The Right Place, but at the Wrong Time

Good afternoon HHSE Friends & Followers - As shareholders in HHSE know, the purpose of filing the Form 10-12(g) Registration is to elevate the company to fully-reporting so that we can promptly elevate our OTC Status, file a S1 Registration offering, and raise the significant funding needed for a commercial launch of MyFlix (among other corporate endeavors that will benefit from the S1 raising).  

So the whole point of the Form 10 Registration has always been to set a receptive stage for a stock offering and raising.

Accordingly, it's not surprising that the company's advisors have strongly recommended (today) to delay the filing of the Form 10-12(g) registration - in the wake of THREE powerful (and not favorable) market indicators.  In the past week, the market receptivity to an OTC Markets S1 offering has been impacted by:

1).  MARKETPLACE UNCERTAINTY - the Dow Jones declines over the past week are indicative of a general uncertainty within the marketplace.

2).  MASSIVE INCREASES IN CORONAVIRUS CASES, HOSPITALIZATIONS and DEATHS - There is concern that the second wave of Covid-19 is now in high-gear and could have a much deeper economic impact than the initial and brief shut-downs from back in March.

3).  UNCERTAINTY ABOUT NOV. 3 ELECTIONS AND LITIGATION - There is concern that the results of the election next Tuesday could be contested - adding uncertainty to the markets - and there are additional rumors of impending lawlessness from overly enthusiastic political supporters on both sides. 

The HHSE Form 10-12(g) contains a lot of new and not-yet public information, including assumptions that are based on the timely filing of the S1 Registration & Offering.  Accordingly, we cannot file the Form 10 unless we are confident that filing the S1 Registration within 5-days is a wise move.  As of today - and due to extreme uncertainty in market conditions - we cannot confidently proceed as if this is a great time to file our registration and offering.  It's frustrating, to be "all dressed-up and ready to go to the ball..." only to be told that the event venue is on fire at this present moment.  

Accordingly, let's all hope for a peaceful resolution to the elections, a thoughtful strategy to attack COVID, and a favorable marketplace response to these developments. The addressing and resolution of these issues are believed to be key factors to re-establishing a greater stability within the markets. 

We still have several more weeks before the Sept. 30 financial review (addendum to year-end audits) risks becoming "stale" under S.E.C. timelines.  We do not intend to wait longer than a small allotment of this remaining time for the market conditions to improve.

We realize that some HHSE longs have grown impatient.  So we ask them, do YOU think this is a good time for us to file?  We believe an objective and reasonable analysis of current market conditions will result in the same recommendation as the HHSE advisors. We apologize for those that wanted the filing to occur in October "no matter what." But at what cost do we proceed when conditions are far from ideal?  We want to be in a position in which the first $1.5-mm of the S1 sells out in less than 10-days... and market stability is a requirement for this to happen. 

MONDAY - Nov. 2 - UPDATE - Greetings HHSE Shareholders:  there has been some distress regarding the above blog, in that some are wondering if we are waiting for COVID to be cured, or the Dow Jones to recover (again) before filing the Form 10 and S1.  Apologies for creating a lack of clarity.  

What we are waiting for is the resolution of the Presidential election and the expected (rumored or predicted?) uncertainty and conflicts to be derived therefrom.  Over the past 15-months, HHSE has been communicating with prospective S1 supporters, including companies with existing activities in the digital streaming arenas, who have multiple incentives to support the MyFlix venture. The consensus last week was that the general uncertainty in the marketplace - fueled by at least THREE major factors - would temper the enthusiasm of general market support for the S1 offering. While we cannot wait for a resolution of all issues - we DO believe that a peaceful resolution to the U.S. elections will help calm concerns that are presently impacting the timing of HHSE filings.  We are not anticipating post-election issues that are not resolved quickly... and that this resolution will restore market confidence.

Stay tuned....

HHSE approved for "Current Status" listings - NO LATER than pre-market MONDAY

 Greetings HHSE Friends & Followers - OTC Markets just confirmed by phone that the Q2 reports meet compliance requirements and that HHSE has been approved for restoral to "Current Information Status" - no later than pre-market Monday (could happen sooner, too).

We apologize for the disruption that occurred as a result of allowing the OTC Pinks subscription to expire, in our quest to apply payment to the OTC QB instead.  Allowing the subscription to lapse triggered a slow renewal process that we did not expect (based on prior times that the company had to renew the OTC Pink access subscription).

We hope everyone has a fantastic weekend - and for those of you living in an Autumn Fall Foliage zone, we hope that you enjoy the colors and beauty of this seasonal moment in time.  Pictured below is the lovely LAKE LUCILLE in Fayetteville, Arkansas, reflecting late afternoon sun off the leaves and into a pastel palette of reflections across the water's surface.

ONWARD!

Various Updates on HHSE Issues / OTC Markets / Filings / Legal Issues

Greetings HHSE Shareholders & Friends - Quick summaries on items and issues that Shareholders have been asking about:

OTC MARKETS LISTING - It's been TWO (2) weeks since HHSE paid the renewal fee for our OTC Markets access restoral... and 10-days since we provided additional funds and documents as were requested at that time.  In the past, whenever the OTC Pinks subscription expired, all we had to do was wire the funds and it would be resolved the next day.  Now, however, there are new procedures regarding reinstatement of listed equities... including a thorough review of the HHSE shareholder's lists (including both Objecting Beneficial Owners - OBOs - and Non-Objecting Beneficial Owners - NOBOs), which the OTC Markets told us "normally takes three weeks" under this new procedure.  That said, the primary OTC Markets representative that has been helping HHSE over the past few years said that it was LIKELY that we will be reactivated by tomorrow (Friday, Oct. 16), based on our 10+ years of prior membership and their effort to push us through as a priority issuer.  We will update this BLOG as soon as we are reactivated... which could be tomorrow.  SUNDAY UPDATE - HHSE was approved by the OTC Markets - after the review of the Shareholder's list - on Friday evening, and our active status has been reinstated. However, our ability to upload the Q2 and Q3 financials requires a manual entry tomorrow - so that will now happen and enable us to restore "current" listing for the company.  

TUESDAY NIGHT - UPDATE - HHSE was fully approved (again) as an issuer for OTC Markets, and our access to the site was reinstated Monday night.  The company has prepared the Q2 financials and the Q3 financials (along with all required disclosures). There are two issues of compliance that HHSE is addressing in the morning with the OTC Markets (formatting and breadth of disclosure under new rules).  We anticipate these being resolved tomorrow and the Q2's posted before end of day / Q3's on Thursday.  Moral of the story:  due to the new compliance rules for OTC Markets, it's definitely best to NOT EVER allow an issuer's subscription to lapse... it will literally takes WEEKS to get reinstated (!!).

Q2 / Q3 FILING & AUDITS - Once the OTC Markets access is restored, we will file the Q2 and Q3 filings in order to be restored to "current" status.  We have also sent the auditors the Q3 reports for inclusion in the Form 10 filing, to preserve the recency of the financials.

MYFLIX INITIAL LAUNCH - We did not hit our target response goals with the initial web teaser ads... which our marketing team consensus blames on "poor graphics" and "too much text."  We are reworking these layouts and will try again.  That said, the point of these quiet tests is to tweak the promo ads BEFORE we launch the site... so that the day we turn on the MyFlix site and APP, that we have a major consumer blast campaign ready to activate (and one that we have determined "works"). 

Some Shareholders have also asked for a pre-Form 10 update on a few LEGAL issues for Hannover House.  AT THE REQUEST OF CORPORATE COUNSEL (10-21-2020)- WE HAVE BEEN ADVISED TO ONLY POST ON THE "BLOG" ACTUAL COURT FILINGS - AND NOT COMMENTARY OR STRATEGY.

HHSE and MYFLIX have a winning business plan that completely AVOIDS the LUNACY of dealing with micro-budgeted Indie Producers and the acquisition of third-party titles for distribution.  HHSE has developed a financing structure for the production of HIGH-END feature films (with significant budgets and legitimate stars), and on the opposite end of the spectrum, MYFLIX is riding the Tsunami Wave of consumers gravitating away from DVD and BluRay in favor of streaming directly to their homes.  Two solid business models... combined for strength and diversity as HHSE matures into the ever evolving home entertainment market.  STAY TUNED!

Soft Launch of MYFLIX Consumer Awareness Starts Today

 Greetings HHSE Friends & Followers - The company is doing some last minute pre-launch "tests" of consumer promotional campaigns in support of MyFlix, which commence today.  We will be investigating which offers draw the greatest consumer response, as a guide for the formal ad campaign.  Watch this blog for screen grabs to be added later today showing some of the consumer outreach from paid ads, social media and press today.

Note: the consumer outreach activities launching today are NOT a launch of the MyFlix App and Site.  This is a launch of consumer promotions being tested in support of the official rollout (which is coming next). 

The roll out is a progressive ramp test, with extremely targeted Social Media and IMDB placements for the first few days until we have sufficient data to determine which of the internet ads is the most effective, if any. After two days, the Concept 3 has generated about 2-X the traffic as Concept 1 and 2, perhaps due to the legibility of the small ads (and text heavy Concepts 1 and 2).  

Our two agencies are already working on new concepts for Tuesday and Wednesday as the response for these initial layouts is not hitting marketing projections. This is the whole point of a soft consumer outreach launch... to tweak a campaign for efficiency before blasting big dollars behind it.  The next round of ads will have LIMITED TEXT to see if that helps with the click-thru rate. Stay tuned....

HHSE "Current" Status Restoration / Uplist / MyFlix & More

Greeting HHSE Friends & Followers:  

First of all, regardless of your personal political affiliations or leanings, we hope that you will join Fred Shefte, Eric Parkinson and Randall Blanton as we extend our sincerest best wishes for the recovery of President Trump and the First Lady from the COVID-19 virus.  With all of the turmoil and instability already affecting our nation, we do not need an additional political crisis at this crucial time, and we hope that their recovery is swift and complete.  For those of you directly affected by COVID-19 - whether through direct affliction or from the tragedy of watching loved ones die - as well as for all of us - we hope for a speedy solution to this worldwide viral crisis.

Meanwhile, here are a couple of HHSE updates of interest to shareholders.

1).  OTC Markets - We obtained verification yesterday that our renewal of the OTC Pinksheets subscription will be 100% transferrable into our OTC QB filing fee. We did not promptly renew the OTC Pinks subscription ($3,500) out of concern that this would be lost money due to the OTC QB subscription fee. But with the Yield Sign imminently turning into a STOP sign - we have renewed the filing access to post the Q2 and Q3 filings and be restored as CURRENT REPORTING.  We believe that our filing access to post the Q2 and Q3 reports will be restored TODAY, and that a review of these filings will occur on MONDAY to remove the "STOP" sign.  UPDATE - (Sunday, Oct. 4) - Renewal payment was wired to OTC Markets on Friday. However, HHSE's access to upload filings was not  restored prior to closed-of-business Friday.  Accordingly, we will press our contacts at OTC on Monday morning to reactivate our subscription access so that the required filings needed for "CURRENT" reporting status can be immediately uploaded.  TUESDAY (Oct. 6) Update - HHSE was asked on Monday to advance an additional $1,000 to the OTC Markets due to the lapsed time of the subscription renewal.  This was unclear as the invoice received from them via email last Thursday only listed the $3,500 (which was promptly paid); this additional $1,000 was also promptly paid (via bank wire) already.  We are awaiting their reinstatement of filing access so that the Q2 and Q3 disclosures can be posted and the "Current" status for the company restored. 

2).  MYFLIX - We have signed-up a new supplier partner with very large film library (over 3,000 titles), which elevates both the stature of our releases and the overall available title count (15,000+). We had written an exciting press release about this development, but recognize that we must respect the value of our existing suppliers who have not yet been announced.  A revised "consumer teaser" press release is being drafted which we hope will be substantive but not exclusionary or dismissive of some of our original suppliers.  MyFlix has three consulting firms helping us with the preparation and launch (e.g., Website design, APP creation and PR Outreach); we also now have forty-four (44) supplier partners, which makes an announcement challenging.  This will be resolved as we plan to launch consumer awareness by the end of next week (Oct. 9);

3).  FORM 10 - Company is on target for release this month;  there is some material information about a significant production financing / distribution partnership that is being reviewed and modified so that the Form 10 can proceed with or without specifying non-public information impacting a separate public company. Hold tight...

4).  "SALUTE TO TAHLEQUAH" - Over 250 local businesses, actors and crew in N.E. Oklahoma have helped with the production of "WILDFIRE" - many of whom are likely to be on the HHSE-Snowy Morning Production team once again in June and July with the multimillion dollar production of "THE LEGEND OF BELLE STARR." In a nod of respect and gratitude, Snowy Morning, Inc. and Hannover House, Inc. have placed a full-page color ad in this weekend's edition of the TAHLEQUAH DAILY PRESS thanking the community for the tremendous support received.  In a world that has grown increasingly tense and divisive, it never hurts to show some class and manners with a sincere "thank you" to those of merit.

THANK YOU TO THE PATIENT HHSE LONGS AND SUPPORTERS!

Major Retailer plans for Q1 (2021) Enable HHSE to finally schedule new DVD / BluRay Releases

Greetings HHSE Friends & Followers - After nearly two (2) years of NO NEW RELEASE ACTIVITY for home video products, HHSE is finally able to formalize release dates for a series of titles that have been held back due to market conditions (and COVID impact on retailers).  Watch for these new releases (and new edition re-releases) coming in Q1 (2021) and shortly thereafter from HHSE / Medallion:

MARCH 2, 2021

HEXING - Sci-Fi Horror starring Dominique Swain (DVD / BluRay)

    Gross Sales Forecast:  $65,000

RIDE UNITED - Redbull Motorsports (DVD / BluRay)

    Gross Sales Forecast:  $30,000

MARCH 30, 2021

MANHUNTERS - Action Adventure (DVD / BluRay)

    Gross Sales Forecast:  $115,000

AMERICA UNITED - Concert Special (DVD / BluRay)

    Gross Sales Forecast:  $20,000

SPICES OF LIBERTY - Comedy with South-India audience appeal (DVD / BluRay)

    Gross Sales Forecast:  $35,000

APRIL 20, 2021

SACRED PREY - Trade edition / Fiction Book

    Gross Sales Forecast:  $30,000

EASY LOVE - Foreign Art Film (Streaming, DVD / BluRay)

    Gross Sales Forecast:  $55,000

TOTAL GROSS SALES FORECAST (all seven items):  $345,000

(Approx. HHSE "margin":  $85,000, plus $25,000 in recoupment)

Except for MANHUNTERS, these were all previously acquired titles or re-release promotions that were DELAYED due to the evolving retail marketplace and changes that occurred as a result of the retail shopping impact caused by COVID-19.  With most of the preparation costs completed for these releases, the benefit to HHSE is quite good as there are not significant expenses at this point other than direct cost of goods and freight.  So it will be a nice little bonus revenue stream in Q1 to add to the company's substantial production services fees (for the new feature productions) as well as the MyFlix (HHSE) share of 50% of the net on all MyFlix producer revenues.  Primary retail commitments fueling these specific title sales forecasts are from:  Best Buy, Family Video, Redbox and Barnes & Noble. The company will not be pursuing Walmart placements on these secondary releases, due to Walmart's requirement of approx. 25,000 units of inventory per DVD placement (which is an inventory level greater than the realistic retail unit depletions for these items). 

With HHSE now having a monthly overhead of less than $10,000 (excluding MYFLIX and PRODUCTIONS which overhead costs are funded separately and off-balance-sheet), reinstating a release slate of smaller titles actually becomes a nice bottom-line profit for the company. 

GO HHSE!

HEXING, Trailer:

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

MANHUNTERS (aka "Redneg") Trailer:

https://www.youtube.com/watch?v=pmMT_y2zx5o

EASY LOVE, Trailer:

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

So, it's August 25. Why isn't the MyFlix Portal launched to Consumer?

 Dear HHSE Friends & Followers - HHSE Managers have been getting a LOT of emails from shareholders today, due to Aug. 25 being the announced launch date back in May for the MyFlix Streaming site.

Some of you may have already seen the Access Wire release / USA Today story about the MyFlix Launch.  But this blog will provide additional information to shareholders that was too much in-the-weeds of details for a consumer press release.

https://www.accesswire.com/viewarticle.aspx?id=603340

So here's the status of what HHSE management is resolving with respect to MyFlix.  The vast majority of titles that have been licensed from the 43 supplier studios are films that are MORE than eight years old.  This is an important consideration because "direct-to-home-digital streaming" was not a key revenue source eight years ago, and MANY (if not MOST) of the licensing agreements did not specifically spell out "direct to home digital streaming" as a media right being granted.  Accordingly, before Hannover House / VODWIZ / MyFlix can be safely covered under the Errors and Omissions Insurance Policy, there needs to be additional steps taken on a per-title basis to verify that the owner of the films (or authorized copyright proprietor) has approved the inclusion of "direct-to-home-digital streaming" rights in whatever agreement they originally entered into with suppliers X, Y or Z.  

Some of the MyFlix suppliers define streaming as an extension of the physical home video rights granted to them.  Other suppliers classify streaming as being included in television rights that were granted (because there's not a physical videogram unit).  Some suppliers have found that the ambiguity can result in litigation, because a film's actual owner or copyright proprietor might use the absence of specific digital-streaming rights as the basis to file a lawsuit against the MyFlix Studio Supplier (and possibly also against MyFlix, Vodwiz and HHSE).  Accordingly, the company's Errors and Omissions underwriter has asked for copyright owner acknowledgment of the MyFlix placement AND an indemnification to MyFlix from the supplier studios for every, single title to be offered on MyFlix.  So far, we have only lost about a dozen titles to this process... and we are getting the proper verifications at a good clip (about 300 per week). But we cannot chance it, launch the site, and face huge copyright violation claims.  As of today, we have cleared over 1,100 of the 2,500 titles otherwise on-boarded. We should be able to clear another 1,200 to 1,500 in the next four weeks.

Another key issue impacting a planned MyFlix launch today is marketing funds. We have said for years that you only have one chance to make a first impression.  Accordingly, we felt that a successful MyFlix launch would need AT LEAST 2,500 TITLES to start, including MAJOR STUDIO HITS, and a handful of "EXCLUSIVES."  But we also need more than a hope and prayer for a successful launch:  we need marketing impressions and consumer outreach.  A HUGE amount of our exposure will be generated through "barter" placements of key websites onto MyFlix in exchange for MyFlix links on theirs.  But even with a $200,000 value barter campaign with IMDB, there is still a mandatory $35,000 out-of-pocket PAID ad expense component (which the company cannot comfortably fund until we get the first disbursement of S1 Proceeds).  Overall, we have a $1-mm launch for MyFlix ads, requiring about $150,000 in out-of-pocket cash.  We can internally fund the on-boarding process, the clearances and even the preparation of ads and promotions.  But the launch of the high-impact consumer ads is something that will require a chunk of cash in the $150,000 range that we do not currently have available. Could we launch with a "soft start" and limited noise?  Yes, we can do that... and we can re-invest cash flow (collected via credit cards quickly) into offsetting our marketing fund needs.  But we're not doing it until we have at least 2,500 titles both on-boarded AND cleared for insurance coverage.

The company is also not ready to file the Form 10.  There is about a two week time requirement remaining for the last applicable accounting period to be updated to June 30, 2020 (and to avoid having "stale" financials).  There is also some non-public information in the Form 10 regarding certain titles and supplier deals for MyFlix that we prefer to not release until the site has been launched. But we can scrub this information from the Form 10 and release the registration statement as soon as the auditors sign off on the June 30 updates.

We have acquired three "exclusives" for MyFlix, which is pretty exciting.  We also have a letter-of-intent regarding the financing of $5.5-million for "THE LEGEND OF BELLE STARR" for production in Spring of 2021 (two MAJOR stars), which provides operating cash flow and overhead for HHSE. 

Hannover House is chasing really big stuff with really small resources. As a result, we cannot solve some of the problems we encounter by throwing tons of cash at them. At present, we must rely on hard work, a cheap staff and a little bit of luck.  But isn't that the American dream?  Even Jeff Bezos was packing boxes in his garage back in 1995 during the "hard work, cheap staff and little bit of luck" years for Amazon.com.  

Hang in there, we're going to get this done...