Over the past forty-four months, Hannover House, Inc., (OTC: HHSE) has reduced its total debt load from $6.4-million down to $2.7-million as the company prepares for the launch of its new business plan of the MyFlix streaming and to facilitate the production of high-profile feature films.
The debt reductions were the result of payments and negotiated reductions, primarily from "default judgments" incurred in 2016-2018 under a flawed- legal strategy pursued at that time by company management. Out of state actions filed by producers were ignored and allowed to go to default under the belief that the contract requirement for disputes to be filed in Arkansas would negate the foreign state defaults. This strategy - devised by former HHSE President and attorney Fred Shefte - ultimately proved flawed, and resulted in the company being burdened with millions of dollars in out-of-state defaults, all from cases lacking the factual basis for such claims.
Shefte took a medical leave of absence from the company in the summer of 2018, and never fully recovered or returned to Hannover House until his formal resignation in 2021 and his unfortunate death in April of 2022. The company has had no new lawsuits in over four years as the business model of handling theatrical and video release of third-party-owned productions was discontinued.
"The rapid collapse of the DVD market caught many distributors by surprise," said Hannover CEO Eric Parkinson. "As Video-On-Demand options exploded in popularity, the consumer willingness to spend five or ten dollars to buy a DVD of an independent movie collapsed. DVDs were no longer a good entertainment option, when the same ten dollars could buy a whole month of access to various streaming sites. However, some of the program suppliers to Hannover House filed lawsuits seeking payment for DVDs that were shipped to retailers, but returned unsold for credit. The Hannover agreements were clear in that royalties only applied to net unit sales, not gross shipments. So, these various lawsuits were without contractual merit. Yet, failing to file a response for dismissal even when the cases were filed in the wrong venue created a painful debt burden for the company to carry default judgment balances which could have been avoided. We are grateful for the support of the company creditors and judgment holders in structuring fair and reasonable resolutions to these matters, and enabling our balance sheet to be markedly improved," Parkinson concluded. During the past 44-months, the company secured $763,910 in new debt, of which approximately $261,937 was reinvested into film productions, including WILDFIRE and THE LAST DAYS OF BELLE STARR. These production investments are readily recoupable to Hannover House from contractual sales deliveries.
"Through the support of new lenders, the company has been able to make significant progress in the creation of valuable production assets, the preparation of MyFlilx services and the reduction of our debt burden," said Parkinson. "Their support and confidence will soon be rewarded."
Hannover House was founded in 1993 and has survived through tumultuous market changes impacting the independent film industry, by controlling overhead, anticipating trends and evolving to address opportunities as they arise.
Armed with solid scripts and major star attachments, Hannover House, Inc. (OTC: HHSE) is looking towards international co-productions and financing incentives to cover most of the $80-mm in costs needed for two high-profile original productions. The two principal films in the three-picture international slate for Hannover House include the previously announced family-fantasy "Mother Goose: Journey to Utopia" and a new, major effects thriller which will rely heavily on A.I. software for many complex, visual sequences that previously would have pushed the budget to more than $100-million.
Hannover House is also in development or preproduction on three additional features that are set for filming with in the USA: "The Last Days of Belle Starr"(1889 western thriller); "Modern Antiquities"(contemporary feel-good drama) and "Senior Year"(contemporary sports-drama).
"Mother Goose: Journey to Utopia" is being retitled as "Journey to Utopia" due to the older-skewing nature of the story - despite the presence of the all-powerful Queen of the land being the infamous Mother Goose. Hannover House had previously attached Academy Award winning film legend Shirley MacLaine in the Mother Goose role, although her participation in the film is not currently confirmed. The film tells the story of two teenagers who enter an inter-dimensional portal to end up in the land of Utopia. They must solve riddles to receive the necessary clues to enable a return to their Earthly lives. With the participation of international co-productions and incentive funding, Hannover House feels it can readily secure bank gap funding to enable this film and two others high-profile features to proceed into production for 2024.
"As we move into our business model of feature film productions and video streaming, we are embracing the benefits of working with production companies and funding agencies throughout the world," said Eric Parkinson, C.E.O. of Hannover House. "The explosion of viewer support for premium video-on-demand programming has opened up new opportunities for companies like Hannover House. With the additional benefit of using computer technologies and Artificial Intelligence for special effects on fantasy and sci-fi features, we can achieve production values that previously would have cost over $100-million per feature," he concluded.
Hannover House has recently completed its first feature production with "WILDFIRE: The Legend of the Cherokee Ghost Horse" a family appeal movie inspired by the #1 worldwide hit song by Michael Martin Murphey. The film also stars Chevel Shepherd (winner of NBC's "The Voice" competition), Adrian Paul (of the "Highlander" TV series), Mo Brings Plenty (from "Yellowstone") and late film star Anne Heche in her final feature film release. This Hannover facilitated production was produced by Snowy Morning, Inc. and will enjoy a USA Theatrical release this fall before a premium Video-on-Demand launch in December. The film was directed by HHSE C.E.O., Eric Parkinson.
Originally formed in 1993, Hannover House is celebrating its 30th year of operations, and an evolution from being a distributor of third-party productions into being an independent production powerhouse. In addition to its slate of commercial features, Hannover House is also launching the MyFlix streaming service, to enable consumers to see over 15,000 independent films from a large pool of producers and film libraries.
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