U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2008
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
-------------- ------------------
Commission File No.
000-50892
Hangman Productions, Inc.
------------------------
(Name of Small Business Issuer as specified in its charter)
UTAH 87-0638511
---- -----------
(State or other jurisdiction of (Employer I.D. No.)
organization)
1338 S FOOTHILL DR. #200
SALT LAKE CITY, UT 84108
-----------------
(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (801) 649-3519
(Former Name or Former Address, if changed since last Report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
(1) Yes X No (2) Yes X No
---- ---- ---- ----
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. (as
defined in Rule 12b-2 of the Exchange Act).
Large accelerated filer [_] Accelerated filer [_]
Non-accelerated filer [_] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
None, Not Applicable;
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by court. Yes |_| No |X|
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the Registrant's classes of common stock, as of the latest
practicable date:
August 11, 2008
1,490,000
1
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements.
The Financial Statements of the Registrant required to be filed with this
Quarterly Report were prepared by management and commence on the following page,
together with related Notes. In the opinion of management, the Financial
Statements fairly present the financial condition of the Registrant. The
Financial Statements are on file with the Company's Auditor.
2
HANGMAN PRODUCTIONS, INC.
[A Development Stage Company]
CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2008
and December 31, 2007
6/30/2008 12/31/2007
-------------------------------------
[Unaudited] [Audited]
ASSETS
Assets
Current Assets
Cash $ 25,922 $ 12,461
Prepaid Expenses - 684
-------------------------------------
Total Current Assets 25,922 13,145
Non-Current Assets
Film Costs - 77,448
-------------------------------------
Total Non-Current Assets - 77,448
Total Assets $ 25,922 $ 90,593
=====================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities
Current Liabilities
Accounts Payable $ 10,634 $10,990
Franchise Taxes Payable 100 100
Accrued Interest - Related Party 981 981
Unearned Revenue 3,395
Accrued Director Compensation 2,320 3,013
-------------------------------------
Total Current Liabilities 17,430 15,084
-------------------------------------
Long Term Liabilities
Note Payable - Shareholders $ 48,343 $ 46,020
-------------------------------------
Total Long Term Liabilities 48,343 46,020
-------------------------------------
Total Liabilities $ 65,773 $ 61,104
Noncontrolling Interest - 90,000
Stockholders' Deficit
Common Stock, $.01 par value;
50,000,000 shares authorized;
1,490,000 shares issued and outstanding 14,900 14,900
Paid-in Capital 102,997 45,400
Deficit Accumulated during the development stage (157,748) (120,811)
-------------------------------------
Total Stockholders' Deficit (39,851) (60,511)
-------------------------------------
Total Liabilities and Stockholders' Deficit $ 25,922 $ 90,593
=====================================
See accompanying notes to financial statements
3
HANGMAN PRODUCTIONS, INC.
[A Development Stage Company]
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Month and Six Month Periods Ended June 30, 2008 and 2007
and for the period from inception through June 30, 2008
For the For the For the For the Since Inception
Three Months Three Months Six Months Six Months [8/11/99]
Ended Ended Ended Ended through
6/30/08 6/30/2007 6/30/08 6/30/2007 6/30/2008
------------ ------------ ------------ ------------ -------------
Revenues $ - $ - $ - $ - $ 16,509
Cost Of Sales - - - - 5,750
------------ ------------ ------------ ------------ -------------
Gross Margin - - - - 10,759
General and Administrative Expenses 13,181 5,719 23,395 11,913 129,402
------------ ------------ ------------ ------------ -------------
Operating Loss (13,181) (5,719) (23,395) (11,913) (118,643)
Interest Income - - - - 32
Interest Expense (1,205) (696) (2,380) (1,096) (6,327)
------------ ------------ ------------ ------------ -------------
Net Loss from Continuing Operations
before Income Taxes (14,386) (6,415) (25,775) (13,009) (124,938)
Provision for Income Taxes - - - - 400
------------ ------------ ------------ ------------ -------------
Net Loss from Continuing Operations (14,386) (6,415) (25,775) (13,009) (125,338)
Discontinued Operations:
Gain/(Loss) from discontinued
operations, net of tax (6,044) (5,326) (11,162) (5,326) (32,410)
------------ ------------ ------------ ------------ -------------
Loss from Discontinued Operations 6,044 (5,326) (11,162) (5,326) (32,410)
------------ ------------ ------------ ------------ -------------
Net Income/(Loss) (20,430) (11,741) (36,937) (18,335) (157,748)
============ ============ ============ ============ =============
Income/(Loss) Per Share $(0.01) $(0.01) $(0.02) $ (0.01) $ (0.17)
============ ============ ============ ============ =============
Weighted Average Shares Outstanding 1,490,000 1,490,000 1,490,000 1,490,000 912,083
============ ============ ============ ============ =============
See accompanying notes to financial statements
4
HANGMAN PRODUCTIONS, INC.
[A Development Stage Company]
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Month Periods Ended June 30, 2008 and 2007
and for the period from inception through June 30, 2008
For the For the Since Inception
Six Months Six Months [8/11/99]
Ended Ended through
6/30/2008 6/30/2007 6/30/2008
----------- ----------- -----------
Cash Flows Provided by (used for)
Operating activities
Net Income/(Loss) (36,937) (18,335) (157,748)
(Gain)/Loss from Discontinued Operations 11,162 5,326 32,410
----------- ----------- -----------
Loss from Continuing Operations (25,755) (13,009) (125,338)
Adjustments to reconcile net loss to net cash
Provided/(Used) by Operating Activities:
Non-cash Contributed by Shareholder 600 600 2,400
(Increase)/Decrease in prepaid expenses 684 - -
Increase / (Decrease) accounts payable 3,601 2,958 10,634
Increase / (Decrease) in income taxes payable - 197 100
Increase / (Decrease) in Salaries payable 57 54 39,820
Increase / (Decrease) in accrued interest -
related party 2,323 1,042 4,324
Increase / (Decrease) in unearned revenue 3,395 - 3,395
----------- ----------- -----------
Net Cash Provided by (used) in continuing operations (15,115) (8,158) (64,665)
Net Cash Provided by (used) in discontinued operations (26,224) (62,870) (120,213)
----------- ----------- -----------
Net Cash Provided by (used) in Operating Activities (41,339) (71,028) (184,878)
----------- ----------- -----------
Cash Flows Provided by Investing Activities
Net Cash Provided by (used) in continuing
Investing Activities - - -
Net Cash Provided by (used) in discontinued
Investing Activities 29,800 - 29,800
----------- ----------- -----------
Net Cash Provided by Investing Activities 29,800 - 29,800
----------- ----------- -----------
Cash Flows Provided by Financing Activities
Proceeds from loans from shareholder - 15,000 49,000
Repayment on loans from shareholder - - (4,000)
Issued Stock for cash - - 21,000
----------- ----------- -----------
Net Cash Provided by (used) in continuing
Financing Activities - 15,000 66,000
Net Cash Provided by (used) in discontinued
Financing Activities 25,000 90,000 115,000
----------- ----------- -----------
Net Cash Provided by Financing Activities 25,000 105,000 181,000
----------- ----------- -----------
Net Increase in cash 13,461 33,972 25,922
Beginning Cash Balance 12,461 68 -
----------- ----------- -----------
Ending Cash Balance $ 25,922 $ 34,040 25,922
=========== =========== ===========
Supplemental Schedule of Cash Flow Activities
Cash paid for
Interest $ - $ - $ -
Income taxes $ - $ - $ 884
Stock issued for accrued liabilities $ - $ - $ 37,500
Non-cash gain from disposal of subsidiary $ 27,197 $ - $ -
See accompanying notes to financial statements
5
HANGMAN PRODUCTIONS, INC.
[A Development Stage Company]
Notes to the Condensed Consolidated Financial Statements
NOTE 1- BASIS OF PRESENTATION
The accompanying unaudited, condensed financial statements of Hangman
Productions, Inc. have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission ("SEC") and
disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and
notes thereto contained in the Company's Annual Report on Form 10-KSB
for the period ended December 31, 2007. In the opinion of management
these interim financial statements contain all adjustments, which
consist of normal recurring adjustments, necessary for a fair
presentation of financial position. The results of operations for the
interim period are not necessarily indicative of the results to be
expected for the full year.
Reclassifications - Certain reclassifications have been made to prior
period balances in order to conform to current period classifications.
NOTE 2- LIQUIDITY/GOING CONCERN
The Company has accumulated losses since inception, has minimal
assets, and has a net loss from continuing operations of $14,386 for
the three months ended June, 2008. Because the Company has accumulated
losses from it operations since inception, has minimal liquid current
assets, and has limited sales activity there is substantial doubt
about the Company's ability to continue as a going concern. Management
plans include continuing to develop its screenplay contests. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
NOTE 3- DIRECTOR COMPENSATION EXPENSES / RELATED PARTY TRANSACTIONS
On April 1, 2006, the Company's Board of Directors resolved to suspend
officer and director salaries until the Company generates positive
operating cash flows. Accordingly, there was no officer expense
recorded for the three months ended June 30, 2008. Should operations
produce positive cash flow, compensation will resume with one officer
receiving $1,000 per month, another receiving $500 per month, and the
third receiving $100 per month.
Beginning July 1, 2006 salaries payable began accruing interest at a
rate of 5% per annum. The amounts owed are unsecured and are due on
December 31, 2008. The Company has accrued interest relating to the
salaries payable of $220 at June 30, 2008.
During the year ended December 31, 2007, James Doolin, the Company's
President and director, loaned the Company $13,500 on an unsecured
debenture. The Note accrues interest at 10% per annum and matures on
December 31, 2010. As of June 30, 2008, the outstanding note payable
to the shareholder was $28,025. For the quarter ended June 30, 2008
the Company accrued interest of $682 on the note.
During the year ended December 31, 2007, a shareholder loaned the
Company $18,500 on an unsecured debenture. The Note accrues interest
at 10% per annum and matures on December 31, 2010. As of June 30,
2008, the outstanding note payable to the shareholder was $20,318. For
the quarter ended June 30, 2008, the Company accrued interest of $494
on the note.
As of June 30, 2008, approximately 68% of the Company's issued and
outstanding common stock was controlled by one family giving them
effective power to control the vote on substantially all significant
matters without the approval of other stockholders.
During the quarter ended June 30, 2008, management has provided office
space, telephone service, and computer usage to the Company.
Management has estimated a percentage of usage of the resources to
calculate and record the expenses and believes this estimate to be
reasonable. Any difference between this estimate and the cost of
resources if procured on a stand alone basis is considered immaterial.
The amount allocated, charged to expense and equity for the three
months ended June 30, 2008 equates to $300.
6
HANGMAN PRODUCTIONS, INC.
[A Development Stage Company]
Notes to the Condensed Consolidated Financial Statements
Note 4 - Discontinued Operations
On June 1, 2008, Hangman sold its entire interest in 4th Grade Films,
Inc., 745,000 common shares of stock, at $0.04 per share for an
aggregate price of $29,800, to Michael Doolin, the father of James
Doolin, the President and a director of the Company. Hangman's total
investment in the shares of common stock of 4th Grade was
approximately $5,200. Due to the related party nature of the
transaction, no gain was recognized and additional paid in capital was
increased by $56,997. The results of operations of 4th Grade have been
retroactively restated as discontinued operations.
Note 5 - Recent Accounting Pronouncements
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities" (SFAS 159). This
Statement provides companies with an option to report selected
financial assets and liabilities at fair value. Generally accepted
accounting principles have required different measurement attributes
for different assets and liabilities that can create artificial
volatility in earnings. The Statement's objective is to reduce both
complexity in accounting for financial instruments and the volatility
in earnings caused by measuring related assets and liabilities
differently. SFAS 159 was effective for the Company beginning January
1, 2008 with no impact on the Company's condensed consolidated
financial statements.
In March 2008, the FASB issued SFAS No. 161, "Disclosures about
Derivative Instruments and Hedging Activities. "SFAS 161 is intended
to improve financial reporting about derivative instruments and
hedging activities by requiring enhanced disclosures to enable
investors to better understand their effects on an entity's financial
position, financial performance, and cash flows. SFAS 161 is effective
for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008, with early application encouraged.
We do not anticipate a material impact upon adoption.
In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally
Accepted Accounting Principles. The new standard is intended to
improve financial reporting by identifying a consistent framework, or
hierarchy, for selecting accounting principles to be used in preparing
financial statements that are presented in conformity with generally
accepted accounting principles ("GAAP") for nongovernmental entities
in the United States. SFAS 162 is effective 60 days following SEC
approval of the Public Company Accounting Oversight Board Auditing
amendments to AU Section 411, "The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles." The Company
is currently evaluating the impact, if any, of adopting FAS 162, on
its Consolidated Financial Statements
In May 2008, the FASB issued SFAS No. 163, Accounting for Financial
Guarantee Insurance Contracts - an interpretation of FASB Statement
No. 60 ("SFAS 163"). SFAS 163 clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement of premium revenue and claim liabilities. This Statement
also requires expanded disclosures about financial guarantee insurance
contracts. SFAS 163 is effective for fiscal years beginning on or
after December 15, 2008, and interim periods within those fiscal
years. The Company does not expect that the adoption of SFAS 163 will
have a material impact on its consolidated financial statements.
The Company has reviewed all other recently issued, but not yet
adopted, accounting standards in order to determine their effects, if
any, on its consolidated results of operation, financial position or
cash flows. Based on that review, the Company believes that none of
these pronouncements will have a significant effect on its
consolidated financial statements.
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
PLAN OF OPERATION
The Company's plan of operation for the next 12 months is to continue with
its current business of hosting screenplay contests. The latest iteration of the
ScreenplayShootout! began in December 2007 and the call for submissions closed
June 30, 2008. The winners of this contest will be announced August 31, 2008, at
which time the Company will recognize the revenue generated from the contest.
This year Hangman will also begin developing additional contests to supplement
the ScreenplayShootout! The ScreenplayShootout! welcomes submissions from all
genres, whereas the new contests will focus on individual genres. By the fourth
quarter of 2008, the Company will introduce a horror-themed contest. Although a
genre-specific contest may reduce marketability to a broad participation base,
it will attract a greater concentration of participants within a specific genre,
due to a standardization of judgment parameters.
The Company has accumulated losses from operations since inception and has
not been able to generate profits from operations. The Company intends to
generate revenue through two areas. The Company's management believes the
Company can generate significant revenue through contest submission fees and
sponsor participation. Sponsor participation includes companies who will
advertise on our web properties and other promotional materials, targeting our
participant demographic. However, the Company can provide no assurances that it
will be able to generate any revenue from the film or its contests. Operating
capital, including the proceeds to finance the Company's first film project has
been raised through the Company's shareholders.
The Company has not been able to generate positive cash flow from
operations since inception. This along with the above mentioned factors raise
substantial doubt about the Company's ability to continue as a going concern.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
OPERATING RESULTS - OVERVIEW
The three month period ended June 30, 2008, resulted in a net loss from
continuing operations of $14,386. The Company generated a Net Loss per Share for
the three month period ended June 30, 2008 of $(0.01). Details of changes in
revenues and expenses can be found below.
OPERATING RESULTS - REVENUES
The Company has not generated a profit since inception. The Company
generated a net loss of $20,430 and no revenue for the three months ended June
30, 2008. For the period ended June 30, 2007 the Company generated a net loss of
$11,545 on no revenue. The Company was unable to generate revenue in either
period due to the timing on the Company's screenplay contests. The Company's
current screenplay contest, the ScreenplayShootout! comes to an end on August
31, 2008. The Company will not provide any forecasts of future earnings or
profitability. The future success of the Company cannot be ascertained with any
certainty, and if and until the Company obtains distribution of its film
projects, no such forecast or guidance will be formulated or provided.
8
OPERATING RESULTS - COST OF SALES
Cost of sales was $0 for the three month period ended June 30, 2008 and
June 30, 2007. The Company did not recognize any revenue for the period ended
June 30, 2008 or June 30, 2007, and therefore did not recognize any expenses
related to revenue. As mentioned above the Company will recognize the revenue
from its screenplay contest after the contest concludes and the winners are
announced and the prize money is paid. The winners will be announced August 31,
2008.
OPERATING RESULTS - OPERATING EXPENSES
Operating expense for the three month period ended June 30, 2008, was
$13,181 compared with $5,719 for the period ended June 30, 2007. Operating
expenses included director compensation, professional fees, and general
administrative expenses.
- The Company's professional fees include accounting and legal fees. The
net accounting and legal expenses incurred in the three month period ended
June 30, 2008 totaled $12,318. In comparison the net accounting and legal
expenses incurred in the three month period ended June 30, 2007 totaled
$5,390. The Company's legal and accounting expenses increased this year due
to the additional costs associated with Sarbanes Oxley. The Company
estimates annual accounting expenses to be approximately $14,000.
Management's estimate for legal expenses for the fiscal year to be
approximately $5,000.
- The Company incurred $300 in rent for the three month period ended June
30, 2008 and 2007.
- Other general and administrative expenses for the quarter ended was
approximately $563 compared to $133 for the same period a year prior. The
increase in general and administrative is due to the additional costs
associated with managing the ScreenplayShootout!
OPERATING RESULTS - INTEREST EXPENSES
The Company incurred $1,205 in interest expense for the quarter ended June
30, 2008 and $696 for the quarter ended June 30, 2007. The increase in interest
for the three month period ended June 30, 2008, was because the Company
maintained an significantly higher outstanding loan balance for the most recent
quarter.
LIQUIDITY
As of June 30, 2008, the Company maintained a cash balance of $25,922, and
an outstanding balance of $17,430 in current liabilities. The Company also has a
note payable to the Company's President and a shareholder in the amount of
$48,343. The Company had no inventory as of June 30, 2008.
The Company has a cash balance of $25,922 as of June 30, 2008. Management
anticipates that the Company's existing cash balance will cover the Company's
general expenses of operation for the next twelve months. The Company's
management will continue to advance the Company monies not to exceed $100,000,
as loans to the Company, if needed. A loan will be on terms no less favorable to
the Company than would be available from a commercial lender in an arm's length
transaction. If the Company needs funds in excess of $100,000, it will be up to
the Company's management to raise such monies. These funds may be raised as
either debt or equity, but management does not have any plans or relationships
currently in place to raise such funds. The Company can provide no assurances
that if additional funds are needed the Company will be able to obtain
financing.
The Company's ability to continue as a going concern is dependent on
management's ability to generate revenue and to manage the Company's expenses.
Management will continue to seek opportunities to enhance the value of the
Company and its profitability.
9
CRITICAL ACCOUNTING POLICIES - ESTIMATES
Our discussion herein and analysis thereof is based upon our financial
statements in Item 1 above, which have been prepared in accordance with the
rules and regulations of the Securities and Exchange Commission("SEC")for
interim financial reporting. The preparation of these statements requires
management to make estimates and best judgments that affect the reported
amounts.
OFF-BALANCE SHEET ARRANGMENTS
We do not have any off-balance sheet arrangements as of June 30, 2008.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
This item is not applicable to smaller reporting companies.
Item 4(T). Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Exchange Act) are designed to ensure that information required to be disclosed
in reports filed or submitted under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in rules and forms
adopted by the Securities and Exchange Commission ("SEC"), and that such
information is accumulated and communicated to management, including the
President and Vice President, to allow timely decisions regarding required
disclosures.
Under the supervision and with the participation of our management,
including our President and Vice President, we evaluated the effectiveness of
the design and operation of our disclosure controls and procedures (as defined
in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange
Act")). Based upon that evaluation, our President and Vice President concluded
that, as of the end of the period covered by this report, our disclosure
controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
During the most recent fiscal quarter covered by this report, there has
been no change in our internal control over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act) that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 1A. Risk Factors
This item is not applicable to smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None; not applicable
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None; not applicable
Item 5. Other Information.
None; applicable
Item 6. Exhibits.
(a) Exhibits
31.1 302 Certification of James Doolin
31.2 302 Certification of Shane Thueson
32 906 Certification
(b)Reports on Form 8-K.
We filed a Form 8-K Current Report on June 5, 2008, reporting:
- that the Company sold its entire interest in 4th Grade, 745,000
common shares of stock, at $0.04 per share for an aggregate price of
$29,800, to Michael Doolin, the father of James Doolin, the President
and a director of the Company. The Company's total investment in the
shares of common stock of 4th Grade was approximately $5,200. The Sale
of Effective June 1, 2008, 4th Grade is no longer a subsidiary of
Hangman Productions, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Issuer has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
HANGMAN PRODUCTIONS, INC.
Date: 08/11/08 /S/ JAMES DOOLIN
--------------------------------------------
James Doolin, President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has also been signed below by the following person on
behalf of the Registrant and in the capacities and on the dates indicated.
Date: 08/11/08 /S/ SHANE THUESON
--------------------------------------------
Shane Thueson, Vice President and Director
11