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Posted On: 01/13/2019 11:46:13 PM
Post# of 7315
Greetings HHSE Shareholders, friends and followers - Over the past few weeks we have been collecting questions received from shareholders, and will address these in this weekend's blog below.
1). Q: REGARDING THE FORM 10-FILING DATE, WILL YOU TELL SHAREHOLDERS "IN ADVANCE?"
A: No. We have been advised that specific disclosure or telegraphing of the date that the company will be filing the Form 10 Registration Statement with the S.E.C. would create stock-trading advantages that might result in S.E.C. "comments" or potentially a rejection of the company's registration.
2). Q: IS THE COMPANY "ON TRACK" FOR THE COMPLETION OF THE FORM 10 FILING IN A TIMELY MANNER?
A: Yes.
3). HOW WILL THE FILING OF THE FORM 10 DIRECTLY BENEFIT THE COMPANY'S OPERATIONS?
A: The benefits of becoming a fully-reporting / fully-registered equity are not entirely "direct" for the issuer - in that the registration filing primarily benefits SHAREHOLDERS through improved daily share volume (which often leads to a higher PPS). The company is more likely to benefit from the near-simultaneous filing of the S-1 Registration, which will enable HHSE to directly receive operational and growth funding from the sale of new stock shares.
4). WILL THE COMPANY NEED TO RESOLVE OR SETTLE THE VARIOUS RECENT LITIGATION MATTERS BEFORE FILING THE FORM 10?
A: No. The values of the company's various assets and liabilities - regardless of dollar amount or form - only need to be DISCLOSED to the auditors and within the financials and narrative text of the registration statement. A company can have any number of disputes, debts or significant liabilities, as long as they are disclosed and noted.
5). WITHOUT JEOPARDIZING THE COMPANY'S LEGAL STRATEGIES, CAN YOU ELABORATE ON THE LEVEL OF RISK OR CONCERN THAT MANAGEMENT HAS FOR SOME OF THE MORE SIGNIFICANT LEGAL ISSUES?
A: Yes. Management has identified each of the legal matters that involve the appearance or potential of liability, specifically and alphabetically: (1) Bedrock Ventures, (2) Crimson Forest, (3) Interstar Releasing, (4) JSJ Financial, (5) Lewin / East-Side Story, (6) O'Brien Films, (7) Origin Releasing and (
Uptone Pictures. Items 1 and 4 are foreign defaults that qualify for adjudication under Arkansas Law (and based upon the nature of these notes, Arkansas law is expected to result in a dismissal); Item 2 is ongoing, including a HHSE counterclaim for $4-mm; Item 3 is a California Judgment that was obtained as the result of two fraudulent misrepresentation by the Plaintiff to the California Court; accordingly, under Arkansas law, this case can be dismissed; Items 5 and 6 are foreign defaults based upon non-existent deals (i.e., Plaintiffs filed lawsuits against HHSE without having an actual contractual basis), and as such, these can be dismissed under Arkansas law; Item 7 is a judgment which was voluntarily entered into by HHSE, but newly obtained documents show that the HHSE was induced into accepting the judgment based on an agreement that had been modified by the Plaintiffs; accordingly, this provides the basis to either re-open the case in Texas or to dismiss it under Arkansas Law. Item 8 is being handled by HHSE's California counsel and the company is informed that there is an expectation that this dispute will be dismissed soon. The specific status of each of these disputes or matters is described in clear detail within the Form 10 narrative. Management believes that current legal strategies will result in a positive outcome for HHSE and that we do not feel a material threat to the company's ongoing operations or current activities.
6). ARE PRODUCER LAWSUITS AGAINST DISTRIBUTORS COMMON, OR IS THIS REPRESENTATIVE OF "SOMETHING UNIQUE" TO HHSE?
A: Unfortunately, in the "independent producer" community, lawsuits against distributors are extremely common. Producers often raise the money for a movie by providing investors with inflated expectations of a film's potential performance... and when the "reality of the marketplace" is delivered, they feel pressure to blame it on the distributor. When HHSE suspects this has occurred, we will often move to quickly "unscramble the egg" and divorce ourselves from proceeding with that particular project. In any event, some media distribution companies are not as cautious and have an extremely high rate of litigation (up to 50% of titles released end up in litigation). While HHSE wishes that none of the company's program suppliers would ever be unhappy, we are somewhat relieved to recognize that our dispute frequency is way below average for the industry. Based upon management's research of legal disputes for independent distributors, HHSE appears to have the second lowest levels both in terms of total number of cases and the percentage of releases that end up in litigation disputes (18 titles out of 454 releases). Management feels that the new business model for HHSE and MyFlix will result in a far lower frequency of producer disputes for several reasons which are elaborated on in the Form 10 narrative.
7). WHAT'S HAPPENING WITH MyFlix? CAN YOU ELABORATE ON THE DATE THAT THIS STREAMING SERVICE AND O.T.T. SITE WILL "GO LIVE"?
A: An Update on MYFLIX will be provided as a separate blog this week. It's exciting, moving quickly and is poised for a successful launch.
. THERE SEEMS TO BE LOT OF MISINFORMATION AND SKEPTICISM ABOUT HHSE ON THE "I-HUB" CHAT BOARD WHICH IS CONCERNING TO SOME SHAREHOLDERS. HOW CAN YOU RESPOND TO THESE ATTACKS?
A: Ignore the short-sellers and price manipulators that use misinformation, hidden identities and "mumbo-jumbo" terminology to try to negatively impact the perception of HHSE to our legitimate shareholders. Consider the source: these are the same folks that every few months declare that "the sky is falling" and that "ooooh, if only you knew the secrets that I know, you'd sell your shares to us CHEAP, and RIGHT NOW!" How many times have these I-Hub trolls incorrectly predicted the "imminent demise" of HHSE due to some easily resolved legal dispute or fabricated false claim (e.g.,there's a huge judgment they can't set-aside, Fred is a domestic terrorist, Parkinson has nice hair)... and then BRAGGED that their strategy is to "rinse and repeat" their daily PPS pricing manipulation with small dollar (uneconomical) trades to the bid? Their predictions of doom have always been proven wrong. After all, it only takes a few thousand dollars of buyer-bid support to crush these PPS boxing efforts... which is why the filing of the HHSE Form 10 poses an existential threat to the I-Hub trolls (in that the volume of NEW shareholders in HHSE - post-filing - will reduce their effectiveness to that of mumbling hobos in a large crowd of legitimate traders).
9). WHAT ARE THE NEXT NEW RELEASE TITLES FOR HHSE / MEDALLION? DO YOU HAVE ANY "BIG" RELEASES YET?
A: Yes, we have several big, new projects in the works for release early in 2019 - titles that are significantly higher in stature (and theatrical release breadth) than any prior HHSE / Medallion releases. However, this Q&A blog is not the right forum and moment to disclose these important developments.
10). IS HHSE CONSIDERING ANY "NON FILM" ACQUISITIONS WITH THE PROCEEDS FROM THE S-1 REGISTRATION?
A: Yes, the company is looking at several "related business opportunities" that would be a complement to HHSE / Medallion, but not specifically falling in the existing operational categories. At present, there are three cash-flow positive / profitable businesses that could be acquired by HHSE following the S-1 revenues which may be of merit to the diversification and expansion of the company. However, it would be detrimental to the negotiating process to prematurely begin public discussion / disclosure of new business opportunities that are still in the pre-documentation discussion and research stages.
MORE TO FOLLOW>>>>
1). Q: REGARDING THE FORM 10-FILING DATE, WILL YOU TELL SHAREHOLDERS "IN ADVANCE?"
A: No. We have been advised that specific disclosure or telegraphing of the date that the company will be filing the Form 10 Registration Statement with the S.E.C. would create stock-trading advantages that might result in S.E.C. "comments" or potentially a rejection of the company's registration.
2). Q: IS THE COMPANY "ON TRACK" FOR THE COMPLETION OF THE FORM 10 FILING IN A TIMELY MANNER?
A: Yes.
3). HOW WILL THE FILING OF THE FORM 10 DIRECTLY BENEFIT THE COMPANY'S OPERATIONS?
A: The benefits of becoming a fully-reporting / fully-registered equity are not entirely "direct" for the issuer - in that the registration filing primarily benefits SHAREHOLDERS through improved daily share volume (which often leads to a higher PPS). The company is more likely to benefit from the near-simultaneous filing of the S-1 Registration, which will enable HHSE to directly receive operational and growth funding from the sale of new stock shares.
4). WILL THE COMPANY NEED TO RESOLVE OR SETTLE THE VARIOUS RECENT LITIGATION MATTERS BEFORE FILING THE FORM 10?
A: No. The values of the company's various assets and liabilities - regardless of dollar amount or form - only need to be DISCLOSED to the auditors and within the financials and narrative text of the registration statement. A company can have any number of disputes, debts or significant liabilities, as long as they are disclosed and noted.
5). WITHOUT JEOPARDIZING THE COMPANY'S LEGAL STRATEGIES, CAN YOU ELABORATE ON THE LEVEL OF RISK OR CONCERN THAT MANAGEMENT HAS FOR SOME OF THE MORE SIGNIFICANT LEGAL ISSUES?
A: Yes. Management has identified each of the legal matters that involve the appearance or potential of liability, specifically and alphabetically: (1) Bedrock Ventures, (2) Crimson Forest, (3) Interstar Releasing, (4) JSJ Financial, (5) Lewin / East-Side Story, (6) O'Brien Films, (7) Origin Releasing and (
Uptone Pictures. Items 1 and 4 are foreign defaults that qualify for adjudication under Arkansas Law (and based upon the nature of these notes, Arkansas law is expected to result in a dismissal); Item 2 is ongoing, including a HHSE counterclaim for $4-mm; Item 3 is a California Judgment that was obtained as the result of two fraudulent misrepresentation by the Plaintiff to the California Court; accordingly, under Arkansas law, this case can be dismissed; Items 5 and 6 are foreign defaults based upon non-existent deals (i.e., Plaintiffs filed lawsuits against HHSE without having an actual contractual basis), and as such, these can be dismissed under Arkansas law; Item 7 is a judgment which was voluntarily entered into by HHSE, but newly obtained documents show that the HHSE was induced into accepting the judgment based on an agreement that had been modified by the Plaintiffs; accordingly, this provides the basis to either re-open the case in Texas or to dismiss it under Arkansas Law. Item 8 is being handled by HHSE's California counsel and the company is informed that there is an expectation that this dispute will be dismissed soon. The specific status of each of these disputes or matters is described in clear detail within the Form 10 narrative. Management believes that current legal strategies will result in a positive outcome for HHSE and that we do not feel a material threat to the company's ongoing operations or current activities. 6). ARE PRODUCER LAWSUITS AGAINST DISTRIBUTORS COMMON, OR IS THIS REPRESENTATIVE OF "SOMETHING UNIQUE" TO HHSE?
A: Unfortunately, in the "independent producer" community, lawsuits against distributors are extremely common. Producers often raise the money for a movie by providing investors with inflated expectations of a film's potential performance... and when the "reality of the marketplace" is delivered, they feel pressure to blame it on the distributor. When HHSE suspects this has occurred, we will often move to quickly "unscramble the egg" and divorce ourselves from proceeding with that particular project. In any event, some media distribution companies are not as cautious and have an extremely high rate of litigation (up to 50% of titles released end up in litigation). While HHSE wishes that none of the company's program suppliers would ever be unhappy, we are somewhat relieved to recognize that our dispute frequency is way below average for the industry. Based upon management's research of legal disputes for independent distributors, HHSE appears to have the second lowest levels both in terms of total number of cases and the percentage of releases that end up in litigation disputes (18 titles out of 454 releases). Management feels that the new business model for HHSE and MyFlix will result in a far lower frequency of producer disputes for several reasons which are elaborated on in the Form 10 narrative.
7). WHAT'S HAPPENING WITH MyFlix? CAN YOU ELABORATE ON THE DATE THAT THIS STREAMING SERVICE AND O.T.T. SITE WILL "GO LIVE"?
A: An Update on MYFLIX will be provided as a separate blog this week. It's exciting, moving quickly and is poised for a successful launch.
. THERE SEEMS TO BE LOT OF MISINFORMATION AND SKEPTICISM ABOUT HHSE ON THE "I-HUB" CHAT BOARD WHICH IS CONCERNING TO SOME SHAREHOLDERS. HOW CAN YOU RESPOND TO THESE ATTACKS? A: Ignore the short-sellers and price manipulators that use misinformation, hidden identities and "mumbo-jumbo" terminology to try to negatively impact the perception of HHSE to our legitimate shareholders. Consider the source: these are the same folks that every few months declare that "the sky is falling" and that "ooooh, if only you knew the secrets that I know, you'd sell your shares to us CHEAP, and RIGHT NOW!" How many times have these I-Hub trolls incorrectly predicted the "imminent demise" of HHSE due to some easily resolved legal dispute or fabricated false claim (e.g.,there's a huge judgment they can't set-aside, Fred is a domestic terrorist, Parkinson has nice hair)... and then BRAGGED that their strategy is to "rinse and repeat" their daily PPS pricing manipulation with small dollar (uneconomical) trades to the bid? Their predictions of doom have always been proven wrong. After all, it only takes a few thousand dollars of buyer-bid support to crush these PPS boxing efforts... which is why the filing of the HHSE Form 10 poses an existential threat to the I-Hub trolls (in that the volume of NEW shareholders in HHSE - post-filing - will reduce their effectiveness to that of mumbling hobos in a large crowd of legitimate traders).
9). WHAT ARE THE NEXT NEW RELEASE TITLES FOR HHSE / MEDALLION? DO YOU HAVE ANY "BIG" RELEASES YET?
A: Yes, we have several big, new projects in the works for release early in 2019 - titles that are significantly higher in stature (and theatrical release breadth) than any prior HHSE / Medallion releases. However, this Q&A blog is not the right forum and moment to disclose these important developments.
10). IS HHSE CONSIDERING ANY "NON FILM" ACQUISITIONS WITH THE PROCEEDS FROM THE S-1 REGISTRATION?
A: Yes, the company is looking at several "related business opportunities" that would be a complement to HHSE / Medallion, but not specifically falling in the existing operational categories. At present, there are three cash-flow positive / profitable businesses that could be acquired by HHSE following the S-1 revenues which may be of merit to the diversification and expansion of the company. However, it would be detrimental to the negotiating process to prematurely begin public discussion / disclosure of new business opportunities that are still in the pre-documentation discussion and research stages.
MORE TO FOLLOW>>>>
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