Hannover House Inc (HHSE)

[DJPennyTrader]

3). DISCUSSION ABOUT THE DELAYS IN AUDITS – Shareholders asked both Parkinson and Shefte questions about the various delays and issues that have impacted the completion and / or publication of the 2010 and 2011 audits. While a variety of issue were discussed that had previously impacted the completion, the remaining issue at present was identified as “back-up” for the Producer Recoupment and Pre-Paid Producer Advances line items on the Company’s balance sheet. Parkinson described the difficulties in providing auditable back-up for some of the older items (i.e., titles acquired and initially released prior to 2008), due to incompatible software formats, deep record storage and the absence of support receipts, invoices (and in some cases, the absence of third-party suppliers to confirm work performed on titles dating back more than four years). The establishment of a beginning position for each of the titles in the Company’s Film and Television Library (as of Jan. 1, 2010), and a level of backup support for each line entry, was identified as the last, difficult or unaddressed issue impacting the 2010 and 2011 audits. Parkinson and Shefte both explained that future audits – including the year ending December 31, 2012 – should be very easy and fast to complete, once these supported “base line / starting point” balance sheet line items were accepted.