Welcome to the Hannover House Investor Relations Blog

Thursday, April 23, 2015

Dark Awakening Trailer - to appear before "INSIDIOUS 3" at over a thousand theatres!

Dear HHSE Friends - the June 19 launch of "DARK AWAKENING" will have a showcase of exposure to horror fans, with the TRAILER placement at the head of the June 5th Universal / Focus Features release of "INSIDIOUS - CHAPTER 3."  Regal Entertainment Group, Carmike and Cinemark are among the key theatre chains that have approved this "DARK AWAKENING" trailer placement, to be seen by MILLIONS of HORROR FANS!


Wednesday, April 22, 2015

Principal Photography starts this SUNDAY!

Congratulations to our supplier-partner PASEO MIRAMAR PICTURES on the commencement of principal photography on "A DOG AND PONY SHOW."

Terrific lead cast includes RALPH MACCHIO ("The Karate Kid", "My Cousin Vinny") and Academy Award Winner MIRA SORVINO ("Jackie Brown", "The Replacement Killers").  The film that readers of the script most often compare to "DOG AND PONY SHOW" to is the live-action, talking animals film "CATS & DOGS" (which grossed $93-mm at the USA Box Office and $203-mm World Wide - not counting Video and Television revenues!).

The venture with Paseo Miramar Pictures calls for HHSE to release "A DOG AND PONY SHOW" to approximately 600 theatres in February, 2016, with home video, V.O.D. and S.V.O.D. following in late spring, early summer.  SHOULD BE A HUGE RELEASE!!

And that's a prediction "straight from the horse's mouth!"

Tuesday, April 21, 2015

Why increase the HHSE A/S now?

Good Morning HHSE Friends - There has been some immediate concern and trepidation over the Company's increase in Authorized Share count (which was "upped" by almost 15% from 700-mm to 800-mm).

First of all, let's be clear that the Company is not issuing 100-mm new shares for release into the marketplace. 

The Company has increased the A/S after discussions with the S.E.C. concerning conversion provisions for notes and officer loans which were disclosed in the Form 10, but for which no provision existed to address.  Increasing the A/S now, during the registration review period (prior to May 11), saves the company the cost and time distraction of having to file a second registration document later; additionally, the contingent liability of conversion option needed to be addressed.

Back in February, the Company posed the question of increasing the A/S to Shareholders.  This issue was brought up again at the Shareholder's Meeting in early March.  The number of shareholders who called or emailed their feelings (whether "for" or "against" the concept of a modest A/S increase) represented approximately 10% of the outstanding shares  (about 65-mm total count, based on our shareholder's list).  The consensus was fairly evenly "split" between those who were against any form of A/S increase, and those who recognized that the company would need to have some degree of management flexibility.  After 45-days, the Preferred Shareholders voted to approve the A/S increase.

How many new shares are about to hit the market?  None

When might new shares start to appear?  It's possible that the company's full registration approval (May 11), could provide a basis for a $25,000 convertible note issued last year to mature more quickly.  But the share quantity if exercised on that $25,000 note would be a very modest amount, and would not take the Company much closer to the previous 700-mm A/S/ ceiling.  Also keep in mind that there's a 10-mm certificate from TCA that's scheduled to be retired next month, thus lowering the A/S by that amount.

So while a change in corporate A/S structure is assuredly going to be unpopular to some shareholders, the actual "real world impact" of new shares hitting the market is a false-impression, put forward only by those hoping to motivate low-priced sales.  HHSE is on a tremendous fast-track for growth and volume.  Just watch what happens over the coming month...

Monday, April 20, 2015

HHSE - OTC Markets Update - Monday, April 20, 2015

Good Morning HHSE Friends, and Happy April 20 -

Here's the word received this morning from the OTC Markets:

"We have finished reviewing your December 31, 2014 Report. Your company will be moved to the OTC Pink Current Information tier before the next market open."

Apologies for the drama resulting from having temporarily lost our Current Reporting Status. As disclosed, it was just a timing and filing matter... nothing nefarious or not easily addressed.

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SPANISH DVD BONANZA - In response to the sales success of "ASALTO AL CINE" and the repricing success of the "ANTONIO AGUILAR COLECCION" - HHSE and Green Apple will be releasing TWO MORE Spanish Multipack DVD assortments this summer.  Stay Tuned!

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Friday, April 17, 2015

OTC Markets Status - Restoring to Fully Current

Good Morning HHSE Friends, and YIKES!  We were shocked yesterday to discover that our access to file the 12/31/2014 numbers onto the OTC Markets site was blocked due to a "lapse in subscription" access.  We had previously been told that our UPLIST to the OTC QB (and the payment of $10,000) would be effective after the May 11 S.E.C. certification, and that we would no longer be required to maintain a subscription to the "Pinksheets" service.  What was not clarified was the limbo-period that we find ourselves currently.

Accordingly, HHSE has renewed the Pinksheets subscription and rendered payment to the OTC Markets... simply so that we can get our year-end results posted, and be "restored" to CURRENT reporting status.  This will be our LAST filing as a PINKSHEET Company, due to the imminent uplisting.

MEANWHILE, the "Chicken Littles" of the short-sellers world are going to try to paint a false image of this hiccup in the uplisting process.  Don't listen to them... their agenda is malicious in trying to persuade legitimate shareholders to sell them shares below value.  This housekeeping / listing issue with the OTC has already been addressed, and we're simply awaiting the restoral of our access to post the financials (which will immediately restore CURRENT information / Full Pinksheets status). 

Thursday, April 16, 2015

Question from Annual Shareholder's Meeting - Finally Responded...

Good evening HHSE Friends & Shareholders.  At the Annual Meeting of Shareholders last month, a question was posed about the financing structure of some of the "bigger" productions on the HHSE slate, and why management doesn't consider these to be risky activities.  Management responded to the question by promising to post an explanation and chart to show why this structure poses no reasonable (or real) risk to HHSE, but instead posits only an upside.

We will use "THE SUMMONING" as an example.

The Summoning is a film that by all ordinary measures, is functionally a $4-million dollar production.  However, clever deal-making by the producer and director (including waivers, facility participations and deferrals) has made it possible to produce the film for a budget which qualifies for the S.A.G. Low-Budget rates (which is important for saving another $100k or so).  The production budget for the film has been REDACTED from the graphic above - as have other proprietary details, such as the value of the forecasts or commitments from third party partners.

Structurally, a private lending group is financing the movie.  HHSE ends up with all worldwide rights... BUT... the International is being sublicensed to The Little Film Company and the Subscription Video-On-Demand is being licensed to Netflix through FreeStyle Digital Media. Hannover House has agreed to issue a "standby" guarantee to the lenders for the full amount of their funding, e.g., $2-mm.  However, the value of the sales and revenue sources EXCEEDS the guarantee, SO - the exercise of a call on the HHSE guarantee would be contingent upon a third party default or shortfall in revenues.  Technically, there is risk to HHSE, but the risk has been mitigated with presales, contractual commitments, rebates and revenues.

"This is a lot of work for one movie" one shareholder said recently.  "Why deal with all these production and financing steps when Medallion Releasing have 90+ other titles?"

That's a fair question, but one which ignores the marketplace reality that has a specific limitation on the amount of Video and V.O.D. revenues that are obtainable from direct-to-video properties.  For Hannover House to step up to the next level as a major independent, we need mainstream theatrical titles that have a wide (500+ print) theatrical launch.  It's these sorts of titles that become the locomotives to drive the revenues and pull-through promotions for the catalog and lower-stature properties.  While a movie like "AMERICAN JUSTICE" can achieve placement at Walmart and Redbox, the quantity of units as a direct-to-video release are relatively small when compared against the volume of a 600-title theatrical release like "THE SUMMONING."  Revenue wise, physical home video sales are more than 7-times greater for nationwide theatrical titles than direct-to-video releases.  And in the case of "THE SUMMONING," there's a lucrative home as a Netflix subscription property following its theatrical release.

It's titles like "THE SUMMONING" and "MOTHER GOOSE" that will elevate HHSE into a much larger revenue position - where $50-mm to $100-mm in annual sales becomes both realistic and obtainable.  The core direct-to-video business will always be a good bread-and-butter business... but the sizzle - and the steak - is likely to come from well-structured, high-profile titles for Hannover House in 2015, 2016 and beyond.

What do you think? Could "CITY OF FRIENDS" a big Kids-Video HIT in the USA?

"CITY OF FRIENDS" is a 52-episode animated kids series that has already proven itself as a worldwide hit!  Available now for the first time in the USA, it looks to have a similar pedigree to shows such as "BARNEY" or "DORA THE EXPLORER."

There is some chatter about a possible daily BROADCAST of the episodes on a major USA Television Network, as both a revenue source as well as a promotional vehicle to drive DVD and Bluray sales through traditional mass merchant retailers (the "Barney" model).

Hannover House has generally shied away from animated properties - as they typically take many years and many millions to produce.  But this is a done-series (plus two feature length holiday specials).  That is what is making it look very interesting!