Teaser Art - "MOTHER GOOSE: JOURNEY TO UTOPIA"

SUPER EXCITED to be moving ahead on a major and transformative production for Hannover House.  Here's some teaser information on the first of five major titles that are poised to transform HHSE over the next two years:

Mother Goose -  Journey To Utopia

Family-Appeal "Fantasy" Adventures films rank among the highest grossing movies of all time.  Bridging the commercial markets for both kids and adults, fantasy adventures have an evergreen value and a worldwide appeal, "Mother Goose: Journey To Utopia" builds on the awareness and characters from the infamous "Mother Goose" fables, and combines it with the audience-friendly element of "transportation to a magical world."  The result is a pleasing and commercial adventure that is ideally positioned to become an entertaining and popular movie experience.  With major star casting - including Academy Award Winner SHIRLEY MACLAINE as "Mother Goose" and SAMUEL  JACKSON as "Valkerna" - this film could achieve the stature of other, comparably themed films, including "Chronicles of Narnia", "Tim Burton's Alice In Wonderland" and the recently released "Oz: The Great and Powerful."

 SYNOPSIS:   "Mother Goose: Journey To Utopia" tells the story of young Jack and Gillian, two pre-teen kids from modern-day America.  In researching a homework assignment, they stumble upon a mysterious and dusty old book of Mother Goose rhymes.  Upon opening the book, they are pulled from their world and thrust in to the magical - and fantastical - land of Utopia and Mother Goose.  Here they are faced with the challenge of saving Mother Goose from an evil villain, Valkerna, who believes that children no longer have any imagination.  As Jack and Gillian proceed on their journey, they run into a variety of amusing and enchanted characters who provide various forms of advice and assistance to help them save Mother Goose.  In the end, though, it is the imaginations of Jack and Gillian to save the day, and return them to their own world.

Comparable / Similarly Themed Films:		USA	USA	Worldwide
		Release	Box Office	Box Office
Title	Studio	Year	Gross ($M)	Gross ($M)
Chronicles of Narnia	Disney	2005	$              292	$              739
Chronicles of Narnia (2)	Disney	2008	$              142	$              419
Alice In Wonderland	Disney	2010	$          1,020	$              334
Chronicles of Narnia (3)	Fox-Walden	2010	$              104	$              416
Oz: The Great and Powerful	Disney	2013	$              235	$              492
Mother Goose: Journey To Utopia	Fox-HH	2015

                  

Officer Share Update - pending Form 8 Filing

Dear HHSE Friends & Shareholders - In response to some shareholder inquiries, both Eric Parkinson and Fred Shefte wanted to provide advance notification that officer-owned shares - previously removed from Rule 144 Share Restriction and registered earlier this year with the S.E.C. - have expired and will be returned to restricted status for both Parkinson and Shefte.  Each officer had previously filed a 10(b)5-1 Trading Plan, (which had been registered with the S.E.C.) to allow for the sale of 5-million shares each.  These shares are now being returned, fully intact and unsold, for the holding accounts of Parkinson and Shefte. 

Under Rule 144, officers and directors of publicly-traded companies may apply for a 10(b)5-1 Trading Plan to remove the sale restriction on up to 1% of the stock each quarter.  Over the past four years, Parkinson and Shefte have sold less than 5-million shares each (from an initial issuance of approximately 160-million shares), reflecting their confidence in the long-term value of the HHSE equity.

The return of shares to restricted sale status will be reflected in a Form 8 filing for the Company, planned release next week.

Home Video (Packaged Goods Sales) on KID-VIDS is RECORD SETTING!

Today's news that Universal's "DESPICABLE ME 2" home video release is setting sales records - exceeding $80-MILLION in the first few days - is a great indicator that the DVD / Blu-Ray (packaged goods) side of the business continues strong.  In fact, DVD and Blu-Ray unit sales are actually GROWING for certain genres. Of course, Video-On-Demand is growing as well, but faster for some types of films than the Kid-Vids category, which still seems to favor packaged goods (perhaps it because kids tend to watch videos over-and-over-and-over again, which is not conducive to VOD Streaming?).  Overall, the combined revenues per title from VOD and Packaged Goods is up in 2013, industry-wide across most major studios and independents such as Hannover House.

That said, Hannover's February BUDGET Release of the JULES VERNE ANIMATED CLASSICS seems well timed for the current retail home video marketplace. 

Watch for these commercial new releases, February 4, 2014 (and already being built-up for early January shipments at our replication facility)!

20,000 LEAGUES UNDER THE SEA - Animated Feature, 78-Mins., TV-G, $7.99 MSRP;

AROUND THE WORLD IN 80 DAYS - Animated Feature, 78 Mins., TV-G, $7.99 MSRP;

JOURNEY TO THE CENTER OF THE EARTH - Animated Feature, 78 Mins., TV-G, $7.99 MSRP'

COLLECTOR'S PACK (all three titles) - Animated Features, 234-Mins., TV-G, $9.95 MSRP;

(FYI, the $9.95 3-title Collector's Pack has been designed for placement into the Walmart Budget Bin, where it would carry a $5.00 "everyday low price" for their shoppers).

GO HHSE! 

The final word on the Kennedy Assassination is presented in THE VERDICT...

At long last, Barr McClellan's follow-up to his # 1 National Bestseller, "BLOOD, MONEY AND POWER: HOW LBJ KILLED JFK" has been released to E-Books!

THE VERDICT:  JUSTICE FOR JOHN F. KENNEDY, JUSTICE FOR AMERICA, has been uploaded for placement today onto KINDLE, NOOK and IBOOK, and is expected to "go live" for consumer downloads shortly.

In September, Hannover House was contacted by McClellan with the request to delay the release of this book, as he felt that some updates were merited based on competitive book and documentary releases.  A discussion was held and a decision made that McClellan's book should be as thorough as possible, in order to stand the test of time and become the definitive final word on the controversy. 

While the media frenzy following the 50th anniversary of the JFK Assassination has passed, the consumer demand for the truth has not subsided.  Substantial preorders for the print edition have been received by Amazon, Barnes & Noble, Books-A-Million, Hudson, WH Smith and literally thousands of schools and libraries.   The E-Book will be Hannover's first "promoted" E-Book format title (but our fourth release this year onto digital book formats).  Targeted consumer ads and publicity will launch this weekend, designed to drive traffic to the three primary E-Book sites, and to build awareness and demand.

Here's to a great holiday season for HHSE, and all our shareholders, as we are poised for the largest single quarter of sales activity in the 20-year history of the company! 

Amityville Asylum shipment to Walmart is Hannover's Top Item for 2013!

Who knows what really happened in the DeFeo's, Amityville, New York house back in 1974?  Whether it was a family member who snapped, or a case of demonic possession, the legend has grown into a hugely successful series of films over the years.

Hannover House is pleased to announce that it is now shipping (and invoicing) it's largest Walmart order of the year>>> the January 7th new release title, "THE AMITYVILLE ASYLUM."  Fingers crossed, as the last Amityville DVD release sold over $2.5-MILLION worth of videos at Walmart...!  Will consumers react with the same enthusiasm?  Only time will tell.  Meanwhile, "it's beginning to feel a lot like Christmas" as they say, here at Hannover House, as a lot of hard work is finally paying off!  Check it out, and see the nice essay below on the Amityville Legend.

 

 

 

The Amityville Legend:

When Walls Can Talk

By Cambron Clark

In the early morning of November 14, 1974, six members of the DeFeo family were brutally murdered -- inciting a terror that cloaks the Long Island town of Amityville to this day.  Though the basic facts surrounding the suburban slaughter are well-established, the most disturbing details have yet to be proven.

Around 3:00 A.M., 23-year-old Ronald DeFeo Jr. shot and killed his sleeping father, mother, two younger brothers and two younger sisters in their home. After admitting to slaying his family with eight separate blasts from a .35-caliber rifle, DeFeo testified that voices from the house called him to commit the crime.

Nearly one year after the massacre, DeFeo was found guilty and sentenced to six consecutive life sentences in Green Haven Correctional Facility. However, the closing of DeFeo’s case was only the beginning of the legend that would ultimately surround the shore-side home in Suffolk County.

 

One month following DeFeo’s conviction, two newlyweds, George and Kathy Lutz, purchased the three-story Dutch Colonial-style home at 112 Ocean Avenue. Within moments of moving in, the couple and their three children encountered paranormal incidents occurring around the property.

According to the Lutz family, swarms of flies blotted the bedroom windows, sounds of shuffling and screams echoed from the home’s foundation, and doors and windows creaked open and closed near the times of the DeFeo family murders.  Like Ronald DeFeo, the Lutz children testified to speaking to a grotesque spirit who claimed she would live in the house forever. After 28 days, the Lutz family fled their Amityville home in the early morning – never to return.

Historians, psychics and scientists have all traveled to the ominous Amityville residence in recent years. Some claim the house resides on a massive Native American burial ground. Some believe an escapee from the Salem witch-hunts had once practiced demonic rituals on the land.  Others would like to believe that the alleged paranormal happenings are best suited for campfire stories. 

Whether fact or fiction, the Amityville legend lives on. Decades after the murders, the house itself still stands - serving as a mysterious reminder of eight gunshots, six murders and one chilly November night in the quiet village of Amityville.

Hannover House Pacts with Canada's Top Indie Film Distributor

Hannover House is pleased to announce a new distribution / output arrangement with ALLEGRO MEDIA GROUP for Canada, effective Jan. 1, 2014 - and covering all new release titles through 2017.  Allegro is the most dominant of indie film distributors in Canada, with placements of up to twenty titles per month into Walmart Stores and servicing DVD / Blu-Ray sales to all other major accounts in that market.  The venture with Hannover House is intended to cover all new release titles, plus a look-back period for items released during the past three years that were not otherwise released into Canada (about 10 additional items). 

In the past, Hannover House has utilized third-party sales agencies for the sale of DVDs and Blu-Ray units into Canada.  This has  proven to be inefficient (and at times, problematic for collections).  This direct relationship with the strongest indie wholesaler is an important move that will significantly increase sales of HHSE products, speed up collections, and generate more revenues "per unit" than was received under middle-man structures.  A more specific listing of titles and dates will be released next week.

8k Filing with Edgar... Shareholder Questions...

Good afternoon HHSE Friends & Shareholders - there have been some inquiries (and questions) about why the Company filed an 8K report with the Securities & Exchange Commission yesterday. 

As most of you know, Hannover House, Inc. is not currently "fully reporting" in that our Information Disclosures (8k's) and our Periodic Reportings (10k's and 10q's) have not been published onto the Edgar Database & Website.  We are following a plan to rectify this matter and become fully reporting.  In anticipation of the Company's upcoming Form 10 Filing, we are initiating steps to restore our CIK and CCC access to active status with the S.E.C.

The procedure and steps we have been advised to pursue are the following:

a).    Reactivate the CIK and CCC Files with the S.E.C. by filing a 8K report;

(This occurred yesterday.  Unfortunately, and we knew this would occur, the CIK and CCC codes on file with the S.E.C. for the Company referred to the last registered name of the entity, which was "Mindset Interactive Corp." instead of Hannover House, Inc.).

 

b).    Follow-up the 8K report with a notification to Edgar (from FINRA last year) of the company NAME and TICKER change;  (the filing of a notification of name change occurred this morning, and is in process by the S.E.C. / Edgar team).  UPDATE:  As of 3:07 pm today, the application to change the filing name to HANNOVER HOUSE, INC. was ACCEPTED and APPROVED by the S.E.C., as per a confirmation email received.

 

c).    Become "quasi-reporting" under the Hannover House, Inc. name by filing subsequent 8k information statements (which may include Financials as Exhibits).

 

d).    Speed Up Full-Reporting Status - By having the CIK and CCC files ACTIVE prior to the filing of the FORM 10 and 2-years of Audits, it will speed up the full compliance / full-reporting status when those items are submitted.  At some point along the way - the company's stock may qualify for automatic uplisting on the OTC markets to: OTCQB. 

 

More good things to come, thanks for your support ~ HHSE

 

Announcement of Annual Shareholder's Meeting - Hannover House (HHSE)

As per the corporate By-Laws of Hannover House, Inc., the following notification constitutes a formal announcement of the Annual Meeting of Shareholders, to discuss results and activities for the calendar year ending Dec. 31, 2013.

 

NOTICE OF SHAREHOLDERS MEETING

All verifiable Shareholders of Record, as of Dec. 15, 2013, are invited to attend the fourth annual meeting of Hannover House, Inc., to be held on:

Friday, February 21, 2014

at 1:30 pm, EST

 

Park Central Boardroom

Grand Central Hyatt Hotel

109 E. 42nd St., at Grand Central Terminal

New York, NY 10017

PLEASE NOTE DATE CHANGE:  At the request of multiple, NYC-based investors, the meeting date has been moved to Friday afternoon (Feb. 21), instead of the originally announced Saturday date.  This is due to many parties being unavailable to attend on Saturday, due to residing outside of the city (and in some cases, in respect of those honoring the Saturday Sabbath).  The meeting time of 1:30 - 3:00 for the primary presentation is intended to cover all significant issues.  There will be an extended Q&A opportunity from 3:00 until 4:00 pm.
 

Agenda issues will include:

 

1).   Distribution of Hannover House, Inc. Annual Report;

2).   Review and Discussion of completed Audits;

3).   Discussion of Corporate "Uplist" Opportunities;

4).   Discussion of Revenue Growth Plans for 2014 / 2015;

5).   Introduction and Discussion of New HH Ventures;

 

This will be a "closed" meeting for attendance only by verified shareholders; no media or non-verified shareholders will be allowed to attend.  Hannover House is announcing this meeting date and location more than 90-days in advance in order to accommodate potential travel arrangements for out-of-state attendees.

 

Instructions to be added to the attendees list: 

 

Send an email to Leigha@HannoverHouse.com, including the name under which your HHSE shares are held (stock ownership will need to be verifiable off the Broadridge NOBO list of shareholders as of Dec. 15, 2013).  All approved attendees will receive back a confirmation email not later than February 19, 2014.

 

 Shareholders who will be eligible to attend the meeting must be on record as having a minimum of $1,500 worth of stock in the company both on the date of vesting, as well as on the date of the Shareholder's meeting. All shareholders that will be admitted will be contacted by Hannover House during the week prior to the meeting.  No one not on the pre-approved list of qualified / eligible and confirmed shareholders will be admitted into the meeting, unless specifically excepted as a guest of HHSE or presenter.

 

 

Follow-ups and Updates as requested.

Good morning HHSE friends & shareholders - as promised in a recent blog, here are further details to shareholder questions that were not included in the current Q3 financials and disclosures.

LENNON BERMUDA - After receiving a "Black Friday" placement acknowledgment from the wholesaler that services Walmart for Hannover House, we were subsequently told that the item was moved to Dec. 17th.  Apparently, the buyer was unaware that the audio tracks are John Lennon songs, performed by artists other than John Lennon himself (as is the case with pretty much all tribute albums).  Rather than lose the placement (or risk being buried under a flood of Black Friday competitive items), the option of a standard "new release" placement in mid-December makes a lot of sense.  Also, instead of only having a four-day placement (as is often the case with Black Friday specialty items), this will give the CD a regular shelf spot and shelf life.  Changing the release date as such does not change the reporting period for these revenues (it's all Q4 results).  For those who have wondered, the Lennon Bermuda CD has been presented to Starbucks and is "under consideration" for Q1.  That's all we know about their interest at this time.

THE VERDICT: JUSTICE FOR JOHN F. KENNEDY, JUSTICE FOR AMERICA - Some shareholders have expressed concern about the release date timing of Barr McClellan's sequel to his 2003 best-seller, "Blood, Money & Power: How LBJ Killed JFK."  The new book builds a solid case from his original thesis, as he has incorporated substantial new evidence that has come to light during the past 10 years.  About a month ago, McClellan contacted Hannover House with the urgent request to "delay" the book's release.  His rationale' was that several "other" books had been released in anticipation of the 50th anniversary of the Kennedy assassination, and that he felt like he needed to incorporate by reference (or rebut) any relevant data or claims that these other books might contain.  His statement to Fred Shefte and Eric Parkinson was:  "I'd rather have the most complete and the most accurate book... than be the first to market."  We thought about this and decided that Barr was right.  His 2003 book continues to be the Company's top selling book title... and the relevance of the information contained in "THE VERDICT" does not turn into a pumpkin at midnight, Nov. 22. 

Accordingly, we have elected on a split release date:  the ebook will be published ASAP (possibly this week) on Kindle and Nook; the print-edition book will be published in December (likely on Dec. 17).  It's important to note that while the print edition book will be "available" in December, there's also serious shelf-space issues at Barnes & Noble, Books-A-Million, WH Smith and others during the holidays.  Therefore, we would not expect the print-edition to be widely and easily found at retail until January.  That's okay with us:  the e-book editions are fast cash flow, and low outflow (there's no printing and shipping costs).

AUDIT UPDATE - We're pleased to announce two positive developments relating to the Company's audit projects.  First of all, we have engaged an outside firm that specializes in helping OTC Market companies assemble their audit report materials.  Next, we have received ten responses to our ad for an executive level bookkeeper / controller level accountant (yes, raising the salary by $10,000 has made a world of difference in the caliber of respondents!).  A decision will likely be made this week on the full-time accounting position.  Both developments should help us meet our goal.  And what IS that goal?  The goal is to have Hogan Taylor render their audit letter prior to February 15, 2014.  And the sooner the better.  However, as some have observed, if we do NOT "beat" the Feb. 15 date, then the applicable years changes (from 2011 and 2012... to 2012 and 2013).  The rule is that the Form 10 filing must be accompanied by audits of the "two most recent reporting years".

DECEMBER SHIPMENTS FOR JANUARY STREET DATES - Yes, we'll get a Holiday Boost on our Q4 revenues, thanks to placements of "AMITYVILLE ASYLUM" and "BLUES FOR WILLADEAN" into Walmart and Redbox.  These items will ship and invoice in Q4, and thus appear on the year-end revenue results.  Key titles for Q1 include the home video / VOD releases of "SPRING BREAK MURDERS", "THE POSSESSION WITHIN", "FRANKENSTEIN 2014", "REACH", "SUNSHINE" and three others pending initial announcement.

Onward & Upward....!

Q3 Filing Today, plus much more... (and UPDATE)

Greetings HHSE Friends & Shareholders - Many have written requesting updates on a wide range of issues, from Q3 Sales, to specific title updates, to the audit & accountant projects.

As required by the OTC Markets under the Guidelines for Current Reporting Status, Hannover House will release the Q3 financials today.  We are pleased to report an increase in sales (Year-over-Year Q3, 2012) of sixty-one percent (61%)!  Gross revenues for Q3, 2013 were $1,205,392 as compared to $746,376 for the same reporting period last year.  Income, cash flows, balance sheet and other details will be included in the OTC Markets filing.

We will also be addressing updates on:

Lennon Bermuda - (CD and Book);

The Verdict - (Book and eBook);

December Shipments (for January New Releases: "Amityville Asylum" and "Blues for Willadean");

Audit Update (and specialty consulting firm);

It is possible, but still undetermined as of the posting of this Blog Update, that we may release news today about additional new title acquisitions and strategic partnerships. We thank those of you who have patiently supported Hannover House over the years, and we hope that our activities will help kick-start your Holiday Season in a positive direction.

UPDATE:  4:30 PM, FRIDAY, NOV. 15 -

1).  Q3 FINANCIALS - An unresolved issue regarding how to properly apply international sales revenues is delaying the OTC Filing of the Q3 Financials; this issue will be resolved and the Q3 results will be posted shortly (possibly still today, but certainly prior to market open on Monday).  Some of the International Sales net revenues generated during Q3 are pledged towards film production costs; as this is a new accounting issue for Hannover House, the proper application of the revenue portion and the production liability portions, needs verification from outside accountants.  This issue will be resolved and incorporated within the balance sheets.

2).  Q4 AND ANNUAL SNAPSHOT - As the Company is halfway through with Q4, it's possible to make a reasonable forecast of both revenues and margin from those revenues.  Listed below is the results from the first three quarters, plus the projected end-of-quarter projection for the current period.  The bottom line is a revenue increase year-over-year of about 42% for 2013 as compared to 2012; profit margins are essentially unchanged.

Hannover House
2013 Sales & Income Worksheet
Period	Gross Sales	Profit Margin
Q1, March 31	$                535,273.00	$               432,090.00
Q2, June 30	$                223,802.00	$                  39,377.00
Q3, Sept. 30	$            1,205,392.00	$               351,687.00
Q4, Projected	$            1,410,000.00	$               586,960.00
	$            3,374,467.00	$            1,410,114.00

All other issues mentioned in this mornings blog will be addressed within the Q3 OTC filings and compliance statements, or they will be updated separately on this blog if they are not addressed in the filings.

Successful Media Day with "Blues for Willadean"!

Hannover House wishes to thank director DEL SHORES and producer EMERSON COLLINS for helping arrange the cast members in support of yesterday's "Media Day" taping of "BLUES FOR WILLADEAN."  Interviews were shot for Entertainment Tonight and E! TV, with additional footage planned for the film's Electronic Press Kit (EPK) and as bonus material for the film's January 21, 2014 DVD release (placement into Walmart, Redbox and other major retailers).  Below are some frame-grabs of talent interviews.

BETH GRANT (as "Willadean")

"No Country for Old Men" and "The Mindy Project"

DEBBY HOLIDAY (as the "Blues Chorus")

Acclaimed recording artist

DALE DICKEY (as "Rayleen")

"Breaking Bad", "True Blood", "Iron Man 3"

DEL SHORES (Writer-Director)

"Daddy's Dyin, Who's Got the Will"

First Look - Principal Photography Completed on "Midnight Horror Show"

Northbank Entertainment has completed principal photography on one of the creepiest horror films to come out of the U.K. since the Hammer Films Era.  The "Midnight Horror Show" combines the terror of "Texas Chainsaw Massacre" with the offbeat elements and characters of "Rocky Horror" to create an all new, thriller classic. Hannover House will be handling the release of this film in the USA and Canada, with 4K Entertainment handling distribution for the United Kingdom and Ireland. Checkout this link to Facebook to see a first look at some production stills of principal cast members, perfect for a Halloween announcement.

https://www.facebook.com/hannoverhouse/posts/669277259779604

HHSE high-end Theatricals for 2014 - 2015 to 20th Century Fox

As mentioned in some prior filings and blogs, Hannover House has been very pleased with the strong sales results delivered by 20th Century Fox Home Entertainment on the HHSE title "Twelve," which continues to sell briskly each quarter.  Accordingly, it was not a difficult decision to select Fox as the HHSE distribution partner for our higher-end releases in 2014 and 2015. The Hannover House direct distribution label will continue to sell directly to retailers and wholesalers, but the major theatrical titles will be handled for home video through Fox under this new structure. This is a "Best of Both Worlds" scenario for HHSE - and mimics the transitional distribution structure utilized by Lionsgate a few years back as they began their rapid ascension in the industry. As HHSE begins to announce each of the new, higher-end titles, we will be moving forward with the knowledge that the home video industry leader will be our distribution partner.  Exciting times, more to follow!  (New FOX photo to post to the HH Facebook page).

Court rules in favor of Hannover's motion to limit NBCal to actual amounts due...

Some shareholders have asked for an update on the litigation matter between Hannover House and the National Bank of California.  As of Friday, the court finally made a ruling that was exactly what the attorneys for Hannover House had been seeking (and was not what NB Cal had been seeking). 

As a point of background, Hannover borrowed "Prints & Ads" funds from NB Cal for the release of the film "All's Faire In Love."  The original draw down against the $500,000 credit line had been reduced down to about $320,000 during the first year, and an "oral" agreement had been made between Hannover House and the bank officers to extend the note for another year.  The rationale' behind the extension of the note was that the subscription V.O.D. payments from Netflix were substantial (about $225,000 gross), and that ongoing home video sales and a pending sale to Basic Cable TV would fully retire the balance.

In support of the agreement to extend the note, NB Cal sent documents to Hannover House, which were promptly signed and returned to the bank.  However, unbeknownst to Hannover House (and as testified, to the Bank as well), one of the documents referred to in the amended note was not sent to Hannover House.  The first quarterly installment was due at the end of January, 2013.  During the final months of 2012, the bank officer at NB Cal left and was replaced.  In early January, rather than contact Hannover House to determine the status of the "missing document," the bank's attorneys preemptively filed a lawsuit for breach of the original note.  During discovery, it became clear that it was the bank's negligence in not sending the missing document to Hannover House to fully complete the amendment agreement.  When this document was finally provided (June, 2013), Hannover House promptly signed and returned it, along with an agreement to immediately "catch up" on payments that Hannover had withheld as a result of the lawsuit being filed.  The bank did not accept these terms, and pressed forward in hope of also winning the right to collect additional penalties and attorney's fees.  Rather than accept this obligation (about $100,000), Hannover instructed counsel to file an opposition to some aspects of the bank's filing for judgment, but not disputing the actual balance due.  The point that Hannover wanted to make was that the bank should have NEVER filed the lawsuit... that all of the documents provided to Hannover House were promptly signed... and that quarterly payments stopped only after the bank filed the lawsuit.  The court had to review a tremendous amount of evidence and pleadings. but ultimately agreed with the conclusions of Hannover's position.

In her opinion released last Friday, U.S. District Court Judge Margaret M. Morrow writes "... it is therefore now undisputed that defendant signed the note, delivered it to NBC, and that the amendment has taken effect" (page 9, line 6).  As a result, the attempts by NBCal's attorneys to enforce interest penalties (and to add-in their own legal fees) was denied, and the amount determined as owed was precisely the amount that Hannover House acknowledged and was performing on prior to the filing of the lawsuit.  As oft stated in our filings to the court (and our disclosure documents on the OTC Markets site), Hannover never denied the validity of the loan balance; the Company only disputed the due date of the loan and the bank's subsequent attempts to charge penalties and legal fees.

In her Conclusion, Judge Morrow writes: "... For the reasons stated, the court grants in part and denies in part NBC's motion for partial summary judgment" (Page 15, line 2).

The amount due on this item is the amount that Hannover has listed in our payables and disclosures, namely $331,466, plus $25,574 in interest.  The Company expects this debt to be fully covered by the balance remaining on the Netflix SVOD contract, plus the Basic Cable TV sale and current home video (budget bin) revenues.  Hannover was very pleased with the quality of the legal work and pleadings from our L.A. Counselors, Mark Hankin and Nima Darouian.

While there are certainly "performing obligations" still active as a result of prior litigations, Hannover House is pleased to hear from our corporate counsel that there are no other "open cases" awaiting adjudication before the courts.  The long struggle to overcome the debts from "Twelve" (and that title's impact to our cash flow), has made it past the court-litigation stages and is now a part of our performing debt obligations. Removing the distraction and cost of defendant litigation is a major step forward, and marks the closing of a journey we do not wish to ever travel on again.

Title Update & Shareholder Requests

Greetings HHSE Friends & Shareholders - As promised, today's blog covers the status of some of the new acquisitions, as well as current and pending productions that will fuel revenues and growth for HHSE in 2014.  Additionally, there are other corporate / housekeeping and governance items that have been posted on the OTC Markets Disclosure filings from yesterday's Board of Director's Meeting.

Here's a quick recap on key items that Shareholder emails have addressed:

PRODUCTIONS:

a).   WILD OATS - Road-trip Comedy with Shirley MacLaine (and an ever changing list of leads and supporting cast).  Per the terms of the agreement with the producers, Hannover House will retain its rights to the film (i.e., North American home video / VOD), until such time (if ever) that the producers exercise their rights to buy out Hannover House.  We're happy either way - and will be credited on the film, either way. 

b).   SHUCK & JIVE - A private investor group has agreed to finance this feature, with Hannover House serving as distributor, worldwide, in all media.  Production is planned for June, 2014 with principal photography in Wichita, Memphis and N.W. Arkansas.  Principal talent has not yet been signed.

c).   MOTHER GOOSE - Pre-production continues to progress on this film; co-production (and financing) partnership agreements prohibit us from unilaterally disclosing more at this time.  A formal press update is planned for Sundance in January.

d).   THE MOTHMAN CHRONICLES - This creature-feature / thriller is currently in a hold-mode pending a work-out with private investors and the international distribution rights. 

e).   THE LEGEND OF BELLE STARR - Still in scripting stages; discussion underway regarding "how much dramatic license" can be taken to divert from historic record and surmised truths to tell a more compelling story with this movie?

f).   SHADOW VISION - Pre-production will ramp up in January for a shoot in March; second unit sequences have already been shot and transferred to 4k file formats.

AUDIT & CORPORATE GOVERNANCE:

Company is in the process of hiring a new, full-time Controller / Bookkeeper to finish the reconciliation reports required by Hogan Taylor for the audit project.  Previously candidates did not meet management's expectations or deadlines... and a recent attempt to utilize an outside accounting agency proved frustrating at best (they have been rarely available to come in and perform the required work); accordingly, the only way to get this finished is to cough-up the bucks for a qualified accountant, on staff, full-time, who understands the audit reporting format requirements.  It is crucial to finish the accounting report items required by Hogan Taylor, in order that the audit be completed, and utilized for the Company's Form 10 Registration Filing with the S.E.C.  The filing of the Form 10 will automatically elevate the stock to "OTCQB" status, and is expected to provide shareholder comfort and confidence with the Company's results.

CORPORATE FINANCING:

The Company is reviewing two financing proposals - each of which would provide an immediate, multi-million dollar cash infusion (without a negative impact to the A/S Equity Structure), and both of which would facilitate access to acquire and release high-profile "studio-level" films.  There has been a lot of work over the past six weeks to bring these deals to the table - including a new distribution venture with 20th Century Fox Home Entertainment to accommodate the home media distribution portion of the structure;  however, until a deal is done, there can be no assurance that one of these transactions will ultimately close and fund.  Accordingly, the Company is pleased to continue on our proven course and business model of acquiring and distributing low-cost, direct-to-video releases and mid-level theatrical titles.  With a broadening of Hannover's target "genre" releases (expanding from Sci-Fi / Horror to include Family, Drama, Comedy, Urban and Spanish titles), the Company is well positioned for substantial revenue growth in 2014 - even without one of these extraordinary "brass-ring" type of transformative ventures.  There's a HUGE hole in the U.S. film distribution marketplace... the "major-independent" position that was previously occupied by LIONSGATE before they merged with SUMMIT to become (essentially) one of the new, Major Studios.  The market contains about six "indies" in the lower-revenue spectrum... and six "Major Studios" in the stratosphere of mega-revenues... with no company occupying the $300-million to $500-million per year "Major Independent" spot.  With continued hard work, the right product, and a little luck, Hannover House will strive to reach this position.

... more to come...

Mackenzie Foy, star of "PLASTIC JESUS" and the upcoming Christopher Nolan epic, "INTERSTELLAR."

Revised art for Redbox placement

In order to play up the "girlfriends - buddies" aspect of the movie more prominently, Hannover House has made changes to the key art for BLUES FOR WILLADEAN.  Watch for this poignant and moving drama on DVD everywhere, January 21, 2014... a prime example of HHSE revenue growth through programming diversity...

Parade of New Release Products for HHSE...

The "core" business of DVD / Blu-Ray releases for Hannover House continues to grow... as we build on our successes with Sci-Fi / Horror films each month... and begin to rotate in new genres (that compete for different shelf space); these new genres will enable the company to grow our monthly revenues without cannibalizing our own schedule (which could occur if we tried, for instance, to release four horror titles in a given month, and thus force our key accounts to select "the best two" of the bunch). 

New categories that will be more prominent for the company in 2014 are:

SPANISH LANGUAGE titles - URBAN APPEAL titles - DRAMA and COMEDY. 

One interesting and emerging category in the marketplace is euphemistically referred to as "raunchy-comedy," fueled by the successes of titles such as "The Hangover", "Bachelorette" and the "National Lampoon" series.  In this respect, Hannover House wishes to congratulate Keith Birkfeld, New Films International and the production team on the completion of "AMERICAN BEACH HOUSE" starring Mischa Barton... that's a home video hit in the making!  Hannover House is working with New Films International on other titles they control... and we will be pursuing this new comedy as well.
   
Watch for a long and detailed blog for tomorrow, with lots of updates and issues as requested by shareholders!

Happy Holiday news from Hannover!

Pleased to have just received confirmation of two new December shipments into Walmart Stores:   "AMITYVILLE ASYLUM" and "BLUES FOR WILLADEAN," both priced at $14.95 suggested retail, and in the new release section at only $9.96 each.  These items will also contain a special offer from VUDU, in respect of the new agreement between Hannover House and this Walmart-owned streaming site.  Great news for the holidays, and a great way to launch into a new year for HHSE!  We will continue to build on this solid core business as we reach to fulfill the company's opportunity to become a dominant, major-independent supplier.

Amityville Asylum on sale date: Jan. 7, 2014; Blues for Willadean on sale date: Jan. 21, 2014

Don't know VooDoo Math, but do know that VUDU is going to be huge for HHSE!

(Guest Blog from Eric Parkinson, CEO of Hannover House) - Good morning HHSE Friends, Shareholders and Watchers - as is well-known, Hannover House is very open and receptive to shareholder inquiries for clarification of public items.  However, we do require identity verification before responding to calls and emails, as has been suggested by the advisors currently assisting the company.  HHSE takes pride in being extremely candid, open and accessible... to a level far exceeding most public companies (and certainly unprecedented for Pinksheet traded equities).  That's why it's confusing when shareholders occasionally criticize management for not being transparent with information.  To make such a claim conflicts with the reality of the OTC disclosures, and almost always appears as a thinly veiled attempt to manipulate the stock trading price.

Yesterday, several "longs" emailed me to ask if I was planning to respond to a lengthy post that someone ("Mikeymgd"?)  placed on the "IHUB" board (which I understand is an open forum for stock followers to discuss various equities).  Hannover House and our management do not subscribe to or visit these "chat rooms" so we are reliant upon a verified shareholder to  send us "posts" if they want a response.  Late in the day, a verified shareholder finally provided me with the text of the post, and a request that I respond in respect of the lengthy effort made by the poster.  So here goes! >>

The first issue that the poster raises is their personal opinion as to whether or not the company has "truly turned the corner."  The following sentence in their post refers to lawsuits, so I'm going to presume that the barometer the poster is suggesting as being the measure of whether or not HHSE has "truly turned the corner" would be the status of lawsuits.  As of today, there is only one (1) active and unresolved lawsuit affecting the company.  This time last year, there were seven (7).  If the poster feels that resolving lawsuits is the measure of success, then we arguably have satisfied this goal (or are at least extraordinarily close to having zero unresolved lawsuits). To be clear, the Company still owes money on prior legal matters and judgments; what we are referring to is disputed matters of adjudication still before the courts... we do not wish to imply that all prior lawsuits have been paid off as of this date.

The next statement made was about "acquiring movies."  The poster said to "consider it fact once its (sic) available at Walmart, redbox (sic) or netflix(sic)."  Their following sentence seems to elaborate on this position by stating that "too many items fall through prior to execution."  In reviewing our announcements from the past 3-1/2 years, we were only able to identify two titles that were announced but ultimately not released (with forty-two titles announced and released or in active pre-release solicitation).  The two titles that were abandoned were "HappyThankYouMorePlease" and "Wild Hunt."  In the case of HTYMP, the producers were insisting on a 200-print theatrical opening and a major prints & ads expenditure which made no financial sense to Hannover House.  With "Wild Hunt" the producers allowed the Canadian release to precede the USA schedule, with grey-good shipments of DVDs arriving into the US market.  We believe that both decisions were in the best interests of the Company and shareholders.  We also believe that having 95.3% of our announced acquisitions actually / eventually hitting the marketplace ranks HHSE in the highest echelon of all studios. 

The poster then moves onto the issue of VODwiz, and warns shareholders to "not count your eggs until they hatch (sic)."  The poster describes the "On-Demand" market as a "nitch" (sic) that represents only "1% divided amongst hundreds of on demand pay per view channels."  People are entitled to have their own opinions - they can even jumble popular phrases and misspell words if they want - but they are not entitled to invent their own FACTS.  Download the industry report from NPD Group if you want to see the actual breakout of this multi-billion dollar V.O.D. media; transactional on-demand is the fastest growing segment, and there and there are not "hundreds" of on demand pay per view channels.  Most importantly, there's not a single legitimate competitor pursuing the VODwiz "breadth of selection" programming model.  This poster goes on to predict that Hannover's VOD revenues will be "100k or less annually."  Is he even reading our filings, blogs or reports at all?  In its first week of "on-demand" placement, TOYS IN THE ATTIC generated $28,400... and our top VOD title last year ("All's Faire In Love") generated $238,000.  Granted, some of the VODwiz titles are probably not going to be big revenue performers.  But do the math, and use modest numbers.  If we're generating an ultra-conservative $5,000 per title on average - with 2,500+ titles - that's $12,500,000 per year.  The poster is asking people to find the projection of $4 per title / per year to be plausible?  Such a prediction is wildly inconsistent with current VOD results for the company. 

The poster then moves to the issue of debt reductions, and uses some data from selected quarters to attempt to paint a picture of increasing debts.  Certainly, debt management has been a major issue for the Company, and the painful debts from the release of "Twelve" in 2010 have been quite a burden (thank God that we did not proceed with "HappyThankYouMorePlease" and end up doing it again!).  Some adjustments to our debt reporting merit clarification.  First of all, the company recently acknowledged three sizable debts that, in previous quarters, had been in dispute (or they were listed on the financials at their actual liability levels).  Bedrock Ventures, Evelyn Smith and Interstar Releasing are three lawsuits that the Company ultimately lost due to defaults.  As part of the lawsuit resolution, these debts were restated in filings to reflect the gross amount of the judgments (including legal fees and interest) as opposed to the contractual liability.  Ironically, we are now being told by the audit team that the restatement of these debt amounts will likely need to be back-dated to the applicable period, as opposed to being recognized in 2013.  Regardless, these items were not "newly acquired debts" as implied by the poster.  They are newly "recognized" ledger entries, suggested by the audit team (and in two instances, required disclosures for settlement with the judgment creditors). 

The Current Liabilities also reflect approx. $520,000 for TCA Funding as well as newly reconciled and accrued producer royalties.  The TCA Funds have been used to move forward on ten new releases, revenues from which will be realized in Q4 (2013) and in Q1 (2014). 

Again, going back to the poster's opening salvo of determining success by "turning the corner" in resolving lawsuits, the recognition of these previously disputed amounts was an important part of the lawsuit resolution.  We disagree that these items represent that the Company is moving backwards.  That said, there will be some significant adjustments "the other way" in Hannover's favor for Q3 and Q4 in that some payables obligations have been retired with debt conversions, settlements (at lower that booked payables levels) or otherwise corrected from account reconciliations.  These are the types of ledger adjustments that occur when you're going through an audit process.

			Category
	Q2 2012	Q2 2013	Change	Primary Adjustments
Current	$   2,071,238	$   2,251,858	$      180,620	Added in $520k for accrued royalties and TCA
Long Term	$   2,218,326	$   3,444,432	$   1,226,106	Recognition of Judgments, restated by $1,116k
(Officer Totals)	$      969,175	$   1,158,836	$      189,661	Now accruing at 50% of prior rate
Total Liabilities	$   4,289,564	$   5,696,290	$   1,406,726	Includes $1.636-mm in ledger adjustments

The poster then moves onto a chart of revenues for selected (and non-consecutive) quarters, in an attempt to support a prediction that the Company's revenues are declining.  We would remind shareholders that there are four quarters to a year, and that a one-time adjustment for product returns (as occurred in Q2, 2013), does not indicate that sales are waning.  Ironically, we are being told that the Q2 sales adjustment for returns may need to be applied to quarters in 2011 and early 2012, when the shipments for those particular items were accrued as sales (the eventual returns diminished the sales for those items, and may be more properly applied to the quarter that the sales were accrued, rather than a reporting period with different title shipments entirely).  If these debits are applied to the prior reporting periods, then the sales curve for the Company is restored to a double-digit, year-over-year growth rate.  FYI - On a going-forward basis, the Company is no longer accruing as sales the "gross dollar value" of shipments to key retailers... instead, we are applying a hold back for prospective product returns at an amount set by newly established historical levels.  We will continue to account for sales on an accrual (rather than cash) basis, but will apply a hold-back reserve in order to avoid or minimize any future ledger adjustments.  Again, these are issues that arise while undergoing the audit process, and are being done in order to provide reports in an accurate and auditable form.  

 

The poster then states that the TCA line of credit will show a higher debt amount in Q3.  They are mistaken, as the TCA funding is already included in the Q2 filings. 

 

Lastly, and most revealing, the poster makes a pricing prediction ($.01 per share), which he does not see as being positively affected without some sort of "blockbuster" development.  Well, taking into account the flaws in the poster's analysis - and knowing that there are several major deals in the works for HHSE - I would recommend that the poster pick-up the phone and call us before spending hours in preparing a factually challenged (and loosely veiled "attack") on the Company and its managers.  We have no secrets or nefarious agenda... but are naturally suspicious of anyone who "anonymously" makes derogatory statements, and presents ill-willed opinions as "fact." 

 

There's never any guarantees that any particular Company will grow to become hugely successful... or that the stock price will reflect its proper value.  But Hannover House has been operating now for 20+ years, building the library, building the revenue pipelines, and building into a position for major break-out and growth.  Fred and I believe that the stock should be north of $.10 per share... and we think the developments underway should ultimately convince a majority of market traders.  Maybe we're right... maybe we'll be proven wrong... but we can never be accused of not being forthright and open in telling shareholders the accurate status of the Company to the fullest extent allowable at any given time.  If the poster of yesterday's lengthy diatribe is a legitmate "long" or actual shareholder, I invite them to call me and discuss any questions, rather than expending hours of otherwise productive time picking-and-choosing bits of misinformation to support a flawed hypothesis that the stock should not be trading waaayyy higher than the current PPS levels. 

 

While my feeling is that the poster has used "VooDoo" math in attempting to paint a tainted picture of HHSE, all I can say is to check out the growth rate of the Walmart "On-Demand" site, VUDU, if you want to know which direction the marketplace - and HHSE - is moving!  We want to encourage shareholder inquiries:  if you ever need actual clarification on disclosed items, just give us a call!  Isn't your time worth it?