This will help.
20 How much capital does Hannover currently have at its disposal to complete future negative pickups? What sources of future financing are contemplated?
Answer: We're not doing "negative pick-up" deals. I do remember that term from the 1980's however, back when production ventures were not sophisticated in structure. Most of the deals Hannover / TDGI has closed (or are pursuing) are for the North American rights to already produced / completed features. This is a far safer business model than investing in scripts and hoping-to-hell that the movies turn out to be watchable / releasable. Our financing sources for acquisitions include cash flow from current and upcoming releases, and the ongoing availability of off-balance-sheet private investors for specific title acquisitions. For instance, we had a private investor group supporting a Hannover TDGI bid of $17-million for the franchise rights to "TERMINATOR" (we did not win this bid, as Pacificor prevailed at $29.5-million!). If we had tried to raise $17-million through a TDGI stock venture at $.03 per share, that would have required the issuance of about 566-MILLION shares of stock, effectively doubling our total shares. Not a great idea. I do think it's exciting that Hannover / TDGI is being invited into such high profile opportunities as the "TERMINATOR" franchise, and that we have significant off-balance sheet sources available for big ventures.
21 How does Hannover finance its P&A?
Answer: Already answered, but for clarity, I'll cover the film "TWELVE." Of the $2.2-million being spent on "TWELVE," approx. $1-mm is from cash (mostly from the stock venture) and about $1.2-mm is from vendor credit lines (with the broadcast agency, the newspapers and the labs). As we collect the revenues from "TWELVE," we'll use receipts to pay off (and "replenish") our vendor credit lines, and we'll recycle the $1-mm or so in cash expenditures into future releases. Basically, we'll keep rebooting the same $2-mm to $2.5-mm every six to eight weeks. If we need more funds, then we have the option of investing some of our distribution fee income, or accessing off-balance sheet private participant funds.
