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everything we have worked hard to pursue and achieve is within grasp now, which will be discussed in great detail at next month's SHAREHOLDER meeting in Chicago (April 5, Hyatt at Chicago's Miracle Mile).
NON-LEGITIMATE DEBT CLAIMS - Hannover House has never been super "flush" with surplus cash. As a result, we have always prioritized LEGITIMATE DEBTS over false or fraudulently obtained debts. To date, we have ALWAYS prevailed in our actions to stop fraudulent and false debts... and we do not anticipate this being a problem with JSJ, BEDROCK, LEWIN, ORIGIN or UPTONE - all of which were foreign filed lawsuits (despite the agreements clearly indicating that the governing law and venue for disputes is Arkansas). Shefte, Parkinson and attorney Steven Kay are working on these, and we are confident that each of these matters will have a resolution satisfactory to the company, and compliant with the S.E.C. Form 10 "going concern" evaluation prior to the end of this month.
Apologies... but we are saving all THE GOOD STUFF for disclosure a little bit later!!
HHSE Stock Buy-Back / Return to Treasury. In a private and direct transaction, HHSE has just completed the purchase / buy-back of 500,000 common stock shares at $.013. These shares will be returned to treasury, and removed from the current issuance summaries.
Status of Year-End (2018), Audits & Form 10; authorized to publicly state that this important corporate filing is "on schedule."
HHSE getting ready for takeoff!
S-1 REGISTRATION - HHSE has been in discussions with three significant parties that have expressed support of buying HHSE shares under a S-1 Shelf Registration (simultaneous with the Form 10, or almost immediately thereafter). As presently envisioned, the S-1 would be launched in January with a total potential sale of up to 90-mm HHSE shares made available, with a base price anticipated in the $.045 range, and going all the way up to $.10 for the final traunch of shares. HHSE anticipates raising about $4.5-mm in direct operating capital - while only diluting the total A/S by 10% or less. These direct funds will provide marketing support for MyFlix - as well as cash-flow flexibility for assisting with the development of the tent-pole Major Films and other ongoing operations. The anticipated buyers of the S-1 offering are long-term, strategic partners, and are not expected to sell any of their shares in the first year or two. The structure of the S-1 incentivizes earlier subscribers, as the price per share increases as the inventory of S-1 shares is diminished. The base price of the first traunch of S-1 shares is being established to be at a level estimated to start at 150% of the VWAP of the HHSE shares - which means that these new shareholders are buying equity at a significant premium "above" market. The S-1 Registration will be filed shortly after the Form 10, as the company will await any initial feedback and comments to the registration statement.
FORM 10 REGISTRATION - The long-awaited filing of the company's registration statement is the first step in the company's overall new launch. Large funds and investors that have been hesitant (or prohibited) from supporting HHSE as a Pinksheet stock will now be able to invest in HHSE shares. Management anticipates that the act of filing the Form 10 could (and should) result in a PPS of $.03 or higher. The Form 10 may be filed in the next few weeks, and the impact to the HHSE share price might be seen immediately - even though the S.E.C. has 60-days to provide "comments" requiring the issuer's response.
S-1 REGISTRATION - HHSE has been in discussions with three significant parties that have expressed support of buying HHSE shares under a S-1 Shelf Registration (simultaneous with the Form 10, or almost immediately thereafter). As presently envisioned, the S-1 would be launched in January with a total potential sale of up to 90-mm HHSE shares made available, with a base price anticipated in the $.045 range, and going all the way up to $.10 for the final traunch of shares. HHSE anticipates raising about $4.5-mm in direct operating capital - while only diluting the total A/S by 10% or less. These direct funds will provide marketing support for MyFlix - as well as cash-flow flexibility for assisting with the development of the tent-pole Major Films and other ongoing operations. The anticipated buyers of the S-1 offering are long-term, strategic partners, and are not expected to sell any of their shares in the first year or two. The structure of the S-1 incentivizes earlier subscribers, as the price per share increases as the inventory of S-1 shares is diminished. The base price of the first traunch of S-1 shares is being established to be at a level estimated to start at 150% of the VWAP of the HHSE shares - which means that these new shareholders are buying equity at a significant premium "above" market. The S-1 Registration will be filed shortly after the Form 10, as the company will await any initial feedback and comments to the registration statement.
P&A FUNDS SECURED AGAINST VIDEO / V.O.D. - HHSE has been working with a proven P&A funder for a structure which provides substantial (multi-million dollar) traunches of theatrical release support for qualifying titles under a major studio Video / V.O.D. assignment. HHSE will enjoy the benefits (and upfront fees) from the marketing of titles under this P&A structure - as well as earned sales fees from theatrical settlements. Furthermore, the assignment of video rights to the major studio partner relieves HHSE of the need for substantial video staff and manufacturing funds.
FORM 10 REGISTRATION - The long-awaited filing of the company's registration statement is the first step in the company's overall new launch. Large funds and investors that have been hesitant (or prohibited) from supporting HHSE as a Pinksheet stock will now be able to invest in HHSE shares. Management anticipates that the act of filing the Form 10 could (and should) result in a PPS of $.03 or higher. The Form 10 may be filed in the next few weeks, and the impact to the HHSE share price might be seen immediately - even though the S.E.C. has 60-days to provide "comments" requiring the issuer's response.
HHSE / MYFLIX ONGOING BUSINESS MODEL? With management having determined that the lower-end titles are cash-intensive, time-consuming and deliver only a very marginal revenue upside, the goal has been to identify specific areas within the entertainment industry where a company such as Hannover House can excel. For this reason, the company determined that the best strategy for maximizing revenues and bottom line results is a two-pronged approach: Major Films for HHSE and MyFlix as a one-stop digital streaming store.
By "Major Films" we mean that the company plans to release FOUR (4) features per year that have high-profile casts and which deserve (and get) broad theatrical distribution (500 or more locations). The first of these "Major Films" is a feature that's 95% completed at this time, and which HHSE plans to release in early MARCH, 2019. This title has NOT yet been announced.
It is management's belief that MOST of the titles comprising these four annual tent-poles will ultimately need to be PRODUCED by (or with the assistance of), HHSE in the Studio capacity. This is because at the film festival circuit level - generally speaking - any film of commercial merit has either been pre-sold to the major studios or ends up sparking a bidding for for the acquisition of rights (and HHSE cannot realistically expect to compete against the current acquisitions funding of Amazon, Netflix or the Major Studio specialty divisions). To get these "Major Films" - HHSE is likely going to have to act as a catalyst to spark the production. A good example of how this might occur is listed below (see "MELTDOWN").
With respect to MYFLIX - while the on-boarding of titles continues at full speed (now at 1,168 titles - FULLY WITH MASTERS, as opposed to 2,100 with "only Metadata" and not fully with conformed masters) - and acquisition of more studio supplier partners continues (now representing well in excess of 10,000 titles) - the actual consumer launch of the site does not look likely for the next few weeks. We are now going into the insane HOLIDAY season for ads and digital media, creating both a shortage of promotional inventories and a spike in costs. The cost for 30-second TV Ads on national cable (for instance), drops by more than 50% after January 1st... which also corresponds with terrific cold-weather, indoors-type seasonality (perfect for our MyFlix launch - and also corresponds with when we will surpass the 2,500 titles ON BOARDED level).
S-1 REGISTRATION - HHSE has been in discussions with three significant parties that have expressed support of buying HHSE shares under a S-1 Shelf Registration (simultaneous with the Form 10, or almost immediately thereafter). As presently envisioned, the S-1 would be launched in January with a total potential sale of up to 90-mm HHSE shares made available, with a base price anticipated in the $.045 range, and going all the way up to $.10 for the final traunch of shares. HHSE anticipates raising about $4.5-mm in direct operating capital - while only diluting the total A/S by 10% or less. These direct funds will provide marketing support for MyFlix - as well as cash-flow flexibility for assisting with the development of the tent-pole Major Films and other ongoing operations. The anticipated buyers of the S-1 offering are long-term, strategic partners, and are not expected to sell any of their shares in the first year or two. The structure of the S-1 incentivizes earlier subscribers, as the price per share increases as the inventory of S-1 shares is diminished. The base price of the first traunch of S-1 shares is being established to be at a level estimated to start at 150% of the VWAP of the HHSE shares - which means that these new shareholders are buying equity at a significant premium "above" market. The S-1 Registration will be filed shortly after the Form 10, as the company will await any initial feedback and comments to the registration statement.
FORM 10 REGISTRATION - The long-awaited filing of the company's registration statement is the first step in the company's overall new launch. Large funds and investors that have been hesitant (or prohibited) from supporting HHSE as a Pinksheet stock will now be able to invest in HHSE shares. Management anticipates that the act of filing the Form 10 could (and should) result in a PPS of $.03 or higher. The Form 10 may be filed in the next few weeks, and the impact to the HHSE share price might be seen immediately - even though the S.E.C. has 60-days to provide "comments" requiring the issuer's response.
High-Traffic APPLE TRAILERS Site Features THE RIOT ACT Trailer
HHSE is pleased to announce that APPLE TRAILERS has selected our RIOT ACT Trailer for premium placement and promotions effective Tuesday, August 7. This is good timing in support of the film's Sept. 14 theatrical launch. Check it out!
https://trailers.apple.com/trailers/independent/the-riot-act/
NEW THEATRICAL UPDATES - Materials preparation and marketing support are underway for TWO theatrical releases coming in September. On Sept. 14, THE RIOT ACT will open in approx. 10 theatres in Arkansas and 10 theaters in Top 10 DMA markets... each theatre will have focused marketing support, including lobby standees. If the film's opening weekend results in holdovers, then a plan to expand to additional markets will be immediately implements. On Sept. 28, DOGPATCH USA will open in Arkansas theatres, along with NY and LA exclusives. This documentary feature tells the story of the now-defunct theme park which was based on characters from the Lil' Abner comic strip by Al Capp.
LEGAL ISSUES - Responsive filings have been made in the Crimson Forest matter; at the recommendation of counsel, HHSE has been advised to not elaborate on the company's legal strategy on this publicly-accessible blog.
Regarding Origin Films, the Motion to Dismiss was rejected, so this matter will proceed to trial at some time over the next two weeks. Based upon the contracts and math, HHSE believes that a reasonable review of the accounting reports will result in another victory for HHSE: an adjudication based solely on reality. HHSE has prevailed in the past three matters in which producers chose to ignore the terms of the agreements, and instead sued for "fictional" amounts they incorrectly claimed were owed. As stated previously in this blog, the long-term solution for HHSE to avoid this sort of baseless and frivolous action in the future is to avoid dealing with inexperienced producers and low-end programming.
MYFLIX - On-boarding of titles for this impressive streaming site continues, while marketing & P.R. efforts for the upcoming launch consume the majority of management focus. The company's trademark filing was approved, which was an important step towards empowering HHSE attorneys to halt any "squatters" that are attempting to utilize the MyFlix brand name (we are aware of two current attempts that will be pursued for halting). An outside firm has been engaged for the creation and placement of the MyFlix APP (onto all major platforms and hardware devices)... and a website compliance meeting is scheduled for late August in order to test the functionality of the MyFlix operational infrastructure. At this point, a public launch to consumers in mid-to-late September is looking more realistic. It's understandable (now) why the Disney streaming site allowed themselves 18-months of development (they launch in March, 2019).
COMPLIANCE & AUDIT UPDATES - Progress continues to be made in the audit compliance issues and general status of the Form 10 Registration. Q2, 2018 filing will be made on or before the August 14 OTC Markets Guidelines (a filing which was held from prior release in order to conform as much as possible to current status news and audit adjustments).
Pre-Launch Status & General Updates for the MYFLIX Streaming Venture
Good Morning HHSE Friends & Followers - On the "content" side of the venture, upload activities continue on the first 1,200 titles for the MyFlix site, and we anticipate moving into the next set of masters (2,000+ titles) by the end of this week. Regarding "marketing" - HHSE is in pre-production of two MyFlix videos that explain and promote the service. Filming is expected to occur within the next three weeks. Other marketing efforts include a seven (7) faceted campaign that also include traditional advertising (both paid and barter), social media, influencers / taste-makers, mainstream publicity, targeted P.R. and national media.
As some longs will recall, HHSE pursued two previous paths for the launch of the streaming site. In 2014, extensive research was made for the "VODWIZ" site(prior name) to be hosted in the Arkansas Technology Center through a bank of high-speed computers attached to the internet via fiber optics and backed-up with remote stations in geographically diverse locations. The costs for this operational concept proved prohibitive... so the company looked at a "hosting" arrangement with a third-party supplier(Nanotech) that over a protracted two-year time-span simply did not prove to be a viable fit. Ultimately, the opportunity to be hosted through Amazon - utilizing their vast digital network and infrastructure - revitalized the venture's viability and dramatically reduced the MyFlix start-up costs.
But it's still very costly to acquire the rights and upload film masters - to build a consumer friendly site - and most importantly, to PROMOTE the site so that consumer traffic drives the revenue streams.
This is why HHSE has entered into an off-balance sheet financing agreement for MyFlix: a structure which provides the funding for the venture's creation and launch, while preserving HHSE's right to earn full ownership. Similar to a home mortgage, HHSE owns MyFlix, subject to the retirement of the note (which balance is to be repaid to the lenders from the share of incoming revenues otherwise designated for HHSE). On the HHSE Registration Statement, disclosures and balance sheet, the loan proceeds paid towards the creation and launch of MyFlix will be recognized as a HHSE loan payable, secured for the benefit of the lenders by the assignment of incoming revenues from MyFlix.
HHSE Management felt that this form of traditional lending structure offered a cleaner financing mechanism than more complex fundings that involved stock issuances (which stock-based financing structures have proven to be unpopular with shareholders). The concept of having the MyFlix venture "pay for itself" and through cash-flow made sense for a variety of reasons which will be further detailed in the Registration Statement.
HHSE's enthusiasm for the viability of this new MyFlix division grows with each day of progress in the build-up and launch activities... and we feel vindicated to have learnt from prior missteps and taken this wise course toward success.
Stay Tuned!
TWO NEW PRIVATELY FUNDED FEATURES - HHSE has been approached by private investors to finance both the PRODUCTION and the DISTRIBUTION of two commercial film projects. These ventures came about in large part as a result of the superb quality of THE RIOT ACT production in Arkansas, which is generating good "buzz" among the local investment community. Watch for more details on this blog within the next month.
MYFLIX UPDATES - New title acquisition and on-boarding continues for the forthcoming launch of this exciting new digital streaming platform. Consumer promotional campaigns are in the design / implementation stages for a coordinated launch. HHSE C.E.O. / MyFlix senior executive Eric Parkinson has been invited to participate in an industry panel at the upcoming MIPCOM Television Conference to discuss "The Big Shift" of entertainment from theatres, video and television over into the emerging digital streaming platforms (especially with the next generation of media consumers).MyFlix represents the RIGHT business model at the RIGHT time for HHSE!
OTHER UPCOMING VIDEO RELEASES- Activities are well underway for the forthcoming home video and V.O.D. releases of: AMERICA UNITED, DAISY WINTERS, GETTING GRACE, HEXED, RIDE UNITED and TRINITY. More details, packaging art and promotional support will be posted to this blog over the next few weeks.
DOGPATCH USA - This whimsical documentary about the now defunct theme park in Arkansas will benefit from some licensed character support and promotions from the classic Al Capp comic strip, LIL ABNER. This film will open in theatres on Sept. 28.
THE RIOT ACT - Terrific response & support from key theatres after providing the V.I.P. screening link to this period-thriller. Film opens Sept. 14. Screen count is still being determined, but looks like at least TEN (10) locations within the State of Arkansas due to the historic basis of this film premise (based on a true incident - a murder - at the King Opera House in Van Buren, Arkansas). Other key markets include NYC, LA, CHI, PHIL, DFW and SF Bay Area.
AUDIT UPDATE - HHSE received a request from the auditors on Tuesday for additional backup detail on the net positions for the company's back list library (as these figures impact both the "royalties payable" balance sheet entry, and the "producer recoupment" balance sheet entry). Staff is on this task already.
BONOBOS / SONY - Street date is August 7, and the HHSE shipments were received in time and in good condition; great way to start this important wholesale relationship for physical DVD release. Additionally, placements for Video-On-Demand (also Aug. 7) are across the board at all major sites...
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.
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.
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.
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.TVand 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.
ON-BOARDING / UPLOADS for MyFlix titles continues at a solid pace, while the visuals for the home page and title-genre' pages continue toward final tweaking.
THE RIOT ACT has a new theatrical launch date: Friday, Sept. 14 in NY, LA and other key markets. Watch for new trailer and poster art to be released in the next few days.
AMERICA UNITED (the star-studded concert event from ABC Television, featuring Janet Jackson, ZZ Top, Snoop Dogg, Clint Black and many other superstars), will be released in early November to DVD, to coorespond to VETERAN'S DAY promotions.
HHSE Q2 Filing has been formatted and submitted to our auditors to provide the most current "reporting period" data for the Form 10 filing.
BONOBOS DVDs will hit stores in August through SONY - shipments now in progress!
The Characters from "LIL' ABNER" Comic Strip - come to life in DOGPATCH USA Film
Greetings HHSE Friends & Followers - The Al Capp comic strip "LIL' ABNER" was a worldwide hit in the 1960's and 1970's - with millions of daily readers, and eventually, it's own THEME PARK known as DOGPATCH USA.
Hannover House has entered into an agreement with the producers of "Dogpatch USA" for a limited theatrical release and servicing arrangement for videos into Walmart for the holiday collector's season. This impressive documentary tells the history of the Arkansas-based Theme Park, and it's unusual genesis and eventual downfall. Watch for more details - including new POSTER ART and TRAILER here soon - along with additional details on theatres that will be showing this documentary feature.
https://www.facebook.com/DogpatchUSA.documentary/
AS THE MATERIAL ISSUES OF REGISTRATION AND MYFLIX LAUNCHloom 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!