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Hannover House Inc (HHSE)
OTHER OTC:HHSE
US Market

Hannover House (HHSE) Risk Analysis

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Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

Hannover House disclosed 12 risk factors in its most recent earnings report. Hannover House reported the most risks in the “Finance & Corporate” category.

Risk Overview Q4, 2020

Risk Distribution
12Risks
58% Finance & Corporate
25% Production
8% Ability to Sell
8% Macro & Political
0% Tech & Innovation
0% Legal & Regulatory
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.

Risk Change Over Time

S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
Hannover House Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.

The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.

Risk Highlights Q4, 2020

Main Risk Category
Finance & Corporate
With 7 Risks
Finance & Corporate
With 7 Risks
Number of Disclosed Risks
12
S&P 500 Average: 32
12
S&P 500 Average: 32
Recent Changes
0Risks added
0Risks removed
0Risks changed
Since Dec 2020
0Risks added
0Risks removed
0Risks changed
Since Dec 2020
Number of Risk Changed
0
S&P 500 Average: 4
0
S&P 500 Average: 4
See the risk highlights of Hannover House in the last period.

Risk Word Cloud

The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.

Risk Factors Full Breakdown - Total Risks 12

Finance & Corporate
Total Risks: 7/12 (58%)Above Sector Average
Share Price & Shareholder Rights5 | 41.7%
Share Price & Shareholder Rights - Risk 1
Company's common stock shares are not currently trading "electronically" through the DTCC which can limit an Investor / Shareholder's placement with brokers (if shares are acquired via "paper certificates").
As of June 1, 2020 common stock shares of Hannover House, Inc. were approved for electronic clearance and transfer through the Depository Trust Clearing Corporation (DTCC). Shareholders may still request a physical (paper) share certificate if electronic transfer is not preferred.
Share Price & Shareholder Rights - Risk 2
Our stock price may be highly volatile and subject to wide fluctuations due to many factors, including a substantial market overhang.
The market price of our common stock may be highly volatile and subject to wide fluctuations in response to quarterly variations in operating results, announcements of distribution agreements, new affiliations or new products and services by us or our competitors, changes in financial estimates by securities analysts, lack of market acceptance of our products, or other events or factors, including the risk factors described herein. In addition, the stock market in general experiences significant price and volume fluctuations that are often unrelated to a company's operating performance. As with any public company, we may be subject to securities class action litigation following periods of volatility in the market price of our securities which could result in substantial costs and a diversion of management's attention and resources.
Share Price & Shareholder Rights - Risk 3
Our common stock is subject to the "penny stock" rules of the SEC and the trading volume in our securities is, to date, modest, which can make transactions in our stock cumbersome and may reduce the value of an investment in our stock.
The SEC has adopted Rule 15g-9, which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must: (i) obtain financial information and investment experience objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Share Price & Shareholder Rights - Risk 4
Investors / Shareholders may experience a dilution of ownership interest because of the future issuance of additional shares of our common stock and our preferred stock.
In the future, Hannover House, Inc. may issue authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. The Company is currently authorized to issue an aggregate of 980,000,000 shares (to accommodate the upcoming S1 stock offering which calls for the sale of up to 150-million shares in three stages of 50-million shares each). It is possible that some key creditors / debt holders of the Company may elect to convert their existing debts into shares in the Company. While such an action would have a beneficial impact to the Company's balance sheet, the issuance of new shares could negatively impact earnings per-share and overall value to existing shareholders. The Company may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes. The future issuance of any such additional shares of our common stock or other securities may create downward pressure on the trading price of our common stock. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes, including at a price (or exercise prices) below the price at which shares of our common stock are then quoted on the OTC or other quotation system.
Share Price & Shareholder Rights - Risk 5
Our current corporate President, Don Frederick Shefte, has indicated that he will be retiring at some point during the first half of 2021.
Don Frederick Shefte (74) has been battling cardio-pulmonary health issues for several years, including 12-weeks of hospitalized intensive care in late 2018. Shefte has also gone through a marriage divorce in 2020 and a Feb. 8, 2021 personal bankruptcy filing. Accordingly, Mr. Shefte has expressed interest in retiring or resigning from his duties as President of the Company at some point during the first half of 2021 – subject to the timely filing of the Company's Form 10, S1 and the successful launch of the MyFlix streaming service. Although several qualified candidates have presented themselves as suitable replacements in the position as8"President," there is no assurance that a replacement President and Officer with the professional experience of Shefte will be available to the Company – certainly under Shefte's current voluntary salary waiver – unless these corporate achievements have been completed.
Accounting & Financial Operations1 | 8.3%
Accounting & Financial Operations - Risk 1
Company does not expect to pay dividends for some time, which could result in no immediate return on a stock purchase investment.
Hannover House, Inc. has never declared or paid cash dividends on our common stock. We currently intend to retain our earnings, if any, to provide funds for the operation and expansion of our business and, therefore, do not anticipate declaring or paying cash dividends in the foreseeable future. Any payment of future dividends will be at the discretion of the Company's board of directors and will depend upon, among other things, our earnings, financial condition, capital requirements, level of indebtedness, contractual restrictions with respect to the payment of dividends and other relevant factors of our operations.
Debt & Financing1 | 8.3%
Debt & Financing - Risk 1
The Company needs additional capital for new venture development, new product acquisition, general operations and existing debt management.
The development, production and distribution of original content feature films – as well as the onboarding and launch of the MyFlix streaming portal each demand significant funding resources which exceed the company's abilities from current revenue levels. To continue with the acquisition (or production) of commercially viable feature film products – and to finance the costs to on-board titles and launch the MyFlix streaming site – Company will be reliant upon outside financing which may not be available. Sources which the Company plans to pursue include the issuance of a S1 stock registration filing to raise up to eight million dollars (USD $8,000,000) for such ventures. Other financing options include the use of international pre-sales and various co-production and state film incentives to provide the capital for high-profile feature film productions. Currently, the Company has no established bank-financing arrangements. Therefore, it is likely that the Company's future financing need would involve some form of registration offering or future private offerings of the Hannover House, Inc. equity securities, debt financings, or strategic partnerships and other arrangements with corporate partners.
Production
Total Risks: 3/12 (25%)Above Sector Average
Employment / Personnel2 | 16.7%
Employment / Personnel - Risk 1
Our future growth will require the recruitment of additional qualified employees, and there is no assurance that we will be able to find such employees on acceptable terms.
To accommodate our future growth, we will need to increase the depth and experience of our employees and management team. Our future success will depend to a large degree upon the active participation of our key officers and employees. There is no assurance that we will be able to employ additional qualified persons on acceptable terms. Lack of qualified employees will adversely affect our business development.
Employment / Personnel - Risk 2
Our future success is substantially dependent on the performance and continued service of Eric Parkinson, our Chief Executive Officer.
We are presently substantially dependent on the experience, abilities, industry relationships and continued services of Eric F. Parkinson, our Chief Executive Officer. The loss of Mr. Parkinson's services would be highly detrimental to the Company's ongoing and future business, and his replacement with an executive with Mr. Parkinson's level of experience and prior success in the entertainment distribution industry could be prohibitively expensive; Parkinson has been waiving any salary for over 18-months, having previously deferred the majority of prior salary. Additionally, Parkinson has been loaning personal funds to the Company over the past two years – most recently with loans totaling over $25,000 during 2020. It's very unlikely that an experienced and proven successful entertainment executive could be obtained who would agree to not take a salary as well as to provide loans to the company, as has been the case with Parkinson.
Costs1 | 8.3%
Costs - Risk 1
We may incur significant costs to ensure compliance with corporate governance and accounting requirements.
With the Company's impending registration through the Securities and Exchange Commission, the enhanced level of compliance and disclosure – including audit and review requirements – may result in a strain on the Company's resources. New operational procedures will need to be implemented and maintained, to comply with the Company's public company reporting requirements, including operational compliance under the Sarbanes-Oxley Act of 2002, and other rules implemented by the SEC. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers.
Ability to Sell
Total Risks: 1/12 (8%)Below Sector Average
Sales & Marketing1 | 8.3%
Sales & Marketing - Risk 1
The company's previous core-business of DVD Distribution is being eroded and replaced with digital streaming media for deliver to consumers.
During the years 2004 through 2008, the company was selling nearly four-million DVD units per year to Walmart Stores, Inc., primarily for the "budget bin" business (at suggested retail prices of $5.00 or less), in addition to a robust new-release business for two or three higher priced DVD titles per month. Beginning with the emergence of the BluRay format, available retail shelf space at Walmart, Target, Best Buy and other major USA retailers began to shrink for independent films. Beginning with the emergence of the Netflix / Amazon Prime models of direct-to-home digital delivery of entertainment, the consumer buying trends have evolved away from DVD and BluRay units in favor of home streaming. While Hannover House is moving its titles into the streaming media – both through multiplatform placements as well as through the planned "MYFLIX" multi-studio site, there can be no assurance that the revenues previously generated by DVD and BluRay physical units will be fully replaced with digital streaming revenues.
Macro & Political
Total Risks: 1/12 (8%)Above Sector Average
Natural and Human Disruptions1 | 8.3%
Natural and Human Disruptions - Risk 1
The Company's secondary business of "booking" films into theatres has been effectively frozen during the COVID-19 Shut down of theatres and public spaces.
HHSE and Medallion had to postpone five films that were planned for release to theatres during 2020, which titles were expected to generate over $250,000 in "fees" to the company. The prolonged closure of theatres during COVID safety protocols has essentially removed this income generating activity from the company at this time.
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
    The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
      They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
        It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
          How do companies disclose their risk factors?
          Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
            Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
              Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
                According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
                  How can I use TipRanks risk factors in my stock research?
                  Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
                    You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
                      Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
                        A simplified analysis of risk factors is unique to TipRanks.
                          What are all the risk factor categories?
                          TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
                          1. Financial & Corporate
                          • Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
                          • Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
                          • Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
                          • Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
                          2. Legal & Regulatory
                          • Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
                          • Regulation – risks related to compliance, GDPR, and new legislation.
                          • Environmental / Social – risks related to environmental regulation and to data privacy.
                          • Taxation & Government Incentives – risks related to taxation and changes in government incentives.
                          3. Production
                          • Costs – risks related to costs of production including commodity prices, future contracts, inventory.
                          • Supply Chain – risks related to the company’s suppliers.
                          • Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
                          • Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
                          4. Technology & Innovation
                          • Innovation / R&D – risks related to innovation and new product development.
                          • Technology – risks related to the company’s reliance on technology.
                          • Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
                          • Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
                          5. Ability to Sell
                          • Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
                          • Competition – risks related to the company’s competition including substitutes.
                          • Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
                          • Brand & Reputation – risks related to the company’s brand and reputation.
                          6. Macro & Political
                          • Economy & Political Environment – risks related to changes in economic and political conditions.
                          • Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
                          • International Operations – risks related to the global nature of the company.
                          • Capital Markets – risks related to exchange rates and trade, cryptocurrency.
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