Item 11 A1-A6 – Supplemental Disclosures. i). T

Item 11 A1-A6 – Supplemental Disclosures.
i). The Company has completed the written and disclosure portions of a Form 10-12(g) Registration Statement, which was previously planned for filing with the Securities and Exchange Commission on or Jan. 15, 2016, subject to the completion of outside audits by a PCAOB licensed auditing firm. The Company has since engaged a qualifying auditing firm and participated in extensive interviews and reviews of filings, reports and back-up materials. As disclosed to shareholders on the HHSE Company blog site on January 30, 2016, the new auditors have made several determinations of material deficiencies in the financials for the Company, specifically, 1). The value of the Film Library relative to all other assets (and the issues of the five-year-aging of the prior Film Library Valuation report, the changing marketplace for physical video sales as compared to the growing market for digital streaming, and the significant exclusions of key titles from the prior Film Library) and 2). The need for Internal Controls and Compliance Documentation that would conform to standards prescribed under Sarbanes-Oxley Act 404. While technically not “advising” the Company on how to conduct internal controls or instructing the Company to conduct a more thorough and current Film Library Valuation Study, the new auditors did clarify that not addressing or rectifying these issues would result in significant comments by the auditors to the Form 10-12(g) audit portion, and this could result in commentary and non-compliance following S.E.C. review of the registration filing. Having the Company’s largest balance sheet asset reviewed under more recent valuation, and having the Company conform to widely accepted Internal Controls Procedures, would be a requirement for the auditors, unless the Company was willing to proceed with significant auditor’s footnote commentary on these issues. Rather than risk having another obstacle impact the S.E.C. acceptance of the Company’s registration, management has taken the steps to conform to these higher disclosure and operational standards. Company anticipates that the updated Form 10-12(g) Registration Filing, including 2-years of full-year audits and a revised and updated Film Library Valuation Report will be submitted to the S.E.C. in the near-term future, subject to the completion of the new Film Library Valuation (it should be noted that Company is seeking to obtain a lowered valuation than the initial figure determined by the new Library Evaluators, which contains sales forecasts for titles greater than Company Management’s estimates. It is Company’s position that a Library Valuation that is significantly higher than forecasts based on Company’s existing, internal self-distribution apparatus, could elevate shareholder expectations higher than management’s more conservative forecasts. While the higher sales values provided by the first Library Valuation report have as a premise the assumption that HHSE will align itself with one of the Major Studios in the coming year, there can be no assurance that such a deal will occur, and as such, management feels that the current Film Library Valuation should reflect existing distribution channels and revenues, and conform closer to management’s estimated current value of $28-mm. A review of sales activities at the Cannes Film Festival and Marche du Film (held in May, 2016, subsequent to the current reporting period), will be included in a telephonic discussion on May 25 with the Film Library valuation supplier, with the goal of reaching a mutual consensus as to a value that is both realistic within the industry, and obtainable based on Company’s current distribution apparatus.
With respect to the Company’s auditors and the Company’s Film Library valuation service provider, Counsel has advised that Company is not required to disclose the new auditing firm until the Registration Statement is filed. This strategy has been accepted by management as a move to minimize shareholder interference with the auditing process and the Film Library Valuation.