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Wednesday, July 27, 2016

Update on Alchemy / Anderson BK Matters

Greetings HHSE Friends & Followers - there have been a lot of legal activities in the past few days from creditors and debtor-parties in the bankruptcy cases of Our Alchemy, LLC and Anderson Digital / AN Connect.  But the bottom-line status as of today is encouraging for creditors.

1).  Creditor's Committee - Court has approved the formation of such a committee. Fred Shefte has been nominated by twelve supplier studios to appear on this committee... at this time, no other individuals have been officially put forward to serve on the Creditor's Committee.

2).  Accounting Representation - Court has approved the hiring of a CPA accounting firm.

3).  New Appearances - A total of fourteen (14) suppliers have filed notices of appearance through counsel.  Two banks and two labs have filed (and all four appear to have various forms of secured claims or lab liens).

4).  Notable Developments - under the request of SEAL, Anderson Merchandisers has filed a series of motions to terminate their deal with Our Alchemy, LLC.  The details of their motion are not posted. But counsel speculates that a determination may have been made that "unwinding" the sale of Anderson to Alchemy (which, ostensibly would require repayment of the $30-mm in estimated payments), may be less problematic for Anderson than facing the wrath of multiple allegations.

With about $60-mm in actual debts (subject to the verification of the newly hired accountants), the receipt back from Anderson of $30-mm could result in a significant recovery for creditors... on top of all other assets, inventory, film distribution rights, preferential recoveries and accounts receivable.

Tuesday, July 26, 2016

All those $125,000 New Release Shipments start to ADD-UP to Big Money!

Beginning with DARK AWAKENING in June and continuing now through the OCTOBER New Release product commitments, HHSE / Medallion Supplier Studio products have scored TEN (10) placements IN  A ROW with Walmart Stores.  There are FOUR additional titles being considered for NOVEMBER - so the Company's path to success keeps marching forward.

Financially, each New Release placement results in outbound shipments of approximately $125,000 per title... of which HHSE / Medallion "hold back" revenue recognition until units actually sell-thru to consumers.  For calendar year 2015, HHSE / Medallion experienced a 12% average returns rate against gross sales... this is trending higher for 2016 (currently in the 20% average range) - but if we can "net" $100,000 per placement, and pop two-to-four titles into Walmart monthly, this becomes a very solid piece of our revenue pie.  Next up?  DAY OF REDEMPTION and BAD GIRLS for October.


Tuesday, July 19, 2016

General Update / Tuesday, July 19

Greetings HHSE Friends & Followers - In response to shareholder inquiries, here are some updates on issues of interest:

1).  NEW RELEASE ACTIVITIES - On the home video front, UNION BOUND and LINDA VISTA PROJECT are set at Walmart for August.  On the theatrical release front, HOMELESS BILLIONAIRE expands Labor Day, and SPICES OF LIBERTY (a Cannes Festival acquisition) opens Sept. 30.  HHSE / Medallion titles are also set for Walmart in September, October and November as new release home video items.

2).  ALCHEMY / AN CONNECT MATTERHHSE President Fred Shefte is scheduled to attend the 341 Hearing next Monday at the bankruptcy court in Wilmington, DE.  Shefte is armed with the support of 12 supplier studios who have provided written support for the formation of a creditor's committee as well as for Mr. Shefte's nomination to serve on such a committee.  A detailed analysis of the assets and benefits to HHSE / Medallion taking a leadership role in this matter will become evident once key information about the case, the assets and the disposition is approved for release.

3).  VODWIZ PARTNERSHIP - Vodwiz has entered into an agreement for a major hosting partner for VODWIZ, the activation for which requires additional mastering procedures.  To conform with this new partnering host, ALL titles must have closed-captions, and HALF of all titles must be in HD / Widescreen format.  Once these two threshholds are met, then the relationship can be publicly announced contemporaneously with the launch of this streaming portal.  Tom Sims continues to manage this burgeoning digital-streaming venture, and reports that the Alchemy matter has driven tonnage of titles for placement consideration.

4).  LIBRARY VALUATION / FORM 10 - At the request of our service providers, the Company is not providing new information on this corporate governance filing matter today.

5).  LEGAL ISSUES - Resolutions were formalized with Tribune and Accutrack and filed with the court (as previously mentioned in this blog).  Counsel reports favorable status on all other disputes and litigation matters.

6).  PRODUCTION ISSUES - Subject to key talent schedules, principal photography on "MOTHER GOOSE: JOURNEY TO UTOPIA" is set for Sept. 19;  The producers of "AJA" are also working to coordinate key talent schedules.  "TRUE FRESHMAN" is looking at an October launch of principal photography.  "YOUR LOCAL NEWS" completed post-production yesterday, and should be available for theatrical launch in October.

7).  INTERNATIONAL BOOK PARTNERSHIP - HHSE has made an agreement with a key wholesale book distributor in the U.K. (that also services all, major western European countries). This will be a "finished goods" venture, details for which will be announced separately.















Thursday, July 14, 2016

HHSE / MEDALLION First-Stage Victory in Alchemy Matter

Dear HHSE Friends & Followers - HHSE / MEDALLION were instrumental in providing the Trustee with evidence of significant assets in the Alchemy / Anderson bankruptcy estate.  Accordingly, the case has been formally converted to "Asset" based, and all creditors are being notified.  HHSE's D. Frederick Shefte, Esq., will be appearing in Court in Wilmington, Delaware on Monday, July 25, regarding the official formation of the Creditor's Committee.  For a variety of reasons, this is a very good development.

As of Friday morning (July 15), twelve Supplier Labels / Studios have requested that HHSE / MEDALLION represent their interests (via Proxy) at the July 25, 341 Hearing.

Onward....



Wednesday, July 13, 2016

Update on ALCHEMY and other Corporate Matters

Greetings HHSE Friends & Followers - the last week has continued with its frenetic pace of sales, corporate, production and general operational issues.  In specific response to shareholder questions, we are providing updates on the specific items listed below.

1).  ALCHEMY - At the request of Hannover House and Medallion Releasing -- and following our assistance with the Alchemy Bankruptcy Trustee in identifying millions-of-dollars in assets -- we have successfully assisted with the conversion of the Alchemy Bankruptcy from a Chapter 7 no-asset liquidation, into a significant "asset-based" case.  There will be a 341 Hearing on July 25 at the bankruptcy court in Wilmington, Delaware, at which time it is widely anticipated among key supplier / creditors that HHSE's own Fred Shefte, Esq., will be designated as the Chairman of the Official Creditor's Committee in this case.

This is a great development for Hannover House / Medallion and all supplier studios.  What was erroneously listed as a "no asset" case (for expeditious closure of the case - as was hoped-for by Alchemy insiders), has been reopened into an asset and forensics accounting case. The Alchemy assets are significant: a film library with over 1,000 titles (of which 250 are considered "high-profile catalog" hits), and more than 50 new and unreleased titles. Alchemy also has the valuable "vendor" access to Walmart and Target, and the forensic recovery of preferential payments made to insiders within the last year could result in additional, significant proceeds. Hannover House / Medallion have documented sales and inventory values of $754,000, which places us within the top 10% of creditors.

It is our belief that a substantial amount of recovery is possible... and simultaneously, HHSE / Medallion are being solicited to take-over distribution duties for many of the Supplier studios formerly represented by Alchemy.  So for HHSE / Medallion and the key Supplier studios, there appears to be a golden-lining to the Alchemy storm clouds. More news will be posted as authorization is obtained.

PLEASE NOTE: There are several parallel paths being pursued by HHSE / MEDALLION at present involving Alchemy matters - and an exciting variety of new opportunities that have presented themselves to HHSE / MEDALLION as a result of the Alchemy implosion. Any one of these opportunities / ventures could significantly change the stature and revenues of HHSE / MEDALLION.  Accordingly, Management has been focused and occupied for the past week on the pursuit of these significant opportunities.

2).  FRIVOLOUS LITIGATION - Although HHSE has not been 'served' the lawsuit posted by an event photographer in Washington, D.C., we are aware of this matter through internet postings that a lawsuit was filed.  A brief history of the matter: at the request of the Algerian producers, HHSE assumed the responsibility to pay an event photographer a fee of $1,000 for snapping photos of the Algerian director and some cast members last July 31.  The bill was not paid, despite our promise (and intention) to pay the guy the $1,000 work-for-hire fee as agreed.  Frankly, with our Q4 / Q1 cash flow so negatively impacted by Alchemy non-payments, the priority for paying for photos that were never needed anyway, was falling as a less crucial item than the timely fulfillment of new release orders for ongoing operations. So eventually, the photographer grew impatient and filed a lawsuit. We don't blame the guy.  He shot some party photos, and he deserves to be paid (whether or not we had any legitimate use for photos shot in a theatre lobby).  However, we are told that he invented an arbitrary and absurd amount, rather than suing for the pre-agreed fee of $1,000. Our counsel informs us that you cannot invent a claim for "a hundred-kagillion dollars in damages" if the agreement for services called for a payment of only $1,000. Such an action is considered an abuse-of-process, and subjects the Plaintiff to paying sanctions and legal fees to HHSE.  So, if we're ever served this lawsuit, our attorney will file a motion with the court while simultaneously "tendering" the $1,000 fee. If the Plaintiff accepts the payment, we would be willing to drop our counter claim for sanctions and legal fees.

3).  REVELATIONS MOVIE - Major New Release for WALMART.  Typically, HHSE / MEDALLION has tried to avoid new release titles during November and December - as retail shelf space is usually dominated by summer blockbusters.  However, the holiday-set / pro-Christian drama "REVELATIONS" made sense to be timed for Holiday availability.  Accordingly, we are pleased that this will be a featured new release for Walmart during the crucial Q4 and Black Friday sales seasons.

https://www.youtube.com/watch?v=ov190W2tQQo

4).  NEW RELEASE ACTIVITY - A lot is on the table, including 6 new theatrical releases (not yet announced). However, now that HHSE / MEDALLION are comfortably aligned with solid whoelsale partners, we're able to ramp-back-up the physical video release schedule.  New Releases for JANUARY (DVD / BLURAY) include IDENTITY CRISIS, DINOSAURS OF THE JURASSIC, THE ALGERIAN, BONOBOS: BACK TO THE WILD, and the Spanish Titles FILOSOFIA NATURAL DEL AMOR and A TIRO DE PIEDRA.

New Releases for FEBRUARY (DVD / BLURAY) include THE HOMELESS BILLIONAIRE, SPICES OF LIBERTY, and the Spanish ANTONIO AGUILAR FESTIVAL.





Tuesday, July 5, 2016

BOOM - BOOM! "Dark Awakening" and "Brutal Colors" now on shelves at Walmart Nationwide!

TODAY IS STREET DATE for two new release DVD's from Hannover House:  DARK AWAKENING and BRUTAL COLORS!!



FOR IMMEDIATE RELEASE
Tuesday, July 5, 2016

WALMART ROLLS OUT DVD’S OF ACCLAIMED THRILLER “DARK AWAKENING”

(Bentonville, AR) Horror movie fans have hit the jackpot with today’s release onto DVD of the acclaimed horror-thriller, “Dark Awakening” from director Dean C. Jones. This suspenseful and critically praised theatrical release is now available on DVD at Walmart locations nationwide, announced distributor Hannover House, Inc. (OTC: HHSE) in a press announcement from Bentonville, Arkansas.  The videos carry a suggested retail price of $14.95, but will be available for a limited time at Walmart for only $9.96.

“'Dark Awakening' is one of the best, independent horror films to be released in the past decade,” said Eric Parkinson, C.E.O. of Hannover House, an independent film distribution company with more than 400 titles in its library.  “Director Dean Jones has added a terrifying twist to the haunted-house premise, with a powerful, surprise ending that left audiences jumping and screaming.  We think that this title will become a home video classic in the vein of ‘Halloween’ and ‘Amityville Horror.’  It’s definitely worth seeing and owning for future views,” he concluded.

The film stars action and horror film legend Lance Henriksen (“Terminator”, “Alien”), alongside Jason Cook and Valerie Azlynn.  “Dark Awakening” opened in theatres last June, and played in more than forty cities across the USA.  Walmart Stores, Inc., is the nation’s largest retailer of DVD and BluRay videos, with a market share of more than fifty percent of all physical home video unit sales.


DARK AWAKENING
Sci-Fi / Horror
DIRECTOR:  Dean C. Jones
PRODUCERS:  Dean Jones, Starr Jones, Liliana Kligman-Roitman, Albert T. Dickerson
PRINCIPAL CAST:  Lance Henriksen, Valerie Azlynn, Jason Cook
STUDIO:  Hannover House
INITIAL THEATRICAL RELEASE DATE:  June 26, 2015
HOME VIDEO RELEASE DATE:  Tuesday, July 5, 2016
TECH DETAILS:  91 Minutes, Dolby Suround, 1:1.85 aspect ratio
MPAA RATING:  Not Rated (PG-13 equivalent)
TRAILER LINK:  https://www.youtube.com/watch?v=vwPg2R8jNGU

DARK AWAKENING” – Legendary visual effects master Dean C. Jones (“X-Men: First Class”, “Pirates of the Caribbean”, “Star Trek: The Next Generation”) directs this intense, supernatural thriller about a small town with a very dark past.  Principal cast include Lance Henriksen (“Aliens”, “Terminator”), Valerie Azlynn (“Tropic Thunder”, “Poseidon”) and Jason Cook (“General Hospital”, “Days of our Lives”).  “Dark Awakening” was produced by Dean Jones, Albert T. Dickerson, Starr Jones, Liliana Kligman-Roitman, Phil Smoot and Michelle Weisler.

With the death of his mother, and a frustrating career as the city's District attorney James Thomas decides to move his wife (Jennifer) and seven year old son (Danny) to the families estate home in rural Cedar Rock Falls, North Carolina. Shortly after the transition Jennifer and Danny begin to experience strange paranormal occurrences. The house is haunted by the ghostly apparitions of nine dead children. Seeking answers and solace for the nightmare they are going through Jennifer approaches the local parish priest (Father Donovan) .Unfortunately the mystery deepens as she discovers that he holds the darkest secret of all. He is cognizant of the origins of the dead children, the reason for their resurrection, and how and why it ties to her beloved husband James.
- Starring: Lance Henriksen, Jason Cook, Valerie Azlynn,Willian Pifer, Lauren Sesselmann.



ERIC PARKINSON, FRED SHEFTE and HANNOVERHOUSE, In Association With  CAFE OSCURO FILMS
AND ATLANTIC & PACIFIC PICTURES PRESENT A DEAN C. JONES FILM “DARK AWAKENING”
LANCE HENRIKSEN  JASON COOK AND VALERIE AZLYNN  INTRODUCING WILLIAM PIFER AND LAUREN SESSELMANN CASTING DIRECTOR DONALD  PEMBRICK AND DEAN E. FRONK  DIRECTOR OF PHOTOGRAPHY DAVID BRIDGES
MUSIC BY TERRY HUUD AND MICHAEL HUEY  EDITED BY SHERWOOD JONES
EXECUTIVE PRODUCERS LILIANA KLIGMAN-ROITMAN AND MICHELE WEISLER
PRODUCED BY WM. STARR JONES  DEAN C. JONES  ALBERT DICKERSON III  WRITTEN AND DIRECTED BY DEAN C. JONES

© 2013 NEVERMORE FILMS, LLC

Additional Updates & Responses to Shareholder Inquiries


Greetings HHSE Friends & Followers - I hope that everyone had a relaxing and invigorating holiday weekend.  For those of you that went out to see some theatrical releases, this was an incredibly strong (3-day) weekend for the USA Box Office - not only in terms of ticket sales, but also with respect to the quality of films available.  While some analysts are criticizing the opening performances for "TARZAN" and "BFG" - both films are terrific and are well positioned to build into significant box office hits. The family film "FINDING DORY" has topped $371-mm (!!), and as expected, both the "PURGE" and "INDEPENDENCE DAY" sequels delivered for their core audiences.

Fortunately, HHSE did not have any titles in brawl at theatres this past weekend.  The amount of money spent by the major studios to lock their locations made it economically unattractive for anything less than a tent-pole level (super-wide) theatrical opening.  Still, for movie goers, this past weekend was a great time to visit the local multiplexes!

Moving on to shareholder emails and inquiries, we've had more questions regarding ALCHEMY, VODWIZ, LIBRARY and FORM 10 / AUDIT issues, which we will address below.


1).  WHAT IS THE TOTAL "EXPOSURE" OR LOSS THAT AN ALCHEMY BANKRUPTCY COULD IMPACT ONTO HHSE?  Good question, and one for which a precise dollar amount may not be known unless (or until) Alchemy actually files bankruptcy and is ordered by the court to accurately account to it suppliers for sales and product returns.  Based upon WALMART "Point-Of-Sale" reports (actual units paid for by consumers and therefore not subject to return to the supplier), HHSE / MEDALLION estimate that the funds owed to us and our suppliers are in the range of $750,000, covering titles sold through at Walmart and Target Stores from September (2015) through May (2016).  All of these "sales" have been withheld from HHSE filings as the Company moved to begin recognition of third-party consignment sales on a cash-basis (rather than accrual).  So there would be no "write-down" per se against revenues if Alchemy were bankrupt or otherwise never paid.  As may be surmised through trade reports, many suppliers feel that there is a viable path for payment by pursuing the well-funded Anderson Merchandisers / AN Connect.  This was the supplier that HHSE and other studios signed-up with... not Alchemy... so Anderson's "sale" of their obligations to Alchemy may not be without liability to them.  As stated previously - and as reported in public press disclosures - HHSE / Medallion are now aligned with Cinedigm for sales into Walmart and Target; however, we will not ignore our rights and remedies to pursue the collection of sales due from Alchemy / Anderson.  Over the next few days, as the Alchemy matter evolves, HHSE will update shareholders via this blog.  UPDATE: AS OF TODAY (TUESDAY, JULY 5), THE ALCHEMY WEBSITE IS REPORTING THAT THEY HAVE, INDEED, FILED FOR BANKRUPTCY.  THIS WILL ENABLE HHSE / MEDALLION TO FILE A CLAIM AND TO SEEK SETTLEMNT OF BOTH OUR INVENTORY AND OUR RECEIVABLE. 

2).  WHAT ARE THE START UP COSTS FOR GETTING VODWIZ UP AND RUNNING WITH CONTENT?  This is a complex question, because there are fixed costs and variable costs. The basic fixed costs are the formatting of each program into the proper digital formats (including mandatory closed-captioning).  This has been running approx. $400-to-$500 per title; but most of the VODWIZ supplier studios have been delivering pre-formatted elements.  Variable costs include:  how much will be expended in ads and PR to launch the venture?  How many staffers will be needed in operations, promotions and new title acquisitions?  The issues impacting such questions would require a massive executive summary to describe.  HHSE / VODWIZ have been paying these mastering and preparatory costs "as we progress" the venture.

3).  HOW MUCH MONEY WILL BE NEEDED TO PROPERLY ADVERTISE A VODWIZ LAUNCH TO BUILD CUSTOMERS / SUBSCRIBERS?  The key word in this question is "properly" which is subjective.  But VODWIZ expects to have a very visible and a solid "launch" campaign, fueled primarily through the HHSE "prepaid cable & internet advertising" ($765,000) combined with internet banner barter-clicks (with entertainment sites).  The strategy is to focus first on avid film consumers and lovers, as they are the most likely consumer of independent films (comprising over 90% of the VODWIZ product offerings).  As the site builds volume, revenues and subscribers, VODWIZ plans to follow the Netflix launch and growth model of reinvesting 10-to-15% of monthly revenues into building awareness and traffic until such time that an optimal level of revenues and traffic has been balanced.

4).  HOW MANY EMPLOYEES ARE NECESSARY TO KEEP VODWIZ RUNNING, AND WILL THEY BE HIRED BY HHSE AND EMPLOYED AT HHSE HEADQUARTERS?  While all of the "back room" functions of program streaming, technical services and billings will be handled by our third-party services provider, the "front-end" functions of acquisitions and marketing will be handled by VODWIZ management. In this respect, in short order after launching, there will be a President (GM) with middle-management help with Acquisitions, Marketing and Administration, as well as support staff.  The initial launch of VODWIZ (for the first 30-to-60-days) will not require new hires... and when new staff are added, it is anticipated that they will be paid for from the instantaneous daily cash-flow that the venture generates (as all transactions are credit / debit card or ACH-based). The venture will have the flexibility to expand / or contract / to balance with the revenue volume.  Ultimately, VODWIZ will likely NOT remained housed at the HHSE / Medallion office-&-warehouse location currently hosting all other operations.

5).  WHAT IS THE COST OF HAVING A LIBRARY VALUATION COMPLETED?  The primary factors impacting the cost of Film Library Valuation study are:  size of library, access to historical sales or reasonable "comp" titles, and planned usage of the report.  A larger library is going to take more time to evaluate;  a library with no sales history (or lots of "unreleased" titles), requires more time to establish baselines for comparisons; a company that plans to pursue bank-financing using a Film Library as an asset requires additional procedures to be followed.  With respect to HHSE, the total Film Library venture looks headed towards a completed cost of about $38,000.  

6).  WHAT IS THE COST OF A COMPLETED AUDIT?  Again, many factors impact the costs of an audit.  But $40,000 is a reasonable expenditure for a company with the number of items and variables as HHSE, and is consistent with the pricing from our auditor.

7).  HOW WILL A LIMITED CASH CRUNCH AND LACK OF STAFF (PER PRIOR BLOG) AFFECT TIME-FRAMES FOR VODWIZ AND AUDIT?  WHICH OF THESE IS THE COMPANY'S PRIORITY?  This compound questions includes several false assumptions.  So an accurate answer requires a clarification of the items contained within the question.

a).  LIMITED CASH CRUNCH - Prior blogs have referenced a combination of issues that have had a direct impact on cash flow for HHSE.  First of all, the total lack of payments from Alchemy (Anderson) since Sept. 2015 had previously created a painful dip in cash resources - primarily impacting our activities several months ago.  Next, the exciting growth in new product (DVD / BluRay) sales through Cinedigm has required an increased investment in new release manufacturing and freight costs (also creating a dip in cash resources).  But the company's ongoing expansion of theatrical release activities and revenues have - to date - satisfied most of the Company's needs, including providing for sufficient overages to enable ongoing payables management.  Yes, having the Alchemy funds would make our managerial jobs easier.  So we look forward to a resolution of that matter.  But the current and ongoing Cinedigm sales will more than offset the prior loss of a smaller (monthly) revenue component that the Company had previously enjoyed from Alchemy / Anderson.

b).  LACK OF STAFF - A prior blog lamented the loss of Caitlin McKenzie from our staff.  She accepted a better paying position with Universal, and the opportunity was too beneficial for her to reject. We wish her well, and appreciate her long-advanced notice and help with transitional activities.  Caitlin's prior job duties at HHSE have been temporarily picked-up by a combined effort from Tom Sims, Jayson Blocksidge, Betty Pendelton and Eric Parkinson - until such time that we can find a suitable, full-time replacement as Director of Sales. Caitlin was involved in preparing new titles for submission to key accounts ("Title Fact Sheets" and other data required for new releases to be evaluated by Walmart, Target, Best Buy, Netflix and Redbox - all of which have slightly different data requirements).  Caitlin was not involved in any activities relating to VODWIZ or the AUDIT.  So "Lack of Staff" is a non-issue with respect to the actual subject of the above question, which appears to be in reference to TIME-FRAMES for VODWIZ and AUDIT.

c).  TIME-FRAMES FOR VODWIZ AND AUDIT - As posted previously, a joint-announcement for the launch and operations of VODWIZ will govern the public disclosure of time-frames and other factors impacting that venture.  The ongoing activities of the Auditors is not impacted by the fluctuating level of HHSE support staff, nor the Company's cash flow (except to the extent that they might issue another invoice for additional services, in which case, payment of such would be a super - TOP - priority).  

Great Questions!  Thanks for taking the time to think about legitimate and relevant issues that actually affect the company!  We often receive absurd questions about irrelevant or inconsequential items. So to receive legitimate questions that show that someone has put forth some thoughtful analysis is most appreciated.  We are thankful for having many intelligent and insightful "longs" and we look forward to the achievement of our corporate and revenue goals in the comings days / weeks / months.