Hannover House Inc (HHSE)

[mikeymgd]

A solid post but some of the DD is not exactly accurate.

My DD is fully backed by HHSE SEC documents..

FACT #1... they have 580 million in the O/S and had (up until yesterday) only 600 million A/S

No arguing this. Though I understand the reasoning in the 8K, it is a huge disappointment to see this. I find it a failure on managements part PERIOD.

Fact #2 HHSE reported 1.8 million in current debt.

True and I would think this will take years to pay off. I do not see HHSE generating beyond 10m in revenue within the next couple of years. Though the debt is reasonable at 1.8m, paying it down Q0Q will help reduce concerns.

Fact #3 they reported less than 10 grand in the bank.. in other words they have no money to pay their bills.

Absolutely incorrect based on accounting measures. In no place does it show Accounts Payable due in the amount of 10k a DAY. For that reason the under 10K is but a moment in time. Since HHSE is small their cash should always remain very very tiny. A large cash balance would be a red flag of false accounting. Tiny companies growing revenue will always be on the brink of not paying bills. They require available cash to go to sales and not to sit in bank accounts. Also consider Prepaids as savings accounts.

Fact #4 again HHSE themselves reported 25 Million shares in dilution for last quarter alone.. why? see fact #3...
all easily readable on Federal Securities and Exchange Commision documents..

which leads me to what will be...

In correct. They reported 17m dilution. The other 8m shares had their restricted legends removed but were part of the OS the whole time. The float changed but that is not dilution.

Not actually accurate
Change
During
Share Structure Description
12/31/2013 9/30/2013 Quarter

Unrestricted Common Stock
449,580,622 424,437,771
25.412.851

Restricted Common Stock
130,651,743 138,651,743
(8,000,000)

COMMON STOCK ISSUED
580,232,365 563,089,514
17,142,851

THIS IS FROM THEIR ANNUAL FILING....

Fact#5 HHSE will dilute the newly added 100 million shares in the authorized.

That is not a fact. The fact is its your opinion..THAT IS NOT DISPUTABLE AS FACT. Just because something happens in the past does not automatically make it a fact prior to its future action. Though to be fair, odds are huge that a majority if not all will be diluted.

Fact#6 they will easily eclipse 600 million shares in O/S within the next year..

Again a 100% false statement. Until it occurs its not a fact but an opinion. Though again I agree with you and fully expect HHSE to exceed 600m OS within the next 12 months.

unless HHSE is lying to you.. are they? here let me get you what they told the federal government..

yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=9794837-1133-57074&type=sect&dcn=0001471242-14-000060

i sure hope they arent lying.. i for one happen to believe the documents eric puts out are legitimate.

In the end the stock is a great trade. HHSE continues to struggle as a growing company. They made great progress last year and continue to rebuild from a gross failure in 2012. They greatly need to find a way to grow margins again and get cash flow moving higher. As they work on building sales, the company increases in value but at the same time they continue to dilute its value through share distribution. Hopefully very soon the two will diverge and growth will far outpace dilution. Till then the stock will be volatile with great resistance at each up leg. Take advantage of the volatility while growing a core position for nearly no cost but profits. That is what I feel the best position here.

One last important note

YoY Revenue Growth was 31.9%
YoY Share growth(dilution) was 18.5%

For the stock price to truly run, this difference will need to be much greater.

JMHO of course.