Welcome to the Hannover House Investor Relations Blog

Friday, May 30, 2014

Announcing "AMERICAN JUSTICE" from Paseo Miramar Studios....

Hannover House is proud to announce a new, multi-title output agreement with Paseo Miramar Studios, beginning immediately with the release of "AMERICAN JUSTICE" starring Tommy "Tiny" Lister, James Russo and John Schneider.  A formal press announcement covering this title and the output relationship between the two companies is in process...

"AMERICAN JUSTICE" is an ideal genre' title for Walmart and Best Buy among other big-box retailers selling DVDs and Blu-Ray videos.  It's also a powerful candidate for Video-On-Demand success and a likely placement into Redbox.  Action, Revenge, Suspense and Explosions... everything you need for harvesting video gold!  Go HHSE!!

TRAILER:  https://www.youtube.com/watch?v=cKnSbdSbCiw

Post-Cannes Era...

Dear HHSE Friends & Shareholders - we're still reeling a bit from our robust success at Cannes, and reawakening from the jetlag and shell-shock of that successful endeavor. New sales and positive deal closures for productions, acquisitions and international licensing has mandated that the Company make some organizational and staffing changes - additions - in order that HHSE can properly service these enhanced activities and revenue flow. With revenues for 2014 already on track to exceed $10-mm - and without any VODwiz or new acquisitions in this mix - HHSE is clearly on track for 300% or more increases in 2014, and possibly higher. We expect that the PPS will soon reflect the realities of the business... meanwhile, stay tuned! 

Tuesday, May 27, 2014

Welcome to the beginning of the New Era for Hannover House!

Dear Friends & Shareholders - The Cannes 2014 market was robust and successful for Hannover House, and proved quite a few points that have material impact on the company's immediate results and long term direction. 

Some of our new items are already featured on the HannoverHouse.com website, which is shaping up very impressively!  Meanwhile, here's a brief recap of key events and issues resulting from Cannes 2014:

1).   MULTI-MILLION DOLLAR PRE-SALES AND CO-PRO DEALS - First of all, we proved that top tier titles such as "Mother Goose: Journey to Utopia" (with solid casts, scripts and "the right budgets") can and will attract major territorial buyers, presales and co-production opportunities.  This opens HHSE to be a significant player in the product and financing space of companies such as MILLENNIUM and LIONSGATE.

2).   CATALOG AND D-T-V ITEMS DO HAVE INTERNATIONAL VALUE - HHSE offered ten catalog titles (and one "new" production of "Dinosaurs of the Jurassic World"), and we were pleased with response from key territories, including deals for France, Spain, Italy, U.K. and more.  This is "found" money from the company's library, and evidence that our international valuations were overly conservative.

3).  MAJOR TITLES CAN BE ACQUIRED "FOR THE RIGHT PRICE" IF LICENSED EARLY - The Company's acquisition of "Within Screaming Distance" for $1-mm plus a P&A Commitment (all of which is being privately funded on behalf of HHSE), proves that early participation in higher-end titles can result in dramatic savings over "bidding-war-mania" that often accompanies finished films at festivals such as Toronto, Tribeca and Sundance.

4).  HHSE CAN ACQUIRE OTHER "FINISHED" FILMS OF A WIDE RANGE - At Cannes, HHSE acquired quite a few titles that will be announced over the coming days and weeks... ranging from "re-releases" for budget-bin placements, to mega-budgeted, national theatrical release titles.  It's an impressive line up that will keep our product pipeline at near capacity.2


The vast majority of sales at Cannes 2014 for Hannover House were pre-sales and co-production deals for "Mother Goose."  Some shareholders have inquired about how such agreements work and are recognized under industry practices and Generally Accepted Accounting Principles. Here's a brief overview:

I.   Presales and Co-Production funding for major films such as "Mother Goose: Journey to Utopia" are assigned to the funding bank, and the proceeds from the production loan are used to actually produce the movie.

II.  The Bank Requires that a "completion bond" be purchased, which is their guarantee that the movie will be completed, delivered and that the pre-sale contracts can therefore be enforced.  A suitable bond is in place for "Mother Goose."

III.  The studio or production entity (in this case, HHSE), can book these agreements as revenue, but must simultaneously "expense" out the cost for the production, and only recognize the applicable distribution fee / commission on the balance sheet.  This results in a nice reporting quarter (or year), but has no immediate benefit to the company's cash flow as the contracts are assigned to the production loan.

IV.  After the film is delivered and the bank's production loan retired, HHSE can "capitalize" the movie on it's balance sheet as a permanent asset - in the same way that "Gone With The Wind" or "Wizard Of Oz" appear on the MGM balance sheet and library report.


Sunrise over Cannes Bay - Hannover House Sales Suite in the Palais des Festivals visible on upper left horizon.

HHSE executives FRED SHEFTE and ERIC PARKINSON announce the launch of Medallion International Pictures to handle the company's higher-end productions.

HHSE CEO Eric Parkinson next to the teaser artwork for "The Legend of Belle Starr."  No presales were sought for this title due to private production funding already committed... as well as the company's desire to keep the top-tier star cast news under wraps.

Odyssey Pictures President John Foster makes the deal with HHSE President Fred Shefte for the North American pre-sale acquisition of "Within Screaming Distance," the first $1-mm+ deal of the Cannes 2014 market.

Friday, May 16, 2014

Quick footnotes to Q1

Some shareholder inquiries about Q1, all regarding the absence of footnotes to clarify some issues. We will post to the OTC an update with footnotes. Meanwhile, here's some super short answers to the list of questions received:

1. Revenues - HHSE has voluntarily held back over $400k from AR as a reserve against potential returns. Although we are confident that our settlement with Phase 4 is a complete release, the proper audit protocol is to hold back a reserve for the underlying duration of the original P4 agreement.

2. Low Salaries - Parkinson and Shefte continue to defer income; what's showing on the Q1 G&A is only the modestly paid support staff. Parkinson and Shefte deferral increase can be seen on the Balance Sheet. Regarding payroll taxes for the support staff, these are included in the line item for employees as we use an outside payroll service that charges salary and taxes combined.

3.  Cash Flow from Intl Presales - no , these presales do not generate immediate cash flow to HHSE. They are pledged to film production costs.

4. Increase in Bank Debt - actually, there was no increase in debt, but a change in reporting the TCA transaction. Since an agreement was made as of 3-31 to terminate the revolving line from TCA, we were advised to immediately recognize the obligation (and we're informed that, under GAAP rules, we likely should have recognized the loan previously, even though it was revolving debt).

Updates to Hannover House public website being added

Over the next few weeks, we will be adding new titles and information to the Hannover House public website. Some new title art is already up... Recently added new staff members will be added to the site in early June as we reconfigure the HH Team page listings. By mid-summer, we plan to launch a total website makeover. Lots of great momentum and activities... Check it out!


Thursday, May 15, 2014

Cannes Update, Day Two News

Greetings HHSE friends and Shareholders. The news of our acquisition of "Within Screaming Distance" was well received and will be a feature story in the Business of Film Magazine (we'll post the link when their story breaks).  The producers are circling John Malkovich as the lead - and he has proven to be a great "anchor" actor to draw other notable talent into a project. However, with director approval and scheduling issues, it's always a challenge to firmly lock in all key cast members until a decision can be made as to "which start date will deliver us the most availabilities from the pool of talent?"  We realize that some of our shareholders are not directly active in the film industry - and as such, may not understand how approval based presales are structured. But be assured, this is a HUGE deal for HHSE, a far bigger project than any prior acquisition, and one of the best screenplays ever submitted (and we've read thousands of them over the years).

The financing is also a major leap forward for the company. Private funding for both the acquisition costs AND theatrical P&A means that HHSE does not have to struggle-and-juggle to fulfill this deal or to manage costs associated with the project. Huge title, no risk to HHSE. That's smart deal-making!

There's  a lot more news and deals to report from Cannes - but it's already 2am here and our schedule tomorrow is epic!

Wednesday, May 14, 2014

Terrific first day at Cannes Film Festival

Media and buyer response to the announcement of Hannover's new division - Medallion International Pictures - was superb. Top title of the day was Mother Goose: Journey to Utopia (due largely to our announced cast). Several "immediate delivery" deals are in the works for "Black-Eyed Dog" (including the lucrative territories of Germany, France, Italy and South Korea); and lots of interest and reaction to our teaser poster for "Legend of Belle Starr."  Biggest surprise of the day?  Had to be the crazy, strong interest from top TV broadcasters and home video sellers around the world to our "Dinosaurs of the Jurassic World."  HHSE catalog titles (10 being presented here) are also generating interest, and should harvest into some nice, incremental sales before the market ends. Check out the Hannover House FB page for more images today. Go HHSE!