Happy Holidays to our HHSE Friends & Followers - We hope that the season is bringing you the joy that you deserve!
Here's a couple of quick updates for this very quiet Tuesday, Dec. 29:
1). SATISFACTION FILINGS - On the blog of Dec. 23, item 3 mentioned that two major judgment matters had been resolved and that the blog site would be posting an update. Later during that day (on the 23rd) our attorney's told us that the presiding judge was on a holiday break until this Wednesday (tomorrow). As soon as these two orders are signed and filed, we will post the details to this site. It's terrific news for HHSE shareholders.
2). GREETINGS FROM L.A. - OOOPS! - This HHSE Blog Site is so popular with some traders that someone tried to hack into it yesterday from Los Angeles at 1:34 pm Pacific Time. Not to worry, Google Security identified the device used and even back-traced it down to the location! The two-step security log-in protocol stopped this individual from getting into this blog and posting something absurd. Someone apparently got a lump of coal in their Christmas stocking instead of the Lowe's Gift Card they were hoping for?
3). Q4 CLOSING ON THURSDAY - HHSE Staffers are taking advantage of this quiet, holiday week, by assisting with the expeditious completion of the Q4 results for our auditors. Moving quickly for our January filing activities.
Have a great week, and a Happy New Year!
Welcome
Welcome to the Hannover House Investor Relations Blog
Tuesday, December 29, 2015
Wednesday, December 23, 2015
HHSE is Honored to add Industry Veteran ERIC DOCTOROW to Board of Directors
The Board of Directors of Hannover House, Inc., (OTC: HHSE), has voted to add entertainment industry veteran ERIC DOCTOROW to its elite membership, effective January, 2016. Mr. Doctorow brings more than 30-years of industry expertise to Hannover House, including senior executive positions at PARAMOUNT, MGM, 20th CENTURY FOX and MIRAMAX. Hannover House feels that Mr. Doctorow's extensive experience, insights, relationships and skills will add tremendous value to Hannover House in both the core operations, as well as in the aspect of investor support. Mr. Doctorow will continue to operate his entertainment venture, Random Media, as well as advise other high-level entertainment companies - some of which could be strategically aligned with current and future Hannover House goals.
Eric Doctorow is a highly-respected
media executive who was President of
Paramount Pictures’ Worldwide Home Entertainment division for ten years where
he was responsible for managing a $2.5 billion division that employed over 500
employees around the world. His responsibilities included marketing, sales,
manufacturing, film acquisitions, finance and business/legal affairs for the
division. Mr. Doctorow’s responsibilities also included overseeing the
distribution of other Home Entertainment franchises including MTV, Nickelodeon
and CBS properties. While at Paramount
Mr. Doctorow established many marketing and distribution strategies now
standard in the industry, led the company’s entry into the DVD market and was
responsible for distributing, Titanic, the most successful domestic home video
release of all time. For ten years prior
to this Mr. Doctorow held various other Home Entertainment positions at
Paramount, including President of its domestic operation. He served as a member of Paramount
Communications Senior Technology Advisory Group.
After an extremely successful career
managing a large corporate enterprise, in 2006 Mr. Doctorow was chosen to lead
MGM’s new worldwide home entertainment business. As General Manager, MGM
Worldwide Mr. Doctorow managed MGM's unique “company within a company” joint
venture with Twentieth Century Fox Home Entertainment for five years. He was a
key executive in helping to introduce the Blu-ray format as well as re-building
the MGM brand with key retailers worldwide. While at MGM, Mr. Doctorow
pioneered a long tail content distribution model now used throughout the
industry. This model allowed MGM to
create more value for its vast library than previously thought possible.
Furthering his entrepreneurial passion
Mr. Doctorow joined Miramax in 2011. At Miramax he was part of a new executive
team assembled to re-introduce the company into the marketplace after the
company was purchased from The Walt Disney Company by an investor group. As Executive Vice President, Mr. Doctorow
helped establish Miramax’s reputation as an important digital player when it
entered into leading-edge content deals with Netflix, Hulu, Facebook and other
platforms.
In 2013 Mr. Doctorow founded Random
Media. As CEO, Mr. Doctorow brought together a management team consisting of
some of the industry’s most experienced executives. The company acquires and
distributes films and other content on a worldwide basis through movie
theatres, conventional retailers, digital platforms, cable companies and
television networks.
Mr. Doctorow also served as Chief
Operating Officer of THQ, Inc. and Chief Operating Officer of Ventura
Entertainment.
Mr. Doctorow is
a past board member of the Video Software Dealer Association, the National
Association of Record Merchandisers, and a founding member of The Digital
Entertainment Group. He is a past
inductee into the video industry’s Hall of Fame. He currently serves on various
media company boards.
Mr. Doctorow holds an MBA and BA from
UCLA.
Wed., Dec. 23, 2015 - Interesting Updates from HHSE
Greetings HHSE Friends & Followers. Here are a few quick updates on Company projects and issue status before most of us break for a few days of holiday time-off!
1). FILM JOURNAL - Listed below is the link to the digital issue of FILM JOURNAL - the premiere publication for the Theatrical Exhibition industry. Hannover House has a generic "2016" ad on page 45. Just FYI.
http://www.rawdesigngraphics.com/FJI_01_2016_Combined.pdf
2). www.WND.com - Hannover House has entered into a marketing & promotions agreement with WorldNetDaily (www.WND.com) for the release of "UNION BOUND" - opening nationwide in theatres on Feb. 12, 2016. WND will be doing zip-code specific email blasts to their millions of readers, to promote attendance at the specific theatre locations carrying the film. WND will also be releasing the book edition, "UNION BOUND" on May 2, 2016, and is predicting another New York Times Best-Seller status for the release (which would be their tenth in a row!). WND readers are philosophically attuned to the storyline of "UNION BOUND" - in that the movie contains pro-Biblical Worldviews. The film is also well suited for the massive audience of "Civil War" aficionados, as well as timed for Black History Month.
3). SATISFACTION OF JUDGMENT / COURT FILINGS - Watch this space for very interesting news later today, as HHSE Attorneys file motions for "Satisfaction of Judgment" related court filings in two major issues that have been of great concern to shareholders over the past few years.
4). NEW BOARD MEMBER ANNOUNCEMENT - A press release is being reviewed for publication soon (perhaps today or tomorrow?) covering a high-profile new member of the Hannover House Board of Directors.
5). "OVER THE EDGE" - Hannover House has contracted with Renegade Motion Pictures for the June (2016) production of "OVER THE EDGE" starring Kurt Russell. Many industry insiders have applauded Russell's star turn in Quentin Tarantino's new release, "The Hateful Eight" - which opens in theatres Dec. 25. HHSE plans to present "OVER THE EDGE" along with "THE SUMMONING", "DELIRIUM" and other major features at the 2016 Cannes Film Festival.
HAPPY HOLIDAYS!!!
1). FILM JOURNAL - Listed below is the link to the digital issue of FILM JOURNAL - the premiere publication for the Theatrical Exhibition industry. Hannover House has a generic "2016" ad on page 45. Just FYI.
http://www.rawdesigngraphics.com/FJI_01_2016_Combined.pdf
2). www.WND.com - Hannover House has entered into a marketing & promotions agreement with WorldNetDaily (www.WND.com) for the release of "UNION BOUND" - opening nationwide in theatres on Feb. 12, 2016. WND will be doing zip-code specific email blasts to their millions of readers, to promote attendance at the specific theatre locations carrying the film. WND will also be releasing the book edition, "UNION BOUND" on May 2, 2016, and is predicting another New York Times Best-Seller status for the release (which would be their tenth in a row!). WND readers are philosophically attuned to the storyline of "UNION BOUND" - in that the movie contains pro-Biblical Worldviews. The film is also well suited for the massive audience of "Civil War" aficionados, as well as timed for Black History Month.
3). SATISFACTION OF JUDGMENT / COURT FILINGS - Watch this space for very interesting news later today, as HHSE Attorneys file motions for "Satisfaction of Judgment" related court filings in two major issues that have been of great concern to shareholders over the past few years.
4). NEW BOARD MEMBER ANNOUNCEMENT - A press release is being reviewed for publication soon (perhaps today or tomorrow?) covering a high-profile new member of the Hannover House Board of Directors.
5). "OVER THE EDGE" - Hannover House has contracted with Renegade Motion Pictures for the June (2016) production of "OVER THE EDGE" starring Kurt Russell. Many industry insiders have applauded Russell's star turn in Quentin Tarantino's new release, "The Hateful Eight" - which opens in theatres Dec. 25. HHSE plans to present "OVER THE EDGE" along with "THE SUMMONING", "DELIRIUM" and other major features at the 2016 Cannes Film Festival.
HAPPY HOLIDAYS!!!
Thursday, December 10, 2015
Thursday, December 3, 2015
CBS 60-Minutes Feature on "BONOBOS" this Sunday!
Dear HHSE Friends & Followers - HHSE is proud and humbled to announce that CBS 60-Minutes will run a 13-minute feature story this weekend (from correspondent Anderson Cooper) on the plight of the BONOBOS and the LOLA YA BONOBO Sanctuary in the Congo. Footage from the HHSE film was provided for CBS to utilize in the program, and Claudine Andre' (the star of the HHSE feature film), mentioned the importance of the feature film in expanding awareness of this issue.
Here's a quick teaser for this Sunday's broadcast:
http://www.cbsnews.com/videos/preview-bonobos/
Hannover House has known about this coverage since last year when Anderson Cooper and his crew agreed to the story and visited the film's location site in the Congo. We have been patiently (and quietly) awaiting the broadcast of this story - as it will be a major help in expanding awareness of the Bonobos and of the HHSE feature film and upcoming home video release.
Watch it if you can!
Follow
Here's a quick teaser for this Sunday's broadcast:
http://www.cbsnews.com/videos/preview-bonobos/
Hannover House has known about this coverage since last year when Anderson Cooper and his crew agreed to the story and visited the film's location site in the Congo. We have been patiently (and quietly) awaiting the broadcast of this story - as it will be a major help in expanding awareness of the Bonobos and of the HHSE feature film and upcoming home video release.
Watch it if you can!
60 Minutes
CBS
60 Minutes has been on the air since 1968, beginning on a Tuesday, but spending most of its time on Sundays, where it remains today. This popular news magazine provides both hard hitting investigations, interviews and features, along with people in the news and current events.
60 Minutes has set unprecedented records in the Nielsen's ratings with a number 1 rating, five times, making it among the most successful t.v. programs in all of television history. This series has won more Emmy awards than any other news program and in 2003, Don Hewitt, the creator (back in 1968), was awarded the Lifetime Achievement Emmy, along with the 60 Minute correspondents. For the 2009 season, correspondents include Steve Kroft, Lesley Stahl, Bob Simon, Scott Pelley, Morley Safer, Katie Couric, Byron Pitts, Lara Logan, Charlie Rose, Anderson Cooper, and Andy Rooney. Added to the 11 Peabody awards, this phenomenally long-lived series has collected 78 awards up to the 2005 season and remains among the viewers top choice for news magazine features
60 Minutes has set unprecedented records in the Nielsen's ratings with a number 1 rating, five times, making it among the most successful t.v. programs in all of television history. This series has won more Emmy awards than any other news program and in 2003, Don Hewitt, the creator (back in 1968), was awarded the Lifetime Achievement Emmy, along with the 60 Minute correspondents. For the 2009 season, correspondents include Steve Kroft, Lesley Stahl, Bob Simon, Scott Pelley, Morley Safer, Katie Couric, Byron Pitts, Lara Logan, Charlie Rose, Anderson Cooper, and Andy Rooney. Added to the 11 Peabody awards, this phenomenally long-lived series has collected 78 awards up to the 2005 season and remains among the viewers top choice for news magazine features
Further Notes to Q3 Filing
Good morning HHSE friends and followers - It has been suggested that HHSE respond to some of the frequent and silly "criticisms" that the fake stock experts post onto some of the trader chat boards. We generally ignore such obvious drivel. However, one of our larger shareholder's today felt that we should clarify WHY the Q2 balance sheet - which was shown as a side-by-side comparison in the CURRENT filings - "appears" to have a math error.
It does not have a math error. It has a "missing footnote" error caused during the paste-up process from MacReport Media (and since fixed for the OTC markets filing). The footnote clarified why the total liabilities increased for Q2 but that the company was not retroactively restating earnings or shareholder equity... that the Q2 balance sheet was for side-by-side comparison only, and that the reader should refer to the CURRENT (Q3) period in evaluating the company's balance sheet.
Let's clarify below:
Check the OTC markets filing. The addition of $13,170 for accrued interest on "current / short term notes" was added to the CURRENT (09-30-2015) results. It was ALSO applied RETROACTIVELY to the previously filed 06-30-2015 numbers... BUT... the Shareholder's Equity was NOT reduced by $13,170. The 06-30-2015 numbers were provided for COMPARISON only, and could have easily been left off the filing. There was a footnote explaining the retroactive application of accrued interest on the short term notes... but in the paste-up by MacReport Media, that footnote got eliminated and no one noticed. In order to comply with OTC markets, we simply CHANGED the shareholders equity for the prior 06-30 quarter and refiled the document, without a footnote. The addition of "accrued interest" for current (short-term notes) was a recommendation from our new auditors.
It does not have a math error. It has a "missing footnote" error caused during the paste-up process from MacReport Media (and since fixed for the OTC markets filing). The footnote clarified why the total liabilities increased for Q2 but that the company was not retroactively restating earnings or shareholder equity... that the Q2 balance sheet was for side-by-side comparison only, and that the reader should refer to the CURRENT (Q3) period in evaluating the company's balance sheet.
Let's clarify below:
Check the OTC markets filing. The addition of $13,170 for accrued interest on "current / short term notes" was added to the CURRENT (09-30-2015) results. It was ALSO applied RETROACTIVELY to the previously filed 06-30-2015 numbers... BUT... the Shareholder's Equity was NOT reduced by $13,170. The 06-30-2015 numbers were provided for COMPARISON only, and could have easily been left off the filing. There was a footnote explaining the retroactive application of accrued interest on the short term notes... but in the paste-up by MacReport Media, that footnote got eliminated and no one noticed. In order to comply with OTC markets, we simply CHANGED the shareholders equity for the prior 06-30 quarter and refiled the document, without a footnote. The addition of "accrued interest" for current (short-term notes) was a recommendation from our new auditors.
Tuesday, December 1, 2015
"UNLIMITED" Feature from CMD and HHSE - Theatrical Release for Spring, 2016.
Good Morning HHSE Friends & Followers - The Company is proud to announce the Spring (2016) theatrical release of "UNLIMITED" - an inspiring drama of hope and redemption - and an honorable tribute as the last feature performance for the legendary actor (and former U.S. Senator) FRED THOMPSON. The film will be supported with targeted outreach to Churches and the Christian-Film marketplace through CMD (the production and distribution team behind more than ten prior Christian film hits).
http://unlimitedthemovie.com/
"UNLIMITED" is the third announced theatrical title from HHSE and Medallion Releasing for 2016 - out of an overall slate of twelve theatrical titles for next year. Stay tuned for more release announcements (and more title-specific news on "UNLIMITED", "UNION BOUND" and "ENCOUNTER").
http://unlimitedthemovie.com/
"UNLIMITED" is the third announced theatrical title from HHSE and Medallion Releasing for 2016 - out of an overall slate of twelve theatrical titles for next year. Stay tuned for more release announcements (and more title-specific news on "UNLIMITED", "UNION BOUND" and "ENCOUNTER").
Monday, November 30, 2015
Q3 Filing for S.E.C. Edgar - MacReportMedia
Good Morning - at the request of Shareholders, embedded below is the Q3 (2015) Form 10-Q report that was submitted over a week ago to MacReport Media for formatting and filing with the S.E.C. Edgar Database. Please note that some of the formatting below (especially on financial tables) may appear out of alignment due to limitations of this blogsite only accepting specific data types.
We will press MRM to get this filing published onto Edgar ASAP. Hopefully, with the holiday weekend finally at an end, all parties will be back to full staff and full speed.
* * * * *
We will press MRM to get this filing published onto Edgar ASAP. Hopefully, with the holiday weekend finally at an end, all parties will be back to full staff and full speed.
* * * * *
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-Q
_________________
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended: September 30, 2015
Hannover
House, Inc.
(Exact
name of registrant as specified in its charter)
_________________
Wyoming
|
000-28723
|
91-1906973
|
(State or Other Jurisdiction
|
(Commission
|
(I.R.S. Employer
|
of Incorporation or Organization)
|
File Number)
|
Identification No.)
|
1428 Chester
Street, Springdale, AR 72764
(Address of Principal Executive Offices) (Zip Code)
(Address of Principal Executive Offices) (Zip Code)
479-751-4500
(Registrant’s telephone number, including area code)
(Registrant’s telephone number, including area code)
f/k/a "Target Development Group,
Inc."
f/k/a "Mindset Interactive
Corp."
330 Clematis Street, Suite
217, West Palm Beach, Florida 33401 (561) 514-0936
(Former name or former address and former fiscal year, if changed since last report)
(Former name or former address and former fiscal year, if changed since last report)
_________________
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes o No þ
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files). Yes o No þ
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer o
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting company þ
|
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Act). Yes o No þ
APPLICABLE
ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by
a court. Yes o No þ
APPLICABLE
ONLY TO CORPORATE ISSUERS
Indicate the number
of shares outstanding of each of the issuer’s classes of common stock, as of
the latest practicable date.
The
Company’s stock is traded on the OTC “Pinksheets” Markets under the trading
symbol: HHSE. The Cusip number for the Company is: 410686 101. The following is
true and correct, per our transfer agent, as of and at the period ending on September
30, 2015:
- Total Common Stock Shares in issue as of September 30, 2015: 754,843,404*
- Above Shares Restricted from Sale: 103,860,595*TOTAL COMMON STOCK SHARES IN MARKET: 650,982,809*
- Series “A” Preferred Shares: 3,000,000
Shareholders of
Record: 2,018 (Standard Registrar count)
Total Beneficial
Shareholders: 344 (Broadridge, ICS count)
Total Authorized Common
Stock Shares: 800,000,000
Total Authorized
Series "A" Preferred Shares: 10,000,000
* Share count
includes 10-mm restricted stock shares issued as collateral to TCA Global
Master Fund, which are subject to return to treasury stock. Share count also includes the issuance by
Transfer Agent during the current reporting period of a block of approximately
9,854,147 common stock shares to Blackbridge Capital, which Company has
demonstrated to have been issued in error by the Transfer Agent, and which
occured without meritorious basis.
Company has engaged litigation counsel to pursue its rights and remedies
in recovering these shares or obtaining financial consideration.
The
Transfer Agent for the Company’s stock is:
Standard Registrar & Transfer Company,
Inc.
12528 South 1840 East
Draper, UT 84020
Tel. 801-571-8844 / Fax 801-571-2551
Page
2
PART I. FINANCIAL INFORMATION
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|||
ITEM
1.
|
FINANCIAL
STATEMENTS
|
||
5
|
|||
6
|
|||
7 - 8
|
|||
Shareholders’ Equity & Statement of Cash Flows / Sales Detail
|
9 – 11
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||
ITEM
2.
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MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
|
12
|
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
15
|
|
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
16
|
|
PART II. OTHER INFORMATION
|
|||
ITEM
1.
|
LEGAL
PROCEEDINGS
|
16
|
|
ITEM
1A.
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RISK
FACTORS
|
17
|
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
17
|
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
17
|
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
17
|
|
ITEM
5.
|
OTHER
INFORMATION
|
17 – 20
|
|
ITEM
6.
|
23
|
||
21 – 22
|
|||
Page
3
FORWARD-LOOKING
STATEMENTS
This
disclosure statement contains “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995. In some cases you can
identify forward-looking statements by terms such as “may”, “intend”, “will”,
“could”, “would”, “expects”, “believe”, “estimate”, or the negative of these
terms, and similar expressions intended to identify forward-looking statements.
These forward-looking
statements reflect our current views with respect to future events and are
based on assumptions and are subject to risks and uncertainties. Also, these
forward-looking statements present our estimates and assumptions only as of the
date of this disclosure statement. Except for our ongoing obligation to
disclose material information as required by federal securities laws, we do not
intend to update you concerning any future revisions to any forward-looking
statements to reflect events or circumstances occurring after the date of this
disclosure statement.
Actual
results in the future could differ materially and adversely from those
described in the forward-looking statements as a result of various important
factors, including the substantial investment of capital required to produce
and market films and television series, increased costs for producing and
marketing feature films, budget overruns, limitations imposed by our credit
facilities, unpredictability of the commercial success of our motion pictures
and television programming, the cost of defending our intellectual property,
difficulties in integrating acquired businesses, and technological changes and
other trends affecting the entertainment industry.
PART I — FINANCIAL
INFORMATION
The
Company's Financial Statements for the three-month period ending September 30,
2015 are contained within the following pages. In compliance with regulations
governing FORM 10-Q reports, the information contained within these financial
statements is unaudited.
Page
4
HANNOVER
HOUSE, INC.
CONSOLIDATED STATEMENT OF INCOME &
RETAINED EARNINGS
FOR THE THREE-MONTH PERIOD ENDING SEPT.
30, 2015 (UNAUDITED)
Q3 2014 | Q3 2015 | Change | |||||||
REVENUES (see media detail report) | $ | 407,605 | $ | 2,798,774 | $ | 2,391,169 | |||
Reserve for Potential Returns (WM, BB, Target) | - | (179,905) | (179,905) | ||||||
ADJUSTED REVENUES FOR QUARTER | 407,605 | 2,618,869 | 2,211,264 | ||||||
COST OF SALES | |||||||||
Commissions | 170 | - | |||||||
Sales and Marketing | 13,900 | 4,250 | (9,650) | ||||||
Video Manufacturing | 12,271 | 37,488 | 25,217 | ||||||
Film & Book Royalties | 33,054 | * | 1,780,875 | * | 1,747,821 | ||||
Freight | 1,868 | 29,420 | 27,552 | ||||||
Other Expenses | 49,313 | 22,426 | (26,887) | ||||||
TOTAL COST OF SALES | 110,576 | 1,874,459 | 1,763,883 | ||||||
GROSS PROFIT | 297,029 | 744,410 | 447,381 | ||||||
GENERAL AND ADMINISTRATIVE EXP. | 81,756 | 187,645 | 105,889 | ||||||
INCOME FROM OPERATIONS | 215,273 | 556,765 | 341,492 | ||||||
OTHER INCOME (EXPENSE) | - | - | - | ||||||
INCOME BEFORE TAXES | 215,273 | 556,765 | 341,492 | ||||||
PROVISION FOR INCOME TAXES | ** | 75,346 | ** | 194,868 | 119,522 | ||||
NET INCOME | $ | 139,927 | $ | 361,897 | $ | 221,970 | |||
RETAINED EARNINGS (Beginning of Period) | $ | 2,495,703 | |||||||
RETAINED EARNINGS (End of Period) | $ | 2,857,600 | |||||||
* Company is expensing the accrued royalties or third party participations as a cost of sales. | |||||||||
** Company is reserving a total of 35% off pretax earnings as the cumulative, accrued tax liability for both | |||||||||
Federal and applicable State Income Taxes |
Page
5
HANNOVER HOUSE, INC.
CONSOLIDATED GENERAL AND ADMINISTRATIVE EXPENSES
FOR THE THREE MONTHS ENDING 9-30-2015
GENERAL AND ADMINISTRATIVE EXPENSES | |||||
3-Months | 3-Months | Category | |||
Ending | Ending | Change In | |||
CATEGORY | 6/30/2015 | 9/30/2015 | Period | ||
Auto | $ - | $ - | $ - | ||
Bank Charges | $ 850 | $ 2,200 | $ 1,350 | ||
Consulting | $ - | $ - | $ - | ||
Employees and Labor | $ 63,365 | $ 79,647 | $ 16,282 | ||
Entertainment | $ - | $ - | $ - | ||
Equipment | $ 3,673 | $ 4,188 | $ 515 | ||
Fees | $ - | $ - | $ - | ||
Insurance | $ 453 | $ 647 | $ 194 | ||
Labor | $ 650 | $ 3,213 | $ 2,563 | ||
Legal and Accounting | $ 3,000 | $ 16,400 | $ 13,400 | ||
Miscellaneous | $ 1,818 | $ 11,564 | $ 9,746 | ||
Office | $ 3,202 | $ 17,845 | $ 14,643 | ||
Rent | $ 10,050 | $ 13,050 | $ 3,000 | ||
Taxes | $ 7,893 | $ 24,887 | $ 16,994 | ||
Telephone | $ 3,254 | $ 3,623 | $ 369 | ||
Travel | $ 4,290 | $ 8,500 | $ 4,210 | ||
Utilities | $ 1,388 | $ 1,881 | $ 493 | ||
TOTAL OF GENERAL AND | |||||
ADMINISTRATIVE EXPENSES | $ 103,886 | $ 187,645 | $ 83,759 | ||
Footnotes: Officer Salaries for Parkinson and Shefte (the majority of which are deferred income) | |||||
appear on the income statement as accrued (but deferred) payables, as well as on the Company's | |||||
balance sheets. |
Page
6
HANNOVER HOUSE,
INC.
Consolidated
Balance Sheet / As of Sept. 30, 2015 (Unaudited)
6/30/2015 | 9/30/2015 | |||||||||
ASSETS | ||||||||||
CURRENT ASSETS | ||||||||||
Cash & Cash Equivalents | 41,984 | 355,071 | ||||||||
Accounts Receivable, Net | 4,170,680 | 4,715,385 | ||||||||
Prepaid Wages | - | - | ||||||||
Merchandise Inventory | 232,268 | 254,734 | ||||||||
Prepaid Advertising | 765,000 | 765,000 | ||||||||
Prepaid Producer Royalties | 2,196,514 | 2,200,816 | ||||||||
Producer Marketing Recoupment | 2,299,495 | 2,261,337 | ||||||||
Film Distribution Rights | 1,986,379 | 1,986,379 | ||||||||
Film Production Investments | 406,131 | 412,009 | ||||||||
Notes Receivable and Net Recoupment | - | - | ||||||||
TOTAL CURRENT ASSETS | 12,098,451 | 12,950,731 | ||||||||
PROPERTY & EQUIPMENT | ||||||||||
Office Furnishings, Equip. & Film Gear | 158,225 | 162,413 | ||||||||
Less Accumulated Depreciation | (39,356) | (39,356) | ||||||||
Vehicles | 22,500 | 22,500 | ||||||||
Less Accumulated Depreciation | (10,000) | (10,000) | ||||||||
Real Property | - | - | ||||||||
TOTAL PROPERTY & EQUIPMENT | 131,369 | 135,557 | ||||||||
OTHER ASSETS | ||||||||||
FILM & TV LIBRARY (incl. VODWIZ)* | 23,565,337 | 23,565,337 | ||||||||
TOTAL OTHER ASSETS | 23,565,337 | 23,565,337 | ||||||||
35,663,788 | 36,516,068 | |||||||||
Page
7
HANNOVER HOUSE,
INC.
Consolidated Balance Sheet / As of Sept. 30, 2015
(Unaudited) / continued
LIABILITIES & SHAREHOLDER'S EQUITY | ||||||||||
6/30/2015 | 9/30/2015 | |||||||||
CURRENT LIABILITIES | ||||||||||
Accounts payable | 159,152 | 155,344 | ||||||||
Accrued Royalties | 812,440 | 1,217,577 | ||||||||
Acquisition Advances Due | 39,154 | 34,852 | ||||||||
Accrued Wages | 20,760 | 17,760 | ||||||||
Payroll Taxes Payable | 38,260 | 14,083 | ||||||||
Deferred Income Tax Payable | 1,512,352 | 1,707,220 | ||||||||
NB Cal AFIL P&A Loan | 249,306 | 149,306 | ||||||||
Hounddog P&A Note (Weinreb) | 731,025 | 731,025 | ||||||||
Interest on Weinreb Note | 225,955 | 238,748 | ||||||||
Graham Financial Services Note | 80,000 | 80,000 | ||||||||
Interest on Graham Note | 6,068 | 7,468 | ||||||||
Short Term Notes (Various) | * | 154,936 | 154,936 | |||||||
Interest on Short Term Notes | 13,170 | 18,980 | ||||||||
Bank of Fayetteville Note | 15,000 | 15,000 | ||||||||
Interest on B.O.F. Note | 5,129 | 5,392 | ||||||||
TOTAL CURRENT LIABILITIES | 4,062,707 | 4,547,691 | ||||||||
LONG-TERM LIABILITIES | ||||||||||
Long-Term Payables | * | 1,935,705 | 1,855,205 | |||||||
TCA Global Master Fund | 206,180 | 131,180 | ||||||||
Mortgage Note Payable | - | - | ||||||||
Executive Salary Deferrals | 608,561 | 636,171 | ||||||||
Officer Notes Payable | 201,455 | 151,455 | ||||||||
TOTAL LONG-TERM LIABILITIES | 2,951,901 | 2,774,011 | ||||||||
TOTAL OF ALL LIABILITIES | 7,014,608 | 7,321,702 | ||||||||
SHAREHOLDER'S EQUITY | ||||||||||
Common Stock | 26,166,647 | 26,336,767 | ||||||||
Retained Earnings | 2,495,703 | 2,857,600 | ||||||||
TOTAL SHAREHOLDER'S EQUITY | 28,662,350 | 29,194,367 | ||||||||
35,676,958 | 36,516,068 | |||||||||
* | Company has recategorized short-term notes into "current" liabilities, rather than Long-Term Payables |
Page
8
Hannover House, Inc. | ||||||
Consolidated Statement of Cash Flow | ||||||
For the three months ending Sept. 30, 2015 | ||||||
6/30/2015 | 9/30/2015 | |||||
Cash flows from operating activities | ||||||
Net Income | $ | 368,391 | $ | 366,897 | ||
Adjustments to reconcile net income | ||||||
to cash provided by (used in) | ||||||
operations | 126,432 | (248,651) | ||||
Depreciation | - | - | ||||
Accounts receivable | (61,882) | (544,705) | ||||
Inventory | 1,382 | (22,466) | ||||
Prepaid advertising | - | - | ||||
Producer marketing recoupment | 272,408 | 38,158 | ||||
Prepaid producer royalties | (442,118) | (4,302) | ||||
Film distribution rights | 50,000 | - | ||||
Accounts payable | 40,430 | 3,808 | ||||
Short Term Notes | - | - | ||||
Weinreb P&A interest | (12,793) | (12,793) | ||||
Graham Financial interest | (1,400) | (1,400) | ||||
Bank of Fayetteville Interest | (300) | (263) | ||||
Long Term Payables | (366,601) | 80,500 | ||||
Real Estate Mortgage Payable | - | - | ||||
TCA Global Master Fund | 108,204 | 75,000 | ||||
Accrued royalties | (26,219) | 405,137 | ||||
Deferred income tax payable | 198,365 | 194,868 | ||||
Accrued wages | - | 3,000 | ||||
Payroll taxes due | (14,413) | 24,277 | ||||
Executive salary deferral | 30,000 | (27,610) | ||||
Cash used in operations | 269,886 | 329,455 | ||||
Cashflows from investing activities | ||||||
Film production investments | (120,438) | (5,878) | ||||
Furnishings, Equipment, Truck | 3,144 | (4,188) | ||||
Weinreb / Hounddog P&A note | - | - | ||||
Graham Financial Services note | - | - | ||||
Bank of Fayetteville note | - | - | ||||
Acquisition Advances Payable | 1,846 | (4,302) | ||||
NB Cal loan (AFIL) | (154,438) | (100,000) | ||||
Officer notes payable | - | (50,000) | ||||
Cash provided by investing activities | (269,886) | (164,368) | ||||
Cash flows from financing activities | ||||||
- | 148,000 | |||||
Increase in cash | - | 313,087 | ||||
Cash, beginning of period | 4,761 | 41,984 | ||||
Cash, end of period | $ | 41,984 | $ | 355,071 |
Page
9
HANNOVER HOUSE,
INC.
Change In Shareholder’s Equity
For the Three Month Period Ending September
30, 2015
Common Stock | Retained | ||||||||||
Shares | Amount | Earnings | Total | ||||||||
Balance at June 30, 2015 | 713,927,966 | $ | 26,166,647 | $ | 2,495,703 | 28,662,350 | |||||
Net Adjustments to Equity | 170,120 | ||||||||||
TCA / Magna (July 22) | 5,289,969 | ||||||||||
Blackbridge (Aug. 13) | 15,089,163 | ||||||||||
Blackbridge Issuance Error (Sept. 8) | 9,854,147 | ||||||||||
TCA / Magna (Sept. 23) | 5,059,970 | ||||||||||
TCA / Magna (Sept. 24) | 5,622,189 | ||||||||||
Net Value of Equity Transactions | - | ||||||||||
Net Income | $ | 361,897 | 361,897 | ||||||||
Balances at Sept. 30, 2015 | 754,843,404 | - | 2,857,600 | 29,194,367 |
Page
10
HANNOVER HOUSE,
INC.
Sales by MEDIA and
Ranked by Top 15 Titles During Q3, 2015
SALES SNAPSHOT: Q3 - (Period Ending Sept. 30, 2015) | |
Consumer Products (DVDs, BD's, Books) | $ 721,159.38 |
25% Returns Reserve on Packaged Goods Sales | $ (179,905.60) |
Television / V.O.D. / S.V.O.D. | $ 516,065.00 |
VODWIZ Mastering & Upload Fees | $ 43,750.00 |
International Licenses | $ - |
Major Studio Distribution Ventures | $ - |
Theatrical Releasing Revenues & Fees | $ 1,517,800.26 |
$ 2,618,869.04 |
HHSE Sales Ranks | ||
For The Three Month Period Ending Sept. 30, 2015 | ||
Rank | Title | HHSE Income Sources |
1 | DANCIN' IT'S ON | Theatrical Servicing Fees / Agency Fees |
2 | DARK AWAKENING | Home Video / SVOD-TV Cable |
3 | THE ALGERIAN | Theatrical Servicing Fees / Agency Fees |
4 | BONOBOS | Theatrical Servicing Fees / Agency Fees |
5 | ON ANGEL'S WINGS | Home Video (DVD) |
6 | LAZARUS PAPERS | Home Video (DVD) |
7 | AMERICAN JUSTICE | Home Video (DVD) |
8 | ANTONIO AGUILAR | Home Video (DVD) |
9 | GABRIELLE | Home Video (DVD) |
10 | WEATHER STATION | Theatrical Servicing / Home Video |
11 | ASALTO AL CINE | Theatrical Servicing / Home Video |
12 | ENCOUNTER | Theatrical Servicing Fees / Agency Fees |
13 | GRIM | Home Video (DVD) |
14 | GRAND CHAMPION | Home Video (DVD) |
15 | ALL'S FAIRE IN LOVE | Home Video / VOD-SVOD |
Page
11
Item
2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations
The
following discussion should be read in conjunction with the unaudited interim
consolidated financial statements and related notes to the unaudited interim
consolidated financial statements included elsewhere in this report. This
discussion contains forward-looking statements that relate to future events or
our future financial performance. These statements involve known and unknown
risks, uncertainties and other factors that may cause our actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed
or implied by these forward-looking statements. These forward-looking
statements are based largely on our current expectations and are subject to a
number of uncertainties and risks including the Risk Factors identified in our Annual
OTC Markets filing for the year ending December 31, 2014. Actual results could
differ materially from these forward-looking statements. Hannover House, Inc.
is sometimes referred to herein as "we," "us,"
"our" and the "Company."
The
nature of the issuer’s business is driven by the
operating entity, Hannover House, which is a full-service producer and
distributor of entertainment products (i.e., feature films for theatrical,
video, television and international distribution, and a publisher of books).
Hannover
House, Inc., is a Wyoming Corporation. Truman Press, Inc., d/b/a “Hannover
House” is an Arkansas Corporation.
Hannover
House, Inc., f/k/a Target Development Group, Inc. (which was also formerly
known as "Mindset Interactive Corp.") was registered as a corporation
in Wyoming on January 29, 2009. Truman Press, Inc., d/b/a “Hannover House” was
registered as a corporation in California on September 15, 1993, and
re-registered in Arkansas effective June 2008. The Ecklan Corporation,
registered on March 25, 1998, in the State of Texas, was the predecessor entity
to Target Development Group, Inc.
The
Company, Hannover House, Inc., as well as Truman Press, Inc., d/b/a “Hannover
House” each have an effective fiscal year-end date of December 31.
Neither
the Company, Hannover House, Inc., nor the operating entity, Truman Press,
Inc., d/b/a “Hannover House” have ever been in bankruptcy. To the best of
management’s knowledge, no predecessor entity has ever been in bankruptcy.
Effective
January 1, 2010, Target Development Group, Inc., acquired all of the shares of
Truman Press, Inc., d/b/a “Hannover House” in a stock-swap agreement. The
details of this acquisition venture are described in detail within the
information statement posted on the OTC Markets Disclosure Statement of
December 14, 2009.
Over
the past four years, the Company has defaulted on several loan or credit
obligations, but none representing a material event to the Company or falling
outside of the ordinary course of business. As previously disclosed through the
Company's filings with the OTC Markets, the Company had incurred debt relating
to the theatrical releasing costs of the film "Twelve" (debt
obligations were accrued with Andersons, AOL, Bedrock Ventures, 42 West,
Technicolor, Tribune Ent. and others). As of September 31, 2014 the Company had
reduced the cumulative total of the outstanding debt balances for this film
from an original gross of $4.2-million (inclusive of obligations to the
production company / licensor), down to less than $812,000 as of this reporting
period. Other significant obligations of
the Company include "P&A" for the release of the film,
"Hounddog" (Weinreb loan), "P&A" for the release of
"All's Faire In Love" (NBCal Loan), producer / licensor obligations
to Interstar Releasing, Fantastic Films and E.E. Smith, all of which are
itemized or otherwise included within the Company's financials.
Page 12
As
of 9-30-2015, there were no further changes of “control”.
As
of 9-30-2015, there were no increases of 10% or more of the same class of
outstanding equity securities.
During
the quarterly reporting period ending 9-30-2015, the Company issued a total of
31,031,291 shares of stock.
Additionally, and without legal basis, authorization or prior
notification to Company, Standard Registrar & Transfer Co., Inc., issued
9,854,147 shares to Blackbridge Capital, which is the subject of a pending
legal action for recover of shares or proceeds. The authorized and legitimate new
issuances consisted of a total of 15,972,128 shares issued to Magna
Investments, in a debt conversion transaction to reduce the balance owed to TCA
Global Master Fund; and 15,089,163 to Blackbridge
Capital in consideration of debt reductions for National Bank of California
loan balance.
The
Company has not experienced any delisting of the issuer’s securities. As of the
9-30-2015, there were no current, past, pending or threatened legal proceedings
or administrative actions that could have a material effect on the issuer’s
business, financial condition or operations other than those items specifically
described hereunder or otherwise disclosed in OTC Markets Filings. As of 9-30-2015
and remaining true through the date of this filing, there were no past or
pending trading suspensions by a securities regulator. The legal proceedings,
whether past, pending or threatened, all fall under the guidelines of being
within the ordinary course of business, and are disclosed in detail in this
filing or incorporated within previously filed disclosures with the OTC Markets.
Business
of Issuer -- The SIC Codes most closely conforming to the
Company’s business activities are: 7822 (Services – Motion Picture &
Video Tape Distribution) and 2731 (Books: Publishing). The Company
is currently operating. At no time has the Company ever been a “shell company”
as defined in the guidelines.
Through
the operating entity of “Hannover House,” the Company is actively involved with
the production, acquisition and distribution of entertainment products into the
USA and Canadian markets, including theatrical films, home video releases,
rights licenses of films and videos to Video-On-Demand platforms and
television, as well as book publishing (including printed editions and
electronic “E-Book” formats).
FILMS
& VIDEOS – Most of the film and video titles that
are distributed by the Company are “acquired” or otherwise licensed from
third-party suppliers, often production companies or media companies seeking to
expand their income and market reach through a relationship with Hannover House
or through the company’s recently formed multi-studio sales cooperative,
Medallion Releasing, Inc. Some of the properties distributed by the Company are
“sales agency” ventures, in which the Company performs certain sales
& marketing functions on behalf of the owners of the properties, as opposed
to having the Company actually purchase or otherwise license rights into the
property. In 2010 with the merger of Hannover House and Target Development Group,
Inc., the Company began moving away from “sales agency” ventures and
pursuing actual rights-licensing / acquisition structures for new titles being
released under the Hannover House label, as this form of licensing arrangement
can ultimately be more lucrative for the company. Most of the titles being
distributed by the Medallion Releasing division are under sales agency
agreements, ranging from 15% to 50% revenue splits with the program suppliers and
outside labels.
BOOKS
/ E-BOOKS – The Company remains active in the acquisition and
licensing of publishing rights to printed books and e-Books. The gross margins
earned by the Company in the release of Books are generally much higher than
the margins derived from the release of Film and Video properties; however, the
upside revenue potential for books is usually not as high as the potential for
Films. So the Company seeks to maintain a balance in its release slate of
high-margin book properties, with high-revenue Film and Video properties.
Page 12
The
use of the term "Company" refers to the combined entities, as
reported on a consolidated basis, of Hannover House, Inc., Truman Press, Inc.,
d/b/a “Hannover House” and Bookworks, Inc. (a
special purpose entity utilized for Screen Actors Guild activities and
productions), as well as VODWIZ, Inc. (the
special purpose video-on-demand portal venture), and Medallion Releasing,
Inc. (the multi-studio sales venture).
Each of the corporate entities files separate income tax returns with the
federal government and respective states of registration; however, financial
statements and reports, as of January 1, 2010, refer to the combined and
consolidated results of all entities. Hannover House, Inc. is the publicly-traded
entity for all operating divisions. Truman Press, Inc., d/b/a “Hannover House”
is the operating and releasing division entity for all consumer products.
Bookworks, Inc., is a special purpose entity established for the servicing of
book and publishing ventures, and more recently, used for Screen Actors Guild
productions.
As
of 9-30-2015 and remaining true through the date of this filing, the Company
does not foresee any probable or existing governmental regulations as having an
adverse or material impact to the operations.
During
calendar year 2009 (and specifically limited to activities for Truman Press,
Inc., d/b/a “Hannover House”), the Company invested approximately $15,000 on
activities that could be characterized as ‘research and development.’ During
the calendar year of 2010, and under the consolidated reporting of all
entities, the Company invested approximately $20,000 on projects and activities
that could be characterized as ‘research and development.’ During the calendar
year of 2011 and under consolidated reporting of all entities, the Company
invested approximately $166,000 on projects and activities that could be
characterized as ‘research and development.’ (specifically, the production of
feature film / video products). During
2012, the Company invested approximately
$287,114 on production projects / R&D assignable; during 2013, the
Company made no new investments in production or activities that would be
R&D assignable. The company has been
involved in some feature film productions during 2014 and the first quarter of
2015, including development, pre-production and post-production work on “Bonobos: Back to the Wild” (nature docudrama), “Mother Goose: Journey to Utopia” (live-action fantasy adventure), “Dinosaurs of the Jurassic” (Documentary), “Shadow Vision” (Sci-Fi
Thriller), “The Summoning” (Horror-Thriller), “Shuck and Jive” (Urban Drama)
and “Clown Town” (Horror). The Company is also working on
structuring financing and distribution ventures for three additional features,
“Extreme Operative” (action-adventure), “Dog and Pony Show” (Family-Animal Adventure), “Bridge
To Redemption” (Action-Thriller), “The Legend of Belle Starr” (Historic-Action-Western), “True Freshman” (Sports-Christian-Feature), “Over
The Edge” (action-adventure), and “Primate” (sci-fi-creature-feature). A previously
announced development project, “Wild
Oats” has been licensed under a distribution pact between the production
company and The Weinstein Company, for which Hannover House is both credited
and a profit participant. Production on “Wild
Oats” is completed, and stars Shirley MacLaine, Demi Moore and Jessica
Lange. The film was directed by Andy
Tennant (director of studio megahits
“Ever After”, “Sweet Home Alabama” and “Hitch” – all of which surpassed $100-mm
in domestic USA Box Office proceeds). The company feels that its
participation in facilitating the production of these and other higher-end
titles generates many benefits: longer
license periods (usually perpetuity),
greater revenue opportunities (including
international rights), and higher-end titles to serve as locomotives to
elevate the company’s stature with theatrical exhibition chains and video mass
merchants which can help with catalog and secondary title placements.
The
Company has not incurred any non-negligible costs relating to compliance with
environmental laws, whether to federal, state or local. As of 9-30-2015, the Company had 12 full-time
employees, positions were: CEO,
President, VP Sales, Director of Sales, Director of Promotions, Production
Manager, Bookkeeper, Film Booker, Receptionist, Technical Services, Publicity
Assistant and Warehouse Manager.
Page 13
The
nature of products and services offered:
A.
|
The
principal products of the Company, and their respective markets are:
|
i.
|
Theatrical
films – released to theatres in the United States
|
ii.
|
Home
Video Products (DVDs, Blu-Rays, Digital Copies) – released to video specialty
retailers, mass-merchandisers, bookstores, schools, libraries and rental
outlets (including kiosks) in the United States and Canada;
|
iii.
|
Video-On-Demand
releases – films and videos offered for direct ‘in-home viewing’ by consumers
via a variety of service providers.
|
iv.
|
Books
and E-Books – sold through bookstores, schools, libraries, internet retailers
and streamed through a variety of e-Book platforms.
|
B.
|
The
primary distribution methods used by the Company for all consumer product
goods can be categorized as: “two-step wholesale” distribution (wherein the
Company sells its products to an authorized wholesale distributor, which in
turn, resells the products to retailers or consumers) and “direct
distribution” wherein the Company sells its products directly to consumers or
directly to the end-user retailer.
|
C.
|
The
Company has announced, and included in previously published disclosures, a
listing of some of the principal, upcoming theatrical films that will also be
released onto home video formats.
|
D.
|
Competitive
Position – The Company competes for theatrical screens and retail (home video)
shelf space against seven (7) Major Studio suppliers and approximately eight
(8) independent studio suppliers. While all of the Major Studio competitors
operate their own (in-house) home video distribution divisions, only three of
the independent studio suppliers operate both theatrically and in the home
video markets. Operating a home video releasing label “in-house” provides the
Company with an advantage in the solicitation of titles for acquisition, as
well as provides greater control over the Company’s cash-flow and corporate
goals.
|
E.
|
Materials
and Suppliers – The principal service providers to the Company are listed in
detail in this disclosure, below. The principal suppliers of new release film
and video products include the following production companies and programming
sources (listed alphabetically): Allegheny Image Factory; American
Family Movies; Associated Television; Atlantic-Pacific Picdtures; Atlas
Films; BerVon Entertainment; Cinetic Media; CMD; Daybreak Pictures; Empire
Film Group, Inc.; Eurocine International; Gaumont, SA; Green Apple Films;
Little Film Company; Origin Motion Pictures; Plaza Entertainment, Inc.;
Phoenix Entertainment; Phoenix Releasing Group; Sola-Media, GmbH; Shoreline
Entertainment; SND Films; Studio 3 Entertainment; PWI-Veracruz Entertainment
and XVIII Entertainment. The principal suppliers of books for the Company to
publish include (listed alphabetically): James Danielson, Phil Goodman, Brenda
Hancock, Vivian Kaplan, Barr McClellan and Vivian Schilling. The Company sees
no shortage of properties available for acquisition in any of the applicable
media.
|
|
F.
|
Dependence
on Major Customers – Two of the Company's current customers as of 12-31-2014
contributed fifteen percent (15%) or more to the overall, annualized sales
revenues. Wal-Mart Stores, Inc.
(inclusive of sales to their SAM’S Clubs division), has been purchasing most
of the Company's new release DVD titles. The Company does not see the
Wal-Mart market share as an unhealthy dependence on a key customer, as
Wal-Mart constitutes a much smaller share of the Company’s overall revenues
than for many Major Studios, and the Company does not anticipate that the
growth in sales to Wal-Mart Stores, Inc., will grow disproportionately with
the Company’s other customers. Medallion Releasing has commenced activities
for the international sales and licensing of higher-end properties owned or
controlled by the Company, the revenue results for which also exceed the
fifteen percent (15%) threshold of total, annualized revenues. The Company does not feel that the rapidly
growing sales revenues being realized from the international markets poses an
unreasonable or viable threat to operations, as sales are cumulative over
multiple licensing agreements for specific territories, media and
titles.
Page 14
|
|
G.
|
The
Company does not own or control any patents, franchise or concessions. The
licenses and royalty agreements fall under the category of being part of the
ordinary course of business.
|
H.
|
The
company does not need any government approvals of principal products or
services.
|
The
nature and extent of the issuer’s facilities include a primary office and
warehouse combo unit (under lease from Elder Properties, Springdale, AR),
comprising approximately 6,000 square feet.
Item
3 Quantitative and Qualitative
Disclosures About Market Risk
Investment
in the Company's Stock bears similar risks as may exist with other stocks
trading on the OTC Markets board. The trading price for Company's Stock Shares
can vary significantly based upon a variety of factors unrelated
to
the Company's actual value or revenue achievements. On an accrual basis, the
Company is generating profits each
quarter,
with regular DVD and Blu-Ray product sales supplemented with long-term
receivables for Subscription Video-On-Demand and Television sales. However, on
a cash-flow basis, the Company's cash resources are often strained by immediate
and long-term debt obligations. Some investors and shareholders have expressed
discomfort with the Company's persistently tight cash position, which has been
the result of balancing ongoing operational needs with debt management and new
release activities against product cash flows. Conversely, many shareholders
have also expressed resistance to the concept of issuing equity shares under
"debt conversion" structures, which would relieve much of the
cash-flow burdens but would result in a dilution of shareholder equity.
Accordingly, management has worked to find the best balance of maximizing
shareholder value and return, while minimizing equity dilution activities.
There can be no assurance that ongoing cash flow from product sales will, by
itself, be sufficient to meet the Company's combined operational,
debt-management and growth needs. To address the Company's cash position,
management has initiated an agreement with an Accounts Receivable-based lender,
to accelerate cash flow from current product sales and thus facilitate faster
growth into new areas (such as the
Company's "VODwiz.com" streaming venture), as well as to provide
working capital to enable the Company's Film and Television Rights Library to
be more efficiently exploited.
While
there are no material threats at present to the Company's ongoing viability,
there can be no assurance that the majority of long-term creditors will
continue to comply with debt reduction and installment payment agreements. And
while the Company continues to generate DVD and Blu-Ray sales to major
retailers (and Video-On-Demand contracts through the major VOD portals), there
can be no assurance that current and past sales performance will continue into
the future. The remedies available to the Company for continued viability and
growth are revenues from product sales and licenses, credit arrangements (both
with lenders and suppliers) and stock-equity opportunities (ranging from shelf-registration of new shares to
"debt-conversion" ventures to alleviate the cash-flow burden from
older, qualifying payables). Investment in the Company's Stock Shares bears
significant risks, as well as significant upside potential. The
"Price-Earnings Ratio" for publicly-traded entertainment stocks in
the Company's area of activity results in an average P/E rate of 22-times. The
current P/E ratio for Company's (Hannover House's) is 3.1, based on an annualized
projection of the current reporting period.
This extremely low P/E rate for Hannover House shares relative to the
other publicly traded companies operating in the same business sector, suggests
that the shares are currently trading at a price that is undervalued by a
factor of approximately 6-times when compared to the industry average.
Item
4. Controls and Procedures - Evaluation of Disclosure Controls and Procedures
The
term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e)
of the Securities Exchange Act of 1934 as amended (the “Exchange Act”). These
rules refer to the controls and other procedures of a company that are designed
to ensure that information required to be disclosed by a company in the reports
that it
Page 15
files
or submits under the Exchange Act is recorded, processed, summarized and
reported within required time periods specified in the SEC’s rules and forms,
and that such information is accumulated and communicated to management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.
As
of September 30, 2015, the end of the period covered by this report, the
Company carried out an evaluation under the supervision and with the
participation of our Chief Executive Officer and President of the effectiveness
of our disclosure controls and procedures. Our Chief Executive Officer and
Chief Financial Officer have concluded that such controls and procedures continued
to be effective as of September 30, 2015 .
Item
4T. Controls and Procedures
Changes
in Internal Control over Financial Reporting
As
required by Rule 13a-15(d) of the Exchange Act, the Company, under the
supervision and with the participation of the Company’s management, including
the Chief Executive Officer and Chief Financial Officer, also evaluated whether
any changes occurred to the Company’s internal control over financial reporting
during the period covered by this report that have materially affected, or are
reasonably likely to materially affect, such control. Based on that evaluation,
there has been no such change during the period covered by this report.
PART II - OTHER INFORMATION
Item
1. Legal Proceedings. As of September 30, 2015,
the Company was involved in the following legal matters for which ongoing court
activities / filings or adjudicated status were still pending:
1). TCA GLOBAL MASTER FUND
– The previously disclosed balance due to TCA Global from Company, was the
subject of a Florida Courts judgement issued during Q3, 2015. The Company noted that the court filings from
the attorneys for TCA contained several demonstrably erroneous statements,
including the wrong balances due to TCA, and misstatements that TCA had been
unable to secure payment via “debt conversion” transactions (which had been
occurring regularly throughout the prior year).
Rather than spend significant legal fees to rebut and contest the
statement errors, Company decided instead to pay off the proper balance, in order
to enjoy the benefits of the release of the UCC Security Interest and the
return of the 10-million “collateral” shares of Company’s stock that were
issued to TCA back in May of 2013. As of
the date of this filing, the balance due to TCA has been reduced to
approximately $61,000, and is expected to be paid in full during the month of
December.
2). STANDARD REGISTRAR
– The Company has engaged George B. Morton, Esq., to pursue an action to
collect back from Standard Registrar an issuance of approximately 9.8-mm shares
that were released by Standard to Blackbridge Capital in mid-September without
legal basis or authorization. The value
of the shares at the date of issue was approximately $61,000, which sum falls
below the jurisdiction under Federal Court rules; accordingly, the original
plan to file in US Federal Court in California has been modified to file as a
civil court action in Arkansas.
3). STOCK MANIPULATOR’S SUIT
– The Company has engaged George B. Morton, Esq., to pursue an action against
five known members of an organized stock “bashing” gang that have collectively
damaged the Company’s share price by more than $10-million in market
capitalization value over the past three years.
Due to the size of the damages in this case, the jurisdiction will be
the US Federal Court, western district of Arkansas.
A
related action to pursue charges for the criminality of the actions taken by
these manipulators is also being prepared for this same court venue.
Page 16
4). BRENDA HANCOCK VS. HANNOVER HOUSE –
One of the Company’s “author” clients has filed a lawsuit in Washington County,
Arkansas, seeking an early termination of the distribution rights license
extended to Hannover House for her book, “One of the Lucky Ones.” The Company had previously agreed to an early
termination of the license due to sluggish sales for the book. Accordingly, the Company response (to be
filed in early December) will be to seek payment of its legal fees to respond.
5). HANNOVER HOUSE VS. JSJ INVESTMENTS
– Company offered to pay JSJ Investments in CASH for a convertible note, based
upon the clear language in the note which stated the legal interest rate of 17%
plus the principal. JSJ refused to accept the cash and demanded to “convert”
the obligation into freely trading shares at a greater than fifty-percent
discount to current market pricing. It
is Company’s position that the note clearly has a procedure for the payment of
the principal and interest in cash, and that the “conversion” option only
applied in the event of a default on the note.
The representative for JSJ communicated that it is their position that
they are entitled to massively discounted shares, and that the cash payment
language was merely a formality, and never an actual option. Company’s response to that position is to let
the court decide what is legal under the law, recognizing the usury rate caps
for lenders and the presupposition that the note was entered into by both
parties in good faith.
Item
1A. Risk Factors
Other than as set forth in this FORM 10-Q
filing, there are no specific risk factors relating to the Company's securities
that are not universally applicable to other equities trading on the OTC
Markets.
Key Man / Principals
- The Company is reliant upon the continued employment and work performance of
the two, principal managers, Eric Parkinson (CEO) and D. Frederick Shefte
(President). As an accommodation to benefit the Company's cash flow, both
Parkinson and Shefte have been deferring a majority of their salaries.
Additionally, as has been required by many third-party program suppliers,
Parkinson has often been listed as a "key man" to the rights licenses
or sales venture agreements for specific acquisitions, due to his successful
home video sales track record. Additionally, the engagement of Tom Sims as VP
of Sales for both Hannover House, Inc. and Medallion Releasing, Inc., makes him
into an important and key man employee. The
cessation of employment by any of these principals could have a material and
negative impact on the Company, as current cash flows would not facilitate the
hiring of comparably qualified executives, and the loss of Parkinson as
"key man" could result in multiple title agreement cancellations.
Item
2. Unregistered Sales of Equity
Securities and Use of Proceeds.
Not
applicable to Issuer.
Item
3. Defaults Upon Senior Securities
Not
applicable to Issuer, although a previously active credit arrangement with TCA
Global Master Fund has since been terminated by mutual consent.
Item
4. Submission of Matters to a Vote of
Security Holders.
Not
applicable to Issuer.
Item
5. Other Information.
Additional
Information required by the OTC Markets that is not (necessarily) required
under S.E.C. reporting guidelines:
Page 17
(OTC MARKETS
“GUIDELINES FOR CURRENT REPORTING STATUS” - PART D / MANAGEMENT STRUCTURE AND
FINANCIAL INFORMATION
Item 11 (A-1 through A–6) – The name of the Chief Executive Officer,
members of the board of directors, as well as control persons are:
- Eric Filson Parkinson, Chief Executive Officer and member of the board; business address for Mr. Parkinson is: 1428 Chester St., Springdale, AR 72764. At all times during the prior five years, Mr. Parkinson has been employed as the C.E.O. of Truman Press, Inc., d/b/a “Hannover House.” During 2014, Mr. Parkinson had been earning an accrued salary of ninety-thousand dollars (USD $90,000) per year, for which the vast majority has been, and continues to be deferred and accrued. The salary that Parkinson is accruing during calendar year 2015 has been adjusted back to its previous level of one-hundred-eighty-thousand dollars (USD $180,000) per year. As of December 31, 2014 and continuing to this date, Mr. Parkinson beneficially owned 43,141,649 shares of Class A common stock in the Company, and 1,800,000 shares of Series A Preferred Stock. Mr. Parkinson has voluntarily surrendered back into company treasury a total of 31,800,000 shares of stock, to be held pending satisfaction of corporate and sales achievements, and subsequently delayed for review until January, 2016. Parkinson has no other Board memberships or affiliations other than volunteer, non-profit associations.
- Don Frederick Shefte, President and member of the board; business address for Mr. Shefte is: 3741 N. Old Wire Road, Fayetteville, AR 72703. At all times since November, 2006, Mr. Shefte has been employed as the President of Truman Press, Inc., d/b/a “Hannover House” as well as a part-time, adjunct professor of Business at the Sam Walton School of Business at the University of Arkansas. Prior to joining Truman Press, Inc. (in November, 2006), Shefte was the Senior Vice President and Senior Trust Officer at the Bank of Fayetteville. During 2014, Mr. Shefte has an accrued salary of ninety-thousand dollars (USD $90,000) per year, for which the vast majority has been, and continues to be deferred and accrued. The salary that Shefte is accruing during calendar year 2015 has been adjusted back to its previous level of one-hundred-eighty-thousand dollars (USD $180,000) per year. As of December 31, 2014 and continuing to this date, Mr. Shefte beneficially owns 31,487,546 shares of Class A common stock in the Company, and 1,200,000 shares of Series A Preferred Stock. Shefte has no other Board memberships of affiliations other than volunteer, nonprofit associations. Shefte has voluntarily surrendered back into company treasury total of 5million shares of stock, to be held pending satisfaction of corporate governance achievements.
- Tom Sims, currently employed as Vice President of Sales for Hannover House, Inc., and Executive Vice President of Medallion Releasing, Inc., has agreed to join the Board of Directors for Hannover House, Inc., effective upon the Company’s full registration and acceptance as a fully-reporting Issuer with the Securities and Exchange Commission and the effective date upon which Sims is added as an additionally named, covered party of the Officers and Director’s Liability Insurance. As of June 30, 2015, Sims received a first-year bonus of one-million(1,000,000) shares of Common Stock. Under the terms of his employment as Vice President of Sales, Sims is also entitled to receive an additional one-million (1,000,000) shares for each $10-million in gross revenue generated by the Company in any given calendar year under his sales management.
- Legal / Disciplinary History. Neither of the board of directors members has been involved in any form of criminal conviction or proceeding or named as a defendant in a pending criminal proceeding; neither director has been suspended, vacated or otherwise barred from any involvement in securities, commodities or banking activities; neither director has been affected byPage 18a finding or judgment by a court of competent jurisdiction, the Securities and Exchange Commission, the Commodity Futures Trade Commission or a state securities regulator of a violation of federal or state securities or commodities laws; neither director has received an order by a self-regulatory organization that permanently or temporarily bars or limits such person’s involvement in securities activities.
- Disclosure of Family Relationships – There are no family relationships existing between or among either of the Board of Directors, or any other officers, directors, or beneficial owners of more than five percent (5%) of any of the class of the issuer’s equity securities.
- Disclosure of Related Party Transactions – The Company was not involved in any Related Party Transactions valued at $120,000 or more, or valued at more than one percent of the issuer’s total assets at year-end for its last three fiscal years.
- Disclosure of Conflicts of Interest – There are no known conflicts of interest.(OTC Markets) Item 14 – Beneficial Owners – The total count of Beneficial Owners as reported to the Company by Broadridge ICS (as of Dec. 31, 2014) was 343. As of December 31, 2014 and remaining true through the date of this filing, the Company was aware of only two shareholders controlling directly or beneficially more than five percent (5%) of any class of the issuer’s total authorized equity securities (except as described in Item 14 c) below):
- Eric F. Parkinson (CEO), 1428 Chester St., Springdale, AR 72764 – holding 43,141,649 shares of Common Stock. Parkinson also owns 1,800,000 shares of Series A Preferred Stock. Mr. Parkinson retains a lien to reclaim up to 31.8-million shares from his original allotment of TDGI shares, which were a voluntarily surrendered back to the company’s treasury pending achievement of certain corporate and revenue goals for the company under his direction as C.E.O. During Q2 (2012), Parkinson allocated from his personal holdings a total of 1,800,000 shares of restricted stock, for the benefit of key employees and as additional consideration for a term note extended to the Company by a private investor. Parkinson has an agreement with the Company regarding a performance-based formula for the recapture / replacement of these shares, to occur no sooner than July 1, 2013, but since extended to January, 2016 for re-evaluation.
- Don Frederick Shefte (President), 3741 N. Old Wire Road, Fayetteville, AR 72703 – beneficially owned 31,487,546 shares of Common Stock. Shefte also owns 1,200,000 shares of Series A Preferred Stock. Upon closing of the acquisition of Truman Press, Inc. by Target Development Group, Inc., in January, 2010, the TDGI stock allocation for Shefte was divided with Shefte receiving 50,987,547 shares and each of his two adult children receiving 6,373,443 shares under a pre-existing agreement relating to Shefte’s ownership interested in Truman Press, Inc. Mr. Shefte retains a lien to reclaim up to 5-million shares from his original allotment ofTDGI shares, which were a voluntarily surrendered back to the company’s treasury pending achievement of certain corporate governance goals for the company under his direction as President.Item 11 A1-A6 – Supplemental Disclosures. i). The Company has completed a Form 10-12(g) Registration Statement. This document is expected to be filed with the Securities & Exchange Commission on or before Jan. 15, 2016, in order to include the full year-end audits for the current year (2015), as well as the newly completed audit for calendar year 2014. Company is prepared to ‘close-out’ the 12-31-2015 period at the close of business on Thursday, Dec. 31, in anticipation of the corporate goal of an expeditious filing of the Form 10 Registration Statement).Page 19ii). Company expects to fully retire the debt balance due to TCA Global Master Fund this calendar year, which will trigger the return of 10-mm shares of common stock issued to TCA in 2013 as partial collateral for a business loan. iii). Company has recently enacted a change of corporate direction which puts a greater emphasis on theatrical release activities, with the generation of fees for release services as well as from revenue collections. iv). Company plans to add a total of three (3) new members to the Board of Directors in January, 2016, timed with the activation of Officers & Director’s Liability Coverage and the filing of the Form 10 Registration; v). Beginning in January, Company, and dependent on factors including the Common Stock PPS at that time, as well as the Company’s status with certain, key creditors, the Company may want to utilize a portion of cash collections to purchase common stock shares “off the open market” and retire said shares back into treasury. vi). Company hopes to complete installment payment plans in December for several key creditors, including the Anderson’s (“Twelve P&A Loan”), Michael Weinreb (“Hounddog P&A Loan”), Second Star Investments (“Twelve P&A Loan”), Bedrock Ventures (“Twelve Acquisition Loan”), E.E. Smith (“Boardinghouse Stew”) and Interstar Releasing (“Dawn of the Living Dead” dispute). Management believes that the stronger cash flow being generated from current enhanced theatrical and home video releasing activities can be utilized to reduce or retire the debt burden from these key creditors – all of which have demonstrated patience for several years while the Company has grown.Item 6. ExhibitsExamples of theatrical one-sheet poster arts for recent, current and upcoming theatrical releases from Company.
Page 20
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Date:
November 15, 2015
|
Hannover
House, Inc.
|
By: /s/
Eric F. Parkinson
|
|
Eric
F. Parkinson,
Chairman & Chief Executive Officer |
Page
21
CERTIFICATION
I,
Eric F. Parkinson certify that:
1.
|
I
have reviewed this quarterly report on Form 10-Q of Hannover House, Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent function):
|
(a)
|
All
significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
(b)
|
Any
fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: November
15, 2015
|
Hannover
House, Inc
|
By: /s/
Eric F. Parkinson
|
|
Eric
F. Parkinson
Chairman Chief Executive Officer |
Page
22
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