Thursday, July 12, 2018 Update on HHSE Litigati

Thursday, July 12, 2018
Update on HHSE Litigation Moves and Resolutions - Along with Additional News Bits
Happy Friday-the-13th to our HHSE Friends & Followers - Firstly, we want to congratulate director MARCEL WALZ on the opening week digital streaming success of his film, "BLOOD FEAST" - which has been in the top 10 for ALL new release horror titles streaming this week... a terrific start for "Blood Feast" and HHSE! The launch of the Digital release is also very well-timed for the upcoming COMIC-CON show in San Diego - where Marcel will be signing autographs and "Blood Feast" posters on Friday, July 20 at 2:30-pm.


Next - and as mentioned in an earlier blog - HHSE has been active in prevailing, settling or otherwise progressing in cleaning up the company's balance sheet and other disputes. The purpose of these activities is to eliminate litigation, strengthen the company's balance sheet and generally improve the overall optics of HHSE as the company emerges from S.E.C. Registration and the simultaneous launch the highly-anticipated MYFLIX digital streaming venture. Over $5-mm in debts have been paid, settled or otherwise retired by HHSE over the past few years - and strategies are in place for all of the company's major creditors. Most of the nuisance lawsuits have already been adjudicated in HHSE's favor or otherwise dismissed. There are three currently active litigation matters that are in motion, for which shareholders are seeking status updates.

1). UPTONE RELEASING ("Union Bound" - HHSE has complied with all of the terms of the settlement agreement except a final release of unsold DVD returns (which requires the cooperation of wholesaler, Cinedigm Entertainment). HHSE has paid Cinedigm for costs and handling fees associated with the release of unsold merchandise, and we anticipate that these DVDs will ship to UPTONE by mid-next week. Upon receipt of merchandise, the settlement agreement will have been satisfied and proper court filings are required to be completed by Uptone's counsel in order to have this issue fully vacated and closed.

2). CRIMSON FOREST - Plaintiff's counsel has extended to named Defendants a 21-day extension of time to file a response, based upon improper service. A clerical default against three of four named Defendants will be vacated following the formal motion, including failure to file a Motion for Default, failure to provide evidence of proper (legal) service, failure to notify Defendants and the written agreement by Plaintiff's counsel to HHSE for a 21-day extension as of July 10 (providing until August 1 for a responsive filing). HHSE's cross complaint integrates the Crimson claims with the overall merger and financing agreement, and HHSE will seek to enforce the financial terms of the merger agreement, calling for a minimum of $1-million prior to May 15, 2017 (which Crimson did not pay), and additional financial damages of more than $3-million caused to HHSE and HHSE shareholders as a result of Crimson's breach of the merger and financing agreement. Per the terms of the March 8 Merger Agreement, and as filed with the S.E.C., disputes regarding the merger must be adjudicated in California, under California law. Accordingly, HHSE counsel feels that a cross-complaint in the Crimson matter is one of our responsive options - or alternatively, that a separate action can be filed by HHSE against Crimson for their breach of the merger and other acts that otherwise negatively impacted against HHSE (all of the strategic actions and decisions in this matter will occur prior to the August 1st filing date).

3). ORIGIN RELEASING - HHSE's counsel filed a variety of motions and objections in the past two weeks, one of which contained an embarrassing typo in which HHSE was erroneously listed as the "Plaintiff" instead of as the "Defendant." While this attorney error did not appear to impact the accuracy and validity of the remainder of the filings, it does provide yet another example of why the HHSE "going forward plan" cannot include anymore micro-budgeted films from unrealistic or otherwise delusional producers. There is no financial upside to selling sub-standard productions, and the risk of irrational producers filing a lawsuit is not worth the effort. The Texas judge in the Origin case ruled that HHSE was "in breach" of the February, 2013 settlement agreement by selling videos past the six-month sell-off period (a factual point which HHSE did not oppose, and indeed, HHSE openly reported these sales). This "partial judgment" of undisputed fact does not dilute the accuracy of HHSE sales statements and payments, which are the basis of Origin's action. The HHSE Motion for Dismissal of the entire case is calendered for August 4th - and under Texas law and precedent - is expected to prevail.

AS THE MATERIAL ISSUES OF REGISTRATION AND MYFLIX LAUNCH loom 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!

And finally, HAPPY FRIDAY THE 13TH! Please do NOT look backwards into a mirror and call-out the name of "Candyman" three times... not today of all days! Cheers!