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Friday, February 22, 2013

Stop the presses! Big News Scoop!!

For those of you that didn't attend the Shareholder's Meeting, or read the past two OTC filings dating back to January 25, here's a news scoop:  The Hannover House - Bedrock matter was settled, fully documented and executed weeks ago.  I bring this up because some are trying to create confusion about a subsequent court ruling three weeks after the settlement.

There are some people out there (at least one, with multiple alias names) that like to pretend that Hannover House is not a real company, or that there is not an audit in process, or that in general the sky is always falling for this-or-that daily operational reason.  A couple of gleeful posts on internet chat boards yesterday hope that readers will disregard the Jan. 25th Bedrock settlement, and instead focus on the subsequent court ruling last week.  Yes, the judge finally ruled in the matter of dismissing the default judgment, originally slated for Dec. 17, but not ruled on until Feb. 14.   Not that last week's ruling is relevant or legally applicable anymore (because of the settlement with Bedrock), but for what it's worth, the judge ruled against Hannover's motion to set-aside the judgment. 

So everyone "Stop the presses!"  Big news:  Hannover clearly made the right decision in settling the case!

For the rest of us with logical, cognitive thought processes, let me share with you some of the key points of the rationale' behind the Jan. 25 settlement.  HHSE attorneys (Parker and Hankin) provided a cost estimate of how much it would take to "continue" fighting the case if the judge ruled in Hannover's favor, and thus agreed to set aside the default (and "start" the lengthy litigation process).  With significant funding ventures in motion for "Mother Goose" and other corporate activities, the idea of trying to operate under the shadow of the uncertainty of this case appeared detrimental to the company's progress.  With bigger titles in the pipeline, Hannover is now facing opportunities to consumate stronger distribution partnerships.  Having a big, ugly lawsuit lingering on-and-on could have jeopardized these activities.   Conversely,  the company could have spent hundreds-of-thousands of dollars in costly Federal Court litigation, and still risk the possibility of ultimately losing the case. So we settled with Bedrock.  The terms of the settlement were found to be mutually beneficial, and these will be disclosed to the required levels in the Company's year-end filings.

The structure of the settlement (and term pay out) reduces the obligation to a manageable, monthly line-item, and not some big, scary beast of a material threat. 

Would we have preferred that no litigation had ever occured and that no payments were ever to be made to Bedrock?  Of course.  But that didn't happen, so we managed the circumstances in the manner that we felt was in the best interests of the company and our shareholders.  We believe we achieved the best possible outcome.

Will we ever do another financing deal that's structured like the Bedrock venture was?  Hell no!  But we will live and learn, and survive to fight another day.  The company is making money every month from our direct-to-video titles, and taking conservative (non-recourse financing) steps to move into an exciting arena of higher-profile titles.  Our core business is solid enough that we can navigate through issues that for non-revenue producing entities, would be challenging.  The Hannover House corporate goals for 2013 and 2014 include smarter deal making, and a conservative control on financing resources.  Under this mandate, the debt load that has impeded our growth these past two years can become a historic footnote as we grow the company into a bright and sunny new chapter.