Welcome to the Hannover House Investor Relations Blog

Thursday, February 26, 2015

"Tiny" Lister is HUGE at Walmart with AMERICAN JUSTICE Jumping Off The Shelves!

Dear HHSE Friends - although Walmart vendor policy restricts the release of unit-specific sell-thru data, we can say that there was nothing TINY about the first two days of product on-shelves at Walmart for "AMERICAN JUSTICE."  This indie-action-thriller stars the bigger-than-life "TINY" Lister ("Friday"), along with a great supporting cast of John Schneider, James Russo, Johnny "Nitro" Hennigan and the always lovely Vida Guerra.

Why is "AMERICAN JUSTICE" selling so well?  Could it be the great CAST?  Could it be the killer BOX?  Could it be the PLOT that pits a wrongly-accused black man against corrupt and racist white police officers?  Sounds like a pretty current topic to us!  Anyway, it's always exciting to have a hot selling item... those titles that blow through the top-end forecasts and make it fun for the studios!

Deferred Income Taxes, Form 10 and Winter Weather Advisory...

Dear HHSE Friends - After years of struggle and obstacles, HHSE managers were extremely excited last month to receive back the Audited Financials  (2012 and 2013 Balance Sheets, Income Statements, Cash Flows and Changes in Stockholder's Equity reports).  The Company promptly incorporated these Financials into the Form 10 Registration - along with about 30-pages of disclosure and explanatory write-up and about 20 pages of additionally required corporate documents.

HHSE submitted the Form 10 - missing only footnotes and the auditor's cover letter - to MacReport Media for final formatting into Edgar-friendly structure.  Mac Report Media got these items and Form 10 formatted and submitted last week to the S.E.C. Edgar data base a "test" filing to make sure that all issues of access, file number and formatting would be approved.

With that in hand, HHSE reached back out to the auditors for the final exhibits of the Auditor's Report cover letter and Footnotes to the Financials.  HHSE has been essentially waiting to receive and add-in these final exhibits to the otherwise fully completed Form 10.

On Tuesday afternoon, HHSE was informed of a problem.  The auditors had already required that HHSE add a line item for "deferred income taxes" in 2012 and 2013 (as these periods generated an accrued profit).  But the "starting position" of deferred taxes payable (from prior year
s) and its impact to shareholder equity had not been adjusted to change the starting numbers for Jan. 1, 2012. So in reviewing the final report, the auditor's requested to see support for these 2011 ending balances.

All of yesterday - and into late last night - was a marathon for Fred Shefte, Daniel Ackerman and Eric Parkinson as the modifications to the financials for 2010 and 2011 (to allow for deferred income taxes) had to be incorporated into the Balance Sheets, Income Statements, Cash Flows and Changes in Stockholder's Equity positions.  These adjustments were not previously requested, as the auditors were reliant upon Management provided carry-forward balances for the prior years that were not covered by the audit.  However, in respect that the Company had (erroneously) not been line-listing deferred income taxes for the audit years, a check of the 2010 and 2011 OTC Markets filings showed that this oversight would have an impact to the beginning position of shareholder equity, retained earnings (and the carry-forward of deferred income taxes into the audited years).  So, at a crazy late date in the process, HHSE had been charged with providing modified statements for 2010 and 2011 in order to provide a supported "beginning basis" for the 2012 and 2013 years.

Substantiated "beginning basis" numbers had been requested years ago by a prior auditing firm with respect to the amounts that the Company had capitalized or categorized for Prepaid Producer Royalties, Producer Recoupments and Film Production Investments.  Fulfilling that request was extremely time-consuming and challenging, as it required a review of 20-years of sales history, collections and expenses by item.  So we were glad to have that major, forensic challenge long-ago completed.  But the need to include a line-item for deferred income taxes in prior years had not been requested by any parties until this week.

The updates have now been made, and provided to our auditor.  If the auditor's final report exhibit is released to HHSE (and to MacReport Media) today, there is an expectation that the successful "test" through Edgar of the Form 10 will result in a prompt publication of the statement... ranging from "immediate" to one-business day.  We are pressing hard for this final exhibit so that MRM can hit the send button to Edgar.

Both Parkinson and Shefte have faced a heavy burden of criticism and anger from shareholders due to the persistent delays and obstacles that this Form 10 Registration (and audit) have incurred.  For those of you who have successfully filed a Form 10 Registration in the past - we are confident that, even in the best scenarios, it is not an easy filing to fully comply with.  In the case of HHSE, where the operating company is NOT a start-up - but instead has 21 years of activity history - it's more complex.  Add to the challenge that the public equity vehicle (Ecklan / Mindset) had previously registered, and then filed a Form 15 Termination, and you'll realize that NOTHING about the HHSE Form 10 Registration  has been standard or easy.

BY THE WAY - for those "conspiracy theorists" out there - the Company received the revised, audited financials on Jan. 15, after getting preliminary reports as far back as November, that required responses, and in some cases, adjustments.  The auditor informed us that the Auditor's Report (cover letter) and Footnotes would be ready by Feb. 17th, and we relied on this written verification in proceeding with the XBRL, formatting and test submission.  The planned date from the auditor was not met, despite their intention and prior promise.  We're happy that the Form 10 is done, and happy that the audits are done.  But we have to have the cover letter and footnotes included in the filing.

With respect to excluding a provision for deferred income taxes, this was a HHSE management error in reporting made clear back to 2010.  None of our prior staff accountants (including a CPA) had brought this matter to our attention.  Fortunately, the Auditors caught it, and required these line item adjustments for the audit period years of 2012 and 2013... we only wish that the question for prior periods had arisen weeks ago, as we completely understand the concern over a supportable basis for the carry-forward numbers.

* * * * *

AND WHEN IT RAINS, IT SNOWS - The National Weather Service is predicting snow-packed and icy / closed highways for Northwest Arkansas due to a Winter Storm Warning that hits tonight and through Saturday.  HHSE has contacted ALL RSVP attendees to the Shareholder's Meeting and determined that a majority are available to attend one week later, after the road conditions are safer. Accordingly, the HHSE Shareholder's Meeting has been moved to Saturday, March 7th.  A full agenda will be posted on the SH Blog on Friday, March 6th.

Wednesday, February 25, 2015

BOOM! BOOM! BOOM! Three Home Runs for HHSE at Walmart!

AMERICAN JUSTICE is jumping on day one at Walmart Stores nationwide!  Looks like it's positioned for a good initial launch and long-term placement!  Watch also for AMERICAN JUSTICE at Redbox kiosks (about 1/2 of the USA has the item at Redbox Kiosks, as it's part of the "Urban" locations product mix).  

GRAND CHAMPION should be another big winner in the Family Modulars at only $5.00 retail.  Major cast includes JULIA ROBERTS, BRUCE WILLIS, GEORGE STRAIT and EMMA ROBERTS.

ASALTO AL CINE' is attacking the Spanish Modular at about 850 Walmart Stores, and had a good first day of sales.

It's exciting to have three titles in at Walmart, each in non-competitive categories, yet each with a clearly identifiable market.  Watch for more news on additional Walmart / SAMS placements and sales / retail turns updates!

Tuesday, February 24, 2015

WALMART! And other interesting updates....

1).  HHSE TITLES ON SALE at Walmart!  Will post photos shortly!

2).  FORM 10 PUBLICATION - MacReport Media reports that the document COULD be published today by SEC / EDGAR.  Will update as this occurs.

3).  TRIBUNE ENT - As stated previously, Company debt to Tribune (newspapers), all from the release of the movie "TWELVE" in 2010, was adjudicated in favor of Tribune (HHSE never contested the amount, only the Company's ability to pay it without jeopardizing cash needed for operations and the generation of new release revenues as priority).  A new attorney was hired by Tribune to collect, and as of yesterday, HHSE's attorney spoke with their representative, and a structure for monthly installments is now being drafted.  Tribune will hold off any enforcement / collection actions while this new payment structure is being drafted and implemented.


Friday, February 20, 2015

Updates on Matters, including Form 10, New Releases, etc...

Good Morning HHSE Friends -

1).  FORM 10 STATUS - We finally received back (this morning) from MacReport Media the Form 10 registration document formatted for EDGAR (see email below).  We are providing them instructions now for the placement of the exhibits (listed below), and do not see any reason why they would not be able to file this today with the S.E.C. / Edgar Dept.  The work performed by MRM was complicated due to the size of the file being greater than their self-service on-line portal can accommodate, as well as the other issues of content and exhibits.  We were told that there is a substantial amount of snow in upstate New York that impacted the staff this week at MRM, including our primary contact (PattyAnn Phillips) not being in the offices for two days.

2).  BIG WEEK AT WALMART! - Next week (Feb. 24) will see THREE new release titles from Hannover House at Walmart stores.  Watch for AMERICAN JUSTICE at all A&B Stores (does not include Home Town Markets);  ASALTO AL CINE will be at all Urban and Spanish locations (approx. 825 stores), and GRAND CHAMPION will be in the Family Modular and Easter promo cube at approximately 2,238 locations.  Next week is also the REDBOX placement for AMERICAN JUSTICE nationwide and SUNSHINE at SAMS Clubs.  Our current shipments and orders in process for Walmart include GABRIELLE, DOONBY, SILENT NO MORE, ON ANGEL'S WINGS and SALVATION.  For the month of June, Hannover House and Medallion Releasing supplier labels will have a record number of titles at Walmart (14), representing a crazy-percentage of the total 68 sku's available for the New Release In-Line product.

3).  SHAREHOLDER'S AGENDA / VODWIZ / NEW FUNDINGS & More news to follow - focused on getting the FORM 10 published to EDGAR, and then Management can prioritize energy towards dissemination of news and announcements!

Tuesday, February 17, 2015

HHSE Completes Form 10 Filing / Audits & Release

Good morning HHSE Friends - Today will likely be viewed as a key day in the history and development of Hannover House, Inc., as the Company has finally fulfilled its long-sought goal of completing the audits, and Form 10 registration.  The filing - which will be released via MacReport Media to the S.E.C. Edgar Database - is completed and now in process.  It is believed that this document will be published in the next day or two via the Edgar website (although neither Hannover House nor MacReport Media contol the timing of the S.E.C. publication);  it is believed that the S.E.C. will generate an acknowledgment email that the filing has been received, which counsel has authorized HHSE to publish on this blog for shareholder review.

Some key questions:

1).  Does the Form 10 Registration include AUDITED Financials?  Yes, audits have been completed for the full fiscal years ending 12/31/2012 and 12/31/2013.  Additionally, unaudited financial data for the year ending 12/31/2014 is included for comparison purposes.  The audit for 2014 is expected to be completed in about three weeks, well in advance of the April 1st deadline for fully reporting companies.

2).  What took so long?  Quite a few factors impeded the Company's ability to file sooner.  The registration and withdrawal of registration (via a Form 10 in August 2005), created additional documentation and financial disclosures, including a three year comparison.  The absence of auditable financial records for TDGI during 2009 (prior to the merger with Hannover House) meant that a three-year history would not have been possible until 2013 (if the years selected had been 2010, 2011 and 2012);  however, as the requirement is for the three most recent years, the periods selected were 2012, 2013 and 2014.

3).  Will the Form 10 be released via this Blog or other means prior to the S.E.C. Edgar publication?  This is under review;  counsel is concerned that preemptive publication of the Form 10 via a non-Edgar means could appear to be providing some investors with preferential information as compared to standard investors who are relying upon data published by the S.E.C.

4).  What sort of surprises will shareholders see?  The biggest adjustment is to add a provision for Deferred Income Taxes, and how this impact's retained earnings, the balance sheets and equity.  Some items were reclassified (but within the same general categories of Assets or Liabilities), and adjustments to the Income Statements were made to reflect write-downs.  But overall, the revenues and stockholder's equity were not impacted significantly.  As stated previously, many of the issues impacting the Company's financials were previously addressed and modified by management.

5).   Why did the Company change auditors?  This will probably surprise none of our sophisticated shareholders, but "basher harassment" of our previously designated auditors (including the false threat of litigation by the bashers), created an unreasonable standard for completion of the audits.  Ultimately, it was determined that an auditing company experienced in both Pinksheet securities and Entertainment companies would be a better fit for HHSE - especially if the identity of the auditor was withheld to avoid further efforts to sabotage the completion of this Registration filing.

6).   Will the Company issue a Press Release or other notifications of this development?  Absolutely.  Management believes that the filing of the Form 10 represents a crucial step towards stabilizing the HHSE stock price, attracting new investors and moving to uplist on the OTCQB.  Additionally, the Company will now (likely) be eligible for electronic share transfers (via DTC), which had been cited in the past as an obstacle to some shareholders.

7).  Is their "other good news" that the Company plans to release now that the Form 10 project is completed? Yes.

Tuesday, February 10, 2015

Updates on London productions...

Good afternoon HHSE friends - we were pleased to record star LUKE EVANS for "BONOBOS: BACK TO THE WILD" in London last week.  Luke has rapidly ascended to top echelon stature with lead roles in films such as "The Hobbit", "Dracula Untold" and "Fast & Furious 6" with a combined, worldwide box office grosses of more than FIVE-BILLION dollars (source: IMDB.com)! 

In Bonobos, Luke provides the voice of Beni, the orphaned bonobo ape, who is rescued by Claudine Andre, nursed back to health and released into the wilds of the Congo.  Hannover House is pleased to be working with the Lola Ya Bonobo Rescue Center on this film, with portions of the proceeds benefiting this charity as well as the World Wildlife Fund.  Stay tuned for more news on "BONOBOS: BACK TO THE WILD" and other exciting production activities from HHSE!

Luke Evans with Bonobos Producer Vivian Schilling

Luke at the mic

Schilling with WB DeLane Lea's top mixer, Nick Kray