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Friday, June 6, 2014

Friday Updates - Hannover House

Dear HHSE Friends & Shareholders - busy day here, with the Walmart shareholder's meetings and activities (they ARE our biggest account, as you know!).  Still, in respect of shareholder inquiries, here's a quickie recap of some items being addressed right now today and over the next few days:

1).  MEDALLION - As previously announced, Hannover's new releasing entity, "MEDALLION INTERNATIONAL PICTURES" was launched at Cannes to robust success.  As originally planned and launched, Medallion has been envisioned as the releasing mechanism (and financing vehicle) for the Company's higher-end productions.  That is already happening.  What we are supplementing now is the addition of outside studio labels to the Hannover House family for our existing North American business.  This structural model - similar to the $150-mm level that Tom Sims achieved at Universal-Vivendi - is to combine four or more "complementary" (but not directly "competitive") releasing labels together for HHSE to represent.  Three established labels (plus one "start up") have already pledged to join this new multi-studio effort.  The sales entity will be known as MEDALLION RELEASING, INC., which is a 100% wholly-owned division of Hannover House, Inc., HHSE.

2).  PASEO MIRAMAR PICTURES - As previously announced, one of the titles that Hannover House "acquired" at Cannes was the urban-actioner "AMERICAN JUSTICE" from Paseo Miramar Pictures.  Under separate press release, HHSE will announce that Paseo is one of the four new studios joining forces with Hannover House and Medallion Releasing (Paseo being the "start-up" mentioned in item "1" above).  Under the venture with Hannover House, Paseo Miramar will deliver between four and six new productions to HHSE over the first 18-months of the agreement.  "AMERICAN JUSTICE" is the first of these titles.  Watch for this news release for pre-market Monday, pending approval of press release wording from the various parties.

3).  CORPORATE MATTERS - We're very pleased to announce the completion of the Form 10 Registration Statement; this document will be filed with the S.E.C. Edgar Database upon approval of Hogan-Taylor regarding their sign-off on the 2012 and 2013 audits.  HHSE is pushing for a filing within the short-term future.  All of the absurd theories from skeptics about the audit filing delays will be put to a rest, and management's prior filings and amendments will be shown to be substantially consistent with the sign-off.

4).  FORECAST FOR 2014 - HHSE managers have been asked by some of our loyal "longs" to provide a gross revenue forecast for 2014, based upon the various factors below:

a).    HHSE Historic "core" revenues ................. ??
b).    New revenues from intl. sales......................??
c).   New revenues from MultiStudio structure....??
d).   New revenues form major Cannes acqs........??
e).   New revenues from VODwiz launch............??

This is a challenging request for a variety of reasons, elaborated below:

a).   HHSE core business has consistently fallen in the range of $3-mm to $4-mm per annum.  There is no reason to expect this to vary for 2014.  So it's quite easy to put a figure on this core business.

b).  The company has written many millions in deals for current productions, which under GAAP rules for bonded productions can be realized as revenues at any time from contract execution through delivery.  How much of this will the company choose to report for 2014, vs 2014 when the films are delivered?  The revenues and fees do not "go away" if the decision to split the revenue recognition timeframe is pursued.  But it makes it hard to say now - in June - how much the company will want to book for 2014?

c).  Under Tom Sims, Vivendi was moving $150-mm per year as a multi-studio venture;  under Tom Sims, Allegro was moving north of $20-mm per year (based on the difference in product label caliber).  So how many millions will the multistudio venture of HHSE (under Medallion Releasing) generate?  Could this division be $20-million per year BY ITSELF?  Certainly, once it's fully running.  But how many outside-studio label titles can be placed during 2014?  This makes it hard to put a 2014 revenue number out at this time for this specific activity.

d).  Major Cannes Acquisitions - There are several jaw-dropping deals in process from Cannes.  It's possible that HHSE will ultimately NOT get any of these titles.  It's also possible that HHSE would get ONE or TWO of these titles... each being worth $6-mm to $10-mm in revenue ranges.  Again, there is such a material impact to the company if any of these deals "closes" that it makes it difficult to put a 2014 revenue figure on this category.

e).  VODwiz Revenues - with 10 supplier studios in place, and hundreds of new titles ready for on-boarding within the next few weeks, it seems assured that HHSE will meet the goal of a consumer launch this summer (and with 2,500 titles onboard or in process of onboarding).  What sort of revenue number will this generate?  We don't know, so it's challenging to make a projection.

One of our longs - a shareholder who is ACTUALLY in the filmed-entertainment business - felt that the company could be positioned to gross $15-mm to $20-mm in 2014.  We concede that this figure is a possibility, but we do not make a formal corporate forecast as such.  If we have a stellar year of 300% growth over 2013 (i.e., about $10-mm gross), and the market was looking for $15-mm+, then we'd be viewed as not hitting forecasts.  So here's our forecast:  WE'RE KICKING ASS already in 2014, and it's CLEARLY going to be a significantly stronger year than anything in the past.  We're not putting a more specific revenue number on it, however, as a record year is worth noting regardless.