31. In November 2004, the Company announced an internal audit that needed to be completed before they could file their Form10-K with the Securities and Exchange Commission (“SEC”). The American Stock Exchange then halted trading of Hanover shares because of the Company’s uncorrected accounting problems. Hanover shares were delisted from the American Stock Exchange. Without any word from the Company, the shares then started trading on the Pink Sheets, where they remain until this day.
32. The Company’s internal audit was not completed until February of 2006. On
February 21, 2006, the Company issued a press release announcing preliminary financial results for the fourth quarter and fiscal year 2005 and the completion of the 2004 audit and the filing of all past due SEC periodic reports.
33. Specifically, Hanover said it expects to report revenue of $407 million for 2005, compared with $403 million in the prior year. Net income for 2005, which includes some one-time sources, is expected to be $11.7 million, compared with $4.9 million for fiscal 2004. Despite the generally positive results, including the Company maintaining constant year-over year sales, as well as achieving a profit despite the costs associated with the year-long audit, the statements by the Company in the release accentuated only the negatives associated with the financials and the audit. Despite the negative tone of the Hanover press release concerning its 2005 results, the stock closed at $2.55 on Friday, February 24 . th
The Buyout Offer From Chelsey
34. On February 27, 2006, Hanover announced that it received a proposal from Chelsey
to acquire all of the Company’s outstanding stock that it does not already own for $1.25 per share in cash, a significant discount to its last trading price (the “Offer”). Chelsey has stated that it is only interested in pursuing the Offer and has no interest in selling its holdings in Hanover.
