Where we have been... Where we are now... and Where we are going at HHSE...

Greetings HHSE Friends & Followers:

As we reflect back on 2017, HHSE Management is taking a few days to look at our past, present and future activities to help guide sage decisions.  2017 has been a momentous year for the company - due in large part to the attempted (but terminated) merger with Crimson Forest, and the subsequent re-focus of the company's primary activities and revenue streams.

Looking much further back - five, six, seven years and more - and looking forward in time for an equal time-frame, we can see trends and opportunities for HHSE and our shareholders.

First of all, we'd like to point out that Hannover House is unlike most any other "OTC Pinksheet" listed company.  We have been operating continuously since 1993 (24-years) and have been reporting to the OTC Markets since Dec. 2009 (8-years).  Statistically, most OTC listed equities are flashes-in-the-pan time wise... lots of Stock Hype / I.R. Promotions, insider share dumps, and quick closures.  That's definitely not HHSE.

As a result of this general trend for Pinksheet companies, a whole sub-industry of stock manipulators has developed that can impact OTC-Pinksheet listed companies (for the entirety of OTC markets in general, not specifically limited to Hannover House).  Like a gang of drunken hobos in public park - mumbling to each other with insane prognostications - the stock hobos are only effective against low-information shareholders gullible enough to actually read the chat-board postings of manipulative and fact-free ramblings.

Fortunately, every false statement made by the stock hobos or those manipulators attempting to "box" or otherwise control the HHSE stock price, can be easily countered with demonstrable facts.

So, let's take a few minutes to take a high-altitude look at the Company and where we are going.

WHAT IS OUR PLAN FOR GROWTH IN 2018 AND BEYOND?

*  We believe that HHSE is "one film away" from being a major independent studio. All it takes is any one of the many titles in our current release queue to become a surprise box officer performer such as "Lady Bird" or "Get Out" and we are suddenly a $100-MM company.

*  We have an impressive slate of titles for 2018 and 2019 - and two terrific distribution partners for North America (Cinedigm Entertainment and Sony Pictures Home Entertainment) - as well as our direct relationships with all of the major theatre exhibition chains. Our "lower-end" titles are much higher profile than in past years... and our higher-end titles are now genuine theatrical caliber contenders. We are positioned for the proverbial lucky break that happens when the right film is released at the right time...

*  Our recently re-focused Theatrical Release model is delivering huge benefits to our ancillary revenues... and our new partnerships with indie labels is providing access for the VODWIZ streaming venture, which truly could become "the tail that wagged the dog" for HHSE shareholders.

What else is worth noting for this long, holiday weekend?  Here are a few observations:

1).  Hannover House has Not Issued any Shares in 2.5-years.  See the chart below.  For the company's first two years as a public equity, the stock structure was quite stable.  For the past 2-1/2 years, the stock structure has also been stable.  But in 2013 and 2014, the company got involved in some ugly predatory lender situations, most notably TCA Global and JSJ, which precipitated a rapid growth in share issuances. The business model for both TCA and JSJ - as exercised against HHSE and many other borrowers - is to make repayment with cash as difficult as possible, in order to force a "conversion of the debt" into freely trading shares of the issueer at a dramatic discount-to-market. Such returns grossly exceed the legal usury law limitations in all states, and this general business practice is operating in a legally dubious space.  JSJ, for instance, refused to accept repayment from HHSE via a bank wire transfer (including all applicable, legal interest per the note), preferring instead to file a lawsuit (in Texas?!), in order to try to force repayment via shares at 200% or more interest.  These predatory lenders generally prey on companies that are unable to defend themselves, and therefore are forced to allow the lenders to squeeze out profits far in excess of lending laws through toxic-conversions; most of the time, these small borrowers are ultimately forced out of business.  However, this was not the case with Hannover House - as the company has a  operating business that is unaffected by fluctuations of our stock price and not dependent on the issuance of shares for capital. These toxic dilutions from 2013 and 2014 definitely hurt our shareholders, and hurt our "market cap," as demonstrated in the charts.  So, the Board voted to cease such forms of borrowing, and as a result, HHSE has not issued any new shares in 2.5-years.  Anyone predicting on a chat board or anywhere else that a "big dilution is coming" is mistaken.

2).  It Doesn't Take Much to Double or Triple the HHSE Share Price - Look at the market-cap spike for HHSE stock earlier this year (seen as June, 2017).  This increase in PPS was due to shareholder excitement about the prospect that a merger with Crimson Forest would provide HHSE with high-profile films to distribute.  The growth in PPS was not based on any increase in revenues (in fact, the time-distraction of the Crimson merger caused many 2017 releases to be delayed).  The PPS spike was driven solely by enthusiasm.

3).  Does HHSE Need a Merger Partner? - If the right opportunity came along that would provide HHSE with a reliable source of high-end theatrical titles, we would be responsive to consider such opportunities. However, the programing philosphy ultimately revealed by Crimson Forest did not conform to North American market conditions, in HHSE's opinion. When the promised operating funding didn't materialize, the promised high-end productions turned into low-end films, and the promised "big" releases all turned out to be Mandarin-language releases, we knew that the partnership would not deliver what HHSE wanted for our step-up to major independent status.

4).  What's in Store for the first half of 2018?   

a).  Release Activities:  January will see the theatrical release of "BLOODFEAST" - delayed since July due to MPAA re-cut needs.  February will see a massive placement of DVDs and BluRays for "BATTLECREEK" (street date Feb. 6).  That same week, on Friday (Feb. 9), HHSE will commence the initial theatrical launch of "DEATH HOUSE" to theatres.  In April, three titles will be released via Sony Pictures Home Entertainment (including "DAISY WINTERS");  in May, HHSE will release "THE RIOT ACT" to theatres and Cinedigm will release DVD's and BluRays of "THE LENNON PROJECT" for the Company. Other titles in queue for theatrical and / or home video during the first half of 2018 include "MUSE", "INSOMNIUM", "IDENTITY CRISIS", "SLEEPER CELL", "DINOSAURS OF THE JURASSIC" and "SACRED HEARTS" (all but the last title were planned for 2017, but delayed during the Crimson merger pursuit).  

b).  Corporate Governance:  HHSE will be re-filing a Form 10 Registration with two full years of audits (2016 and 2017) early this coming year, during the first few weeks; the CPA review is already underway and much of the documentation and procedural steps for the audit were already assembled during 2017 while planning for the Crimson merger.  We feel that a registration of the shares and the subsequent uplist to OTC:QB will attract more investors and some institutional funds... resulting in a higher anticipated daily trading volume, and a predicted much higher HHSE stock price (based on business results, industry fundamentals and the proven power of Shareholder Enthusiasm). 

c).  New Ventures - With Sony and Cinedigm handling selected HHSE releases, our management time can be redirected towards theatrical releases, higher-end acquisitions (including productions) and our VODWIZ streaming venture.  As will be seen in our 2017 filings, theatrical release activities are the engine that is now driving HHSE revenues in all other arenas.  Theatrical titles get more shelf space and priority placement when released to home video; theatrical titles get larger license fees from Netflix and Television licensors;  and theatrical titles provide two direct revenue streams for HHSE in the form of both servicing fees and revenue participations.  The current mass merchant and key video retail support for "BATTLECREEK" evidences the sales boost that a targeted, limited theatrical release can deliver for the subsequent home video release.

5).  Thoughts on the HHSE Stock Chart - The chart below is divided into two sections.  The top section shows the "approximate market cap" at six-month intervals beginning in June 2010 and continuing through to this week. The Market Cap was calculated by the total of all shares in issue, multiplied by the closing price of the stock during a one-week period during the stated month.  The bottom section of the chart shows the total SHARES IN ISSUE for the company during this same time frame. The dark-blue shares represent those that are "restricted" from sale, and the light-blue shares represent the total share count of restricted plus unrestricted shares for that time period.

Perhaps the most visible trends to see on this chart are that the company did very little in share issuances for the first two years... and none for the past 2.5-years - as seen by the flat-line of total shares in issue.

The next interesting item of note is the tremendous PPS Spike that occurred earlier this year, at which time the Market Cap jumped from $5.4-MM to $24-MM in just a few month's time.  What's interesting about this result is that the company was functionally frozen from new releases during that time, so the sudden shareholder enthusiasm cannot be attributed to improved revenues... it can only be viewed as a reaction to the prospective merger with Crimson.  The current Market Cap of $12.4-MM has been stable for quite a few months now.

A third observation can be seen during the "heavy dilution" time-frames of 2013 to the end of 2015, when TCA (via MAGNA) and JSJ were flooding the market with toxic-conversion shares. What is interesting about this? Well, the market cap stayed surprisingly stable during this dilution... meaning that the average PPS went DOWN while the total float went UP, but the overall Market Cap remained steady.  HHSE Management believes that the Market Cap remained relatively steady during these dilution times due to Investor Relations / Stock Promotions. As the toxic-lenders dumped their HHSE shares onto the market, some effort was being expended (by them or third parties) to create an investor market for their share dumps... which is another reason why HHSE management hates the concept of these toxic-conversion notes.  It also answers the question that some shareholders have posted to HHSE management over the past few years about "why aren't you doing IR / Stock PR now?" The answer is that we are are focused on building the fundamentals of the business rather than on creating a momentary spike in PPS interest while some third party lender dumps out shares.  We are not philosophically opposed to I.R. and new investor outreach. We just feel that the cost of such promotions would be best utilized after our Registration and other major events in the works.

There are more thoughts and developments to share... watch this blog over the holidays, and watch for news releases occuring between Christmas and New Years, as well as during the first week of January.  Happy Holidays / Merry Christmas / Happy New Year and Best Wishes to all our HHSE shareholders!

HHSE VODWIZ welcomes Production Master Technician EARL HALE to our Team!

Greetings Hannover House Friends & Followers - Just in time for the Holidays, we are pleased to announce the engagement of EARL HALE as Technical Services Director for VODWIZ and Hannover House.  Earl has an impressive resume in video production, mastering and technical services, including multi-year directorships at Walmart TV and the Media Center of the University of Arkansas Global Campus.  A formal press release will post in early January, along with VODWIZ supplier and status news.

Watch this blog for an informative overview on Saturday of Hannover House for the past two years, as well as a sneak-peek into major activities for the company in 2018!

...And a very HAPPY Thanksgiving to all HHSE Shareholders!

Greetings to all HHSE Friends & Followers on this pre-Thanksgiving Wednesday!

As we reflect back on the past year, and our current situation, we find much to be thankful for. Some business ventures don't always work out as planned, but circumstances keep working out for the better. The results of this past year generated some definitive conclusions:

1).  COMMERCIAL?  We think it's safe to say that U.S. Theatrical and Video audiences are not anxiously awaiting the next "Mandarin-language" action film.  Despite big production values and big China box office results, the USA theatres and video retailers cannot get traction with films such as "Shock Wave" and "Extraordinary Mission."

2).  GOOD PRODUCT SELLS - U.S. Theatrical Exhibitors and Video Retailers have proven that they WILL strongly support "quality" films with production values, recognized stars and good performances.  Case in point:  our tiny theatrical release of "BATTLECREEK" has now sparked RECORD home video pre-orders for Hannover House - with placements at WALMART, TARGET, BEST BUY, FAMILY VIDEO and "awaiting" final approval from REDBOX.  This is the first HHSE video heavily supported by TARGET in five years!  Our advanced-buzz for "DAISY WINTERS" suggests even more impressive results are likely to follow!

3).  UPLIST - While HHSE does need to "uplist" - we DON'T need to do a corporate-merger with another entity to achieve this goal.  We were enticed by the offer of working capital and access to production funds from Crimson Forest, and thus our long, slow-dance this past year to try and complete a corporate merger.  But in the end, we have determined that we do NOT need to dilute our shareholders by 42% (or any amount) in order to become fully registered and uplisted.  Fortunately, the time we spent attempting to complete the Crimson merger enabled HHSE to get our audit materials and records in order to quickly facilitate a re-filing of our Form 10 Registration promptly following 12-31-17.

Completion of third week for "THE RIOT ACT" Western Production

Greetings HHSE Friends & Followers - The "toughest" footage is now in the can... including all of the OPERA HOUSE sequences (with over 200 costumed characters and extras) and the "Main Street" Sequences (with over 40-animals, 100 extras and 70 truck loads of dirt!).  Only 1-1/2 more weeks of principal photography and this one will be ready for editing and post work.

Meanwhile, here's a link to some local news coverage of the shoot... including a last minute "cameo" recruitment of Executive Producers FRED SHEFTE and ERIC PARKINSON to appear as the Newspaper Photographers (anything to save a buck!).

http://www.4029tv.com/article/movie-filmed-on-historic-main-street-in-van-buren/13639564

To protect the confidentiality of the cast and story elements, the local news journalist on the above story was prohibited from shooting during actual filming of THE RIOT ACT.

THE RIOT ACT is based on the true story of romance, murder and revenge that occurred at the Van Buren Opera House in 1903. The film is planned for an APRIL 27, 2018 Theatrical Release through Hannover House, with top USA Markets targeted.

Nearly 35% of the film's production financing is coming from the State of Arkansas incentive and rebate programs... additionally, the Van Buren Chamber of Commerce, the Convention & Tourism Bureau and the Arkansas Heritage funds have all contributed to provide materials, props, goods and in-kind services equivalent to more than $500,000 in production cost savings. One of the key benefits to making THE RIOT ACT as the first HHSE "in-state" production in Arkansas under the new incentives program, is to prove the accessibility and benefits of the local production support and State incentives, in anticipation of the ambitious "MELTDOWN" feature - planned for principal photography early next year at the Arkansas Nuclear One plant outside of Russellville, Arkansas.

http://www.entergy-nuclear.com/plant_information/ano.aspx

ONWARD>>>>

 HHSE President  FRED SHEFTE atop the lift-gate for Grip Truck 1, utilized on this shoot primarily for the Dolly, Tracks and 12-k HMI lights for the night-time sequences.

HHSE CEO ERIC PARKINSON and FRED SHEFTE on the set at Historic Van Buren

Principal Photography is utilizing the 8K format of the RED MONSTRO, with High-Speed Cooke Lenses, liberal use of Steadicam sequences and the Elemack Spyder pedestal dolly and articulating jib-arm.

What happens when a couple of Exec. Producers visit the set? Sometimes they get recruited for bit parts... and in this case, Shefte and Parkinson portray the Newspaper Photography team for the Fort Smith Times (1903).

If "the South Rises Again," Shefte will be ready to document the next Civil War on this 1890's large format box camera.

General Updates on Various HHSE Corporate / Production & Distribution Activities

Greetings HHSE Friends & Followers - As requested and promised, the following blog highlights some updates on key issues of interest to our Shareholders.

1).  TIMING OF Q3 FILING - We anticipate being a day late on this filing, with the OTC Markets posting expected on Thursday, Nov. 16.

2).   VODWIZ UPDATE - As anticipated, we have closed a major studio venture that will provide tonnage of product to VODWIZ, including a large quantity of recent, theatrical hits.  The totality of programming that will be available to consumers through VODWIZ appears to be on track to being second only to Amazon at this point. We see VODWIZ as a major portal for home entertainment digital streaming access, and potentially "the tail that wags the dog" so to speak. Additionally, we are about a week away from the anticipated finalization of a private funding structure to finance the costs associated with building the VODWIZ website (to Amazon Digital infrastructure standards), and all other pre-launch and initial consumer launch costs for this venture.

3).  IRS ACKNOWLEDGES LEVY ERROR - HHSE management is pleased to report that a levy issued by the IRS for "estimated payroll taxes" has been corrected and relieved after providing required documentation for the payroll reporting periods previously in question. We have been told that the IRS levy will be lifted (and customers notified) within the next 21 days, and the future reporting of payroll taxes (through our third-party payroll service) will correctly identify the Employer I.D. Numbers that sparked the arbitrary / estimated assessment in the first place.

4).  WEEK THREE OF "THE RIOT ACT" FEATURE PRODUCTION - the ambitious, period western (based on a true story and set in 1903) continues to shoot in and around Fort Smith, Arkansas and Van Buren, Arkansas.  We are scheduled to wrap principal photography next Wednesday (just before Thanksgiving). Although we are limited in our ability to publicly release cast photos and other production details, we can share a few "approved" stills below that were previously released through social media.

For THE RIOT ACT feature - the historic city of Van Buren, Arkansas, has been converted into a 1903 Western Town with the addition of 70-truckloads of topsoil onto the main street (and the voluntary closure of auto access and most businesses for five days).

Producer Lauren Sweetser ("Winter's Bone") also portrays the female lead in THE RIOT ACT

The Arkansas-Missouri Railroad has been restored to 1903 period look and utilized in several key scenes for THE RIOT ACT.

Street Scenes and Opera House sequences for THE RIOT ACT have utilized up to 300 fully costumed extras, plus horse, wagons, cattle and other elements of production value.

5).  DISTRIBUTION ACTIVITIES - HHSE is currently gearing up to manufacture and fulfill the large video manufacturing required to fulfill the record-breaking DVD orders received for BATTLECREEK and BLOODFEAST.

The company is pursuing release activity for the long-awaited (and delayed) theatrical launch of BLOODFEAST, as well as the upcoming DEATH HOUSE, GETTING GRACE and additional markets for the WWII drama CHOSEN.

Other distribution activities include the video releases now in motion for both BONOBOS and ALGERIAN (now renamed as "SLEEPER CELL"), as well as the romantic comedy SPICES OF LIBERTY, the Red Bull motorsports actioner RIDE UNITED, and the also long-awaited DINOSAURS OF THE JURASSIC.  Other home video titles include the thrillers IDENTITY CRISIS, MUSE and INSOMNIUM.  Many of these releases were intentionally delayed during the protracted "merger" activities between Hannover House and Crimson Forest, which have thankfully been removed as a distraction from our ongoing productivity.

On the publishing front, the re-release of the novel "QUIETUS" (in "trade cover" format) is on schedule for the Barnes & Noble promotion in February, which will be supported with ads in the New York Times Book Review, Publisher's Weekly and Library Journal, as well as email campaigns, social media and a high-profile publicity outreach promotion from FSB Associates.

Lots of good stuff on our plates and in motion...

Battlecreek Theatrical Launch - meeting and exceeding our ancillary commitments!

Greetings HHSE Friends & Followers - Friday (Nov. 3), marked the launch of BATTLECREEK into  27 theatres in 18 different markets across the USA.

Some shareholders have expressed the need for a clarification blog as to why HHSE has released BATTLECREEK to only 27 theatres and an explanation of the manner pursued - in hopes that this information will illuminate the overall ancillary business model for those who are unfamiliar with the film industry.

What is the rationale for doing a limited theatrical release with limited advertising support? Isn't that a guarantee that a film will not hit a good box office number?

Yes, that's correct. Perhaps blindingly obvious to those who understand our strategy.  If our 27 theatres playing BATTLECREEK had SOLD OUT EVERY SEAT FOR EVERY SHOWTIME this past weekend, we might have grossed about $200,000 - because unlike a film such as THOR which played in large auditoriums, smaller indie releases are usually in 60-to-90 seat auditoriums, and often "split" (shared auditorium) with another indie release. But we didn't sell out all of our shows and we didn't hit $200,000. We generated about $30,000 - and will likely finish the first week with about $45,000 in box office gross.

So, why spend $35,000 in "hard costs" plus $15,000 in "deferred fees" in pursuit of only $45,000 in total box office grosses (that will "settle" out after the theatres keep their share to about $20,000 back to HHSE)? The math from box office returns alone does not seem sustainable. That's correct. It's not a logical venture until you see the massive impact this sort of theatrical release delivers for all other ancillary revenue streams.

Our goal with BATTLECREEK was to enhance the visibility and credibility of the film so that we could MAXIMIZE overall revenues for HHSE.  By opening the film in "at least 8-of the top 25 largest markets" we qualified the film for NATIONAL TV coverage - elevated its stature for home video - positioned the film for a lucrative Netflix contract - qualified the film for a Redbox kiosk placement - and legitimized the film for international markets. From a modest investment, we reap major returns.

How major? Well - based on video preorders already received from Walmart, Target, Best Buy, K-Mart and Family Video - BATTLECREEK will be the largest new release video shipment since 20th  Century Fox Home Video shipped over 250,000 units of "TWELVE" for HHSE back in January, 2011. Because of what happened THIS WEEKEND with BATTLECREEK in theatres, HHSE will have our biggest December ever.

Will HHSE ever have a movie that has more significant box office potential? Absolutely - in fact,,we have solid indications that our Dec. 1 release of DAISY WINTERS could have that special "spark" with holiday movie audiences. If it does, great. If it does not, still great, because we are spending theatrical funds conservatively and  in a targeted manner so that we are NOT dependent on box office magic to thrive. Meanwhile, national TV audiences have ALREADY seen feature stories on BATTLECREEK on ACCESS HOLLYWOOD, ENTERTAINMENT TONIGHT and EXTRA.  Tomorrow morning, ALISON EASTWOOD is slated for FOX AND FRIENDS and HOME AND FAMILY (Hallmark Channel)... major national TV placements that would NOT occur for a "direct-to-video" release... but are available for theatrical titles... and ironically DRIVE the home video demand.

Successfully releasing independent films is a strategy and process involving multiple revenues streams and steps to achieve the best, bottom-line result.  We are happy with the launch of BATTLECREEK, and know that our year-end financials will demonstrate the validity of this strategy.

OPENING NIGHT Screening event was open-to-the-public at the Laemmle's Music Hall in Beverly Hills, where the film has a one-week engagement.

Director ALISON EASTWOOD answers audience questions after the Beverly Hills screening.

In addition to National TV shows, Alison Eastwood also appeared last week on the local NYC program "GOOD DAY NY" and on the L.A. based afternoon news for KABC-TV.

Alison taped her BATTLECREEK segement for Hallmark's HOME AND FAMILY which airs on Monday, Nov. 6, nationwide.

Battlecreek opens FRIDAY in Key Markets!

Greetings HHSE Friends & Followers - Watch for BATTLECREEK publicity on major TV news and entertainment shows this week... and check out your local theatre Fandango or other listings for locations near you.  The initial 25 locations opening this Friday are listed on the film's website:

www.BattlecreekFilm.com

There is also a special event occurring this Friday at the Laemmle's Music Hall in Beverly Hills, with surprise celebrity guests, cast and crew to support director Alison Eastwood and her Q&A.  Event is open to the public, standard theatre admission required.  SEE L.A. TIMES FRIDAY AD BELOW.

Watch for updates!