Welcome to the Hannover House Investor Relations Blog

Tuesday, April 3, 2018

Countdown to Form 10 Filing - Update on Status & Analysis

Greetings HHSE Friends & Followers - Over the past few years, the Company has gone through cycles of having tremendous focus and effort expended on the filing of the Form 10 Registration Statement - followed by periods of relative inactivity on the subject, due to a wide range of distractions or conflicting corporate priorities (i.e., months of time lost during a protracted corporate merger, time lost due to management focus on new releases or new distribution partnerships, momentum lost due to cash flow obstacles from defaulting customers and "estimated tax liabilities" from the IRS, etc., etc.). 

The on-again, off-again cycle of movement towards registration has been like riding atop a jerky steam-engine, which has spasmodically shaken some shareholder's off the train, while leaving the remaining passengers (shareholders) queasy at best. 

Recently, a very long-standing and faithful shareholder posed a heartfelt question to Parkinson and Shefte.  "Do you guys REALLY want to do the Form 10 Registration? It seems like it is often not among your top priorities."  

The answer we provided to him clarified our management position on the subject and hopefully will illuminate to our remaining shareholders the vision, rationale' and expectations we see within our collective reach. We hope that you will take the time to read this management summary in order to better understand the process and plans.


1).  CREDIBILITY - As most HHSE longs know, the "unaudited" status of the majority of HHSE's prior filings has provide fertile ground for a small but vocal handful of stock critics. For eight years, their chorus of "impending doom, any minute now... just wait... just wait a bit longer, hold on, it's coming," has in it's own ironic way mirrored the failure of HHSE management to promptly finish the Form 10 registration. So, management understands that we have inadvertently empowered the critics to think (or state) that the Registration filing will  never happen. However, keep in mind that the delay in the Form 10 filing has been the ONLY prediction that the naysayers have gotten right. That said, this one and only temporarily correct critique is about to move over onto the stock critic's extraordinarily long "WRONG" statements column, which will give them a perfect 100% ALWAYS WRONG rating. Audited financials are credible financials. Whether you like it or not. Period.

2).  UPLIST TO OTC:QB  - The next natural step following registration is an automatic move of HHSE changing its annual subscription with the OTC Markets from "Pink" to QB.  This more-prestigious trading platform is not only more credible to investors, but is also a threshold requirement for MANY forms of investors  and institutional shareholders.

3).  INFUSION OF NEW SHAREHOLDERS - There is a significant list of individuals, funds and investment groups that have been observing and following HHSE for years (and communicating frequently with Hannover House as to their interest). We're not talking about "toxic lenders" of the sorts like TCA or JSJ that function as neither legitimate investors nor lenders but are instead operating on the fringes of securities and usury laws by structuring inflated stock conversion ventures.  No, we are talking about legitimate, high-net worth individuals and "whale" funds that see an EASY step to pop the HHSE stock to north of $.10 per share, prior to the implementation of more sophisticated investment tools (ranging from multi-million dollar lines of credit to direct stock purchase ventures).  FOR INSTANCE - with HHSE at $.10 per share, an investment group pursuing a direct-stock purchase of 9.9% equity,would be buying approx. 80-mm shares for a payment directly to HHSE of $8-million. That would be an $8-million cash infusion that could be used to grow operations and revenues, and to clean-up the Company's balance sheet debts, perhaps negotiating substantial reductions in exchange for cash in some cases (most of which were already  discussed with major creditors during last year's protracted Crimson Forest merger effort). 

Please note that we are NOT saying that the Company definitely will obtain a multi-million dollar line of credit under attractive terms post-registration... and that we are NOT saying we will be issuing any new stock at all once the HHSE price hits $.10 per share. But we want it to be clear to our shareholders that these options would exist after a registration filing followed by the infusion of new shareholder capital on the open market.  It's a powerful position that is obtainable for the Company... and one that does not currently exist as a Pinksheets-listed equity.

4).  SHARE LIQUIDITY AND EXCHANGE - Once registered, the Company's shares can be moved to electronic trading platforms (DWAC / DTC) for simplified deposit of shares and trading eligibility for many larger funds and brokerages.

5).  PERSONAL BENEFITS TO HHSE MANAGERS - Suppose for a moment that you are one of the principal managers of HHSE, putting in 18+ hours a day for 10+ years and almost zero salary. What is your incentive and upside?  Selling a few-million shares every four years for $.01 each?  Wouldn't Parkinson and Shefte be WAAAYY better off if they never had to sell ANY of their HHSE shares in order to obtain some of the benefits that could be gleaned from a registered equity?  If the registration creates greater access for investors and more become shareholders, the HHSE stock price will appreciate significantly, and with it, the value of the management-owned shares. Which is better to own: 50-million shares at $.015 each or 50-million shares at $.15 each?  Clearly, HHSE Managers will benefit alongside all other HHSE Shareholders as the registered equity appreciates to its actual value.

6).  THE END OF THE FALSE PROPHETS - The small chorus of the HHSE doom squad will have to move to another chat-board to spew their venom with any impact. The new volume of HHSE investors with massive buying power will reduce all criticisms to that of an inaudible mosquito buzz.

7).  THE ABILITY TO LEGITIMATELY ACQUIRE MAJOR VENTURES - Once fully registered, the next obtainable step is to consider another uplist to NASDAQ - as well as to also consider acquiring complementary companies that will work in synchronicity with the HHSE / VODWIZ goals and business model for growth.

... and lastly, the Form 10 Registration is important because it's important to a majority of the HHSE shareholders.

THAT SAID, the next questions posed to management often are:

a).  Are you proceeding?

b).  Is it all happening RIGHT NOW?

c).  Is the filing of the Form 10 something that is likely to happen SUPER FAST, but definitely during the current calendar quarter?

The short answer to all three questions is YES.  The longer answer is that we have completed our management folders (which are the detailed schedules, summaries and back-ups to the financials), we have completed the new library valuation, and we are days (not weeks) away from presenting the full 2016 and 2017 audit-kit years to our PCAOB auditors.

HHSE / VODWIZ is going to the Cannes Film Festival and Marche du Filme on May 9th - to not only look for new films that are conducive to the Company's core business plan (of acquiring and releasing quality theatrical films that will work for the Sony Pictures Home Video and Cinedigm models) - but also to present the live (published) BETA site of the VODWIZ portal and to sign up additional program suppliers to participate in that major endeavor. With Amazon Digital providing VODWIZ with backroom operational functions, digital streaming and consumer payment / financial management - (including real-time access to transaction details and payments) - the HHSE / VODWIZ management focus can be on acquiring quality content and building subscribers and per-transaction customers.

VODWIZ can quickly become one of the top streaming portals and OTT Channels in the world, offering (literally) thousands of feature films and hundreds of hours of episodic television programming direct-to-consumers (and via both a per-transaction sale basis or a monthly "all you want to watch" flat subscription fee). With producer sentiments worldwide beginning to sour on the deals now available for content owners from Netflix, Hulu, Amazon Prime and other licensors and portals... the timing to announce a "new V.O.D. storefront" for the placement of film libraries is as perfect as the current moment is for HHSE to file our Form 10 Registration. 

Two projects of epic consequence and material value.  Both in motion. Both happening now. 

So, yes, dear shareholders: HHSE management has a renewed focus to complete the Form 10 filing as it is clearly a foundational step to enable the Company to quickly (and more easily) achieve great results. Stay tuned, but you won't have to stay patient much longer.

* * * * * 

ON A PROJECT-RELATED NOTE:  "GETTING GRACE" writer-director-star DANIEL ROEBUCK is currently in N.W. Arkansas to help promote the HHSE release expansion of the film to additional theatres this Friday.  Roebuck spent time today at the HHSE corporate offices - meeting with Parkinson, Shefte, Desiree Garnier, Maryevelyn Jones, Jon McCallum - and later visiting local sites, meeting with fans, and conducting TV, RADIO and NEWSPAPER interviews.  Roebuck has another full day tomorrow (Wednesday, April 4) - ending with a screening of the film at the Malco Razorback Cinema - in the 162-Recliner Theatre One.  Here's a few snapshots from today: