BOOM~! MyFlix signs up TWO NEW MAJOR supplier studios!

Greetings HHSE Friends & Followers:  There is a business philosophy that "momentum creates momentum," and this week's MyFlix development definitely supports that thesis. 

One of the existing MyFlix supplier studios talked-up the venture to two other major suppliers that we had been hoping (and trying) to bring aboard.  As a result, we now have two new suppliers:  one with 410 existing and fully mastered titles for streaming, and the other with a whopping 1,840 fully mastered titles (including 1,200 titles produced & released within the last five years, and 75 titles with more than 100-locations of theatrical release exposure!).  It's getting hard to state the exact count now of available programming for the MyFlix launch - but these two new supplier studios definitely put the inventory at more than 12,000 titles... and the ready-for-initial-launch count at north of 5,000 titles.

The concept of a ONE-STOP DIGITAL SUPERSTORE is gaining traction within the industry as "brand-specific" sites have limited choice and rapid viewer burnout.  MyFlix is looking to be the future locomotive for Hannover House as we lead the edge of new media distribution!  

Stay Tuned!  

Happy President's Day! BLOG UPDATES / REVISED

Greetings HHSE Friends & Followers - Much to report on Berlinale' deals and general corporate activities...

1).  BERLIN / EFM MARKET

a).  Sales Status for International Licenses;  Meetings were held with buyers representing fourteen key territories, with a primary focus being on licenses for the recently completed feature, THE RIOT ACT.  Sales have been consummated in three of these territories, with "offers" expected from six additional markets. There is an outreach campaign in motion to reach buyers from another 40+ territories for which Berlinale' meetings did not occur.

b).  New Programming Acquisitions;  The company acquired the USA Distribution rights to four commercial titles at Berlin. In order to best position these films, the formal announcements for each will be individually released and tied-into the company's strategic schedule.

c).  Financing Partners ("Meltdown" and "Mother Goose");  It could jeopardize the current negotiations and documentation process to provide information on major film financing at this time. However, "deals" were made regarding the financing of "MELTDOWN" at USD $12-mm and "MOTHER GOOSE: JOURNEY TO UTOPIA" at USD $5-mm. Both of these films fulfill one of the key aspects of the HHSE "modified business model" - which calls for a modest number of LOCOMOTIVE level tent-pole features per year, and a modest number of "specialty cinema" features (but NO more "B-minus" indie horror type films) - and the focus on the launch of the MyFlix streaming site.

d).  New MyFlix Supplier Studios;  Fourteen (14) new supplier-studio partners have agreed to support the launch of MyFlix at EFM. These suppliers collectively represent an additional 800+ titles; as per the existing policy with MyFlix supplier partners, each will be announced individually and formally via a wire-services press announcement.


2).  CORPORATE ENDEAVORS

a).  Status of Year-End (2018), Audits & Form 10;  authorized to publicly state that this important corporate filing is "on schedule." 

b).  Analysis of S-1 Venture and impact to HHSE;  HHSE has been contacted by multiple venture capital partners, investors and funds expressing their support of buying significant positions into HHSE following the filing for the Form 10 and S-1. There is a total of USD $8-mm potentially available to the company under the S-1 offering, through block offerings of new issues at $.03, $.05 and $.08 per share. A modest "test" of HHSE pricing resistance occurred last July whebn a relatively modest amount of buying pressure about $120,000 (8-mm shares) was conducted last July by one major investor, which buying pressure caused the HHSE stock price to literally DOUBLE in only a few days... accordingly, there is a reasonable basis to anticipate that buying pressure of $1.5-mm initially (i.e., 50-mm S-1 shares at $.03 each) would likely result in a much higher PPS than $.03 / share if purchased on the open market. Therefore the S-1 block pricing - which is CURRENTLY a premium to today's market price of shares - is still a much better deal for these major purchasers than if the same dollar volume were run through the open market. Additionally, as is the structure of a S-1 Registration, the net sales proceeds go to the issuer (HHSE) for corporate uses and endeavors... whereas stocks traded on the open market benefit only the direct participants of a particular trade transaction. The second block of S-1 shares is 50-mm at $.05 each, and the third and final block of shares is another 50-mm at $.08 each.  HHSE feels that the first block of shares is likely to sell very quickly based upon current inquiries... and that these proceeds will be very helpful in building momentum and consumer participation for the MyFlix venture, as well as for general operations and some payables management.

c).  Update on Shareholder's Meeting (April 5, Chicago);  It should be noted that the April 5 meeting at the Hyatt Regency Chicago will actually start at 3-pm Central Time. The prior announcement listed 2-pm Central Time, which could result in a trading advantage for attendees during regular market hours. Accordingly, by starting the meeting at 3-pm, any "news" of a previously non-public nature can be posted to all shareholders over the weekend, prior to the opening of the next market day of trading.

d).  HHSE Stock Buy-Back / Return to Treasury.  In a private and direct transaction, HHSE has just completed the purchase / buy-back of 500,000 common stock shares at $.013. These shares will be returned to treasury, and removed from the current issuance summaries.


3).  LEGAL ISSUES & UPDATES

a).  "Stay" Motions in foreign / sister state judgments;  With Parkinson now back from the Berlin / EFM market, the filings to "stay" all actions in the cases of dubious foreign judgments will be promptly filed in the Washington County Courts in Arkansas. These include:  LEWIN, JSJ and BEDROCK. There remains no collection efforts in Arkansas by ORIGIN (Texas) at this time, reducing the urgency to address this particular matter.  REVISED (UPDATED 2-20-2019 at 5:45-pm Central).  Shareholders have asked for updates / clarifications about two legal issues:  The Crimson case (L.A. Superior Court) and a new Bedrock filing (Washington County, Arkansas). The Crimson case has been DISMISSED and there is no "status conference" tomorrow or trial next week; accordingly, we did not feel it merited mentioning in the blog today. With respect to BEDROCK, an unaffiliated third-party garnishee (Regal Entertainment) has filed a motion for dismissal of the Bedrock levy, on the basis of excusable neglect and non-affiliation. Again, because this was not a filing that impacted HHSE's position (and pending motion for dismissal), we did not feel it merited mentioning in this blog today. 

b).  General Response / Reaction to false narrative and chat board silliness;  As has been proven in four prior court cases, Producers that "invent" false claims of monies due - despite clear accounting evidence to the contrary - have never once prevailed. It came to HHSE's attention that a representative of Royal Blue Pictures ("Gabrielle" and "Brutal Colors") has made false and disparaging comments on a stock chat board, which incorrectly state that HHSE owes them money. As per the terms of the contracts, this producer (and any other) are entitled to royalties on ACTUAL sales, not on the value of gross shipments before returns and costs. When a title like "BRUTAL COLORS" gets an order from Walmart for 20,000 units... that does NOT mean that $140,000 is now DUE to the producer, despite that figure being the value of the units multiplied by the average wholesale price. What it means is that this is a STARTING point... which will be reduced by virtue of UNSOLD / RETURNED units, manufacturing costs, freight, HHSE sales fee on "net" units sold and other marketing costs. In the case of "Brutal Colors" which had a greater than 75% "returns" rate for unsold shipments, the net monies are <negative> (meaning that the total costs to place the units exceeded the actual "net" purchase revenues of units by consumers). The corporate decision to STOP selling "micro-budgeted" horror films is borne by the dual realities that:  1). Such titles are NO LONGER commercially viable; and 2). The Producers of such titles tend to be inexperienced and often delusional. The new business model for HHSE - involving only higher-end features for production, and specialized "art" cinema fare for targeted release - circumvent both issues of sales viability and supplier sophistication. If the representative of Royal Blue Pictures persists in making false and damaging claims against HHSE on the stock chat-boards, we will pursue our rights and remedies for damages as well as judicial declaration for repayment of the funds that HHSE invested in the marketing of "Brutal Colors."


4).   MYFLIX SPECIFIC NEWS

The right idea at the right time! If ever affirmation were needed as to the viability of the MyFlix venture, it was delivered quite enthusiastically at the Berlin / EFM market. Fourteen out of Fifteen supplier meetings resulted in a "yes, we want to participate" - with only ONE supplier saying, "no, we are keeping our titles available ONLY on our own streaming platform" (which, in that particular case, their streaming site has only 110 titles... which is hardly a solid motivation for a consumer to buy a monthly subscription - in HHSE's opinion!). What is CLEAR to those on the front lines is that DIGITAL STREAMING is the new medium for delivery of MOST entertainment... and is growing exponentially each year. "Physical" DVDs, BluRays and UltraHD discs are only working now for MAJOR THEATRICAL TITLES or SPECIALIZED RELEASES.  The former "impulse" DVD business of a Walmart consumer (for instance) seeing an attractive DVD box and saying, "heck, $9.96 is a fair price!" are pretty much over... now that these same shoppers recognize that $10 bucks will get them a full MONTH of programming on Netflix, with over 1,200 titles... HHSE is adapting by doing what NO OTHER MEDIA COMPANY has done: consolidating almost EVERY indie supplier (and a few Major Studios) into a one-stop streaming site:  MyFlix.  We are quite confident that this is going to be the huge locomotive that pulls through everything else at HHSE!

The POTTSDAMER PLATZ in Central Berlin is sort of "ground zero" for the EFM and Berlinale' Festival. All of the theatres showing films are located in the Pottsdamer Platz area... which prior to the fall of the Berlin Wall in 1989, was a large "rubble" field from World War II damage. 

All sorts of movers-and-shakers were in attendance at the EFM, with 22-representatives from AMAZON and 45-representatives from NETFLIX adding a "streaming" vibe to the event!

Many world premieres were held at EFM, including this Japanese drama, 37 Seconds, which won multiple prizes at the Festival:

https://www.japantimes.co.jp/culture/2019/02/17/entertainment-news/japanese-director-hikaris-37-seconds-wins-prizes-berlin-film-festival/#.XG2NTaJKiUk

Consumers and the public could buy tickets to some EFM Screenings at the Arkaden Mall located in the heart of Pottsdamer Platz. 

The iconic tower at Alexander Platz was about 2.8-miles east of Pottsdamer Platz and the EFM. 

Berlin is abundant with museums, history and iconic sites, including this partially destroyed church (damaged from World War II bombings)

The Infamous BRANDENBURG GATE is located on the eastern edge of the enormous Teagarden Park in central Berlin... and marked one of the more inconic sites of the former BERLIN WALL and revolution to tear it down in 1989.

HHSE CEO Eric Parkinson was an invited VIP participant to the "EFP European Shooting Stars" roundtables during EFM. This was a forum with TEN (10) rapidly rising stars from countries throughout Europe, that had 10-minutes of discussion with some of the world's top producers, directors and casting directors. 

Despite freezing rain on most days, Consumers flocked to catch glimpses of major stars and the excitement of Berlinale - some are pictured here getting a family shot by a local Polizei. 

The primary location for EFM meetings was the GROPIUS BAU building. However, overflow space was also held at the Marriot in Pottsdamer Platz, and "unofficially" most of the major studios held suites at the adjacent Ritz Carlton. 

Eric Parkinson of HHSE attended six evening screening events, however, only "EASY LOVE" was chosen as a commercial option for the USA market. 

HHSE CEO Eric Parkinson with Inspiration Films' Grant Bradley at the Ritz Carlton (Grant provided financing for "The Pilgrim's Progress" and additional faith-and-family films coming in 2019 / 2020 from Inspiration Films). 

The GROPIUS BAU building was the primary EFM host location. 

Eric Parkinson / EFM Credentials & Security Badges (one for general access, one as an authorized and accredited Film Buyer). 

GROPIUS BAU consists of studio-supplier-seller booths around the central lobby, as well as in a large concentric hallway that encircles the entire building. 

NOTICE of Annual Shareholder's Meeting

NOTICE OF SHAREHOLDERS MEETING

All verifiable Shareholders of Record, as of Dec. 31, 2018, are invited to attend the annual meeting of Hannover House, Inc., to be held on:

Friday, April 5, 2019

at 2:00 pm, Central Standard Time

Executive Conference Room

Hyatt Regency Chicago

151 E. Wacker Drive, Chicago, IL  60601

The meeting time of 2:00 – 3:30 will start with a featured presentation and review by HHSE C.E.O. Eric Parkinson for approximately 45-minutes – followed by questions and answers from attendees and remote viewers.  THE ENTIRE MEETING WILL BE “LIVE-STREAMED” OVER THE INTERNET FOR ACCESS BY REGISTERED SHAREHOLDERS.

Agenda issues will include:

1).   Review of Results from the HHSE Form 10 and S-1 Filings;

2).   Review and Discussion of MyFlix Status;

3).   Discussion of Other Corporate Opportunities and Ventures;

4).   Questions & Answers;

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 60-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 Maryevelyn Jones at Mejones@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. 31, 2018).  All approved attendees will receive back a confirmation email not later than March 1, 2019.

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.

MyFlix Updates and More Developments of Interest to HHSE Shareholders

Greetings HHSE Shareholders, Friends & Followers - This has been an eventful and exciting week thus far for HHSE, despite the shortened week due to the M.L.K. Holiday. As promised earlier, this blog will contain (among other topics) an update on MyFlix.

MYFLIX UPDATE - First of all, Parkinson and Shefte have taken some deserved criticism for promising a MyFlix Blog update LAST WEEK, but not delivering. We have determined that it's better for us to NOT provide such specific timing predictions, because circumstances often create impediments. In the case of MyFlix, the plan was to start releasing the names of our forty principal program suppliers, beginning with five or six per week via the Blog and via wide-distribution Access Wire press releases. However, this well-intended plan encountered several obstacles:  

a). Which do we list first, and does this make the other suppliers look "less important?" 

b). How can we begin wide release press announcements without telling the WHOLE MyFlix launch story (knowing that we absolutely CANNOT announce a studio supplier partner ONLY via a blog mention).  

c). How do we control the overall messaging and branding of MyFlix - which focuses on the concept of being one of the world's largest DIGITAL SUPERSTORE OF MOVIES & ENTERTAINMENT - by only disclosing information about a handful of suppliers at a time?  

So, no. We want to keep our HHSE shareholders in the loop of updates... but not at the expense of sabotaging the venture's successful launch. Without jeopardizing the launch, we can state that the venture is on-track for a significant consumer launch that should position MyFlix quickly as a major digital streaming portal / website and APP. Management firmly believes that the greatest growth opportunity at this time in the media industry is through the creation of consumer direct streaming portals. Rather than building a digital portal that aspires to be the "Science Site" or the "Mandarin Film site" or the "Comedy Site"... MyFlix is being built to be the "EVERYTHING SITE" - and it is this SuperStore concept that we believe will ultimately prove to be the winning formula. Maybe it's the local WALMART mentality that has inspired our vision?

We can say this to our shareholders and followers: over the next few weeks AS IT IS APPROPRIATE TO RELEASE MYFLIX INFORMATION, this Blog will be timed with Access Wire press releases to be a simultaneous vehicle for the dissemination of such updates. We're insanely excited about MyFlix - and are dying to talk about it 24/7. But as has been said, "loose lips sink ships," and we must be cautious with our messaging on the launch of MyFlix.

ORIGIN MATTER UPDATE - As we predicted, the appointment of a "receiver" in Texas was both absurd and unenforceable; accordingly, HHSE was not surprised to learn today that the receiver who had been appointed to the case has declined to accept the appointment, stating that there is nothing in the State of Texas to attach. For those of you that read and follow this HHSE management blog (as opposed to intentionally inaccurate sources), the Origin matter is NOT a great big, scary "ooohhh, you'd better sell us your shares now" development. It is, in fact, a matter that has a meritorious legal basis at this point in time to be completely set-aside. For your edification, below are excerpts from the HHSE Blog of Jan. 13 (mentioning the company's strategy), and from last week, January 18 (mentioning the unenforceable nature of a Texas-based receiver against a non-Texas entity). 

(Excerpt from HHSE BLOG, Jan. 18, 2019) "Well, the Dallas Texas Civil Court that has been handling the ORIGIN VS. HANNOVER HOUSE litigation made the unusual (if not Draconian) move to approve the assignment of a "Receiver." This is odd at best because Hannover House has no offices in Texas, no assets in Texas and no customers with headquarters in Texas. The appointment of a receiver in Texas has the same "real world impact" as appointing a receiver to attach Hannover House assets on the Moon."


(Excerpt from HHSE BLOG, Jan. 13, 2019) "Item 7 (referring to Origin Releasing) is a judgment which was voluntarily entered into by HHSE, but newly obtained documents show that the HHSE was induced into accepting the judgment based on an agreement that had been modified by the Plaintiffs; accordingly, this provides the basis to either re-open the case in Texas or to dismiss it under Arkansas Law."


CRIMSON FOREST MATTER UPDATE - As of yesterday, a settlement with Crimson's counsel and Hannover House is now being mutually drafted... and this dispute will be removed from calendar and future actions in the Los Angeles Superior Court. Upon mutual approval, additional details concerning the principal terms of this settlement may be released. 

WATCH THIS SPACE!

Theatrical Expansion / New Film Festival Platform and Studio Partnership for THE RIOT ACT

Greetings HHSE Friends & Followers - maybe the Super Wolf Blood Moon is a good sign, because sales and exhibition opportunities are one the rise for the Hannover House release of THE RIOT ACT. The film has been selected for featured presentation at a major film festival (details will be released separately), which has sparked theatre interest for additional playdates in March and April... AND... a major studio home video venture for the film's release (physical DVD / BluRay and Video-On-Demand) this May (with details also to be subject to a separate press announcement).  International sales are now in motion, with many offers received expected to be finalized at the European Film Market / Berlinale festival (Berlin, Germany, Feb. 7 - 15). 

"THE RIOT ACT" star and producer LAUREN SWEETSER with I-Hollywood TV personality NOAH WILSON. Oct. 4, 2018 at the Laemmle Fine Arts Theatre, Beverly Hills, CA.

Odd Happenings in Texas...

Greetings HHSE Friends & Followers - Well, the Dallas Texas Civil Court that has been handling the ORIGIN VS. HANNOVER HOUSE litigation made the unusual (if not Draconian) move to approve the assignment of a "Receiver." This is odd at best because Hannover House has no offices in Texas, no assets in Texas and no customers with headquarters in Texas. The appointment of a receiver in Texas has the same "real world impact" as appointing a receiver to attach Hannover House assets on the Moon.

Hannover's counsel in this matter feels that what the attorneys for Origin are hoping for is that the appointment of a receiver in Texas will somehow create "unencumbered cash and receivables" to apply against the settlement agreement. Certainly, as clearly communicated to Origin, their counsel and the court, there are NO unencumbered assets or receivables for Hannover House / Medallion... and any attempt to circumvent prior security interests will hit a wall.

We understand Origin's frustration and anger; we are sympathetic to this situation because HHSE management is genuinely working to create a mechanism to pay them the settlement agreement.  If we were NOT wanting to honor the settlement agreement, the "unmarked" distribution contacts would be a good basis to work to halt enforcement actions. But we do not disagree that Origin is owed monies... Hannover House "received the benefit" of sales for Origin predecessor titles, even though Phase 4 did not actually render cash payments to Hannover House (Phase 4 used the "positive cash flow" revenues from titles owned by the Origin predecessor to OFFSET revenue losses on other Hannover House releases such as PINK SKIES and ANIMAL CLINIC). From a GAAP accounting standpoint, this resulted in a ROYALTY PAYABLE even though no cash passed through to Hannover House.  Subsequent changes in Hannover's customers (and a general decline in the sales of indie films on DVD), meant that Hannover was unable to rectify an accounting journal entry and render payment to the Origin predecessor. We get it. We understand that this would be frustrating and upsetting to the new owners of these films (Origin Releasing). We also understand that there is no TRUST basis for Origin to study our situation and truly understand our proposal for the settlement funds. Why should they trust us?  After all, Hannover House did NOT pay them royalties that were technically owed under GAAP rules for the past five years!  Hannover House has not yet EARNED the presumption of trust to the Origin owners.

However, this is not the first time that Hannover House has faced a situation of dealing with an acrimonious and uncooperative creditor. The company endured (and prevailed) with prior significant matters - such as Fantastic Films and TCA Global - both of which started out as "angry adversarial matters" and ultimately became resolved and fully paid only after deferring to a Hannover House work-out plan.

A friendly work-out plan with Hannover House is what we are hoping will eventually be agreed to by Origin. They might be feeling "victorious" today, having won a judgment good in the State of Texas. But the enforcement - and hoped for "collection of funds" against Hannover House in other states is not an automatic acceptance, especially with U.C.C. and prior lien holders that could file a motion to stay enforcement (or file in the Dallas court for a motion to vacate the receiver appointment).  It may take several months of angry efforts before Origin realizes the futility of such a strategy... and accepts the value of the Hannover plan to create these settlement funds. HHSE management is patient... we will await with hope that they come back to the table and enable this matter to be resolved (just like we have succesfully paid-off other, legitimate and major debts over the years). 

MEANWHILE - Parkinson and Shefte recall the "gleeful" predictions that I-Hub short-sellers made many times in the past that incorrectly anticipated "the end of the world" for Hannover House. In fact, eight separate instances (ALL SINCE RESOLVED IN HANNOVER'S FAVOR!) come to mind.

The bottom line is that Hannover House has a definitive methodology to retire the Origin Releasing balance... and it does NOT involve any of the ineffective methods that they are currently pursuing to attach assets. We have communicated this methodology to Origin as well as to the court. Over the next few months, the viability of our strategy will become evident and we think that calmer heads will prevail in that Origin will likely grow exhausted from pursuit of their current, adversarial collection efforts.

SO, stay tuned... the future is ahead for HHSE, and is clearly not with releasing more B-minus horror films into today's marketplace. What we are doing with high-end films, the development of MyFlix site and the registration of the company's shares all mark the beginning of an exciting new era. The Origin matter is a vestige of a former time and business model when micro-budget films were still viable in the DVD marketplace. These small, direct-to-video films are not the level of programming that HHSE management sees in the company's future.

ONWARD!!!

Downtown Dallas, Texas skyline - overlooking the West End Entertainment District.

Balance Sheet Cleansing and other Pre-Form 10 Matters

Greetings HHSE Friends & Followers - As we finalize the last few tweaks in our Form 10 narrative and registration documentation, we are dealing with some issues of balance sheet adjustments.  

For instance, some shareholders have noted (with dismay?) that HHSE has finally issued new stock shares after a 41-month freeze on such issuances. A block of 10-mm shares were issued on Monday to a known  (but non-affiliate) long in order to restore the Graham Financial Services note to current status (rather than be  listed as "in default" for the registration statement). This move improves the company's narrative (to not have any credit lines in default), and has been achieved in a manner which will NOT result in 10-mm shares hitting the open market.  At the same time, with the filing of the Form 10, the 10-mm shares issued years ago to TCA Global Master fund are being cancelled. 

There are other balance sheet adjustments underway, including the detailed / updated status of all payables, producer royalties, producer recoupment balances, film investments, hard assets and officer deferrals and loans - which are part of the supporting documentation of our current 12-31-2018 filings.  While these adjustments are all proving to be "positive" for HHSE, on the "negative side" of the balance sheet impact the value of the company's DVD inventories is being written-down to reflect the dismal state and resale value of the physical DVD market for lesser-known titles. The bottom line is that the registration filing must reflect the most accurate and current data for the company's activities... good, bad or indifferent. It just needs to be disclosed. 

On the SALES front, there is some exciting news regarding our ancillary (North American and International) sales for THE RIOT ACT, as well as two new distribution alliances for upcoming titles.  

MyFlix also continues to dominate the workload, with the process of signing-up additional suppliers and uploading more titles both building in momentum.