As stated previously, the S-1 shares are being offered to accredited, qualified investors at pricing levels which are at a premium to the CURRENT pre-filing PPS for Hannover House. The rationale' is that a bulk purchaser coming in (for instance) to purchase $1-million worth of HHSE in a one-week period might see the open market price jump dramatically and to a level greater than the S-1 pricing (which is still at a premium to current pricing and based on current trading volume).
Some key shareholders have asked for a description of our intended use-of-proceeds from the S-1 offering. We had planned to hold this until after the filing. However, in respect of the insights that some key shareholders may hold, we have decided to release an OVERVIEW later today, and to solicit feedback in order that the final S-1 filing may benefit from a greater level of observation.
* * * * *
S-1 SHELF REGISTRATION PROVIDES FINANCIAL FUEL FOR HHSE ACTIVITIES
The Bottom-Line for HHSE Management's Initial Plans for the USE OF PROCEEDS from the S-1 Registration is that we are only anticipating a raising of $3-million, even though the S-1 will be available for UP TO $8-Million. This is not due to any skepticism on the value of the offering, but based solely on discussions already in motion for large funding groups (which appear to be accessible for about $3-million into HHSE rather quickly). It's crucial under such registrations to define and adhere to a strict Use of Proceeds, as the inducement for direct purchasers of shares is often based on the company's pledge of specific endeavors. It's also important to note that both investors and regulators resist S-1 fundings which are utilized primarily for the retirement of debts or for the benefit of principals. Generally, those supporting a S-1 offering want to know that the majority of the new funds will go towards generating exciting, new ventures... and not just to pay yesterday's bills. In this respect, as well as the intention to apply some proceeds towards overhead, administration and payables management, HHSE has proposed the following formula for the Initial $3-million to be raised from the S-1:
1). Proceeds Allocated towards Development & Launch of MyFlix: $1,000,000 (33%)
2). Proceeds Allocated towards HHSE Payables / Debt Management: $1,000,000 (33%)
3). Proceeds for Feature Development, Theatrical & Video Activities: $1,000,000 (33%)
It is our position that the allocation of 33% each for MyFlix, Debts and Other Revenue Operations is a reasonable plan to build shareholder value while still empowering management with payables funding for allocation. Clearly, the hot-buttons for new funding are MyFlix AND the high-end films (that, except for reimbursable "development" costs, will be funded through off-balance sheet investment, pre-sales and governmental incentives).
In order to welcome and update some NEW HHSE SHAREHOLDERS that have just joined our team, below is an OVERVIEW of the MyFlix multi-studio streaming venture.
HHSE will also be developing and facilitating the production of several HIGH PROFILE titles that will become the revenue locomotives of the non-MyFlix activities. The titles that have been ANNOUNCED include MELTDOWN, THE LEGEND OF BELLE STARR and MOTHER GOOSE: JOURNEY TO UTOPIA.
WE ARE ASKING FOR SHAREHOLDER COMMENTS TO THIS PROPOSED USE OF PROCEEDS BEFORE WE FINALIZE THE S-1 NARRATIVE AND TABLES. PLEASE EMAIL COMMENTS OR QUESTIONS TO: Eric@HannoverHouse.com
* * * * *
WHAT IS MYFLIX?
Myflix is a second-generation
Internet streaming portal designed primarily as a digital-streaming marketplace
for Independently produced feature film and television programs. Utilizing the best-functioning elements of the
Netflix Subscription and Amazon Prime transactional models for in-home delivery
of content, Myflix builds on the concept of “watch what you want, when you want it” by offering literally
thousands of films and programs that are otherwise not available for viewing on
any other streaming platforms or OTT App sites.
HOW IS MYFLIX DIFFERENT?
While there are dozens of streaming
sites for specific genres of films or studio-specific content, there are very
few sites offering a broad range of title selections… and the majority of these
established portals concentrate on offering only the major studio hits.
While Myflix does anticipate offering some mainstream and specialty programming from major studio suppliers and television
networks, the vast majority of Myflix titles will be independently produced films. According to industry research published in The-Numbers.com,
in 2016 the U.S. Major Studios released a total of ninety-nine (99) films to
theatres in North America, while the indie studios released 644 films to North
American theatres. This ratio of six-times greater volume of films from independent sources as compared to the major studios has continued to this day - yet, the three most popular current streaming services continue to fight over the handful of major studio titles available each year.
In addition to theatrically released independent films, on average an additional 1,500 indie films are produced in North America each year which either end up as “straight-to-video” or which receive no
distribution at all.
MyFlix understands the "low-hanging fruit" concept of the existing streaming sites in competing for the same 99 major
studio titles. After all, these major studio films tend to be the biggest box office hits each year. But in concentrating on hit titles which many consumers already viewed at theatres, the handful of existing streaming sites are functionally abandoning the much larger universe of
independently produced and distributed features. Film aficionados that consume a lot of
product through theatres, video and streaming can easily burn-out on the limited
offerings available on Netflix, Hulu, Crackle and I-Tunes… and often migrate to
Amazon for the wider selection of titles that Amazon offers on a transactional (per-viewing) basis (or to a lesser level, through Amazon Prime subscriptions). But even Amazon imposes substantial programming
barriers for indie producers… leaving over 1,200 newly produced films
each year without a legitimate “streaming
home” portal.
Myflix differs from Netflix and
Amazon (and the myriad of smaller
streaming sites) in several key ways:
1). Broad Selection of Independent
Films – Myflix
aspires to be one of the primary portals for all entertainment programming… but most
notably (and initially) to focus on the
larger universe of independently produced feature films and television programs;
2). Pioneer in Video Games – Myflix suppliers include several
producers of single-player video games, as well as titles offering multi-player
interactivity options. Access to stream
video games is billed to the user on an hourly basis which prospectively could
generate significant revenues from some of the more addictive video game escapes.
3). Pioneer in Educational Programming – Myflix suppliers include several
large libraries of educational films and videos, covering a wide range of
topics and study levels. The Amazon
operational platform that forms the infrastructure for Myflix includes
interactivity, which can be accessed for “test” scoring after viewing an
educational film… with the results of such tests being used to accumulate
viewing-credits for students to see premium movies or access the Video Games
function… an option that Myflix believes could be popular with parents.
4). Producer-Friendly Reporting &
Payment Structure
– Unlike Netflix (which provides
producers with NO STATISTICS on titles performance…as well as stretching out
the payment of license fees over a two-year period), the Myflix reporting
and payments model for producers is transparent and monthly. The on-boarding information
provided to Amazon for each title also includes information as to the payment
beneficiary… and Amazon will render ACH payments each month to each of the
Myflix program suppliers (monthly
payments to occur on or about the last day of each month, reflecting the
transactions during the prior full month, e.g., ACH payment on Feb. 28 reflects
all transactions that occurred during the month of January).
5). Affordable / Competitive On-Boarding
Fees – Myflix
suppliers can get each title on-boarded and activated for as little as $100 if
their masters and meta data are properly formatted. If a program requires master reformatting,
closed-captioning, key art or other formatting, the Myflix producer agreements
include these services on an exhibit with a pre-approved pricing list, including
mark-ups for Myflix services in handling, formatting and uploading of each
titles. Other streaming sites also charge
on-boarding fees, but at much higher rates, which can be burdensome to indie
suppliers. The Myflix on-boarding rates
are reasonable to the producers, yet still profitable for the venture.
Strategic Overview for Launch of
Myflix.com
and the Myflix Over-the-top (OTT) APP
Portal
The launch of Myflix can occur within 90-days following the first substantial funding from the Hannover House S-1 Shelf Registration. Based upon the filing precedent of the Form 10 Registration, and the reasonable time-frame of thirty days for funding of the initial S-1 offering, it is viable to look for a MyFlix consumer launch into North America in April, 2020. Over the course of the first year, reach and
service into international territories (initially,
English-speaking) will be activated through meta data territorial filters
available through the digital infrastructure of the company's hosting and servicing partner.
The initial trade-industry announcement of the USA launch
occurred in May (2018) at the Cannes Film Festival and Marche du Filme – the
world’s largest marketplace and gathering of studios and producers of
entertainment programs. At Cannes,
Myflix was featured as the Cover Ad for Business Of Film (visible daily on all trade publication racks), as well as a
featured ad within Screen International and Cannes Market Daily trade
publications. A feature story and
interview with principals was conducted by Jon Bryant, an entertainment
correspondent for The Guardian and BBC Worldwide – which will be made available
to Myflix for support of the USA launch, as well as utilized by Bryant’s two
key media outlets. Eric Parkinson and
Fred Shefte met with over 100 program suppliers at Cannes and received
unanimous interest and widespread support for adding programs to Myflix. Following the Cannes 2018 "trade" launch, the company received studio participation commitments from forty-three partners, collectively representing over 12,000 titles. Over 8,000 of these titles are not currently available for streaming into North America through any other site... giving MyFlix the promotional ability to tout that the site has "thousands of movies not available through any other site," which could be welcomed news for consumers facing Netflix fatigue.
The visual layout for Myflix will be
dictated in large part by the requirements to conform to the infrastructure of the company's hosting and servicing partner… but can be dressed-up with graphics, colors and text formats to
stylize the site. Myflix will be
accessible to consumers either as a direct internet URL (www.Myflix.com), or as a Myflix OTT App, which
Myflix managers will begin to aggressively promote as a “pre-installed” app for
ROKU, APPLE, SONY, LG and other manufacturers of OTT Devices and Internet
friendly DVD / Blu-Ray players. Most
players also allow for the easy download of third-party apps, so a marketing
goal will be to make the Myflix app both easy to locate, and easy to install.
MYFLIX – “APP” for Mobile Devices and Tablets - The MyFlix APP for mobile devices
and tablets is being designed by the same company currently designing
and building the DISNEY+Plus Streaming APP (which
launches to consumers this month). MyFlix
will also be available as a downloadable “APP” as well as being promoted as a
pre-installed APP to major hardware manufacturers.
In-House Management – Including
Marketing / Publicity / Advertising
Acquisitions / Title Uploading and
General Operations Adds Efficiency
Myflix will be fully integrated and
self-contained as an operation. All
managerial and operational steps relating to the acquisitions and upload of
content – as well as the marketing, promotion and advertising of the site and
portal – will be handled by in-house staff (as opposed to costly and less
controllable third-party agencies). As
mentioned previously, the day-to-day operations of the website (including streaming of content, processing
of customer payments, and monthly reporting of all activities) will be
handled by a third-party host & servicing partner for modest fees (consumer payment
processing and streaming charged based on data). Having the technical / operational / payment
processing and producer reporting duties handled by an established data management firm frees up the Myflix
managers to concentrate on acquiring exciting titles for the service and
focusing on the marketing of the site / portal to consumers.
The Myflix management team consists
of Eric Parkinson and Fred Shefte as executives (and primary contacts with the
program suppliers and studios); Desiree
Garnier as Director of Marketing; Star Noorbakhsh as Director of Publicity;
Earl Hale as Technical Services Manager; Graphics and Art
elements will be supplemented by key outside supplier Jon McCallum (Oleum Rain Studios), with Video
Production (for promotional videos and
YouTube ads) created by Arkansas One Media. The company will also employ a team of data entry / title on-boarding technicians, and an in-house CPA / Financial Controller.
The benefits of having all necessary
activities in-house are both an increase in efficiency, as well as a dramatic
decrease in cost to the venture.
Efficiency is improved through
instant communications and the knowledge that Myflix issues are the sole
beneficiary of each employee’s time… cost savings are incurred because the
modest cost of staffing (especially in Arkansas) is substantially lower than the
costs to hire a third-party services agency (with
their own overhead needs and expenses added to the equation).
As subscriptions and transactions for
Myflix grow, the expansion of the support staff can be easily adjusted.
How does VODWIZ / Hannover House
Plans to LAUNCH
The Myflix Streaming Service and APP to Consumers in only 90-Days Following the Initial S-1 Traunch Funding?
The question that some would ask is HOW can MyFlix create
awareness, curiosity, site visits and conversions into transactions over a 90-day promotional cycle following the first significant funding? Management has developed a SEVEN-TIERED
marketing approach that we feel will rapidly build awareness for Myflix –
resulting in site traffic, first-time users and conversion to repeat customers
and subscribers.
1). Supplier Marketing
2). Entertainment “Taste-Maker” Marketing
3). Targeted Social Media Marketing
4). Viral Video Outreach Campaign
5). Web Banner Barter Placements
6). Traditional “Paid” Internet Ads
7). Traditional Publicity / PR Outreach
Campaign
Each of these promotional tools will
be implemented in support of the initial consumer launch of
Myflix and are designed to spark a collective-consciousness of brand awareness
and intrigue. A summary of the principal
elements of each of these seven marketing programs is included in this
overview, along with a chart showing the anticipated total number of consumer
impressions that Myflix is targeting from each source.
1). Supplier Marketing – The majority of the titles being offered on the Myflix
platform are otherwise not available on any other streaming site. This is why
many of our producer-supplier partners feel that their own outreach efforts
will be useful in promoting specific title availabilities. Upon activation onto Myflix, we believe that many of the producers will want to assist with consumer outreach to notify contacts and colleagues of their titles' availability. We will encourage posting of title-specific news by producers onto FaceBook / Instagram and Twitter campaigns. How many of these
targeted "friends of producers" will respond and choose to see the film on MyFlix? How many might sign-up for a
trial (one-month) subscription? It’s impossible to know… however, we view
these sorts of producer outreach campaigns as being mutually beneficial (to the producer and to Myflix), but
coming at virtually no cost to Myflix. We believe that most producers
will be motivated to post their title’s availability onto social media and to
reach out to dozens (if not hundreds or thousands)
of interested friends and colleagues.
2). Entertainment “Taste-Maker” Marketing – Myflix is in possession of the
current and direct contact list of the top 350 Newspaper & Broadcast Film
Reviewers in the USA, including the New York Film Critics Circle the Los
Angeles Film Critics Association, the Chicago Film Critics and many more. Myflix intends to offer these important
taste-makers a free one-month trial subscription and access to the site… in
support of considering our request for a mention / write-up in their publications or media outlets. Myflix feels that the site’s unique service
of offering thousands of movies otherwise not available to stream merits an
entertainment story write-up and that this coverage should collectively result
in many millions of consumer impressions.
3). Targeted Social Media Marketing – In 2017, Warner Brothers
Archives and Digital Services decided to consolidate their catalogues under
Turner Classic Movies and Criterion Collection onto a single site, FilmStruck (launched in Oct., 2017).
The marketing of FilmStruck was focused “almost entirely” through Targeted Social Media (although Warners would not reveal to Ad Week if there were additional
paid placements or in-kind promotions on Warner-Brothers related websites or
media). Warners is also not formally
announcing how many subscribers it ultimately obtained for FilmStruck. But they shuttered the venture in November, 2018 due to a poor performance of subscribers vs. the costs to promote the site. An analysis of what happend with FilmStruck validates the business plan for MyFlix in several ways: it shows that Targeted Social Media Marketing can be a tremendous tool towards building subscribers and traffic... but only as PART of a multi-faceted consumer outreach campaign. The FilmStruck demise also shows that streaming portals that are OVERLY SPECIFIC to one category will struggle to compete against site with higher profile titles (or, in the case of MyFlix, sites with HUGE programming options spanning a variety of genres and entertainment product categories). MyFlix can use Social Media in a very targeted manner, focusing on users that have specifically indicated interest in independent films... or which have been tracked via web use or cookies from having
previously visited major film sites.
A reasonable “comp” digital streaming
venture for Myflix to measure against is the RLJ-Owned ACCORN MEDIA / ACCORN
TV. This streaming site consists of approximately
1,200 “British TV” related properties (many
from the BBC and Channel 4, and many that appear on PBS), plus approx.
2,000 independent films, including about 300 titles under the Urban Genre’
category. As a publicly-traded company,
RLJ releases its statistics on subscribers, and recently announced via Reuters
that it had over 700,000 monthly subscribers (paying on average $8.99 per month).
In late 2018, Discovery Channel
founder John Henricks began an aggressive marketing push for his Science /
Documentary streaming venture, entitled CURIOSITY STREAM. This specialty
streaming channel offers approx. 1,800 programs to its members, with a monthly
access fee of $2.99 (Standard Definition)
and $9.95 (4-k definition, where available). Despite the limited quantity of programs
(and the specific nature), industry estimates place the total count of monthly
subscribers for CuriosityStream at 1.5-million, which suggests a current
monthly gross of $4.4-million and about $54-mm per year based solely on the
“standard” definition subscription model. It's too soon to evaluate if the super-specific genre' model of Curiosity Stream is a good concept... or one headed in the direction of FilmStruck. Regardless, MyFlix plans to offer hundreds of documentaries and science-appeal programming from the libriaries of existing supplier partners to the venture.
4). Viral Video Outreach Campaign – One of the more cost-effective ways to generate consumer
awareness, interest and buzz is through the creation and promotion of a VIDEO
that might spark into a Viral sensation.
Although there are many examples of how “viral” videos have kick-started
ventures and sales, one of the more memorable successes recently has been the
launch of the “Squatty Potty,” via a
low-cost video placed onto YouTube – which subsequently went viral, and reached
over 50-million views (via YouTube,
Broadcast shares and other sites combined).
https://www.youtube.com/watch?v=YbYWhdLO43Q
Myflix has developed three (3) concepts for promotional
videos to support the launch of the site:
a). The Straight-Forward Informational
Video – what
is Myflix, how it works, how to sign up, etc…
b). The 1984 Programming Revolt – A parody video, inspired both by
the Orwell novel and the infamous Apple Superbowl commercial… in which Myflix
consumers revolt against being “programmed”
by the big, evil media titans – limited on what they are allowed to see – and
instead demanding the freedom to “Watch What you Want, When you Want it”
with Myflix. If this video is produced
well, with a balance of ironic wit and logic, we think it could spark viral
sharing. After all, Netflix “programmers” make the decision as to
what their subscribers will be allowed to see… how does that fit into the
ME-Generation?
c). The Film Aficionados Video – Again, portraying unnamed “other”
streaming sites as either being too limited in scope or too specialized in
programs offered, the Film Aficionados video will show some sophisticated (yet accessible Hipster-generation)
viewers scanning through the offerings of an unnamed site (think, but don’t SAY Netflix), saying “seen it, seen it, seen it, seen
it….” and asking “I’ve already seen
all these titles, where can we go to see the broadest possible selection of
films and television?” Again, if
properly executed, the Film Aficionados YouTube video will be a
super-inexpensive, and potentially very cost-efficient way to build awareness
and traffic for Myflix.
5). Web Banner Barter Placements – Myflix has initiated discussions
with key film and entertainment sites to do “barter placements” of hot-link
banner ads. E.G., the Myflix site will
have a small ad for IMDB reading something like “Everything you want to know about almost every movie ever made, visit
IMDB.com” – and quid pro quo, the IMDB site would have an equally sized ad
for Myflix reading something like “Stream
popular hits, indie favorites and thousands of movies not available on any
other site at Myflix.com.” The company has made barter ad agreements with twelve major entertainment sites.
6). Additional “Paid” Internet Ads – There are cost-effective ways to
reach the most accessible portion of the Myflix target market of film lovers,
and consumers of indie films, most notably, through THR.com (The Hollywood Reporter) and Variety –
the two top “trade” industry publications and websites. Paid banner ads for Myflix on these two sites
will benefit the company not only by reaching a specific, target market of
movie consumers, but also by legitimizing the site within the industry and to
potential program suppliers, including the some of the other major studios (that have adopted a “wait and see” position
on the launch of Myflix). A banner
ad on the home page of the Hollywood Reporter costs only $2,500 but can make over
1.5-million VERY TARGETED impressions.
Variety is equally competitive in cost per thousand. Myflix plans to include these PAID banner
placements on the same week as site launch (July
27) – and at the same time that the YouTube videos are released, the Barter
Banners are placed, and the traditional P.R. outreach is implemented.
7). Traditional Publicity / PR Outreach Campaign – Last, but not least, Myflix feels
that the company’s unique position as a new streaming portal is newsworthy at
all major levels: National Cable News,
National Entertainment News, National Talk Shows, Entertainment publications
and websites, personality publications – and of course, the wire services,
newspapers, television and radio. The
Myflix launch will include a pitch for CEO Eric Parkinson to appear on talk and
news programs to discuss the evolving market for home entertainment – and as
available, some CELEBRITY guests from featured programming may be available to also attend.
Parkinson’s unique background in home entertainment started
with his first # 1 hit in 1984 – a video highlights of the 1984 Summer
Olympics, produced in partnership with ABC Sports. Parkinson has released over 1,200 titles to
home video, including 137 Gold or Platinum Hits and 8 titles hitting the #1
best-seller status on the Billboard Video Charts. He is an articulate interview guest and is
uniquely qualified to discuss the evolution of the Home Video experience into
the digital arena… and how Myflix is ideally positioned to meet this changing
marketplace.
The seven-tiered marketing approach is designed to deliver for Myflix the
MAXIMUM number of consumer impressions at the lowest possible cost to the
venture. Myflix managers feel that these
approaches will be both more affordable and more effective than a campaign
based on paid-advertising.
* * * * *
OPERATIONAL CODE OF ETHICS, Adopted by HHSE Board of Directors, and for inclusion in the Company's FORM 10 Registration Filing:
OPERATIONAL CODE OF ETHICS, Adopted by HHSE Board of Directors, and for inclusion in the Company's FORM 10 Registration Filing:
ADHERENCE TO CODE
OF ETHICS STANDARDS
Pursuant to 17 C.F.R. § 229.406,
promulgated by the Securities and Exchange Commission to implement section 406
of the Sarbanes-Oxley Act of 2002, a company subject to reporting requirements
under the Securities Exchange Act of 1934 must disclose whether or not it has
adopted a written code of ethics applicable to its principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions, and if no such code has been adopted, why
not.
The Company believes that this
Code of Ethics is reasonably designed to deter wrongdoing and to promote the
purposes set forth in 17 C.F.R. § 229.406. The Company also believes that this
Code of Ethics promotes an atmosphere of self-awareness and prudent conduct by
encouraging and protecting the reporting of questionable behavior in accordance
with OTC Market Guidelines. As used
herein, “Company” means Hannover House, Inc. and its subsidiaries Medallion Releasing,
Inc. and Bookworks, Inc.
A. Scope.
This Code of Ethics applies to all
directors, officers and employees of the Company.
B. Purpose.
The Company is proud of the values
with which it conducts business. It has and will continue to uphold the highest
levels of business ethics and personal integrity in all types of transactions
and interactions. To this end, the Company’s Code of Ethics serves to
(1) emphasize the Company’s commitment to ethics and compliance with the
law; (2) set forth the Company’s basic standards of ethical and legal
behavior for its directors, officers and employees; (3) elaborate
reporting mechanisms for known or suspected ethical or legal violations and for
other questionable behavior; and (4) deter and detect wrongdoing.
Given the variety and complexity
of ethical questions that may arise in the course of the Company’s business,
this Code of Ethics serves only as a rough guide. Confronted with ethically
ambiguous situations, all directors, officers and employees should remember the
Company’s commitment to the highest ethical standards and seek independent
advice, where necessary, to ensure that all actions they take on behalf of the
Company honor this commitment.
C. Ethical Standards.
1. Honest and Ethical Conduct.
All directors, officers and
employees shall behave honestly and ethically at all times and with all people.
They shall act in good faith, with due care, and shall engage only in fair and
open competition, by treating ethically competitors, suppliers, customers and
colleagues. They shall not misrepresent facts or engage in illegal, unethical,
or anti-competitive practices for personal or professional gain. No director,
officer or employee may offer or accept bribes, kickbacks or substantial gifts either
directly or through another party.
This fundamental standard of
honest and ethical conduct extends to the handling of conflicts of interest.
All directors, officers and employees shall avoid any actual, potential, or
apparent conflicts of interest with the Company and any personal activities,
investments or associations that might give rise to such conflicts. They shall
not use the Company for personal gain, self-deal, compete with the Company or
take advantage of corporate opportunities other than on behalf of the Company.
They shall act on behalf of the Company free from improper influence or the
appearance of improper influence on their judgment or performance of duties.
There is a likely conflict of interest if, for example, a director, officer or
employee causes the Company to engage in business transactions with relatives
or friends; receives loans or guarantees of obligations from the Company (or a
third party because of his or her relationship to the Company); has more than a
modest financial interest in the Company’s competitors, suppliers, or
customers; or uses non-public information for personal gain or for gain by
relatives or friends.
If a director, officer or employee
involved in a particular decision has a relationship—business, financial, or
otherwise—with a competitor, supplier, customer, candidate for employment or
other person, that might impair or appear to impair his or her independence in
making that decision, he or she shall disclose such relationship to the
Chairman of the Audit Committee. No action may be taken with respect to the
transaction or party giving rise to the actual, potential or apparent conflict
unless and until such action has been approved by the Audit Committee.
2. Timely and Truthful
Disclosure.
In reports and documents filed
with or submitted to the Securities and Exchange Commission and other
regulators, and in other public communications made by the Company, the
Company’s directors, officers and employees involved in the preparation of such
reports, documents and communications shall make disclosures that are full,
fair, accurate, timely and understandable. Such disclosures shall contain
thoroughly and accurately reported financial and accounting data. No director,
officer or employee shall knowingly conceal or falsify information,
misrepresent material facts or omit material facts necessary to avoid
misleading the Company’s independent public auditor or the public.
3. Legal Compliance.
In conducting the business of the
Company, all directors, officers and employees shall comply with applicable
governmental laws, rules and regulations at all levels of government in the
United States and in any non-U.S. jurisdiction in which the Company does
business. If a director, officer or employee is unsure whether a particular
action would violate an applicable law, rule, or regulation, he or she
should seek the advice of the Company’s outside counsel before undertaking it.
It is always illegal to trade in the Company’s securities while in possession
of material, non-public information, and it is also illegal to communicate or
“tip” such information to others.
4. Confidentiality.
The Company’s directors, officers
and employees shall take all reasonable steps to protect the confidentiality of
non-public information about the Company and its customers and to prevent the
unauthorized disclosure of such information unless required by applicable law
or regulation or legal or regulatory process.
5. Conflicts
of Interest.
The Company’s directors, officers
and employees shall take all reasonable steps to avoid any and all forms of “conflict
of interests” which either directly or indirectly benefit the individual over
the Company, or which appear to conflict with the impartial and objective
performance of an individual’s duty to the Company. A conflict of
interest shall include any situation under which a director, officer, or
employee takes actions or has interests that may make it difficult to perform
his or her work on behalf of the Company in an objective and effective
manner. Conflicts of interest may also arise when a director,
officer, or employee, or a member of his or her family, receives improper
personal benefits as a result of his or her position with the
Company. Loans to, or guarantees of obligations of, employees and
their immediate family members shall also constitute an unacceptable conflict
of interest.
D. Violations of Ethical
Standards.
1. Reporting Known or
Suspected Violations.
The Company’s directors and
executive officers shall promptly report any known or suspected violations of
this Code of Ethics and any other questionable behavior to the Chairman of the
Audit Committee. No retaliatory action of any kind will be permitted against
anyone making such a report, and the Audit Committee will strictly enforce this
prohibition.
Upon learning of any unethical
business conduct, or dishonest or illegal acts, the Audit Committee shall
investigate the report as it deems appropriate and provide feedback to the reporting
party (unless such party is anonymous) as to the result of its investigation.
2. Accountability for
Adherence.
If the Audit Committee determines
that this Code of Ethics has been violated directly or by failure to report a
violation, withholding information related to a violation or taking prohibited
retaliatory action against someone who reported questionable behavior, it may
discipline the offending director, officer or employee for non-compliance with
penalties up to and including removal from office or dismissal. Such penalties
may include, depending upon the severity of the infraction, oral or written
reprimands, the withholding of bonuses, the deduction of some or all of the
person’s earned deferred management compensation, the forfeiture of director
stipends, removal from committees of the Board of Directors and, if warranted,
termination. In addition, violations may result in criminal penalties and/or
civil liabilities for the offending director, officer or employee and/or the
Company.
E. Waivers
Excepting as may be prohibited
under regulations or procedures as set forth by the Securities and Exchange
Commission, the Company’s Board of Directors, in its discretion, may grant a
waiver of a provision of this Code of Ethics to any director, officer or
employee. If the waiver is granted for a director or executive officer, a
current report on Form 8-K must be filed with the Securities and Exchange
Commission in accordance with the applicable rules and regulations of the
Commission and the OTCQB Market.
