Hannover House Inc (HHSE)

[Etrnaly]

They gave info on the off balance financing for "Twelve."

BOARD AGENDA ITEM “A” – Approval of Off-Balance Sheet Financing Opportunities –
The Board reviewed the proposal set forth by C.E.O. Eric Parkinson regarding the financing for
the acquisition and release of major, theatrical-caliber titles, including director Joel
Schumacher’s drama, “TWELVE.” Under the Parkinson plan for “TWELVE”, the financing
required to pay for the film’s license fee advance (USD $1.75-mm) and for the film’s Prints &
Advertising / theatrical releasing costs (approximately USD $2-mm) would be funded through a
combination of private investor funds, supplier credit terms, pre-paid advertising and internal
corporate cash resources, and would not require an issuance of company stock or equity. The
private investor funding portion would be repaid with a priority recoupment position from
incoming revenues of “TWELVE” and an ongoing participation in the company’s applicable
distribution fees for that specific title, but that the venture would not be structured as a corporate
debt obligation. As such, the private funding venture for “TWELVE” would not hold recourse
against the company other than against the rights granted in and to that specific title. Additional
funding opportunities were discussed covering supplier credit proposals from three media
placement agencies and from two major film laboratories, which would be supplemented with
cash flow from the company’s operations to collectively fully fund theatrical releasing
expenditures. The Board voted to approve this plan for the financing of the acquisition and
release of “TWELVE” and to use this funding structure for the company’s pursuit of additional,
high-profile features.

So it cost approximately $3.75mm to license and print the film. Part of it was paid by the company and another part was paid by the off balance sheet financing. The private investor will get paid back first. If the movie flops, the investor can't hold the company accountable.

Sounds like a pretty good deal to me. As for the audited financials, we got a preview not too long ago. We're just waiting for the CPA to finish the audit.