Update on HHSE Litigation Moves and Resolutions - Along with Additional News Bits

Happy Friday-the-13th to our HHSE Friends & Followers - Firstly, we want to congratulate director MARCEL WALZ on the opening week digital streaming success of his film, "BLOOD FEAST" - which has been in the top 10 for ALL new release horror titles streaming this week... a terrific start for "Blood Feast" and HHSE!  The launch of the Digital release is also very well-timed for the upcoming COMIC-CON show in San Diego - where Marcel will be signing autographs and "Blood Feast" posters on Friday, July 20 at 2:30-pm.

https://comiccon2018.sched.com/overview/type/U%3A+Updated/Individual+Signing

Hannover House C.E.O. Eric Parkinson with "Blood Feast" Director MARCEL WALZ

Next - and as mentioned in an earlier blog - HHSE has been active in prevailing, settling or otherwise progressing in cleaning up the company's balance sheet and other disputes. The purpose of these activities is to eliminate litigation, strengthen the company's balance sheet and generally improve the overall optics of HHSE as the company emerges from S.E.C. Registration and the simultaneous launch the highly-anticipated MYFLIX digital streaming venture. Over $5-mm in debts have been paid, settled or otherwise retired by HHSE over the past few years - and strategies are in place for all of the company's major creditors.  Most of the nuisance lawsuits have already been adjudicated in HHSE's favor or otherwise dismissed.  There are three currently active litigation matters that are in motion, for which shareholders are seeking status updates.

1).  UPTONE RELEASING ("Union Bound") - HHSE has complied with all of the terms of the settlement agreement except a final release of unsold DVD returns (which requires the cooperation of wholesaler, Cinedigm Entertainment).  HHSE has paid Cinedigm for costs and handling fees associated with the release of unsold merchandise, and we anticipate that these DVDs will ship to UPTONE by mid-next week.  Upon receipt of merchandise, the settlement agreement will have been satisfied and proper court filings are required to be completed by Uptone's counsel in order to have this issue fully vacated and closed. 

2).  CRIMSON FOREST - Plaintiff's counsel has extended to named Defendants a 21-day extension of time to file a response, based upon improper service.  A clerical default against three of four named Defendants will be vacated following the formal motion, including failure to file a Motion for Default, failure to provide evidence of proper (legal) service, failure to notify Defendants and the written agreement by Plaintiff's counsel to HHSE for a 21-day extension as of July 10 (providing until August 1 for a responsive filing). HHSE's cross complaint integrates the Crimson claims with the overall merger and financing agreement, and HHSE will seek to enforce the financial terms of the merger agreement, calling for a minimum of $1-million prior to May 15, 2017 (which Crimson did not pay), and additional financial damages of more than $3-million caused to HHSE and HHSE shareholders as a result of Crimson's breach of the merger and financing agreement. Per the terms of the March 8 Merger Agreement, and as filed with the S.E.C., disputes regarding the merger must be adjudicated in California, under California law. Accordingly, HHSE counsel feels that a cross-complaint in the Crimson matter is one of our responsive options - or alternatively, that a separate action can be filed by HHSE against Crimson for their breach of the merger and other acts that otherwise negatively impacted against HHSE (all of the strategic actions and decisions in this matter will occur prior to the August 1st filing date). 

3).  ORIGIN RELEASING - HHSE's counsel filed a variety of motions and objections in the past two weeks, one of which contained an embarrassing typo in which HHSE was erroneously listed as the "Plaintiff" instead of as the "Defendant." While this attorney error did not appear to impact the accuracy and validity of the remainder of the filings, it does provide yet another example of why the HHSE "going forward plan" cannot include anymore micro-budgeted films from unrealistic or otherwise delusional producers. There is no financial upside to selling sub-standard productions, and the risk of irrational producers filing a lawsuit is not worth the effort. The Texas judge in the Origin case ruled that HHSE was "in breach" of the February, 2013 settlement agreement by selling videos past the six-month sell-off period (a factual point which HHSE did not oppose, and indeed, HHSE openly reported these sales). This "partial judgment" of undisputed fact does not dilute the accuracy of HHSE sales statements and payments, which are the basis of Origin's action. The HHSE Motion for Dismissal of the entire case is calendered for August 4th - and under Texas law and precedent - is expected to prevail.

AS THE MATERIAL ISSUES OF REGISTRATION AND MYFLIX LAUNCH loom near and seem likely to transform HHSE, eliminating the issues of nuisance litigation and very old balance sheet debts will improve HHSE's overall optics and appeal for new investment funds and shareholders. Watch for updates on these issues over the next few (crucial) weeks!

And finally, HAPPY FRIDAY THE 13TH!  Please do NOT look backwards into a mirror and call-out the name of "Candyman" three times... not today of all days!  Cheers!

"R" Rated Version of BLOOD FEAST launches to V.O.D. Platforms Today!

Greetings HHSE Friends & Followers - the "R" rated version of BLOOD FEAST launches today on key V.O.D. Platforms (see some of the links below) - and is already generating strong traffic and transactions.  The special UNRATED / UNCUT director's version of the film will continue to play in theatres across the U.S.A. ("only in theatres") - but may eventually find a home on V.O.D. and physical home video.  Meanwhile, fans can see MOST of the meatiest stuff with the "R" rated version, available now on these links below (and other USA / Canadian platforms and cable carriers):

ONLINE PLATFORMS:

iTunes: https://itunes.apple.com/us/movie/blood-feast/id1396933546

Shortened Link: http://bit.ly/BF-iTunes

Amazon: https://www.amazon.com/Blood-Feast-Robert-Rusler/dp/B07DPJZG35/

Shortened Link: http://bit.ly/BF-Amazon

Google Play: https://play.google.com/store/movies/details/Blood_Feast?id=v6i70mTEW-w

Shortened Link: bit.ly/BF-GooglePlay

Xbox: https://www.microsoft.com/en-us/p/blood-feast/8d6kgwxn280c/0001

Shortened Link: bit.ly/BF-Xbox

Fandango Now: https://www.fandangonow.com/details/movie/blood-feast-2018/MMVB332015DA83120EDA52B164854406A87B

Shortened Link: bit.ly/BF-FandangoNow

Vimeo on Demand: https://vimeo.com/274775102

Shortened Link: bit.ly/BF-VimeoOnDemand

HHSE's "THE RIOT ACT" is a $2-mm Production, completed for $468,000 (!!)

Greetings HHSE Friends & Followers - Last November, HHSE facilitated the production of "THE RIOT ACT" (shot on location in and around Van Buren, Arkansas), by combining financial resources of distribution presales and State of Arkansas rebates with a bank credit line. 

But one of the most valuable contributions to the film was the outstanding support received from the Fort Smith and Van Buren convention & tourism bureaus - which helped in securing wagons, costumed extras, horses, and an unprecedented "total shut down" of downtown Van Buren for a week... all at little or no cost to the production.  With 70+ dump trucks of dirt, the streets and sidewalks were restored to 1903 status, and with limited expense on art direction, the buildings of Van Buren were converted to the proper period.  The value of the in-kind goods and services is well in excess of $1-mm, and really made a huge difference with the final look of the film.

As another cost-cutting (free) expense to the production - HHSE managers (and the Executive Producers of the film, Eric Parkinson and Fred Shefte), took a quick break from supervisory duties, and appeared in a bit cameo as the local newspaper photographers.

THE RIOT ACT will open this Fall - the release specifics are still being finalized... but it's likely to follow the "Lady Bird" model, with the initial weekend focused on New York and Los Angeles.  A full-page ad in the April Cinemacon issue of BOX OFFICE MAGAZINE generated over 200 playdate offers from all major circuits and key art house / specialty cinemas across the country... so the film has a lot of theatrical options available. 

Pictured below are HHSE CEO Eric Parkinson (with a temporary "period goatee") and President Fred Shefte - on the SONY Pictures Studio lot, on the RIOT ACT location, and in character as 1903 Newspaper photographers. 

Myflix - Brand Positioning for the New Media Marketplace

Greetings HHSE Friends & Followers on this lovely Fourth of July mid-week holiday! As we move into third gear for our ramp-up of the MYFLIX streaming site and portal, it is helpful to look at the current marketplace to help determine our POSITIONING and PROSPECTS for the venture.

First of all, let's look at the economic benefits of this streaming venture, as compared to the "current" film distribution model for HHSE / Medallion (which has been heavily weighted towards physical DVD sales since our first hit DVD title - "I Gotta Go" - in 2003).  When we place a title like BATTLECREEK or LOST IN THE PACIFIC into retail outlets, the company has to advance a significant amount of capital upfront for the manufacturing and freight costs to fill the retail shelf space allotted for a particular title. The larger the initial orders, the more that HHSE's capital is tied-up into inventories.  While the wholesale pricing of most $14.95 suggested retail priced DVD titles is around $7, and the manufacturing and fulfillment for these is around $1 per unit, initial shipments of 30,000 units to retailers does tie-up a lot of working capital... and is often not returned into cash flow to the company for four or five months (i.e., allowing for the time to manufacture, ship, stock the shelves, determine net consumer purchase quantities, settle the balance of unsold returns, and finally have the retailer pay the net sales to the supplier).  

At any given time, significant amounts of capital are being captured into fulfilling inventory for retailers, spread over four-to-five months of a multi-title release slate.  It's expensive to be in the physical DVD and BluRay distribution business... and even more burdensome when a title is widely placed with retailers!

Both of these costs (manufacturing expenses and payment delays) are functionally eliminated with the V.O.D. streaming model.  There is no cost for replicating and shipping DVDs and there's no multi-month "wait" for payment (V.O.D. transactions occur directly with consumers via credit card or bank debit, and are paid in DAYS to the streaming service sites, as opposed to MONTHS for traditional retail distribution).  So, in this respect, a shift away from physical DVD / BluRay sales in favor of streaming revenues will significantly reduce the amount of operating capital tied-up at any given time for HHSE / Medallion.  The company is basically moving AWAY from a cash-intensive model, and into a "fast-cash flow" delivery model.  The company's cash flow IMPROVES under such a digital-streaming distribution model.

Some shareholders have asked, WHERE do we see the MyFlix brand falling within the scope of competitive options for the S.V.O.D. space?  In order to best answer such a question, let's take a look at the principal Subscription-based entertainment streaming suppliers servicing North America:

NETFLIX is the 900-pound gorilla, with over $1-Billion in monthly subscription revenues.  Amazon is a distant second place, with HULU in third, and HBO NOW targeting to close-in on $100-mm in monthly revenues by early 2019.

The comparable suppliers to MYFLIX are most likely viewed as ACORN.TV and FILMSTRUCK.  Acorn has a mix of British TV programming, PBS and Urban features with an impressive 710,000 monthly subscriber base after less than 5-years of operations.  FilmStruck launched just last October, and already has over 250,000 monthly subscribers generating about $2.8-million in monthly grosses.  VRV is a label consolidator (not unlike MyFlix) and they represent a handful of specialty labels, primarily on a non-exclusive basis (MyFlix will have MANY of the same titles that VRV is offering). UFC and SCREAMBOX are specialty subscription channels (wrestling / horror).


Based on the MyFlix revenue-sharing model with our 30+ program supplier labels, the venture should be operating in a cash-flow-positive mode after only 15,000 Monthly Subscribers - which is a revenue level so far below these other principal SVOD sites that it boggles the mind to try to justify any forecasts which do not significantly exceed this threshold. 


The variable costs impacting the MyFlix launch and growth is MARKETING and ADVERTISING.  How does the company build brand-name visibility and awareness with consumers in a cost-effective manner?  Obviously, the company is not looking to rely on word-of-mouth, but is also not planning to buy a multi-million-dollar Superbowl TV commercial. The company's MyFlix marketing plan is extensive, creative and is designed to deliver tens-of-millions of consumer impressions at a very cost-effective level. The launch campaign includes paid internet ads and banners onto high-traffic sites catering to film consumers... other major support activities include extensive "barter" web placement activities, social media outreach, taste-maker and influencer campaigns, traditional publicity support and viral-style videos designed to build the MyFlix brand.


After reaching the cash-flow-positive threshold, MyFlix will work to expand its subscriber and user base through ongoing marketing and advertising - as well as a robust program of NEW TITLES to be added at over 300 per month. In short order, HHSE believes the site has the elements and panache' to become an entertainment brand name and a hugely popular destination portal.

Hannover House has been operating continuously since 1993 - initially in the Book publishing business, then into DVD when the opportunity arose, then later into theatrical, international and into feature film production as conditions in the marketplace suggested that HHSE take steps to EVOLVE in order to THRIVE. Now, with the digital streaming frontier wide-open ahead of us - and 30+ supplier partners (collectively with over 10,000 feature films and 2,000+ hours of television programming) - MyFlix will be among the largest of libraries for consumers to browse and access through this delivery breakthrough of digital streaming media.

MyFlix is the main reason why there is wide-spread enthusiasm among smart and visionary investors who recognize what a huge deal this site has become... and what a massive turning point this represents in the long history of Hannover House.  




Watch this space!

July looks to be a busy time for HHSE!

Happy Friday to our HHSE Friends & Followers - Corporate movements are kicking into third gear for July, with material activities on multiple fronts, and lots of meetings and travel support.

The Launch of MYFLIX requires two L.A. trips during July - plus one web-hosting visit to Seattle.  The L.A. trip will also allow for some face-to-face meetings with key MYFLIX suppliers and other major studios that we are seeking to enlist.  The aggressive Q3 / Q4 home video & digital release slate for the HHSE / Medallion core distribution business will also benefit from direct meetings with key wholesalers and distribution partners in the L.A. metro.  And of course, we anticipate one or more day trips during July to meet with the auditors (current Form 10 project), should issues requiring clarification not be easily resolved by calls or Skype.

Hannover's original production of the Period-Thriller, THE RIOT ACT, will likely be rescheduled for theatrical release in SEPTEMBER in order to access a retail cross promotion and a College / Universities support campaign. Previously, we had planned this title for theatrical launch on Aug. 24... but the mid-to-late September date is looking more interesting.  HHSE / Medallion also have two other titles for theatrical release - both planned for OCTOBER (neither acquisition has yet been announced, so out of respect for the stature of the films, the company will announce the titles via separate wire-services press releases).

With all of this exciting activity and results, some current and prospective shareholders are asking about the HHSE stock and timing. Accordingly, we share with you below the summation of notes from large traders / professional funds that have been in communication with HHSE management over the past few months.

WHY IS THIS A GREAT TIME TO LOOK AT HHSE?

1).  STABILITY - Company has been in business for 25-years (since 1993).

2).  DIVERSITY - Original business of BOOK PUBLISHING evolved into DVD Distribution and now into THEATRICAL and INTERNATIONAL Distribution as market conditions changed.

3).  NEW MEDIA - the new MYFLIX Venture into digital streaming (www.MyFlix.com), has over 30-studio and film library participants, collectively with over 10,000 feature films and television episodic hours of entertainment. This platform will have (literally) THOUSANDS of movies not available on any other streaming site. Less than ten years ago, NETFLIX was a mail order video rental business. NOW they are among the top movers and shakers in the entertainment industry DESPITE having a very limited selection of programming for viewers.  We believe that MYFLIX could be a revolutionary new streaming destination - and a massive turning point for Hannover House.

4).  STOCK REGISTRATION - HHSE is currently on the "OTC-Pinksheets" exchange. This status has impeded some large, institutional investors and hedge funds from buying into the stock. However, the pending Form 10 filing (including audits), will elevate the stock to the OTC:QB status as an initial step towards possible further up-listing. The OTC:QB status will open the door to significant new shareholders, which most professional traders and investors feel will dramatically improve the PPS and trading volume for HHSE.

5).  NO STOCK ISSUANCES / NO DILUTION - HHSE has not issued any new shares in the past three years, and management has repeatedly stated that there are no plans to dilute shareholders through any deals now in motion or anticipated in the future.  

6).  PRESENTLY UNDER-VALUED PPS - Based on the Price-Earnings ratio for other publicly traded film / entertainment distributors, HHSE should be enjoying a 22X share price based on earnings.  HHSE is on target to realize $1,250,000 in earnings for FYE 12-31-2018. This supports a share price of $.034 at present... and does not take into account the tremendous good-will and enthusiasm factor for the upcoming launch of MyFlix. Some highly respected stock analysts have communicated to HHSE management their prediction that the company's activities could support a share price of $.15 - which is more than ten-times current pricing. Even if their predictions are off by 75% - there is still an easily justifiable share price that is many times more than current trading levels.

7).  TIMING-TIMING-TIMING - The launch of Myflix is a "second generation" site, in that the digital streaming technology and consumer acceptance have already been established. With that essential battle already won, MyFlix can concentrate on becoming "the better mousetrap" for digital entertainment.  You combine this ideal market timing with the company's stock registration uplist, the presence of significant new shareholders post-registration, and new distribution pacts for the company's core film distribution activities (SONY / CINEDIGM), many feel that NOW is the ideal time to take a position in HHSE shares (while the HHSE Price Per Share is artificially low).  Are these professional traders right?  We will all know very soon!  

HHSE makes no representation, guarantee or warranty that our share price will improve significantly as a result of these and other current activities. Every stock investment involves risks and factors outside of the control of issuers and management. But we proudly share with you the above information, projections and rationale' that professional traders have identified as the basis for why they believe that NOW is a great time to look at HHSE. 

CHECK THIS BLOG SITE FOR REGULAR UPDATES ON HHSE and MYFLIX!

Delivering the HHSE Audit Package feels a bit like the final scene from "Indiana Jones"

At long last, the HHSE Audit package has been completed and has been delivered by courier today (it was "after business hours" tonight when the final alphabetizing of the file folders was completed)  Some aspects of the prep for this project were relatively easy... such as the electronically delivered Quickbooks ledger of sales and payables, and scans of 1120-S filings.  But other items - such as the reconciliation of producer recoupment positions for over 450 titles (many going back to 2005) - as well as the copying and collating of agreements (which averaged 12-pages per title, plus term renewals). For these more voluminous elements, a physical copy from Fedex office was more expeditious than the time that would have been required to scan, upload and download more than 4,000 pages of supporting agreements.

But it's done, and we can all now set our sights on a prompt filing of our Form 10 Registration Statement - timed to correspond with our peak consumer promotions for MYFLIX in early August.

TO BE CLEAR: THE AUDIT PACKAGE IS DELIVERED TO OUR REPUTABLE (PCAOB CERTIFIED) AUDITORS!

Stay tuned for updates!  Onward & Upward!

Okay... so maybe it's not QUITE as daunting as the Indiana Jones warehouse image... but a LOT of work, copying, collating and organizing went into the completion of the HHSE audit package!

Monday, June 25, 2018 - The Summer is Sizzlin'

Greetings HHSE Friends & Followers - It's been said that if you don't actually ever sleep... that life is like one incredibly long day. Maybe that explains the 10-day lapse in HHSE Blog postings? Or the long summer days thick with heat and humidity?

For those of you who have not yet been involved with a "start-up" business like MYFLIX, long, sleepless days and nights are the norm, not the exception. This digital platform venture will have thousands of films and hours of TV episodic programming... so it's not dissimilar to launching 100 cable channels simultaneously in terms of product diversity and offerings. 

That said, some HHSE longs are still awaiting news of core activities and operations. In this respect, we have been asked to comment on the status of the HHSE audit package for presentation to the PCAOB auditors. While this is not our first audit... it is definitely the most thorough and specific examination the myriad of investments, deals and financial activities comprising the operations of HHSE. Our goal with the audit prep project has been to anticipate issues that could arise with the auditors as well as with the S.E.C. in the review of our Form 10 registration filing. We are comfortable and confident with our back-up and methodologies; accordingly, we are optimistic that our audit process can now proceed with minimal comments and delay.

The audit package is being presented Thursday morning; we are anticipating a process of about four weeks before the audited financials can be dropped into the otherwise completed Form 10 registration filing. An outside service has been engaged to format the audited financials into the XBRL formatting, and to submit to the S.E.C. Edgar department.  This should put the Form 10 filing date at or near August 1st, approximately the same time that consumer promotions for the MYFLIX launch will be at a frenzied peak. We think the coordination of these two material events for HHSE could be a one-two punch to knock the stock into significant attention.

Will Myflix be the tail that wagged the dog?  Will Myflix become a top destination portal for digital streaming... and a widely recognized consumer brand name?  Will the HHSE core business of indie film distribution grow significantly as the Myflix launch results in a rising tide of revenues, profits and visibility?

Watch this space...