Shareholder Q&A - Pre-Holiday Weekend Post

Good Morning HHSE Friends & Followers - and Happy Pre-Fourth-Of-July Mega Weekend!

Over the past few weeks, HHSE / Crimson managers have received a variety of emails from shareholders asking for greater specificity regarding issues of the merger, operations and strategy.  These questions have been consolidated into TEN (10) key subject lines and are briefly addressed below, following a review with counsel as to breadth of disclosure and appropriateness.

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1).  WHEN WILL THE STOCK-FOR-STOCK SWAP OCCUR - At this point, we have achieved the requirements to enable us to functionally 'do the swap" at any time (and simultaneously file the final docs with the Nevada S.O.S., and OTC Markets). There are no further regulatory obstacles impeding this final step. However, Crimson Forest is still "not fully current" with their S.E.C. reporting / filing... and we are advised that we cannot change the ticker symbol until "current reporting status" is restored. We do not want to do a stock-for-stock swap of HHSE shares into "CRIM" only to have to repeat some steps days later under the newly approved and issued ticker symbol. Plus, we feel it would be a psychological detriment to exchange robustly trading HHSE shares for Crimson stock while a "STOP" sign still exists on the current Crimson Forest Entertainment Group OTC listings page.

2).  WHAT IS THE TIMING AT THIS POINT?  HHSE / Crimson engaged a superb PCAOB auditing firm that will be submitting the review letters for 2-28-16 and 2-28-17.  This firm imposed some formatting requirements onto the workbooks and back-up for Crimson, which have been handled by a competent outside CPA firm (unaffiliated with either HHSE / Crimson or the auditing firm). Under PCAOB rules and Sarbanes-Oxley procedures, the internal control requirements rise above a consumer-level of QuickBooks and Excel formatting. So we were very excited to have this formatting step completed by a competent team of CPAs. Although our auditing firm has specifically requested that we not predict a particular "day" that they will release the report to us for inclusion in the Crimson filings, we are authorized to say that everything is on track for this to be completed "at some point during July."  FYI, July starts tomorrow, and ends in about four weeks from now.

3).  ARE THERE ANY MAJOR VENTURES READY TO "JOIN THE FOLD" FOLLOWING THE STOCK-SWAP?  Yes, several supplier issues, a major distribution venture, several mid-to-large level funding deals (including P&A Marketing, and VODWIZ), and one very significant corporate acquisition.

4).  WILL THE END-FORMULA OF SPLIT (Presently disclosed as being about 57.5% for HHSE and 42.5% for CRIMSON), STAY THE SAME?  No, during the course of the filings and various review procedures (including valuation analysis), the value of HHSE vs. Crimson has changed in HHSE's favor... so the final split will be more beneficial to HHSE shareholders.

5).  WHAT SORT OF UPDATES CAN YOU PROVIDE ON PREVIOUSLY ANNOUNCED PRODUCTIONS (alphabetically):

Basement, Belle Starr, Delirium, Final Minute, Kung Fu Cowboys, Mother Goose, Shimmer, Shuck & Jive, True Freshman?

Each of these films is in various stages of development, pre-production or production. In respect of our filmmaking teams, investors and co-production partners, we feel that updates for each deserve a separate and more thorough forum than a general blog post summary.

6).  WHAT SORT OF UPDATES OR SCHEDULE CAN YOU PROVIDE ON UPCOMING THEATRIAL & VIDEO RELEASES (including):

American United In Support of our Troops, Blood Feast, Dinosaurs of the Jurassic, Extraordinary Mission, Identity Crisis, Ride United, Shockwave, Spices of Liberty, Time Matrix, Where's The Dragon?

Blood Feast, Time Matrix and Where's the Dragon are all upcoming summer theatricals.  The other titles are slotted already into our Q3 / Q4 release schedule for home video / VOD.  Each merits their individual New Release announcement.

7).  ARE THERE ANY NEW "MAJOR" RELEASES FOR 2017 NOT YET ANNOUNCED?

Yes, four high-profile, very commercial titles have been acquired for 2017 theatrical release, each meriting separate announcements and fanfare.  Each of these titles will also be handled by HHSE / Crimson for home video, VOD, SVOD and Television release (for 2018). Additionally, there are three "specialty" titles that were acquired in Cannes that have not yet been announced - but are expected to be released theatrically in Q4 or Q1 2018.

8).  WITH TCA FULLY DISMISSED, ARE THERE ANY OTHER "MATERIAL" LAWSUITS IMPACTING THE COMPANY?   While there are still some clean-up issues regarding the resolution settlements with Andersons, Bedrock, JSJ and a few supplier-creditors, Management does not see any of the remaining issues as falling outside of managerial control or the ordinary course of operating a business of this nature.

9).  IS THE FINANCING FOR ALL OF THE ENHANCED THEATRICAL RELEASE ACTIVITIES NOW UNDERWAY COMING FROM "CRIMSON" SOURCES OUT OF CHINA?  Not at this time.  All of the P&A for the next eight (8) significant releases under HHSE / Crimson is being provided by either the producer clients directly, or through a marketing-fund venture (secured against title-specific revenues). The financing associates and affiliates of Crimson Forest in China are primarily interested in title-specific pre-sales of distribution rights into China, which provides a financing mechanism for the films to be produced and distributed by HHSE / Crimson in all other worldwide territories.

10).  BOTH OF THE CORPORATE WEBSITES FOR HHSE AND CRIMSON ARE VERY INCOMPLETE AND OUTDATED AT THIS POINT...WHEN WILL HHSE AND CRIMSON HAVE FULLY UP-TO-DATE WEBSITES, DESCRIBING THE COMPANIES, THE STAFF, THE RELEASES?  We expect that during July, both the Hannover House.com and CFF.TV sites will be fully updated, and "cross-connected" so that visitors to EITHER site will have access to both catalogs and content.

HAVE A GREAT AND LONG WEEKEND!!

HHSE Pacts with Director Rick Walker on production of "THE BASEMENT"

Good morning HHSE Friends & Followers - We are pleased to announced that HHSE is partnering with director Rick Walker on a fourth project together - this time for the September feature film production shoot of "THE BASEMENT." Previous projects with Rick Walker included the horror film "FUN PARK," the college football documentary "SOONER MAGIC," and the upcoming science-fiction thriller "THE FINAL MINUTE."

"THE BASEMENT" will be shot in and around Fayetteville, Arkansas, in order to make use of the production equipment and post-production capabilities of Hannover House-Crimson - as well as the lucrative State of Arkansas rebates (which can be monetized to receive rebates for up to forty percent of a film's eligible expenses).  The thriller tells the story of a reclusive old woman in a large and spooky house - who is keeping a dark secret in the basement.  Negotiations have commenced with a major star for this role, with additional, commercial cast members expected for the roles of the two nephews as well as the Police Chief who unravels their scheme.

Production is planned for a four-week shoot commencing September 25 - and the film is expected to be a late spring (2018) theatrical release through HHSE-Crimson Forest.

Watch here for more details!

Old Lady Nelson is having some guests for Dinner...

She's cooking-up a special meal for you in 

T H E   B A S E M E N T

(Teaser Art - Not Final Campaign)

VODWIZ activities at Cannes Market bring Supplier Studios count to 22 - representing over 4,500 titles!

Good Morning HHSE Friends & Followers - One of the many exciting aspects of the new financing from the merger of with Crimson Forest, is the long-awaited availability of funding to finally launch the VODWIZ consumer portal.  In anticipation of the current frenzy of mastering activities underway, HHSE executives Eric Parkinson and Fred Shefte held many meetings at the Cannes market last month, to recruit additional large supplier studios for the venture.  The results of the Cannes meetings were to functionally double the number of feature titles now available for upload to VODWIZ, to a count in excess of 4,500 titles.  This quantity (if all were posted and available), would rank VODWIZ in the top five for programming breadth of North American video-on-demand portals.  

As stated in the past, we have felt that "there's only one chance to make a first impression" with consumers visiting the VODWIZ portal.  Accordingly, we have withheld the formal launch of the service (and consumer support marketing), until we can make a strong first impression. We feel that a site with a broad selection of titles - ranging from recent theatrical titles and major studio fare, along with esoteric and hard-to-find independent titles - is the formula to build consumer excitement and viral buzz.  We can finally see the finish line that marks the consumer launch for this exciting venture. Watch this space!!

Busy Release Slate for the Post-Merger Summer / Early Fall Months

Good Afternoon HHSE Friends and Crimson Forest Partners - The next few months will see significantly expanded activities, including a release slate and distribution breadth that represents the highest level of consumer visibility ever for Hannover House theatrical releases.

Five titles (two of which have been previously announced) will see theatrical openings on more than 100+ screens beginning in July... and continuing non-stop through October.  The announced titles ("BLOOD FEAST" and "WHERE'S THE DRAGON?") are up first... but three others (which will each be announced individually) are already in queue for August, September and October... resulting in a relentless march of increasingly commercial releases to theatres, These higher-profile theatrical titles will also drive greater placements and revenues into the home video, VOD and SVOD windows in the months following.

A WIRE SERVICES PRESS RELEASE detailing additional information on these national theatrical titles... as well as updates on new PRODUCTIONS, new FINANCING and MERGER (STOCK-SWAP and FILING UPDATES), will be posted today (or pre-market Thursday at the latest). The delay in releasing these updates involves obtaining third-party approvals of release details, as well as attorney review of language relating to the merger updates.

HHSE thanks Academy Award Winner KIM BASINGER for being our "Eternal Goddess!"

Dear HHSE Friends & Followers - we are honored to announce that Golden Globe and Academy Award winning superstar KIM BASINGER has completed her role in the Crimson Forest-Hannover House production of "WHERE'S THE DRAGON?"

Ms. Basinger performed the role of "Eternal Goddess" and was recorded in Santa Monica, CA at Villa Formosa Studios. Crimson Forest Chairman JON LIM and WTD Animation Director SING CHOONG FOO were in attendance, with English-Adaptation director STAR NOORBAKHSH supervising via ISDN from Crisp Recording Studios in Fayetteville, Arkansas. "WHERE'S THE DRAGON?" will be released to theatres nationwide this summer... watch this space for more details!

UPDATE: Tuesday, June 20 - HHSE / CRIMSON FOREST partner with REGAL ENTERTAINMENT GROUP for a high-visibility, national theatrical launch of "WHERE'S THE DRAGON?" opening Friday, August 25.  This date has been selected to maximize family support for this animated feature, and to position the title for ancillary sales success in the following months (Home Video / V.O.D. / S.V.O.D. and Television).  Competitively, in the category of animated family features, THE EMOJI MOVIE is releasing July 28 (Columbia), and the next major animated title is NUT JOB 2 on August 11 (Open Road), and LEAP on August 30 (Weinstein Company). 

Star Noorbakhsh (Foreground) supervises some of the voice-talent performers in "WHERE'S THE DRAGON?" during the recording of the closing credits ensemble song at Crisp Recording Studios.

... yet another victory for HHSE!

Greetings HHSE Friends & Followers - As reported in this blog, the prior litigation and loan dispute between Hannover House and TCA Global Master Fund was settled quite some time ago, and finally filed with the Florida courts on May 17.  The 10-mm collateral shares have been cancelled, and this matter is closed.

Again, this is ancient news for those reading this blog site (and recognizing the legal obligation HHSE is under to report with full accuracy on the status of issues at the date of such disclosures).  But in respect of those few, remaining naysayers who prefer "willful denial" to truthful reality, here's the court docet listing.  ONWARD!!

Be patient, my friends and you will be rewarded

Good morning HHSE Friends & Followers - As the days turn into weeks, some shareholders have lost patience awaiting the final closure of the impending CRIMSON FOREST-HHSE Merger and how that will impact the bottom-line value of their HHSE shares.

We can state unequivocally that the value of the HHSE shares post-merger is substantially over the $.03 / PPS level - and furthermore state that following a lengthy telephone call with FINRA on Monday, that the few, remaining issues impacting the final step (the stock-for-stock swap) are being resolved and will promptly remove any final impediments to the stock exchange.

For those of you who have grown impatient and feel you must sell-sell-sell now, we bid you farewell and safe journeys.  But we also have an obligation to disclose that the stock-for-stock swap is based on a much higher value to HHSE shareholders (regardless of the temporary, day-to-day variations of the current trading price).  Selling now will only hurt those particular sellers, who we suspect may feel rather foolish in the coming days.  As the merger is structured, HHSE shareholders are being issued newly re-branded Crimson shares based on the predetermined level of the company's assets... not based on the momentary trading price of the HHSE stock prior to the swap.

Unless you have an urgent need for liquidity, veteran traders will be sitting it out for this final, brief pre-swap spell. This morning's blog is being posted now, in the final days before the stock-swap, as an advance rebuttal for anyone who might later claim "we didn't know" (about the short time frame to the swap, and the HHSE valuation being established at substantially over $.03 / PPS).  

For those of you hanging on... it's going to be an AMAZING Summer, followed by a consistent and accelerating momentum in revenues and results through the next few years.  This is the "prize" that HHSE management has been working to achieve:  a fully-reporting equity, substantial operational and marketing funding, and a slate of star-driven, high-profile movies to serve as revenue locomotives!  Watch this space...

Corporate Updates on Merger Events / Resolutions

Good afternoon HHSE Friends & Followers - In anticipation of our pending merger approval, HHSE has been working with our attorneys and key creditors on the final resolution of some of old issues that have been fuel for stock critics - but which were never material threats to the operations of our business.  Here's a quick recap of some recently resolved matters and pending transactions:

1).   TCA GLOBAL MASTER FUND - as stated previously in this blog, a settlement was made with TCA to fully close all maters... well it's finally been filed with the courts in Florida... as the court-recorded documentation of settlements sometimes occurs weeks / months after the deals are made.  In any event, HHSE stock certificate #1530, issued June 18, 2013 as collateral for the TCA Investment Advisory Fee has been cancelled, and these 10-million shares will be returned as unissued treasury stock.

2).   JSJ INVESTMENTS - Principal terms of a settlement are expected this week, based upon communications between attorneys.

3).   ANDERSONS P&A - Principal terms of a settlement are expected this week, based upon direct communications with the lenders.

4).   BEDROCK VENTURES - Company has engaged counsel to re-open the case under Arkansas Law, as compelling evidence exists to have the California matter vacated.

5).   AMITYVILLE ASYLUM - New counsel has been engaged in this matter, which is expected to be settled (or adjudicated) by June 27.

A separate Blog Posting on Merger activities with Crimson Forest is being prepared for later today.

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UPDATE:  Greetings HHSE Friends. The update planned for Tuesday got hijacked by some post-merger funding details that monopolized managerial time for the past two days.  As alluded to in some of our recent, prior blogs and filings, five significant media players (all China-based) will be conducting various financing transactions "post-merger" that will provide production funds, releasing funds and operational resources.  It is our belief that the balance-sheet value and revenue benefits from these various transactions will not only transform the company, but will also elevate the business to a level of qualifying for the NASDAQ exchange.

Meanwhile, here are some quick updates for those issues which we are authorized or empowered to disclose at this time:

1).  MERGER APPROVAL - we have not received any regulatory feedback that would indicate any issues, delays or problems with the valuation methodology and the stock-for-stock swap.  We have separately applied for a Crimson ticker symbol change, and are awaiting word on that matter as well.

2).  DTC / STOCK FOR STOCK SWAP - Our advisors tell us that HHSE shareholders will not need to do anything in order for each of them to receive Crimson Forest shares on the date of the stock-for-stock swap.  Crimson shares are DTC (electronic) and this will avoid the prior issues some shareholder incurred regarding paper certificates from HHSE.

3).  PREMIUM VALUATION - as structured, HHSE shareholder will receive Crimson shares at a significant premium value-to-market.  We cannot disclose the percentage structure until we receive full-regulatory approval.  However, the bottom line is that a shareholder owning "$X" worth of HHSE shares will receive "$X++" of newly re-branded Crimson shares.

4).  CRIMSON SHARE SUPPORT - Contemporaneous with the merger, several of the China-based affiliates will be buying blocks of Crimson stock on the public markets.  It is our belief that this will further support the Crimson share price and result in an even greater appreciation of value for HHSE shareholders.

5).  POST MERGER ACTIVITIES - Besides the launch of several high-profile theatrical productions post-merger, the newly re-branded Crimson-HHSE will be (finally!) launching the VODWIZ portal, and embarking on three, very exciting new distribution ventures involving North American activities, International Sales, and Theatrical Distribution in China.  It is our belief that these significant post-merger activities will have a dramatic impact on the company's revenues, visibility and valuation.

6).  TIME FRAME - we believe that we are only days away from completion of the tasks that are required for the regulatory approval of the stock-for-stock swap, and the physical share exchange.  However, as this time frame is driven by outside agencies, we cannot provide a more specific prediction of the precise day that all of this will be completed.

Post-Cannes & Merger Follow-Up Blog Post Slated for Tuesday, June 6

Greetings HHSE Friends & Followers - At the request of a good number of legitimate shareholders, we have been asked to release both a "post-Cannes" follow-up report... as well as an update / status blog on the present status of the Crimson Forest-HHSE merger completion.

Both topics require third-party approvals of information (or legal counsel);  accordingly, we have set Tuesday (June 6) as our target date to release whatever level of new information is approved for disclosure at that time.

As stated previously, the Cannes Marche du Film was brisk and productive for the combined entities of Hannover House - Crimson Forest, and there were significant new venture deals structured for an impressive slate of high-profile theatrical titles with major stars.

Also, as per prior disclosures, the two companies (Hannover House and Crimson Forest) are already operating as a combined entity, with the only outstanding issue being the stock-for-stock swap (of Hannover House shares into a newly rebranded Crimson equity); the steps for this final process are well into motion, but require regulatory review and approval which is outside of the direct control of HHSE-Crimson managers.

For a variety of reasons, the Cannes Film Festival and Marche du Film is the unquestioned, dominant world market for high-end films.  The luxurious destination is an attraction for the major buyers, and the costs and obstacles to travel and obtain festival credentials pose obstacles to keep away the sort of peripheral non-industry-outsiders who might otherwise clog the lobby of the AFM Lowes Hotel in Santa Monica. The coveted Cannes Buyer's Badge is the ultimate pass to all locations and major events, but requires multiple, positive-referrals from registered sellers.  So, we have been very honored to have achieved this recognition status for the past four years:  a validation of Hannover's stature, proclaimed by top industry insiders and some of our current and prior program licensors.

Assorted photos from Cannes meetings are below and on prior Cannes blogs...