HNFSA/HNFSB - Hanover Foods

[wknecht]

Packer,

 

In all the reading I've done I've come to the conclusion that John Warehime is surfing as close to the boundary of the law as possible if not over the line.

 

Here is a cour document that sheds some light: http://caselaw.findlaw.com/pa-superior-court/1456446.html

 

The trust is very complicated, this investment would be simple if it weren't for the shares outstanding issue. I've heard of some investors just throwing up heir hands and using the 1m share figure, but I think it's more nuanced then that.

 

750k shares, 1m shares, either way this is still cheap.

Still trying to get to the bottom of all his.

 

Are those court documents describing the same trust?  I thought the Trust was restated June 20, 2002 (http://www.sec.gov/Archives/edgar/data/853733/000089322002001108/w63509exv10wcc.txt). The court documents are talking about May 2001.

 

Based on my reading, I think I agree with you for the most part Nate. It seems to me the majority of the shares held by the ESOT exist to fund the 2005 Option Plan and to a lesser extent the ESOP. The shares issued to fund the Option Plan have voting rights but seem only to have an economic interest to the extent they are in the money (which currently they are not, barely). The shares held by the ESOP (17,730) are the same as any other shares outstanding.

 

The wording of the transaction part of the Trust Agreement is a little ambiguous. But taken together with the other statements, it seems the shares only receive distributions in the case the transaction price is above the strike price and the options are exercised. In this case though, the company also receives cash so the dilution is entirely a function of the transaction price.

 

In any case though, I purchased some shares so thanks again for the idea.

 

Some excerpts from the Trust Agreement:

 

“Under no circumstances shall cash dividends and other cash distributions allocated to the Option Plan Subaccount be paid to Option Plan Participants in their capacity as such.“

 

“Company Stock held in the Option Plan Subaccount (as herein defined) of the Trust shall be used exclusively for the purpose of satisfying the Company's obligations under Options (as herein defined) which are exercised by Option Plan Participants (as herein defined) as provided for in Article 3.” Where "Option Plan Participant" means any individual who holds an unexercised Option to purchase Company Stock granted pursuant to the Stock Option Plan.

 

“The Trust shall be irrevocable, except as provided in the following sentence. In the event of a transaction with an unaffiliated third party which involves a sale of all or substantially all of the assets or stock of the Company (including, but not limited to, a merger, consolidation, division or other transaction which involves a sale of all or substantially all of the assets or stock of the Company), the Trust shall thereupon be revocable by the Company and any Company Stock and/or other assets then remaining in the Trust shall be distributed as directed by the Company.”

[Spekulatius]

Any news on HNFSA/HNFSB?  I have been shareholder for a while and have not received anything in the mail yet. I suppose the annual report for Y2013 is due too in Sept?

 

I have called "IR" a couple of times to get a message but never got a live person on the phone. Leaving a message did not yield anything. Frustrating company to deal with for sure.

[oddballstocks]

Any news on HNFSA/HNFSB?  I have been shareholder for a while and have not received anything in the mail yet. I suppose the annual report for Y2013 is due too in Sept?

 

I have called "IR" a couple of times to get a message but never got a live person on the phone. Leaving a message did not yield anything. Frustrating company to deal with for sure.

 

Received the latest quarterly report maybe a month ago in the mail, they skipped a quarter, but otherwise business as usual.  There was an inventory build, and some associated debt built with it.  Maybe it's related to the new frozen beans product they launched.

 

My broker sends me the information in the mail, forwarded from the company.

[matjone]

 

 

 

My broker sends me the information in the mail, forwarded from the company.

 

Do they do this for all of your holdings?  That would be nice.

[oddballstocks]

 

 

 

My broker sends me the information in the mail, forwarded from the company.

 

Do they do this for all of your holdings?  That would be nice.

 

Yes, I use Fidelity and buried deep in the website there is a contact preferences page.  I instructed them to mail me all annual, quarterly reports, and proxies.  I also receive a monthly statement in the mail, but no trade confirmations.  I've had it setup like this for years, this is how I receive annual reports for most of my unlisted holdings.

 

As a side note I called Fidelity and talked to them about how they do mailings for the unlisted stuff.  They said they a company will contact them to get the number of shareholders to mail information to, they then send the annual reports to Fidelity and Fidelity distributes them.  In some cases the company sends one and Fidelity actually reproduces the entire annual report, I was told this is very common.

[matjone]

Thanks.  The more I hear about fidelity the more I think about switching.

[Kiltacular]

Thanks.  The more I hear about fidelity the more I think about switching.

 

Fidelity is excellent.

[Spekulatius]

 

Yes, I use Fidelity and buried deep in the website there is a contact preferences page.  I instructed them to mail me all annual, quarterly reports, and proxies.  I also receive a monthly statement in the mail, but no trade confirmations.  I've had it setup like this for years, this is how I receive annual reports for most of my unlisted holdings.

 

As a side note I called Fidelity and talked to them about how they do mailings for the unlisted stuff.  They said they a company will contact them to get the number of shareholders to mail information to, they then send the annual reports to Fidelity and Fidelity distributes them.  In some cases the company sends one and Fidelity actually reproduces the entire annual report, I was told this is very common.

 

I hold my HNFSA shares in an Interactive Brokers account and so far have not received any shareholder communication.

Sometimes, I do get mailings directly from the companies I invested in , but that is not the case with HFNSA.

[matjone]

I got interested in this and decided to look into it.  The company told me to buy a share and send in a copy of a brokerage statement showing I owned it and they would send a report.  Perhaps you could also switch the holding to your name and the transfer agent would mail reports to your house.

[matjone]

I went ahead and bought a share of this so I could try to figure out what was going on with it.  I just spoke to IB and apparently there is no option to switch your holdings to your name.  So from what I can tell there is no way for me to get on the list to receive annual reports.  Is anyone else who uses IB having this problem?  Has anyone found a way around it?

 

Might be time for me to switch to fidelity.

[oddballstocks]

I went ahead and bought a share of this so I could try to figure out what was going on with it.  I just spoke to IB and apparently there is no option to switch your holdings to your name.  So from what I can tell there is no way for me to get on the list to receive annual reports.  Is anyone else who uses IB having this problem?  Has anyone found a way around it?

 

Might be time for me to switch to fidelity.

 

I have switched holdings into certificate form with Fidelity. They claim there is a fee but I've never paid it. The process is simple, you write them a letter of instruction and mail it. About 8-12 weeks later you receive a certificate with a very serious sounding letter saying don't lose the certificate.

 

Honestly certificates are a pain. I have one laying on my desk because I haven't had a chance to get to the safe deposit box recently. It's weird to have a piece of paper worth a few thousand just laying around in a stack of papers. I keep worrying a kid might get to it and destroy a few grand of capital.

 

 

[fareastwarriors]

What is the benefit of holding the phyisical certificate?

[oddballstocks]

What is the benefit of holding the phyisical certificate?

 

Some companies only give financials to record holders, not street holders.  In order to get financials one needs to actually own the stock, not have a contract with the brokerage that confers ownership.

[matjone]

Can't you switch the thing into your name without having to hold a physical certificate?

[wknecht]

I got the 2013 annual report in the mail. Looks like quite a few changes.

• Jeffrey Warehime is the new CEO, John is still Chairman
  
• ESOT is gone and ESOP frozen
  
• All shares of ESOT were repurchased from the trust in exchange for a promissory note. Proceeds of the note are to be used by the Trust "to fund and/or to facilitate the operations of Designated Employee Benefit Plans maintained or to which there is an obligation to contribute for the benefit of employees of the Company or any of its subsidiaries (regardless of tier) who continue after the date of the Note to remain beneficiaries of the Trust. The term 'Designated Employee Benefit Plans' means the medical plan, life insurance plan, long-term disability plan, 401(k) plans, and other employee benefit plans now or hereafter maintained by the Company or its subsidiaries...". Given the trust is consolidated on the balance sheet, it seems like contracting with oneself to pay future expenses. Aside from share count clarification, I don't see any balance sheet impact.
  
• Share count looks to be 717,489 before dilution from options. Assuming rough dilution of ~28,000 shares, brings total to around 745,000.
  
• NCAV of $133 per share before dilution, and around $128 after dilution
  
• Margins are the lowest they have been in the last 6 years
  

Would be curious if Nate or others know much about Jeffrey.

[gg]

Can someone please post the annual report if they have a digital copy?

[boilermaker75]

Can someone please post the annual report if they have a digital copy?

 

http://www.sec.gov/Archives/edgar/data/853733/000095011604002631/tenk.htm

[oddballstocks]

Haven't received mine in the mail yet, will be anxiously watching the mailbox this afternoon.

 

The CEO appointment was a curveball, I didn't expect that.  What is very encouraging is the number of shares has been disclosed and the ESOT/ESOP wound down.  It seems things are being cleaned up, I wonder if this is in preparation of a future sale?

[oddballstocks]

Can someone please post the annual report if they have a digital copy?

 

http://www.sec.gov/Archives/edgar/data/853733/000095011604002631/tenk.htm

 

Uh, you realize you posted the annual report from 2004 right?

[boilermaker75]

Can someone please post the annual report if they have a digital copy?

 

http://www.sec.gov/Archives/edgar/data/853733/000095011604002631/tenk.htm

 

Uh, you realize you posted the annual report from 2004 right?

 

I do now, sorry.

[matjone]

I had an extremely hard time getting a report.  Ended up having to send them a scanned copy of a brokerage statement from IB, and asked them to send it.  Haven't seen it yet.  If someone does have one and can post it I would appreciate it.

 

There is no rule against doing this, is there?

[oddballstocks]

I had an extremely hard time getting a report.  Ended up having to send them a scanned copy of a brokerage statement from IB, and asked them to send it.  Haven't seen it yet.  If someone does have one and can post it I would appreciate it.

 

There is no rule against doing this, is there?

 

That's unfortunately not all that hard considering some of the ropes a lot of these companies make people jump through.  Sending in a brokerage is easy, so easy that I have JPG's saved on my desktop that I will email out as 'proof' when contacting a CFO via email the first time. 

 

I've had CFO's say they'll send something and never send anything.  I've had to sign an NDA in the past (total BS), and I know people who've threatened legal action, and some who've undertaken it as well.

 

A rule of thumb when a company wants you to sign an NDA they have something to hide.  Most presume it's bad things they're hiding, this is maybe 70% of the cases.  It's the 30% that are absolute gold mines, literally companies that own insanely valuable assets, strong earnings and are selling at multiples that are unbelievable.

[boilermaker75]

I had an extremely hard time getting a report.  Ended up having to send them a scanned copy of a brokerage statement from IB, and asked them to send it.  Haven't seen it yet.  If someone does have one and can post it I would appreciate it.

 

There is no rule against doing this, is there?

 

That's unfortunately not all that hard considering some of the ropes a lot of these companies make people jump through.  Sending in a brokerage is easy, so easy that I have JPG's saved on my desktop that I will email out as 'proof' when contacting a CFO via email the first time. 

 

I've had CFO's say they'll send something and never send anything.  I've had to sign an NDA in the past (total BS), and I know people who've threatened legal action, and some who've undertaken it as well.

 

A rule of thumb when a company wants you to sign an NDA they have something to hide.  Most presume it's bad things they're hiding, this is maybe 70% of the cases.  It's the 30% that are absolute gold mines, literally companies that own insanely valuable assets, strong earnings and are selling at multiples that are unbelievable.

 

So making these reports public is not a requirement for a public company? They can request the SEC not to make their filings public? TIA

[oddballstocks]

I had an extremely hard time getting a report.  Ended up having to send them a scanned copy of a brokerage statement from IB, and asked them to send it.  Haven't seen it yet.  If someone does have one and can post it I would appreciate it.

 

There is no rule against doing this, is there?

 

That's unfortunately not all that hard considering some of the ropes a lot of these companies make people jump through.  Sending in a brokerage is easy, so easy that I have JPG's saved on my desktop that I will email out as 'proof' when contacting a CFO via email the first time. 

 

I've had CFO's say they'll send something and never send anything.  I've had to sign an NDA in the past (total BS), and I know people who've threatened legal action, and some who've undertaken it as well.

 

A rule of thumb when a company wants you to sign an NDA they have something to hide.  Most presume it's bad things they're hiding, this is maybe 70% of the cases.  It's the 30% that are absolute gold mines, literally companies that own insanely valuable assets, strong earnings and are selling at multiples that are unbelievable.

 

So making these reports public is not a requirement for a public company? They can request the SEC not to make their filings public? TIA

 

Being public and filing with the SEC are two different things.  A company can be public and not file, there are certain thresholds that need to be crossed before a company is legally required to become a filing entity.  If they are a filing company then yes, they legally have to require annual reports and proxies.

 

If a company is able to get their shareholder count below 300 (now 1500 with the JOBS act) they are not required to file with the SEC.  Their shares might be traded on the OTC Market, and investors could be buying and selling daily, but the SEC filing burden is eliminated.  What companies decide to show shareholders is up to them once they are 'dark' (non-SEC filing).  There are certain legal requirements, like abiding by books and records requests, but many times they aren't legally required to file anything.

 

There are all sorts of dark companies, some like Conrad are great, they publish their quarterly reports and annual reports on their website and on OTCMarkets.  Then there are others like Walking Company Holdings that won't release anything but a tersely worded statement once a year, and finally companies like Avesis that require an NDA, which is total BS.  <steps onto soapbox> Avesis really pissed me off, as an insurance company their financials are available on the NAIC website as required by law.  They publish a proxy yearly that states their dividend and a few other puff facts.  I went back and forth with the CFO because I wanted to know about their debt and liability structure.  He said ALL financial information was private and he couldn't say a thing because competitors might take advantage.  My second quibble is this, I have extensive insurance experience, especially in understanding some of the pricing and claims payment process.  There is no way a competitor could gain an advantage by reading their summary financials.  Their summary financials and subscriber information is on the NAIC website, and pricing isn't exactly the most hidden item out there.  So I signed the NDA and the CFO answered the exact questions I asked.  Then I asked more related to those and he said he couldn't say anything else unless I signed another NDA that specifically incorporated those questions into the form.  I passed, the company is cheap, dirt cheap, but with slimeballs like that I wasn't interested in investing.  I own five or ten shares I think ($20 worth).  To top this all off, the NDA is illegal, under state law I have a legal right to view that information, I'm a part owner of the company, the NDA is unenforceable and a scare tactic.  I had my revenge, I wrote a post on them, never named them, but shared what I'd learned, I'm sure you can find it via Google.</soapbox>

 

Sorry for the wall of text, I have many other rants like this about POS dark companies that I've encountered.  There are some that are mouth watering cheap but management is so horrible, greedy, and self serving, that if encountered in person I would keep one hand on my wallet at all times for fear that they'd try to lunge for it at the first chance they had.

[boilermaker75]

oddballstocks,

 

Thank you very much,

 

boiler