Historic Times Creating Historic Opportunities

Dear HHSE Friends & Followers - We hope that everyone took some time off today to reflect on the works of MLK, our own goals and achievements, and on the monumental / historic events now impacting the world (from political and economic strife, to the ever-worsening COVID-19 Pandemic). Truly, we are living in historic times.

Which brings us to the earth-shaking / paradigm shift now impacting the entire Entertainment Industry. 

COVID shut-downs have accelerated the prior trend away from theatrical attendance and towards home-movie experiences. The availability of large-screen, HD Televisions at affordable prices... dramatic drop in costs for significant quality surround-stereo sound... and the exploding availability of quality entertainment through streaming services have combined into a perfect-storm for a cultural shift in how we receive and enjoy entertainment.  

DISNEY had no choice after their March 9, 2020 "premiere" event of MULAN. Just 2-days later, Broadway shows and most movie theatres nationally were shut down for the first wave of the COVID-19 pandemic. MULAN had been scheduled to open on over 4,000 screens in March, but Disney had discovered that there were no theatres available, and no audience enthusiasm to sit in a room next to coughing strangers for 2-hours.  So, on Sept. 14, 2020, Disney pursued a bold move to open MULAN onto their Disney+ streaming service at a premium rate. Theatre owners were enraged, but could not protest due to ongoing shut downs. Industry experts freaked out and predicted horrible results for Disney. However, consumers (with their impressive big-screen TVs and surround sound systems) said "bring it on..." and Disney grossed over $300-million in less than a month. They didn't have to split this money with theatres... they didn't have to incur the costs of shipping displays, masters and other promotional materials to 4,000 locations... and they didn't have to WAIT three months to be paid.  The experiment was a success... but was it a fluke?

Since that time, other films have embarked on either a "short-window" to streaming (i.e., 30-days) following a limited theatrical launch - to "simultaneous" release to theatres and streaming.  

This weekend, the second MAJOR title to break the prior rules and release windows opened to more phenomenal streaming success:  "NEWS OF THE WORLD" - a period western starring Tom Hanks - has been # 1 on almost every premium streaming platform (and this has happened after a small theatrical release less than a month ago).  Universal has not yet announced their mega-haul from this weekend's streaming of "NEWS OF THE WORLD."  But industry insiders are already pegging the revenues to settle out in the $250-million range... which is many times greater than streaming revenues under the old "theatres first" model.

One of the interesting observations resulting from the Hannover House audits of our activities these past five years has been the amount of money the company has SPENT in opening films in theatres. On the low-end, each location must have a master, posters, the "Virtual Print Fee" (Projector access), and ideally a small amount of social media / ad support.  So it has been costing HHSE about $2,000 per location as the bare-bones cost of admission.  For higher profile films, the studios like to send banners and standees to theatres... they like to pay for premium screen visibility for upcoming trailers months in advance... and they like to buy tonnage of ads on TV, internet, print and radio... all designed to drive awareness and pack the opening weekends. 

For a studio release onto 2,500 locations, the typical "bare bones" expense is more in the range of $10,000 per location... creating a WHOPPING out-of-pocket marketing cost of about $25-Million.  So what does this give the studio execs (besides ulcers)?  This level of marketing gives the film a legitimate shot a grossing in the top five releases for any given weekend.  Big films can often hit $12,500 "per screen average" box office results... which (if released onto 2,500 screens), could result in an opening weekend of about $31-Million.  Sounds good compared to the $25-mm expense, right?  Wrong.  The THEATRES demand a big piece of the box office... which can be 30% for a huge hit... all the way to 65% for an independent studio title.  If such a release ends up grossing $60-million over the course of four or five weeks... then the Studio will be comfortably into recoupment of their releasing costs (but not yet recouping the costs of producing or acquiring the movie). 

All of these calculations have been thrown out of the window now... with COVID destroying the vice-grip of the theatre chains, and the studio prisoners finally tasting meat.  A distributor with the right product (often with the right stars), can now experience a two-or-three-fold improvement in bottom line results from the new "stream it as soon as you can" paradigm. 

Which brings us to Hannover House and MyFlix.  Over the course of the 28-years that Hannover House has been operating, the Company has re-invented itself several times, in an evolution that parallels the changing entertainment marketplace.  Five years ago, we recognized that direct-to-home streaming was the next big thing, and we developed a multi-studio concept that is finally being launched under the MyFlix banner. Also, over the past few years, we moved away from packaged goods (DVD and BluRay) in favor of how theatrical exposure would help with streaming advances from Netflix and other Subscription VOD sites.  While theatres are temporarily shuttered (for the most part), we do believe that there will remain a good business for the right "event-level" sort of film (where consumers will still want to see it on a ginormous screen as opposed to home viewing).  But what we see as the more obtainable and assured business model is the direct-to-streaming (or simultaneous release onto streaming and theatres), for the next few years.  

Over the next few weeks and months, the results of the simultaneous achievements of the MyFlix launch and the F10 / S1 Offerings from HHSE, are expected to create revenue resources unlike those ever before experienced by the Company.  Some proceeds will be generated from transactional video-on-demand "one-off" sales... and likely more will be generated from all-you-can-watch monthly subscriptions.  But the other side of the company's 2021 model - the creation of original productions - now adds a tremendous component of exclusivity and world-premiere status opportunities for films that HHSE and MyFlix can facilitate together.

Recently, this blog mentioned the opportunities for feature financing from State incentives, co-production opportunities, pre-sale partnerships with international distributors and entertainment lenders acting as bank "gap" financiers.  This sort of consortium of funding elements works ideally for films in the $5-mm to $15-mm production range... and example of which is show in the chart below.

We believe that HHSE and MyFlix can use the changing V.O.D. income paradigm as a key USA distribution component to not only build consumer traffic and revenues for MyFlix... but to also build a sustainable and valuable film library for revenue generation in perpetuity.

While the political world may be on fire... the economy is on eggshells... and COVID is on a spike... you can rest comfortably knowing that HHSE and MyFlix are on target for a tremendous revolution and evolution that will make the coming days and weeks an exciting launch for what will be an even more impressive 2021 for our shareholders. 

Hold onto your seats, friends... the engines are now warming....

HHSE - Reduction in O/S

 Greetings HHSE Friends & Followers - within the next few days, the share count for Hannover House, Inc. (HHSE) common stock at Standard Registrar will reflect a REDUCTION of 500,000 shares.  This is the result of HHSE purchasing 500,000 shares from a non-affiliated shareholder last year at $.012 / share, which shares had not previously been returned to treasury.  This discrepancy was discovered in the audit, and the certificate was retrieved from the transaction file (and has since been returned to Standard Registrar). 

We mention this because of the enhanced attention to the company's transactions during this current uplisting and offering period.

We hope all of you had a fantastic holiday break and New Years, and we look forward to a great month and year for HHSE.

Onward!

Significant and Positive Developments / Updates for Hannover House (HHSE) and MyFlix

Greetings HHSE Friends & Followers.  What a crazy year we had in 2020, but what an exciting year we are facing beginning in just the next few days!

Here's a few updates, including the most critically requested information on our FORM 10 Filing, the S1 Offering and the Launch of the MyFlix Consumer Site & Service.

1).  MYFLIX - If we were launching a streaming service with one (1) movie via a self-service "ROKU" Channel, we might have been able to create some momentary shareholder excitement... but we would not be creating a legitimate, sustainable service with repeat customers and a major revenue base. Accordingly, it was not surprising to discover (over the past few weeks of work with our web design supplier) that a major site like MyFlix - with access to over 15,000 titles - requires substantial infrastructure and technical attention for proper operations.  

What we do NOT want to do is launch with a skeleton site, or with a site featuring only 1,000 titles.  On the other hand, we also do NOT want to launch the site and see an immediate crash from data overload and streaming constrictions. Our plan was to publish the consumer site THIS WEEK (between Christmas & New Years), under the belief that there would be a lot of people at home due to Holidays and Covid. But the site simply is not ready, even with a simplified graphics and tendril model.  

Based on the ongoing problems with Covid and the delayed vaccine roll-out, we believe that people will STILL be mostly at home for some time... and that a release of the site in January is far more likely to not encounter technical problems.

2).  FORM 10 - As described previously, the "going-forward" business model for HHSE is two fold, consisting of the MyFlix service and the production of higher profile features. The prior model of acquiring and distributing micro-budgeted indie films for DVD release is no longer viable due to the maturation of the home video market away from low-budget, non-star-driven titles (plus, we have discovered that many of those micro-budget producers are delusional nuts - and prone to litigation). 

Accordingly, much of the body of the Form 10 Registration concerning operations is focused on MyFlix and not surprisingly, many details of the MyFlix site and supplier partner details are disclosed in the Form 10. With technical issues currently impacting the launch date of MyFlix, we find ourselves facing one of two principal choices:  1).  Delay the release of the Form 10 until MyFlix is launched; or 2). Revise the Form 10 to remove non-public details about MyFlix, and release this registration immediately after these edits. We have decided to go for option two, and we have been editing / updating the F10 the past three days so that it's publication will not inadvertently expose MyFlix supplier partners and unique site services. We do not want to self-sabotage MyFlix by revealing the details of the service before it is functionally "live" to consumers. 

With respect to Form 10 financial details, we have confirmed that there is no issue regarding our filings being viewed as "stale" under S.E.C. timing requirements. So, we will all enjoy an amazing start to 2021... which is more poetic than launching during a historically notorious year anyway. 

3).  S1 FILING - The filing of the S1 will be just a few days after the publication of the Form 10, and we have received strong indications from media partners and large investors that the initial block of 50-mm shares at $.03 / share are poised to sell out quickly. The likelihood of the second tranche of shares (50-mm at $.05) being sold will likely depend upon the public market's pricing for shares at that time. The funds raised will be utilized 70% for MyFlix and new operations, and 30% for existing debt management

4).  DEBT-TO-EQUITY - In advance of the Form 10 and S1, HHSE made deals to exchange approx. $500,000 of debt into HHSE restricted stock shares, thus improving the company's balance sheet and addressing creditors with a plan that could show them a significant upside.

5).  LEGAL UPDATES - HHSE participated in a court hearing last week regarding the "Getting Grace" dispute.  Months ago, we were informed (by the Company's prior counsel in Pennsylvania) that our settlement terms had been accepted but not documented. After months of delays, HHSE ultimately  prevailed in getting the case moved into Arkansas - where the local judiciary has little tolerance for inappropriate and unsupported claims by plaintiffs and their attorneys. Following last week's hearing, HHSE and our new counsel in the matter (Steven M. Kay) have renewed confidence that we will prevail in the dispute (instead of making a "settlement"), and were encouraged by the Judge's attention to a discussion about the appropriateness and applicability of awarding legal fees to Hannover House and other improperly named defendants. A long-term schedule was set, and this was a VERY GOOD day for HHSE. Stay Tuned...

GET READY FOR AN AMAZING 2021~!

Hannover House sends best wishes for a speedy recovery to HHSE Shareholder & Friend, Dr. Rico Simonini

Dear HHSE Friends & Followers:  as we find ourselves on the dawn of the COVID-19 Vaccine, now is not the time to let down our guard and potentially become infected.  

Certainly, this was not the case for HHSE shareholder, friend (and TOYS IN THE ATTIC voice actor) Dr. Rico Simonini - of Cedars Sinai Hospital in Los Angeles - whose exposure to COVID-19 was assuredly the result of his care for patients.  Still, Rico is now battling for his life, facing double pneumonia and other COVID-19 effects.

We send Dr. Simonini our best wishes, hopes and prayers for a speedy recovery.  

In addition to his work with Hannover House in TOYS IN THE ATTIC, Rico has appeared in quite a few feature films, including MAX PAYNE, A GOOD DAY TO DIE HARD and in the starring role as Frank Sinatra in last year's FRANK AND AVA. 

Godspeed and recovery to a great guy and friend!  BE SAFE, HHSE FRIENDS!

HHSE Advisors for Legal / Accounting & Filing Matters

 Greetings HHSE Friends & Followers - some shareholders have contacted management today with concerns about legal filings, payments, audit formats and other non-issues that have been suggested by stock-manipulators.  In respect of these concerns, we will quickly address such misinformation:

1).  AUDIT FORMAT - The HHSE Auditing company is PCAOB Certified, and has recently completed three other Pub-co Audits and filings. We are confident that their procedures and the formatting of our filing and their report coverage complies with S.E.C. rules.

2).  F10-S1 ATTORNEY - The HHSE Attorney handling the review and re-draft (as needed) of both the F10 and S1 filings has many years of experience in these areas, including a recent F10 filing that received quick S.E.C. approval.  We are confident that the advice and structural assistance being provided is top shelf.

HAVE A GREAT DAY / FANTASTIC WEEKEND - and HAPPY CHANNUKAH (to those for which this greeting applies), and an awesome month of Holiday and Religious celebrations!

R.I.P. to Hannover House star Tommy "Tiny" Lister / 6'5" Lead Actor from AMERICAN JUSTICE

 HHSE Mourns the sudden death of Tiny Lister today in Los Angeles at the age of 62. Tiny was anything "but" tiny in stature, standing over 6'5" and carrying a body mass of muscle that some guessed to be north of 350-lbs of power and might.

Tommy "Tiny" Lister was the star of AMERICAN JUSTICE from Hannover House - which was one of the first feature films shot in Oklahoma under the State of Oklahoma Film Incentives program.  Hannover House had a successful home video release of AMERICAN JUSTICE through Walmart, Target, Best Buy and Redbox (among others), plus successful streaming placement through Vision Films to most major digital platforms.  The film has not yet been sold to domestic television, but there have been inquiries recently from Starz and Showtime. 

R.I.P. big man, you will be missed....

https://www.youtube.com/watch?v=_3jJLFi2CmY

Wyoming S.O.S. Adjusts HHSE A/S to Accommodate first $4-mm of S1 Registration Offering

 A key step for the F10 / S1 Fiings has been accepted as of today by the Wyoming Secretary of State, namely, the increase in A/S to 980-mm for Hannover House / HHSE.  Stay Tuned...