. The shareholders recorded in the Stock Transfer Book at
the close of business on the Record Date will be entitled to receive notice,
vote at meetings, or receive dividends. A list of shareholders entitled to
receive notice, vote at meetings, or receive dividends will be prepared by the
secretary when necessary and provided to the officers of the corporation. Every
shareholder who is entitled to receive notice, vote, or receive dividends is
also entitled to examine this list and the corporate stock transfer book.
7. Shareholders Quorum. A quorum for shareholders meeting will be a majority of
the outstanding shares which are entitled to vote at the meeting, whether in
person or represented by proxy. Once a quorum is present, business may be
conducted at the meeting, even if shareholders leave prior to adjournment.
8. Shareholders Proxies. At all meetings of shareholders, a shareholder may vote
by signed proxy or by power of attorney. To be valid, a proxy must be filed with
the secretary of the corporation prior to the stated time of the meeting. No
proxy may be valid for over 12 months, unless the proxy specifically states
otherwise. Proxies may always be revocable prior to the meeting for which it is
intended. Attendance at the meeting for which a proxy has been authorized always
revokes the proxy.
<PAGE>
9. Shareholders Voting. Each outstanding share of the corporation which is
entitled to vote as shown on the Stock Transfer Book will have one vote. The
vote of the holders of a majority of the shares entitled to vote will be
sufficient to decide any matter, unless a greater number is required by the
Articles of Incorporation or by state law. Adjournment shall be by majority vote
of those shares entitled to vote.
10. Shareholder Consent Resolutions. Any action which may be taken at a
shareholders meeting may be taken instead without a meeting if a resolution is
consented to, in writing, by all shareholders who would be entitled to vote on
the matter.
11. Shareholders Cumulative Voting. For the election of directors, each
shareholder may vote in a Cumulative manner, if desired. Cumulative voting will
mean that if each shareholder has one vote per director to be elected, the
shareholder may vote all votes for a single director or spread the votes among
directors in any manner.
12. Powers of the Board of Directors. The affairs of the corporation will be
managed by the Board of Directors. The Board of Directors will have all powers
available under state law, including the power to appoint and remove officers,
agents, and employees; the power to change the offices, registered agent, and
registered office of the corporation; the power to issue shares of stock; the
power to borrow money on behalf of the corporation, including the power to
execute any evidence of indebtedness on behalf of the corporation; and the power
to enter into contracts on behalf of the corporation.
13. Number of Directors and Term of Office. The number of directors will be as
shown in the Articles of Incorporation and may be amended. The number is
currently 5. Each director will hold office for 1 year and will be elected at
the annual meeting of the shareholders.
14. Date and Time of Annual Meeting of the Board of Directors. The annual Board
of Directors meeting will be held on the 24th day of March of every year at 9:00
a.m. This meeting is for the purpose of appointing officers and for transacting
any other necessary business. If this day is a Sunday or a legal holiday, the
meeting will be held on the next day. These meetings may be conducted
telephonically.
15. Special Meetings of the Board of Directors. Special meetings of the Board of
Directors may be called at any time and for any purpose. These meetings may be
called by either the president or the Board of Directors. The request for a
special meeting must be made in writing which states the time, place and purpose
of the meeting, further these meetings may be conducted telephonically. The
request should be given to the secretary of the corporation who will prepare and
send written notice to all directors
16. Place of Board of Directors Meetings. The Board of Directors has the power
to designate the place for directors meetings. If no place is designated, then
the place for the meeting will be the principal office of the corporation.
17. Notice of Board of Directors Meetings. Written notice of Board of Directors
meetings must be sent to each director. The notice must be sent no less than 8
days nor more than 10 days before the date of the meeting. The notice should be
sent to the director's address as shown in the corporate records. The notice
will include the place, date, and time of the meeting, and for special meetings
the purpose of the meeting. When notices are sent, the secretary of the
corporation must prepare an Affidavit of Mailing of Notices. directors may waive
notice of meetings if done in writing, except that attendance at a meeting is
considered a waiver of notice of the meeting.
18. Board of Directors Quorum. A quorum for directors meetings will be a
majority of the directors. Once a quorum is present, business may be conducted
at the meeting, even if directors leave prior to adjournment.
<PAGE>
19. Board of Directors Voting. Each director will have one vote. The vote of a
majority of the directors will be sufficient to decide any matter, unless a
greater number is required by the Articles of Incorporation or state law.
Adjournment shall be by majority vote.
20. Board of Directors Consent Resolutions. Any action which may be taken at a
directors meeting may be taken instead without a meeting if a resolution is
consented to, in writing, by all directors.
21. Removal of Directors. A director may be removed from office, with or without
cause, at a special meeting of the shareholders called for that purpose.
22. Filling Directors Vacancies. A vacancy on the Board of Directors may be
filled by majority vote of the remaining directors, even if technically less
than a quorum. A director elected to fill a remaining term will hold office
until the next annual shareholders meeting.
23. Salaries of Directors. The salaries of the directors will be fixed by the
Board of Directors and may be altered at any time by the board. A director may
receive a salary even if she/he receives a salary as an officer.
24. Fiduciary Duty of Directors. Each director owes a fiduciary duty of good
faith and reasonable care with regard to all actions taken on behalf of the
corporation. Each director must perform her/his duties in good faith in a
manner, which she/he reasonably believes to be in the best interests of the
corporation, using ordinary care and prudence.
25. Number of Officers. The officers of the corporation will include a
president, vice-president, treasurer, and secretary. Any two or more offices may
be held by the same person.
26. Appointment and Terms of Officers. The officers of the corporation will be
appointed by the directors at the first meeting of the Board of Directors. Each
officer will hold office until death, resignation or removal by the Board of
Directors.
27. Removal of Officers. Any officer may be removed by the Board of Directors,
with or without cause. Appointment of an officer does not create any contract
rights for the officer.
28. Filling Officers Vacancies. A vacancy in any office for any reason may be
filled by the Board of Directors for the unexpired term.
29. Duties of the President. The president is the principal executive officer of
the corporation and is subject to control by the Board of Directors. The
president will supervise and control all of the business and activities of the
corporation. The president will preside at all shareholders and directors
meetings, and perform any other duties as prescribed by the Board of Directors.
30. Duties of the Vice-President. If the president is absent, dies, or is
incapacitated, the vice-president will perform the duties of the president. When
acting for the president, the vice-president will have all of the powers and
authority of the president. The vice-president will also perform any other
duties as prescribed by the Board of Directors.
31. Duties of the Secretary. The secretary will keep the minutes of all
shareholders and directors meetings. The secretary will provide notices of all
meetings as required by the By-laws. The secretary will be the custodian of the
corporate records, corporate stock transfer book, and corporate seal. The
secretary will keep a list of all shareholders, directors, and officers
addresses. The secretary will sign, along with other officers, the corporation's
stock certificates. The secretary will also perform any other duties as
prescribed by the Board of Directors.
32. Duties of the Treasurer. The treasurer will be custodian of all corporate
funds and securities. The treasurer will receive and pay out funds, which are
receivable or payable to the corporation from any source. The treasurer will
deposit all corporate funds received into the corporate bank accounts as
designated by the Board of Directors. The treasurer will also perform any other
duties as prescribed by the Board of Directors.
<PAGE>
33. Salaries of Officers. The salaries of the officers will be fixed by the
Board of Directors and may be altered at any time by the board. An officer may
receive a salary even if she/he receives a salary as a director.
34. Stock Certificates. Certificates which represent shares of ownership in the
corporation will be in the form designated by the Board of Directors.
Certificates will be signed by all officers of the corporation. Certificates
will be consecutively numbered. The name and address of the person receiving the
issued shares, the certificate number, the number of shares and the date of
issue will be recorded by the secretary of the corporation in the corporate
stock transfer book. Shares of the corporation's stock may only be transferred
on the stock transfer book of the corporation by the holder of the shares in
whose name they were issued as shown on the stock transfer book, or by his or
her legal representative.
35. Financial Matters. The Board of Directors will determine the accounting
methods and fiscal year of the corporation. All checks, drafts, or other methods
for payment shall be signed by an officer determined by resolution of the Board
of Directors. All notes, mortgages, or other evidence of indebtedness shall be
signed by an officer determined by resolution of the Board of Directors. No
money will be borrowed or loaned by the corporation unless authorized by a
resolution of the Board of Directors. No contracts will be entered into on
behalf of the corporation unless authorized by a resolution of the Board of
Directors. No documents may be executed on behalf of the corporation unless
authorized by a resolution of the Board of Directors. A board of Director's
resolution may be for specific instances or a general authorization.
36. Loans to Officers or Directors. The corporation may not lend any money to an
officer or director of the corporation unless the loan has been approved by a
majority of the shares of all stock of the corporation, including those shares
that do not have voting rights.
37. Assistant Secretaries. The Assistant Secretaries shall perform such duties
and possess such powers as from time to time shall be assigned to them by the
Board of Directors, the President, or the Secretary. In the absence, inability
or refusal to act of the Secretary, the Assistant Secretary in the order
determined by the Board of Directors shall perform the duties and exercise the
power of the Secretary.
38. Assistant Treasurers. The Assistant Treasurers shall perform such duties and
possess such powers as from time to time shall be assigned to them by the Board
of Directors, the President, or the Treasurer. In the absence, inability or
refusal to act of the Treasurer, the Assistant Treasurer in the order determined
by the Board of Directors shall perform the duties and exercise the power of the
Treasurer.
39. Bond of Officers. The Board of Directors may require any officer to give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory of the Board of Directors for such terms and conditions as the
Board of Directors may specify, including without limitation for the faithful
performance of his duties and for the restoration of the Corporation of all
property in his possession or under his belonging to the Corporation
40. Salaries. Officers of the Corporation shall be entitled to such salaries,
emoluments, compensation or reimbursement as such be fixed or allowed from time
to time by the Board of Directors.
41. Third party actions. The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonable believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
<PAGE>
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contender or its equivalent, shall not of
itself create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
42. Derivative actions. The Corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation, except that no indemnification shall be made
in respect of any claim, issue, or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the Corporation unless and only to the extent that the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability and in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
43. Extent of indemnifications. To the extent that a director, officer, employee
or agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
44. Determination. Any indemnification under these Bylaws or Articles of
Incorporation (unless ordered by a court) shall be make by the Corporation only
as authorized in the specific case upon a determination that indemnification of
the officer, director and employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in these Bylaws.
Such determination shall be made (a) by the Board of Directors by a majority
vote of a quorum consisting of directors who were not parties to such action,
suitor proceeding, or (b) if such a quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (c) by the affirmative vote of the holders of a
majority of the shares of stock entitled to vote and represented at a meeting
called for such purpose.
45. Payment in advance. Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
of Directors as provided in Section 4 of this Article VI upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to repay
such amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article VI.
46. Insurance. The Board of Directors may exercise the Corporation's power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another Corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability hereunder or
otherwise.
47. Other Coverage. The indemnification provided by these Bylaws shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under the Articles of Incorporation, these Bylaws, agreement, vote
of stockholders or disinterested directors, the Colorado Corporation Code, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, office, employee or agent and shall inure to
the benefit of the heirs and personal representatives of such a person.
<PAGE>
48. Execution of Instruments. The President or any Vice President shall have
power to execute and deliver on behalf and in the name of the Corporation any
instrument requiring the signature of an officer of the Corporation, except as
otherwise provided in these Bylaws or where the execution and delivery thereof
shall be expressly delegated by the Board of Directors to some other officer or
agent of the Corporation. Unless authorized so to do by these Bylaws or by the
Board of Directors, no officer, agent or employee shall have any power or
authority to bind the Corporation in any way, to pledge its credit or to render
it liable pecuniarily for any purpose or in any amount.
49. Loans. No loan shall be contracted on behalf of the Corporation, and no
evidence of indebtedness shall be issued, endorsed or accepted in its name,
unless authorized by the Board of Directors or a standing committee designated
by the Board of Directors so to act. Such authority may be general or confined
to specific instances. When so authorized, the officer or officers thereunto
authorized may effect loans at any time for the Corporation form any bank at any
time for the Corporation from any bank or other entity and for such loans may
execute and deliver promissory notes or other evidences of indebtedness of the
Corporation, and when authorized as aforesaid, as security for the payment of
any and all loans (and any obligations incident thereto) of the Corporation, may
mortgage, pledge, or otherwise encumber any real or personal property, or any
interest therein, at any time owned or held by the Corporation, and tot hat end
may execute and deliver such instruments as may be necessary or proper in the
premises.
50. Checks and Endorsements. All checks, drafts or other orders for the payment
of money, obligations, notes or other evidences of indebtedness, bills of
lading, warehouse receipts, trade acceptances, and other such instruments shall
be signed or endorsed by such officers or agents of the Corporation as shall
from time to time be determined by resolution of the Board of Directors, which
resolution may provide for the use of facsimile signatures.
51. Deposits. All funds of the Corporation not otherwise employed shall be
deposited from time to time to the Corporation's credit in such banks or other
depositories as shall from time to time be determined by resolution of the Board
of Directors, which resolution may specify the officers or agents of the
Corporation who shall have the power, and the manner in which such power shall
be exercised, to make such deposits and to endorse, assign and deliver for
collection and deposit checks, drafts and other orders for the payment of money
payable to the Corporation or its order.
52. Proxies. Unless otherwise provided by resolution adopted by the Board of
Directors, the President or any Vice President may from time to time appoint one
or more agents or attorneys in fact of the Corporation, in the name and on
behalf of the Corporation, to cast the votes which the Corporation maybe
entitled to cast as the holder of stock or other securities in any other
Corporation, association or other entity any of whose stock or other securities
may be held by the Corporation, at meetings of the holders of the stock or other
securities of such other name of the Corporation, association or other entity,
or to consent in writing, in the name of the Corporation as such holder, to any
action by such other Corporation, association or other entity, and may instruct
the person or persons so appointed as to the manner of casting such votes or
giving such consent and may execute or cause to be executed in the name and on
behalf of the Corporation and under its corporate seal, or otherwise, all such
written proxies or other instruments as he may deem necessary or proper in the
premises.
53. Certificates of Stock. Every holder of stock of the Corporation shall be
entitled to have a certificate certifying the number of shares owned by him in
the Corporation and designating the class of stock to which such shares belong,
which shall otherwise be in such form as is required by law and as the Board of
Directors shall prescribe. Each such certificate shall be signed by the
President and the Treasurer/Secretary of the Corporation; provided, however,
that where such certificate is signed or countersigned by a transfer agent or
registrar (other than the Corporation or any employee of the Corporation) the
signatures of such officers of the Corporation may be in facsimile form. In case
any officer of the Corporation who shall have signed, or whose facsimile
signature shall have been placed on, any certificate shall cease for any reason
to be such officer before such certificate shall have been issued or delivered
by the Corporation, such certificate may nevertheless be issued and delivered by
the Corporation as though the Person who signed such certificate, or whose
facsimile signature shall have been placed thereon, had not ceased to be such
officer of the Corporation.
<PAGE>
54. Record. A record shall be kept of the name of each person or other entity
holding the stock represented by each certificate for shares of the Corporation
issued, the number of shares represented by each such certificate, and the date
thereof, and, in the case of cancellation, the date of cancellation. The person
or other entity in whose name shares of stock stand on the books of the
Corporation shall be deemed the owner thereof, and thus a holder of record of
such shares of stock, for all purposes as regards the Corporation.
55. Transfer of Stock. Transfers of shares of the stock of the Corporation shall
be made only on the books of the Corporation by the registered holder thereof,
or by his attorney thereunto authorized, and on the surrender of the certificate
or certificates for such shares properly endorsed.
56. Transfer Agents and Registrars; Regulations. The Board of Directors may
appoint one or more transfer agents or registrars with respect to shares of the
stock of the Corporation. The Board of Directors may make rules and regulations,
as it may deem expedient, not inconsistent with these Bylaws, concerning the
issue, transfer and registration of certificates for shares of the stock of the
Corporation.
57. Lost, Destroyed or Mutilated Certificates. The holder of any certificate
representing shares of stock of the Corporation shall immediately notify the
Corporation of any loss or destruction of the certificate representing the same.
The Corporation may issue a new certificate in the place of any certificate
previously issued by it, alleged to have been lost or destroyed. On production
of such evidence of loss or destruction as the Board of Directors in its
discretion may require, the owner of the lost or destroyed certificate, or his
legal representatives, to give the Corporation a bond in such sum as the Board
may direct, and with such surety or sureties as may be satisfactory to the Board
to indemnify the Corporation against any claims, loss, liability or damage it
may suffer on account of the issuance of the new certificate. A new certificate
may be issued without requiring any such evidence or bond when, in the judgment
of the Board of Directors, it is proper to do so.
58. Corporate Seal. The corporate seal shall be in such form, as shall be
approved by resolution of the Board of Directors. Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced. The impression of the seal may be made and attested by either
the Secretary or an Assistant Secretary for the authentication of contracts or
other papers requiring the seal.
59. Fiscal Year. The fiscal year of the Corporation shall be such year as shall
be established by the Board of Directors.
60. Corporate Books. The books and records of the Corporation may be kept within
or without the State of Colorado at such place or places as may be from time to
time designated by the Board of Directors.
61. Addresses of Stockholders. Each shareholder shall furnish to the Secretary
of the Corporation or the Corporation's transfer agent an address to which
notices from the Corporation, including notices of meetings, may be directed and
if any shareholder shall fail so to designate such an address, it shall be
sufficient for any such notice to be directed to such shareholder at his address
last known to the Secretary of transfer agent.
62. Record Date. In lieu of closing the stock ledger of the Corporation, the
Board of Directors may fix, in advance, a date not exceeding sixty (60) days,
nor less than ten (10) days, as the record date for the determination of
stockholders entitled to receive notice of, or to vote at, any meeting of
stockholders, or to consent to any proposal without a meeting, or for the
purposes of determining stockholders entitled to received payment of any
dividends or allotment of any rights, or for the purpose of any other action. If
no record date is fixed, the record date for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if no notice is given, the day preceding the day on which the meeting is
held-, the record date for determining stockholders for any other purpose shall
be at the close of business on the day on which the resolution of the directors
relating thereto is adopted. When a determination of stockholders of record
entitled to notice of or to vote at any meeting of stockholders has been made as
provided for herein, such determination shall apply to any adjournment thereof,
unless the directors fix a new record date for the adjourned meeting.
<PAGE>
63. Audits of Books and Accounts. The Corporation's books and accounts shall be
audited at such times and by such auditors as shall be specified and designated
by resolution of the Board of Directors.
64. Emergency Bylaws. The Board of Directors may adopt emergency Bylaws in
accordance with and pursuant to the provisions therefor from time to time set
forth in the Colorado Corporation Code.
65. Amendments. All Bylaws of the Corporation shall be subject to alteration,
amendment or repeal, and new bylaws may be added, by the affirmative vote of a
majority of a quorum of the members of the Board of Directors at any regular or
special meeting.
Dated ______________________
Signature of the Secretary of the Corporation ____________________________
Adopted by the Board of Directors on __________________ , 1999
Signature of the Chairperson of the board _____________________________
Approved by the Shareholders on ___________________ , 1999
Signature of the Secretary of the Corporation ______________________________
10.1
Employment Agreement
Employment Agreement, between Americana Publishing, Inc. (the "Company") and
George Lovato, Jr. (the "Employee"), for good consideration, the Company employs
the Employee on the following terms and conditions:
1. Term of Employment. Subject to the provisions for termination set
forth below, this agreement will begin on January 1st, 1999.
2. Salary. The Company shall pay Employee a salary of $250,000 per year
or 5% of gross sales of the company, whichever is greater for services
of the Employee, payable in regular pay periods, however, such
compensation shall commence when the Company can afford to pay such
compensation or compensation may begin April 1st, 1999.
3. Duties and Position. The Company hires the Employee in the capacity of
Editor in Chief and Chief Executive Officer. The duties may be
reasonably modified at the Company's discretion from time to time.
4. Employee to Devote Time Necessary to Company. The Employee will devote
the time necessary, attention and energies to the business of the
Company, and during this employment, however, may engage in other
business activities related to or unrelated to the company for profit,
gain and or primary advantage. These activities by the Employee are
not prohibited by the Company and further does not prohibit Employee
from making personal investments in any other business of any kind.
5. Confidentiality of Proprietary Information. Employee agrees during or
after the term of this employment, not to reveal confidential
information, or trade secrets to any person, firms, corporation or
entity.
6. Reimbursement of Expenses. The Employee may incur reasonable expenses
for furthering the Company's business including entertainment, travel
and similar items. The Company shall reimburse Employee within seven
working days for all business expenses after the Employee presents an
itemized account of expenditures.
7. Vacation. The Employee shall be entitled to a yearly vacation of a
total of five weeks at full pay. The Employee may take such time off
for vacation at any time and in any quantity of days.
8. Disability. If Employee cannot perform the duties because of illness
or incapacity for more than two weeks, the compensation otherwise due
during said illness or incapacity will continue as stated herein. The
Company may not terminate this agreement for any reason as it relates
to any disability, illness or incapacity.
<PAGE>
9. Termination of Agreement. With cause, the Company may terminate this
agreement with twelve months written notice to the Employee. The
Employee may continue to perform his duties and will be paid the full
compensation during regular pay periods stated herein during the
notice period of twelve months. In addition, the Company will pay the
Employee on the date of termination a severance allowance of one full
year of minimum salary of two hundred and fifty thousand dollars
($250,000) which may be made in twelve equal and consecutive monthly
installments beginning on the date of termination. Without cause, the
Employee may terminate employment upon twelve months written notice to
the Company. Employee may be required to perform his duties and will
be paid the full compensation described herein up to the termination
date and shall receive a severance allowance of two hundred and fifty
thousand dollars ($250,000) which may be made in twelve equal and
consecutive monthly installments beginning on the date of termination.
The Company may terminate the Employees employment upon 90 days
written notice to the Employee and be responsible to pay two years
minimum salary of a total of five hundred thousand dollars ($500,000)
in twelve consecutive monthly installments beginning on the date of
termination should any of the following events occur:
a) The sale of substantially all of the Company's assets to a
single purchaser or group of associated purchasers; or
b) The purchase of substantially all of the Company's issued
and outstanding stock in an effort to take the Company
Private; or
c) The attempt by an individual or associated group of
individuals or corporation or entity to purchase stock in
the Company for the purposes of a hostile take over; or
d) The sale, exchange, or other disposition, in one transaction
of the majority of the Company's outstanding corporate
shares; or
e) The Company's decision to terminate its business and
liquidate its assets; or
f) The merger or consolidation of the Company with another
company where by the directors of the Company as a whole are
no longer majority shareholders; or
g) Bankruptcy or Chapter 11 reorganization.
10. Death Benefit. Should Employee die during the term of employment of
the Company shall pay the Employees estate five hundred thousand
dollars ($500,000) in fifty equal and consecutive monthly installments
beginning 10 days from the date of his death.
<PAGE>
11. Assistance in Litigation. Employee shall upon reasonable notice,
furnish such information and proper assistance to the Company as it
may reasonably require in connection with any litigation in which it
is, or may become, a party either during or after employment. Should
the Employee be involved in any litigation personally as a result of
activities or association with or for the Company, the Company agrees
to pay for all such legal and professional fees incurred by the
Employee.
12. Settlement by Arbitration. Any claim or controversy that arises out of
or relates to this agreement, or breach of it, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. Judgement upon the award rendered may be entered in any
court with jurisdiction.
13. Limited Effect of Waiver by Company. Should the Company waive breach
of any provision of this agreement by the Employee, that waiver will
not operate or be construed as a waiver of further breach by the
Employee.
14. Assumption of Agreement by Company's Successor and Assignees. The
Company's rights and obligations under this agreement will inure to
the benefit and be binding upon the Company's successors and
assignees.
15. Oral Modification Not Binding. This instrument is the entire agreement
of the Company and the Employee. Oral changes shall have no effect. It
may be altered only by a written agreement signed by the party against
whom the enforcement of any waiver, change, modification, extension,
or discharge is sought.
16. Situs of This Agreement. The terms and conditions of this agreement
shall be interpreted under the laws of the state of New Mexico.
17. Automatic Renewal. This agreement shall automatically be renewed for a
period of three years provided that either party has not otherwise
elected to terminate this agreement as provided for herein.
Company Date
Employee Date
Witness Date
10.2
Option to Purchase Common Stock of
AMERICANA PUBLISHING, INC.
Agreement (hereinafter referred to as "Option Agreement") made January 1st, 1999
between (Director) of (city) (state) (herein after referred to as "Purchaser")
and AMERICANA PUBLISHING, INC. (hereinafter referred to as "Seller") a Colorado
Corporation.
Whereas, Purchaser desires to purchase certain unissued but authorized common
stock of Seller.
Whereas, it is agreed Seller is duly authorized to issue new common stock and
will issue common stock to accommodate the purchase by the Purchaser under this
Option Agreement.
Whereas, the Seller and Purchaser have agreed upon all the terms and conditions
of this Option Agreement and execution and delivery of this Option Agreement has
been duly authorized by the Board of Directors of the Seller.
Whereas the Purchaser is granted an option by the Seller to purchase common
stock of the Seller.
Now, therefore, in consideration of the foregoing, and the mutual covenants
contained herein, and for consideration for this Option Agreement of two hundred
and fifty dollars to paid by Purchaser to Seller at execution of this Option
Agreement, the purchase of common stock pursuant to the exercise of this Option
Agreement shall be as follows:
<PAGE>
1. The Seller agrees to sell shares of common stock to the Purchaser at
anytime and in any denomination up to 300,000 shares in total, whereby the
Purchaser may purchase all or part of the total shares, however.
2. The Purchaser may purchase common stock of the Seller for a purchase Price
of ten cents (.10 cents) per share on or before December 31st, 1999.
3. The Purchaser may purchase common stock of the Seller for a purchase price
of twenty cents (.20 cents) per share on or before December 31st, 2000.
4. The Purchaser may purchase common stock of the Seller for a purchase price
of thirty cents (.30 cents) per share on or before December 31st, 2001.
5. Time For Payment For Common Stock. The stock option price of the shares to
be purchased pursuant to the exercise of the option hereinbefore granted
shall be paid in full at the time of the excise of the option at the stated
price per share for that time period as set forth herein.
6. Time Of Exercise Of This Option. The option hereinbefore granted may be
exercised by the Purchaser in whole or in part on or before three years
from the date of this Option Agreement but not to exceed December 31st,
2001.
7. Method of Exercising Option. At least five (5) days prior to the date upon
which the option hereinbefore granted is to be exercised, the Purchaser
shall deliver to the Seller written notice of its election to exercise the
option, which notice shall specify the date, place, time, amount of common
stock and purchase price for the exercise of the option in respect of which
the option is to be exercised.
The written notice shall be sent by U.S. mail addressed to the Seller at
the following address:
Americana Publishing, Inc.
303 San Mateo NE, Suite 104A
Albuquerque, NM 87108
Attn: Chairman of the Board
8. Payment And Delivery Of Shares. The Purchaser shall at the date and time
specified in such notice, deliver a cashiers check or certified funds to
the Seller in the amount of the cash price for such purchase and Seller
shall deliver to the Purchaser a certificate of common stock of the Seller,
duly endorsed and properly issued to Purchaser in the correct number of
shares as represented by the funds and notice received by the Seller.
9. In the event of any of the following condition the Company will issue an
additional 300,000 shares of common stock to the Purchaser for compensation
of $1.00.
a) The sale of substantially all of the Company's assets to a single
purchaser or group of associated purchasers; or
b) The purchase of substantially all of the Company's issued and
outstanding stock in an effort to take the Company Private; or
c) The attempt by an individual or associated group of individuals
or corporation or entity to purchase stock in the Company for the
purposes of a hostile take over; or
d) The sale, exchange, or other disposition, in one transaction of
the majority of the Company's outstanding corporate shares; or
e) The Company's decision to terminate its business and liquidate
its assets; or
f) The merger or consolidation of the Company with another company
where by the directors of the Company as a whole are no longer
majority shareholders.
10. Sellers Representations And Warranties. The Seller is a corporation duly
organized under the state of Colorado and is organized as a publishing
enterprise.
a. Seller has no subsidiaries.
<PAGE>
b. All of the current issued and outstanding common stock of the Seller
is a total of 2,535,000 shares, but does not include the 300,000
shares in this Option Agreement or other Option Agreements or other
offerings.
c. The foregoing representations and warranties shall be true at the time
of the date of this Option Agreement.
11. Modifications. This Option Agreement shall become effective as of the date
hereof and unless sooner terminated, shall remain in full force and effect
until December 31st, 2001. No modifications or amendments of this Option
Agreement shall be effective unless such modification or amendment shall be
in writing and signed by the parties hereto.
12. Construction. This Option Agreement shall be deemed to be made under and
shall be construed in accordance with the laws of Colorado.
13. Binding and Benefit. This Option Agreement shall be binding upon and inure
to the benefit of the Purchaser, its successors and assigns.
14. Termination. This Option Agreement may be terminated by the Chairman of the
Board of the Seller, without cause by a 30 day written notice given to the
Purchaser via regular mail.
15. All Purchase Payment Retained By Seller. Consideration for this agreement
and all subsequent stock option payments shall be retained by Seller and
all stock purchases are considered fully paid and non-assessable. In
witness whereof, the parties of this Option Agreement have set their hands
and the corporate party has caused this Option Agreement to be executed
under its respective corporate seal.
Purchaser Date
Seller Date
Witness Date
10.3
CORPORATE FINANCE CONSULTING AGREEMENT
In consideration of the mutual promises herein contained, the project principals
Americana Publishing, Inc., hereinafter referred to as "Principals", located,
303 San Mateo NE, Suite 104A, Albuquerque, New Mexico 87108, hereby engage B. H.
Capital Limited, located at 303 San Mateo NE, Suite 104A, Albuquerque, NM 87108,
hereinafter referred to as "BHCL" to perform the services generally described
herein to the best of its ability, and Principals fully understand that such
services performed by "BHCL" will only be provided on a best efforts basis,
under the following terms and conditions:
1. This agreement will constitute an open account between Principals and
BHCL, and more specifically, references activities outlined below. The
term of this Agreement shall commence upon execution hereof by the
parties, and will continue to be in force until such time as
Principals notify BHCL, in writing, at the last known address for
BHCL. Such written notification to BHCL shall be tendered at least 120
days prior to the expected termination date of this Agreement. BHCL
shall have the right to terminate this Agreement upon written
notification to Principals, at the last known address for Principals.
Such written notification to Principals shall be tendered at least 10
days prior to the expected termination date of this Agreement.
2. Upon execution of this Agreement, Principals agree to pay the sum of
$1,000 as an initial retainer for professional time provided plus New
Mexico Gross Receipts Tax, plus $1,000 as an initial expense advance
(in the form of a cashiers check or other acceptable liquid funds),
for services provided by BHCL. It is agreed that the principals have
retained BHCL for the services described in paragraph 4-A and shall
compensate BHCL $3,000 per month for three years due and payable on
the 1st of each month thereafter until cancellation plus pre-approved
out of pocket expenses. Further, the Principal shall provide 1 1/2page
of advertising for BHCL, as BHCL chooses in each issue of the
Americana Corporate Finance Reporter for the term of this agreement.
BHCL shall provide such services without limitation of time necessary.
3. It is fully understood and agreed that in the event Principals do not
utilize or implement such services as outlined below, the
consideration heretofore paid shall be retained by BHCL and Principals
shall have no right or claim for return of said funds.
4. For and in consideration of services rendered by BHCL, on behalf of
Principals, BHCL shall be compensated by Principals as follows:
<PAGE>
A. BHCL shall provide general assistance in the identification of
additional credit/capital resources that may provide asset-based
lines of credit, operating lines of credit, working capital line
of credit, factor financing, fixed asset financing, acquisition
financing, equipment leasing, credit enhancements, private equity
capital, public equity capital, additional support collateral,
bridge financing, where applicable and will consult general
management efficiency issues, marketing, corporate strategy,
budgeting, financial statement presentation, corporate structure,
fiscal management techniques, dispute resolution, mergers and
acquisitions and shall advise the board of directors on corporate
governance, and shall provide office space accommodating two
desks, computer equipment, one support employee and use of all of
BHCL's office equipment and facilities.
Additional Compensation as follows:
1. Principals will compensate BHCL in an amount equal to one
percent (1%) simultaneous with closing, of the gross amount
of any credit facility(s), line(s) of credit, equity,
refinanced, restructured capital or credit, credit
enhancement in any form into the Principals company and or
subsidiary and will compensate a one percent (1%) success
fee equal to the gross amount of the net worth of any entity
merged or acquired by or into the Principals company and a
one percent (1%) success fee upon renewal of any of the
aforementioned within a five (5) year period from the date
of this contract. Principals further agree that BHCL has the
right to exchange success fees for additional common stock
of the Principals Company. Further, Principal agrees to
provide for an one full page advertisement in each issue of
Americana Corporate Finance Reporter of BHCL's choice for
the term of this agreement.
B. In the event additional services are provided in the future,
as specified under paragraph 4(A) above, fees shall be paid at
the rate so indicated in paragraph 4(A) above.
C. Any and all expenses paid by BHCL in its efforts to perform on
behalf of Principals shall be reimbursed immediately upon receipt
of copies of expense receipts by Principals. Any and all
anticipated individual expenses, which exceed the sum of $100.00,
shall be submitted to and approved by Principals before such
expense is incurred. Further, Principals agree to pay all
expenses as per invoice presented and is due and payable on
receipt.
D. At such time as BHCL is successful in obtaining funding,
pledges, guarantees or services as generally described in
paragraph 4(A) above, BHCL shall submit to Principals a statement
for services rendered, plus applicable New Mexico gross receipts
tax.
<PAGE>
E. All amounts billed by BHCL in accordance with paragraphs 4(A)
through 4(D) herein, are to be paid upon receipt but unpaid after
15 days of mailing, will incur a monthly service fee of one and
one half percent (1 1/2%). BHCL will further suspend professional
services until such fees are received.
5. Principals will provide to BHCL, as requested by BHCL, any and all
materials, reports, documents, studies and/or information necessary
for BHCL to perform under the terms of this Agreement.
6. Principals shall provide and contract for the services of other
professionals, as necessary.
7. In the event termination of this Agreement occurs prior to the funding
or performance, as outlined or pledged, directly or indirectly, for
Principals, through the efforts of BHCL the fees, as stated in
paragraph 4(A) above, shall be tendered to BHCL as if this Agreement
was still in force and effect. BHCL shall also have the right to
collect such other fees as described herein.
8. In the event of termination of this Agreement, Principals agree to pay
to BHCL any and all fees due to BHCL, plus applicable New Mexico gross
receipts tax, resulting from pledges or performance under this
Agreement, directly or indirectly, for Principals, from individuals or
entities that have been engaged through contact with BHCL during the
term of this Agreement.
9. Principals fully understand that George Lovato, Jr. may be engaged,
under separate Agreement, with companies or other entities that he has
an interest in, to provide services on behalf of BHCL relating to this
Agreement as described herein.
10. It is fully understood and agreed that on occasion Principals will
require consultation time from BHCL during the term of this Agreement.
BHCL will be notified that Principals desire such consultations and a
date and time for meeting will be scheduled in accordance with the
availability of the parties. Travel time will be billed at $150.00 per
hour with advanced approval by Principals or their authorized
representatives. This shall apply only upon agreement to compensate
BHCL on an hourly basis and not on a monthly retainer.
11. It is fully understood and agreed by Principals that Principals will
not circumvent the efforts of BHCL under any and all provisions of
this Agreement. Also Principals recognize that all sources, contacts,
vendors, suppliers, securities underwriters, lenders, dealers are
considered as property of BHCL and, as such, Principals will not
disclose, to any third party, information relating to these sources
for a period of not less than 60 months from completion of this
project.
<PAGE>
12. There shall be a continuing relationship, which extends beyond the
provisions outlined in paragraph 1. Principals agree that for a period
of 60 months commencing upon completion of services under this initial
project, any additional services, funding, pledges or guarantees
provided through individuals or entities that have been provided to
Principals under this project, fees shall be paid by Principals to
BHCL under provisions in paragraphs 2 and 4. -
13. In the event Principals and BHCL desire to change any or all terms of
this Agreement by addendum, such changes shall be made in writing and
executed by all parties.
14. This Agreement shall be binding upon and inure to the benefit of the
heirs, successors, and assigns of the parties hereto.
15. In the event an attorney is engaged by BHCL to enforce any or all of
its rights under the terms of this Agreement, Principals agree to pay
any and all reasonable attorney's fees, as well as any and all
applicable court costs and expenses incurred by BHCL in enforcing any
or all of its rights herein. Expenses shall include the time
involvement, at $150.00 per hour, by BHCL and/or its principals,
agents and/or employees in preparation of such litigation or mediation
of this Agreement.
16. Principals agree to hold harmless BHCL and/or its employees or
contractors from any wrongful act or acts known or unknown at this
time or that may arise during the course of this Agreement between the
signatories or their assigns or successors.
17. If any provision contained in this Agreement shall not be in
compliance with the laws of the State of New Mexico, the remaining
provisions shall remain in full force and effect to the extent
permitted by law.
18. This Agreement shall be governed and interpreted by the laws of the
State of New Mexico.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this _______
day of _____________, 1999.
By By
---------------------------- -------------------------------
Representative
10.4
Blomstrom & Co., P. C.
Certified Public Accountants
8323 Southwest Freeway, Suite 650
Houston, Texas 77074
(800) 235-0517
(713) 771-4385
Fax (713) 771-5553
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement for the purpose of
issuing 465,000 number of Common Shares on Form 10 of our report dated March 10,
1999, on our audit of the financial statements of Americana Publishing, Inc. We
also consent to the reference to our firm under the caption "Experts" and
"Selected Financial Data".
Houston, Texas
April 9, 1999
The CPA - Never Underestimate the Value
Nobody Sees Beyond the Numbers Like a CPA
<PAGE>
PART F/S
INDEX TO FINANCIAL STATEMENTS:
Exhibit Page
Independent Auditors Report F1
Balance Sheet - December 31, 1997 F2
December 31, 1998
March 31, 1999
Statement of Operations for the Period Ended - F3
December 31, 1997
December 31, 1998
March 31, 1999
Statement of Changes in Stockholders Equity F4
For Period Ended - December 31, 1997
December 31, 1998
March 31, 1999
Statement of Cash Flows for the Period Ended - F5
December 31, 1997
December 31, 1998
March 31, 1999
Notes to Financial Statements F6
<PAGE>
Blomstrom & Co., P. C.
Certified Public Accountants
8323 Southwest Freeway, Suite 650
Houston, Texas 77074
(800) 235-0517
(713) 771-4385
Fax (713) 771-5553
Independent Auditor's Report
To the Board of Directors
Americana Publishing, Inc.
(A Development Stage Company)
Albuquerque, New Mexico
We have audited the accompanying balance shed of Americana Publishing, Inc. as
of December 31, 1999 and 1997, and the related statements of income (loss),
changes in stockholders' equity and cash flows for the one year period ended
December 31, 1998 and the period April 17, 1997 (inception) through December 31,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of -Americana Publishing, Inc. as
of December 31, 1998 and, 1997 and the -remits --of -its operations and cash
flows for the periods then ended in conformity with generally accepted
accounting principles.
Houston, TX
March 10, 1999
The CPA - Never Underestimate the Value
Nobody Sees Beyond the Numbers Like a CPA
F1
<PAGE>
<TABLE>
<CAPTION>
Americana Publishing, Inc.
(A Development Stage Company)
Balance Sheet
December 31,
ASSETS March 31, 1999
1998 1997 Unaudited
---- ---- ---------
Current Assets
<S> <C> <C> <C>
Cash $ 667 $ 2,159 $ 201,431
Property and Equipment
Database and Circulation List 18,411 18,411
Computer Equipment 14,629 18,777
Furniture and Fixtures 3,944 11,102
Web Site Development and Name - Americanna Books 4,554
Less: Accumulated depreciation and amortization (7,396) (10,029)
--------- --------- ---------
Total Property and Equipment 29,588 -- 42,815
--------- --------- ---------
TOTAL ASSETS $ 30,255 $ 2,159 $ 244,246
========= ========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Deferred Federal Income Taxes $ 2,589 $ 3,510
Accounts Payable to Related Party $ 22,163
--------- --------- ---------
Total Liabilities, All Current 2,589 22,163 3,510
Stockholder's Equity
Preferred Stock 20,000,000 Shares
No Par Value, Authorized, None Issued
Common Stock 100,000,000 Shares Authorized
$.001 Par Value, 2,535,000, 1,270,000 & 3,000,000
Issued and Outstanding for 1998, 1997 & 1999 Respectively $ 2,535 $ 1,270 $ 3,000
Paid-In Capital 68,774 5,952 329,976
Deficit Accumulated During the Development Stage (43,643) (27,226) (92,240)
--------- --------- ---------
27,666 $ (20,004) $ 240,736
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 30,255 $ 2,159 $ 244,246
========= ========= =========
See Accompanying Notes and Auditor's Report
F2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Americana Publishing, Inc.
(A Development Stage Company)
Statement of Income (Loss)
For the Periods
Inception Three Months Ended
Year Ended April 17, 1997 to March 31, 1999
December 31, 1998 December 31,1997 (Unaudited)
----------------- ---------------- -----------
Revenues
<S> <C> <C> <C>
Publishing Fees $ 9,074 $ 4,745 $ 9,323
Expenses
Compensation Expense-Stock Options -- -- 29,167
Outside Consulting Services 2,359 11,521 --
Printing 3,622 11,460 400
Postage & Freight 6,214 2,166 6,745
Depreciation 7,396 -- 2,633
Management Fees -- -- 9,000
Professional Fees -- -- 7,224
Other Operating Expenses 3,311 6,824 1,830
-------- -------- --------
Total Expenses 22,902 31,971 56,999
Income (Loss) Before Income Taxes (13,828) (27,226) (47,676)
Provision for Income Taxes (2,589) (921)
-------- -------- --------
Deficit Accumulated During the Development Stage $(16,417) $(27,226) $(48,597)
======== ======== ========
Basic and Diluted Loss Per Share $ (0.006) $ (0.027) $ (0.016)
======== ======== ========
See Accompanying Notes and Auditor's Report
F3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Americana Publishing, Inc.
(A Development Stage Company)
Statement of Changes in Stockholder's Equity
For the Period April 17,1997 (inception)
Through March 31, 1999
Deficit Accumulated
Common Paid-In During the
Stock Capital Development Stage Total
----- ------- ----------------- -----
<S> <C> <C> <C> <C>
Stock Issued on May 1, 1997
1,000,000 Shares to Majority
Stockholder in Exchange for
$7,222 in Cash and Publishing
and Internet Distribution Expertise $ 1,000 $ 6,222 $ 7,222
Stock Issued on May 1, 1997
270,000 Shares to Others in
Exchange for Services Rendered 270 (270) --
Deficit Accumulated During the
Period April 17, 1997 (inception)
through December 31, 1997 $ (27,226) (27,226)
--------- --------- --------- ---------
Balance December 31, 1997 $ 1,270 $ 5,952 $ (27,226) $ (20,004)
========= ========= ========= =========
Stock Issued on December 15, 1998
1,000,000 Shares to Majority
Stockholder in Exchange for $4,940
in Cash, Forgiveness of Accounts
Payable Debt of $22,163 and
Contribution of Property and
Equipment of $36,984 1,000 63,087 64,087
Stock Issued on December 15, 1998
265,000 Shares to Others in Exchange
for Services Rendered 265 (265) --
Deficit Accumulated During the
Year Ended December 31, 1998 (16,417) (16,417)
--------- --------- --------- ---------
Balance December 31, 1998 $ 2,535 $ 68,774 $ (43,643) $ 27,666
========= ========= ========= =========
Stock Issued During February and March
1999 Through a Private Offering
Memorandum 465,000 Shares (Unaudited) 465 232,035 232,500
Deficit Accumulated During the Three
Months Ended March 31, 1999
(Unaudited) (48,597) (48,597)
Stock Options 29,167 29,167
--------- --------- --------- ---------
Balance March 31, 1999 (Unaudited) $ 3,000 $ 329,976 $ (92,240) $ 240,736
========= ========= ========= =========
See Accompanying Notes and Auditor's Report
F4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Americana Publishing, Inc.
(A Development Stage Company)
Statement of Cash Flows
Inception Three Months Ended
Increase (Decrease) in Cash and Cash Equivalents Year Ended April 17, 1997 to March 31, 1999
December 31, 1998 December 31, 1997 (Unaudited)
----------------- ----------------- -----------
Cash Flows From Operating Activities:
<S> <C> <C> <C>
Deficit Accumulated During the Development Stage $ (16,417) $ (27,226) $ (48,597)
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided by Operating Activities:
Depreciation 7,396 2,633
Stock Options 29,167
Increase in Accounts Payable 22,163
Increase in Income Taxes Payable 2,589 921
--------- --------- ---------
Total Adjustments 9,985 22,163 32,721
Net Cash Used by Operating Activities (6,432) (5,063) (15,876)
Cash Flows From Financing Activities:
Proceeds From Sale of Common Stock 4,940 7,222 232,500
--------- --------- ---------
Net Cash Provided by Financing Activities 4,940 7,222 232,500
Cash Flows From Investing Activities
Purchase of Property and Equipment -- -- (15,860)
--------- --------- ---------
Net Cash Used in Investing Activities -- -- (15,860)
Net Increase (Decrease) in Cash (1,492) 2,159 200,764
Cash and Cash Equivalents at Beginning of Period 2,159 -- 667
--------- --------- ---------
Cash and Cash Equivalents at End of Period $ 667 $ 2,159 $ 201,431
========= ========= =========
Supplemental Disclosures:
Interest Paid -0- -0- -0-
Taxes Paid -0- -0- -0-
Non-Cash Transaction
Contribution of property and equipment in exchange
for common stock $ 36,984
Forgiveness of accounts payable in exchange for
common stock 22,163
See Accompanying Notes and Auditor's Report
F5
</TABLE>
<PAGE>
Americana Publishing, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
(Information pertaining to the three months ended March 31, 1999 is unaudited)
Note 1: Summary of Significant Accounting Policies
Background and Nature of Operations
Americana Publishing, Inc. (the Company) was organized as a Colorado corporation
on April 17, 1997 for the purpose of publishing books, audio books and
periodicals, and to utilize the internet as its primary distribution channel to
prospective customers. Additionally the Company will utilize the latest
technology to download audio files directly to customers who desire to purchase
books and music and other audio materials immediately.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less to
be cash equivalents.
Property and Equipment
Property and equipment were contributed to the Company by the Company's chairman
and majority stockholder in exchange for common stock. Property and equipment is
carried at the contributors cost basis. Depreciation of property and equipment
is provided using the straight-line method for financial reporting purposes at
rates bases on their estimated useful lives.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the basis of property and equipment for
financial and income tax reporting. The deferred tax assets and liabilities
represent the future tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities are recovered or
settled. Deferred taxes are also recognized for operating losses that are
available to offset future federal income taxes.
F6
<PAGE>
Americana Publishing, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
(Information pertaining to the three months ended March 31, 1999 is unaudited)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Interim Financial data
Financial data for the three months ended March 31, 1999 is unaudited, however
in the opinion of management, the interim data includes all adjustments
consisting only of normal recurring adjustments, necessary for a fair statement
of the results of the interim period.
Note 2: Liquidity
The Company currently has insufficient revenue to meet forecasted operating
expenses for the next year. The Company's profitability and continued operation
are dependent upon significant assumptions, some of which are the ability of the
Company to acquire publishing companies and market products on a profitable
basis. There is no assurance that profitable operations will be achieved.
Subsequent to year end, the Company did raise approximately $232,500 (refer to
note 6) to fund operations until profitable operations can be achieved.
Note 3: Related Party Transactions
During the period April 17, 1997 (inception) through December 31, 1998, a
related party, B.H. Capital Limited (BHCL) which is a dba of a proprietorship of
the Company's chairman and majority stockholder, provided management, office
space, use of equipment and personnel to the Company. Also refer to Note 1,
Property and Equipment regarding the contribution of property and equipment in
exchange for common stock.
F7
<PAGE>
Americana Publishing, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
(Information pertaining to the three months ended March 31, 1999 is unaudited)
Note 4: Stock Purchase Options
On January 1, 1999, the Company granted to eight individuals, five of whom are
directors, options to purchase a total of 1,750,000 shares of common stock for a
purchase option cost of $250 per individual. The purchase price is $.10 per
share if exercised on or before December 31, 1999, $.20 per share if exercised
on or before December 31, 2000 and, $.30 per share if exercised on or before
December 31, 2001. The Company applies APB Opinion 25 and related
interpretations in accounting for its stock option plan. As a result of their
plan, although no stock options were exercised, the Company recognized $29,167
of compensation expense for the three month period ended March 31, 1999. Had
compensation cost for the Company's purchase option plan been determined based
on the fair value at the grant date for such options consistent with the method
of Financial Accounting Standards Board 123 (FAS123), the Company's net loss for
the three months ended March 31, 1999 would have increased by approximately
$9,000. The effects of applying FAS 123 in this pro forma disclosure are not
indicative of future amounts. The fair value of each option grant is estimated
on the date of grant using a present value calculation, risk free interest of
4.6%, no dividends and expected life of 3 years. Stock options available for
future grant amounted to 1,750,000 shares at March 31, 1999. Exercisable stock
options amounted to 1,750,000 shares at March 31, 1999.
Note 5: Income Taxes
Net deferred income tax liability consists of the following at December 31,
1998 1997 March 31, 1999
----- ---- --------------
Deferred tax asset
Net operating loss carryforward $ 4,839 $9,529 $ 16,684
Less: valuation allowance (4,839) (9,529) (16,684)
-------- ------ --------
Net $ -0- $ -0- -0-
Deferred tax liability
Depreciation and amortization $ (2,589) -0- $ (921)
-------- ------ --------
Deferred tax liability, net $ (2,589) -0- $ (921)
F8
<PAGE>
Americana Publishing, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
(Information pertaining to the three months ended March 31, 1999 is unaudited)
Note 6: Subsequent Events
Financial Consulting Agreement
On January 1, 1999, the Company entered into a non-cancelable Corporate
Financial Consulting Agreement with BHCL, a related party. The agreement calls
for the Company to pay BHCL a monthly fee of $3,000 for a period of five years
in consideration for BHCL providing general assistance in identifying
credit/capital resources as well as providing office, personnel and facilities
to the Company. In addition, the agreement calls for the Company to pay BHCL a
1% success fee for any gross amount of financing or net worth of any entity
merged or acquired on behalf of the Company by BHCL and a 1% renewal fee of the
amount of such financial arrangements for a period of five years. Management
believes that the monthly fee approximates the value of these services had the
Company obtained these services from an unaffiliated party. In addition, for the
Year ended December 31, 1998 and for the periods April 17, 1997 (inception)
through December 31, 1997, management estimates that the value of services and
facilities provided at no cost were $36,000 and $25,500 respectively.
Employment Agreement
On January 1, 1999, the Company entered into an employment agreement with its
chairman and majority stockholder. Under the terms of the one year agreement,
which shall be automatically be renewed for a period of three years provided
that either party has not elected to terminate the agreement as provided for
therein, the employee shall receive a salary of $250,000 per year or 5% of gross
revenue of the Company, whichever is greater. The Company may not terminate the
agreement for any reason as it relates to the employee's disability, illness or
incapacity. Should the employee die during the term of employment, the Company
shall pay the employee's estate $500,000 in fifty monthly installments of
$10,000. Subject to certain events, including the sale of substantially all of
the Company's assets to a single purchaser and bankruptcy, among others, the
Company may terminate the agreement upon 90 days written notice and pay the
employee $500,000 in twelve consecutive monthly installments. With cause, the
Company may terminate the agreement with twelve months written notice. During
the notice period, the employee shall be paid full compensation and, receive a
severance allowance of $250,000 in twelve consecutive monthly installments
beginning on the date of termination. Without cause, the employee may terminate
employment upon twelve months written notice to the Company.
F9
<PAGE>
Americana Publishing, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
(Information pertaining to the three months ended March 31, 1999 is unaudited)
Employment Agreement (continued)
Employee may be required to perform his duties and will be paid the full
compensation described herein up to the termination date and shall receive a
severance allowance of $250,000 which shall be made in twelve equal and
consecutive monthly installments beginning on the date of termination.
Private Offering Memorandum
On February 10, 1999, the Company issued a Confidential Private Offering
Memorandum pursuant to Rule 504 of Regulation D of the Securities Act of 1933,
as amended, for 465,000 shares of $.001 par value common stock at $.50 per
share. The offering was totally subscribed in the total amount of $232,500. As
of March 10, 1999, $226,250 had been received.
Note 7: Other Matters
Management's Estimate of Value
The balance sheet presents property and equipment at the contributor's cost.
Management believes that certain assets have a significantly higher fair market
value than reflected on the financial statements. Management's estimate of such
value is set forth below.
Database and Circulation List $175,000
Computers and audio Equipment 21,500
Publication Library 6,000
Land 25,000
--------
$227,500
These estimates reflect management's judgment as to the fair market value of
certain assets as of December 31, 1998. Management's determination of the fair
value for the data base and circulation list was based on the estimated cost of
contractors and outside parties to compile such information. The computers and
audio equipment, and publication library was based on their approximate
replacement cost.
F10
<PAGE>
Americana Publishing, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
(Information pertaining to the three months ended March 31, 1999 is unaudited)
Management's Estimate of Value (continued)
The value of the land was based on the appraised value as set by a real estate
estate professional. There will usually be differences between the estimated
market value and the market value ultimately realized, and the differences may
be material.
Year 2000 Issues
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 date can be interpreted in a number of different ways;
typically the year 2000 is represented as 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 which 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 these 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 party internet providers to
conduct its basic operations. Should any third party with which the Company has
a material relationship fail, the impact could be a significant challenge to the
Company's ability to perform its basis operations. An example of such a
challenge would be the inability of customers to access its web site. 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.
F11
Form of Stock Certificate
Number Shares
This Certifies that _________________________ is the registered holder of
_________________Shares
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this _____________ day of __________________AD.
Seal
