Press Release - Inspiration from Academy Award winning film, "THE ACCOUNTANT"

Good Morning HHSE Friends & Shareholders - A few years back, three filmmakers produced a hilarious short film about a country-accountant, that went on to win the Academy Award in the short film category.  Actor / Producer Ray McKinnon ("The Blindside") was joined by his talented wife Lisa Blount and the ubiquitous TV and Film actor Walton Goggins ("The Shield") in a film that says: "I'll show you numbers that will make your head swim!"

Apparently, heads are swimming today at HHSE with the stellar results of the Company's Q4-2013 period. With major increases in revenues and profits year-over-year, calculating "percentages" can be challenging when the growth is in the multiple hundreds-of-percentiles.

One adept shareholder contacted HHSE this morning to point out that the earnings news release (posted this morning) contains percentage increase calculations that did not calculate the ratio properly.  Instead of 390% increase in revenues, the ratio formula would show a 290% increase... same issue with earnings.  The growth in both categories is still staggering, and the proper percentile ratios will be reflected when the full financial filings are released next week to the OTC Markets and the S.E.C. Edgar database (as the Company's official numbers).  The informational press announcement this morning on the Company's Q4 earnings was just that... a heads-up advisory for the upcoming (and formal) financial filings.

Most companies are happy to deliver 10-or-15% increases.  These are pretty easy percentages for press-type folks to calculate.  But when you get results that are MORE than double - and you cross into greater than 100% increases - it's possible for a press team to make a percentile calculation error when writing a release from what is otherwise just a page of numbers.  With Hannover's impressive results, we're crossing into a whole new realm of growth and opportunity; we'll make sure that next Q's results (if they're greater than 100%) will reflect the proper percentage improvements!

Meanwhile, if you get a chance, definitely check out "THE ACCOUNTANT."

http://www.amazon.com/Accountant-Ray-McKinnon/dp/B002IW8V0O/ref=sr_1_1?s=movies-tv&ie=UTF8&qid=1391005887&sr=1-1&keywords=the+accountant

New Staff needed for New Studio Partners: VODwiz Venture

Dear HHSE Friends & Shareholders - as we ramp up the consumer launch of VODwiz, we find ourselves facing a mountainous new workload of relationships, documents, masters and tracking.  Accordingly, HHSE will be adding some new staff to help specifically with the VODwiz venture.  Our proposed "Product Manager" will be a positioned headquartered out of the Arkansas home office.  Ultimately, we may have acquisitions reps in both Los Angeles and New York.

The successful, commercial launch of the Nanotech Nuvola device (with VODWIZ embedded as one of the key programmers), requires that we ramp-up the roll-out of VODWIZ at an accelerated rate over the next 30-days.  Working with the encoding / mastering team at Nanotech, we will now commence with the add-on of approx. 2500(+) indie studio titles (and some major studio fare as well), so that the consumer introduction to VODWIZ will be met with a broad assortment.  As most of you know, the "Beta-Test" launch of the venture included only selected Hannover House titles.  This was essential to evidencing the data-streaming capacities and functionality, before adding third-party supplier titles.

We're looking for a smart and organized "product manager" for VODWIZ. As Video-On-Demand streaming is an essentially "new industry," it's unlikely that we'll find people experienced in streaming.  Accordingly, a motivated, organized and creative individual with a love of media is what we're seeking for this specific position...

http://regionalhelpwanted.com/search/detail.cfm?sn=263&id=107310160

New Horror Title from HHSE: THE POSSESSION WITHIN

As part of the ongoing (monthly) new release activities for DVD / Blu-Ray and Video-On-Demand titles, Hannover House is pleased to announce the May, 2014 release of director Brian Targett's intense thriller:  INGLODA:  THE POSSESSION WITHIN. 

Direct-to-Video Horror titles have become a solid part of the Hannover House core-release activities and revenues... and this new title should be among the higher-echelon of sellers!

Ingloda: The Possession Within is a taut and intense thriller that has earned the praise of film festivals and critics.  Kelly is the everyday young woman just trying to get by in life with her two best friends. She carries scars from her past and now, at age 24, she must deal with these realities. After discovering the truth about her father's mysterious death, she begins to tip over the edge... visions, spiritual encounters and out of body experiences begin to possess Kelly and transform her into something else.  Kelly's friends, Kacy and Nikki try their hardest to help her, but are they strong enough to prevail over the possession within?

http://www.inglodamovie.com/

Varied Genres for Release Slate Diversity

HHSE is pleased to announce the acquisition of a powerful, new indie-drama, "REACH" starring Catherine Hicks ("Seventh Heaven"), Daniel Bonjour ("Dragonquest") and Jelly Howie (upcoming in the epic miniseries "The Spoils of Babylon").  "REACH" tells the poignant and bittersweet tale of a man facing his own mortality from cancer.  In the tradition of "Dying Young" and "Philadelphia" sometimes we're most alive when facing our final days...the sun is brighter, the love is stronger, and the joy of life is at its greatest.  "REACH" can uplift and touch millions of consumers whose lives have been affected by cancer, either directly or within a loved one.

Over the next few weeks, Hannover House will be meeting with Walmart, Netflix, Redbox, Best Buy and other key accounts to determine the best street date for "REACH" and the various promotional opportunities that might apply to a film with such a universal message.

While the core portion of the Hannover House business will continue to be direct-to-DVD (and Blu-Ray) releases, the addition of varying genres of films will enable Hannover House to compete for MORE shelf (and kiosk) space than would be available for a purely horror-sci-fi product schedule.  Accordingly, shareholders will begin to see a broader mix of titles in the HHSE 2014 home video release schedule, including family films, urban films, dramas and even Spanish. 

Work It, Baby!

Here's a nice and pleasant surprise from the deep catalog of the Hannover House film library.  A four-title "Family Movie Night" submission has been accepted for placement into the Walmart Budget Bins this spring!  Family DVD's continue to be HOT SELLERS, even in the face of competition from video-on-demand and other media.  Unit sales of consumer DVDs of family-appeal videos actually INCREASED in 2013 over 2012. It's no surprise:  kids love to watch moves over-and-over-and-over again (just ask ANY parent!), so owning the DVD's is a good investment in value and time-management.  What's even better than owning a kids DVD?  How about FOUR movies for only $5.00 from the Walmart Budget Bin?!  This new Hannover House multi-pack item will also be offered to all other key accounts.

GO HHSE!!

Snapshot Summary of 2013 >> Setting Stage for 2014 & Beyond!

Greetings HHSE Shareholders & Friends.  In anticipation of our annual shareholder's meeting and the announcement of exciting new projects and ventures for 2014, we wanted to provide a quick overview of last year's results. 

2013 was not without its struggles.  The first six months of the year involved the termination of a key wholesaler relationship (specifically, HHSE's use of Phase 4 Films to provide DVDs and Blu-Rays into Walmart); subsequently, the Company lost some new release sales momentum and additionally had to write-down a substantial amount of sales due to collection and bad-debt issues. 

However, by late-summer, a new wholesale distribution venture for Walmart was in place, and sales began a fast recovery and growth trend.  Overall, the company had a nicely profitable year - despite the lost sales and write-downs from Phase 4 - and is well positioned for 2014 and beyond.  Based on the Price-Earnings averages for companies in Hannover's market space, the HHSE stock is trading at about 25% of value at this time.  However, Management believes that the true value of HHSE stock is far higher than a backwards-looking analysis of last year's activities. 

As we move into 2014 and 2015, we can anticipate significant revenues from ventures already in place, including the VODwiz pay-per-transaction launch, and the monetization of major features, including "MOTHER GOOSE: JOURNEY TO UTOPIA" and "THE LEGEND OF BELLE STARR."  It is not unrealistic to look at the Mother Goose project has having international sales & licensing values of $12-million, and domestic values of $10-million, for instance.

Watch for more news and specific information on new titles that will be presented at this year's Cannes Film Festival by Hannover House under our new international financing and distribution partnership.  Meanwhile, HHSE stock is a crazy bargain at the present time, so get to it!

HHSE 2013 SALES & MARGINS SNAPSHOT

Period	Gross Sales	HH Margin
Q1	$              539,336.71	$           432,783.04	Actual
Q2	$              223,801.78	$           200,830.22	Actual
Q3	$          1,205,392.68	$           428,669.51	Actual
Q4	$          1,134,425.54	$           313,343.50	ProForma
	$          3,102,956.71	$       1,375,626.27
	Earnings Per Share:	0.00238824
	Industy P/E Ratio:	22-X
	PPS Value:	$                   0.0525

Update on Titles / "Major Venture" and "Core Activities"

Dear HHSE Friends & Shareholders - As we prepare our release slate for 2014 and 2015 - as well as our materials in support of the upcoming Shareholder's Meeting - we wanted to update the status of some of those key items that have already been announced.  Listed below are those items comprising the "already announced" properties in the categories of both "MAJOR EVENT" titles and "Direct-to-Video" (or "core business model") releases.

The "core business model" titles can be realistically looked at for generating $4-mm to $8-mm in gross wholesale revenues for HHSE... with the "possibility" that items could break-out and individually exceed $1-mm or more in revenues (on the list below, the most likely prospects for a financial breakout are the book "THE VERDICT" and the "LENNON BERMUDA" audio CD; although both "LION PRINCE" and "BONOBOS" could also click with video consumers, as did similar films "March of the Penguins" and "Chimpanzee").

The "Major Event" titles are positioned to be transformative to HHSE.  These are titles that each are expected to generate many millions of dollars in sales from both the International marketplaces, as well as from the domestic revenue streams.  For instance, it is not at all unrealistic to look at "MOTHER GOOSE: JOURNEY TO UTOPIA" as generating $12-mm from international, and another $10-mm from domestic distribution sources (e.g., $22-mm in gross sales for HHSE);  this is why we consider these titles "transformative" to the Company's stature, revenues and bottom line.

The core business is solid and predictable - and as you can see - HHSE already has a nice line-up of new titles for 2014.  So this is a terrific foundational business - atop which we can (and ARE) building a major indie-studio profile!  Go HHSE!

"2014 - 2015 Major Event" Level Titles In Process:

MOTHER GOOSE: JOURNEY TO UTOPIA

LEGEND OF BELLE STARR

SHADOWVISION

"2014 - 2015 Major Event" Titles in Development:

TERMINATOR 3000 (T3K)

WILD OATS

MOTHMAN CHRONICLES

2014 Titles for "Direct to Video" or Limited Theatrical:

 

		Primary
Title	Licensor	Formats
20,000 Leagues Under the Sea	Plaza Ent.	DVD
Around the World in 80 Days	Plaza Ent.	DVD
Journey to the Center of Earth	Plaza Ent.	DVD
Next Up	Trace Ent	DVD
Verdict - Print Edition	McClellan	Print / Ebook
Lennon Bermuda - Print	Brannon	Print / Ebook
Lennon Bermuda - Audio CD	Brannon	Audio CD
GeneraGraphics	Goodman	Print / Ebook
Bobby Dogs	Brooklawn Ent.	DVD
Ingloda: Possession Within	On-Ride Ent.	DVD
Spring Break Murders	Film Sales Co.	DVD
Wide Blue Yonder	OPIX	DVD / BD
Weather Station	Shoreline	DVD / BD
Reach	Vongtama	DVD
Treasure Island	Plaza Ent.	DVD
Frankenstein 2014	Alphilms	DVD
Borrar de la Memoria	Eduardo	DVD
Asalto Al Cine	Shoreline	DVD
Gabrielle	Royal Blue Pic	DVD
Bonobos	SND / MC4	DVD / BD
Sunshine	East Exit Films	DVD
Buried Alive	Fubot Pictures	DVD
Midnight Horror Show	Northbank	DVD
The Lion Prince	Le Petit Bureau	DVD / BD
The Devil of Lincoln County	Royal Blue Pic	DVD
Valley of the Witch	Northbank	DVD

Today's business model vs. the 2014-2015 Strategy?

As we enter into a new year for Hannover House - and a new era - some shareholders have asked for clarification on the company's "release slate direction" for the coming years.  Rather than go into voluminous detail and analysis of industry trends, sales histories and title specifics, someone suggested that we go with the visual-aide-route of visible presentation.  Accordingly, to help demonstrate the merits of our release-strategy thinking for 2014 and 2015, we submit below a snapshot of a portion of the New Release video shelves this week at Walmart Supercenters in the United States.

Specific DVD titles in this image are small and hard to read.  But if you look real closely, you'll see that on the second-row-up from the bottom, on the left hand side of the endcap, is a placement for the Hannover House new release horror-title "AMITYVILLE ASYLUM."  This item is holding one shelf keeping unit (SKU) with a single, product facing.  This item happens to have been stocked with ten (10) units per "A" store, whereas many of the other items in this endcap were stocked with only four-to-eight units, based on sales forecasting models.

Now, look to the right-hand side of the end cap.  Probably the most prominent item (besides the "Butler" signage), is that they have given a five-SKU placement for "Despicable Me 2."  Each of these skus holds ten (10) units; additionally (and far more significantly), there is a 1/2-pallet "displayer" at most Walmarts for this item, holding an additional 600 units of assorted "Despicable Me 2" format videos.

			Avg. WM	WM Retail
	Location	Units	Price	Value
Amityville Asylum	NR Mod	10	9.96	$                   99.60
Despicable Me 2	NR Mod	50	19.96	$                 998.00
Despicable Me 2	Spl. Display	600	19.96	$           11,976.00
Sales performance of 100% depletions of "AMITYVILLE ASYLUM" generates
less than 1% of the revenues that WM would see from a similar turn rate
of "Despicable Me 2."

While Hannover House can (and HAS) built a nice business with programming comparable to "Amityville Asylum," there is very clearly an upside limitation.  These lower-profile titles rarely merit a "second sku" placement; as such, the likely upside (unless sales are replenished), is the 8-to-10 units initially placed per Walmart location, multiplied by 2,500 to 3,200 stores (depending upon title genre and competitive releases).  If Hannover can carefully program our release DATES and "GENRE" assortments, it's possible to get two or three "New Releases" each month into Walmart.  So the "upside" of this core business is fundamentally limited by shelf space and consumer demand.  Granted, there are many other accounts in addition to Walmart.  But with a 52% market share in the USA, how Walmart goes generally sets the tone for a title's response across all accounts.

So what's the solution?  Bigger titles like Hannover's massively expensive experiment in 2010 with  "Twelve?"  No, actually, movies like "Twelve" fall into what some retail buyers call a "no man's land."  They can be far higher profile (and expensive) than most of the items that make it onto the Walmart New Release shelves... but they tend to not be "big enough" to merit a second sku, or any sort of premium video placement or displays.  In fact, statistically, mid-level films like "Twelve" sell no better than genre-specific, direct-to-DVD items like "Amityville Asylum."  They just cost the distributors a lot more, and therefore can be a lot less profitable to their bottom line.

The answer is to follow-the-leaders with respect to the sort of "higher-end" films that are genuinely connecting with consumers.  A movie like "Despicable Me 2" can satisfy a very broad range of market tastes... from young kids who like the animation, colors and quirkiness... to adults who appreciate the double-entendre humor and sophisticated plot lines.  This is why a movie like "Tim Burton's Alice In Wonderland" connected with multiple age-demos and went on to over $1-billion in worldwide box office.  It's also why a movie like Hannover's "Mother Goose: Journey to Utopia" is as ideally positioned for huge upside, as a film like "Chronicles of Narnia" or even "The Hobbit."  Broad appeal, accessibility, name-awareness, star power and quality. 

Best of all, and unlike the "Twelve" structure, the bigger films that Hannover is pursuing for 2014 and 2015 are being financed with outside capital, to remove downside risk for the company without unreasonably diluting the company's upside revenue potential.

The goal over the next few years will be to have major new Hannover House titles transform the company's profile, stature and revenues - much in the way that "Twilight" transformed tiny distributor SUMMIT, or the way that "Tyler Perry" transformed fledgling LIONSGATE.  Hannover House is positioned in a comparable mode to Summit and Lionsgate "just before" their transformative hits.  With the right product, it can (and should) happen for HHSE.

Meanwhile, the core business - the monthly placement of titles like "Amityville Asylum" and "Blues for Willadean" into Walmart and other USA retailers, will continue to fund the HHSE operations.  In fact, there's always the chance that some of these specialty-level releases will "take off" and outperform a single-sku revenue depletion.  But as we enter into a new year, take a look at HHSE, where we have been, where we are now, and where we are going.  The direction is positive, the aim is specific and the strategy is sound.  We thank you for joining us on this exciting journey.