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 September 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:
November 1, 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 September 30, 2008
and December 31, 2007
9/30/2008 12/31/2007
------------------- -------------------
[Unaudited] [Audited]
ASSETS
Assets
Current Assets
Cash $ 9,976 $ 12,461
Prepaid Expenses - 684
------------------- -------------------
Total Current Assets 9,976 13,145
Non-Current Assets
Film Costs - 77,448
------------------- -------------------
Total Non-Current Asset - 77,448
------------------- -------------------
Total Assets $ 9,976 $ 90,593
=================== ===================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities
Current Liabilities
Accounts Payable $ 10,847 $ 10,990
Franchise Taxes Payable 100 100
Accrued Interest - Related Party 981 981
Accrued Director Compensation 2,349 3,013
------------------- -------------------
Total Current Liabilities 14,277 15,084
------------------- -------------------
Long Term Liabilities
Note Payable - Shareholders $ 39,433 $ 46,020
------------------- -------------------
Total Long Term Liabilities 39,433 46,020
------------------- -------------------
Total Liabilities $ 53,710 $ 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 103,297 45,400
Deficit Accumulated during the development stage (161,931) (120,811)
------------------- -------------------
Total Stockholders' Deficit (43,734) (60,511)
------------------- -------------------
Total Liabilities and Stockholders' Deficit $ 9,976 $(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 Nine Month Periods Ended September 30, 2008 and 2007
and for the period from inception through September 30, 2008
For the For the For the For the Since Inception
Three Months Three Months Nine Months Nine Months [8/11/99]
Ended Ended Ended Ended through
9/30/08 9/30/07 9/30/08 9/30/07 9/30/08
------------ ------------ ------------ ------------ -------------
Revenues $ 3,694 $ - $ 3,694 $ - $ 20,203
Cost Of Sales 3,250 - 3,250 - 9,000
------------ ------------ ------------ ------------ -------------
Gross Margin 444 - 444 - 11,203
General and Administrative Expenses 3,392 4,197 26,787 16,110 132,794
------------ ------------ ------------ ------------ -------------
Operating Loss (2,948) (4,197) (26,343) (16,110) (121,591)
Interest Income 6 - 6 - 38
Interest Expense (1,119) (725) (3,499) (1,821) (7,446)
------------ ------------ ------------ ------------ -------------
Net Loss Before Income Taxes (4,061) (4,922) (29,836) (17,931) (128,999)
Provision for Income Taxes 122 - 122 - 522
Net Loss from Continuing Operations (4,183) (4,922) (29,958) (17,931) (129,521)
------------ ------------ ------------ ------------ -------------
Discontinued Operations:
Loss from discontinued operations,
net of tax - (8,871) (11,162) (14,197) (32,410)
------------ ------------ ------------ ------------ -------------
Loss from Discontinued Operations - (8,871) (11,162) (14,197) (32,410)
Net Income/(Loss) $(4,183) $(13,793) $(41,120) $(32,128) $(161,931)
============ ============ ============ ============ =============
Income/(Loss) Per Share from
Continuing Operations $ (0.01) $ (0.01) $ (0.02) $ (0.01) $ (0.14)
============ ============ ============ ============ =============
Income/(Loss) Per Share from
Discontinued Operations $ - $ (0.01) $ (0.01) $ (0.01) $ (0.03)
============ ============ ============ ============ =============
Income/(Loss) Per Share $ (0.01) $ (0.01) $ (0.03) $ (0.02) $ (0.17)
============ ============ ============ ============ =============
Weighted Average Shares Outstanding 1,490,000 1,490,000 1,490,000 1,490,000 928,185
============ ============ ============ ============ =============
See accompanying notes to financial statements
4
HANGMAN PRODUCTIONS, INC.
[A Development Stage Company]
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Month Periods Ended September 30, 2008 and 2007
and for the period from inception through September 30, 2008
For the For the Since Inception
Nine Months Nine Months [8/11/99]
Ended Ended through
9/30/08 9/30/2007 9/30/2008
----------- ----------- -----------
Cash Flows from Operating Activities
Net Income/(Loss) (41,120) (32,128) (161,931)
(Gain)/Loss from Discontinued Operations 11,162 14,197 32,410
----------- ----------- -----------
Loss from Continuing Operations (29,958) (17,931) (129,521)
Adjustments to reconcile net loss to net cash
Provided/(Used) by Operating Activities:
Non-cash contributed by shareholder 900 900 2,700
(Increase)/Decrease in prepaid expenses 684 - -
Increase / (Decrease) accounts payable 3,814 6,276 10,847
Increase / (Decrease) in income taxes payable - - 100
Increase / (Decrease) in salaries payable 86 54 39,849
Increase / (Decrease) in accrued interest - related party 3,413 1,738 5,414
----------- ----------- -----------
Net cash provided by/(used in) continuing operations (21,061) (8,963) (70,611)
Net cash provided by/(used in) discontinued operations (26,224) (74,187) (120,213)
----------- ----------- -----------
Net Cash Provided by/(used in) Operating Activities (47,285) (88,363) (190,824)
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/(used in) 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 (10,000) - (14,000)
Issued Stock for cash - - 21,000
----------- ----------- -----------
Net cash provided by/(used in) continuing
financing activities (10,000) 15,000 56,000
Net cash provided by/(used in) discontinued
financing activities 25,000 90,000 115,000
----------- ----------- -----------
Net Cash Provided by/(used in) Investing Activities 15,000 105,000 171,000
Net Increase/(decrease) in cash (2,485) 16,637 9,976
Beginning Cash Balance 12,461 68 -
----------- ----------- -----------
Ending Cash Balance $ 9,976 $ 16,705 $ 9,976
=========== =========== ===========
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 $ - $ 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 $4,183 for
the three months ended September 30, 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 September 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 $249 as of September 30, 2008.
During the year ended December 31, 2007, James Doolin, the Company's
President and director, loaned the Company an additional $13,500 on an
unsecured debenture. The Note accrues interest at 10% per annum and
matures on December 31, 2010. As of September 30, 2008, the
outstanding note payable to the shareholder was $28,732. For the
quarter ended September 30, 2008 the Company accrued interest of $706
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. On August 13, 2008,
the Company repaid $10,000 of the note. As of September 30, 2008, the
outstanding note payable to the shareholder was $10,701. For the
quarter ended September 30, 2008, the Company accrued interest of $139
on the note.
As of September 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 September 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 September 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
September 30, 2008. The winners of this contest were announced August 31, 2008,
at which time the Company recognized 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 and begin accepting submissions for
its 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 September 30, 2008, resulted in a net loss
from continuing operations of $4,183. The Company generated a Net Loss per Share
for the three month period ended September 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 $4,183 on $3,694 in revenue for the three months ended
September 30, 2008. For the period ended September 30, 2007 the Company
generated a net loss of $13,793 on no revenue. The Company did not generate
revenue in the period ended September 30, 2007, due to the timing on the
Company's screenplay contests. 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 no such forecast or guidance will be
formulated or provided.
8
OPERATING RESULTS - COST OF SALES
Cost of sales was $3,250 for the three month period ended September 30,
2008 and $0 for the three month period ended September 30, 2007. The Company
recognizes revenue from its screenplay contest after the contest concludes and
the winners are announced and the prize money is paid. The winners were
announced August 31, 2008, at which time the Company recognized the revenue
generated from the screenplay contest.
OPERATING RESULTS - OPERATING EXPENSES
Operating expense for the three month period ended September 30, 2008, was
$3,392 compared with $4,197 for the period ended September 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
September 30, 2008 totaled $3,092. In comparison the net accounting and
legal expenses incurred in the three month period ended September 30, 2007
totaled $3,897. The Company's legal and accounting expenses decreased in
the quarter ended September 30, 2008, due to a decrease in legal and
accounting fee billings for the period. 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
September 30, 2008 and 2007.
OPERATING RESULTS - INTEREST EXPENSES
The Company incurred $1,119 in interest expense for the quarter ended
September 30, 2008 and $725 for the quarter ended September 30, 2007. The
increase in interest for the three month period ended September 30, 2008, was
because the Company maintained a higher outstanding loan balance for the most
recent quarter.
LIQUIDITY
As of September 30, 2008, the Company maintained a cash balance of $9,976,
and an outstanding balance of $14,277 in current liabilities. The Company also
has a note payable to the Company's President and a shareholder in the amount of
$39,433. The Company had no inventory as of September 30, 2008.
The Company has a cash balance of $9,976 as of September 30, 2008.
Management anticipates that the Company's existing cash balance will not 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 September 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.
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: 11/10/08 /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: 11/10/08 /S/ SHANE THUESON
--------------------------------------------
Shane Thueson, Vice President and Director
11