Greetings HHSE Friends - Happy Sunday to you. First of all, let us apologize for erroneously uploading a draft-in-progress of the Q2 report late Friday evening. The file extension names were identical (except for the final time-stamp), and an incomplete draft of the Q2 report was posted on the OTC site for all of Saturday and most of Sunday. Fortunately, the correct version (which we confirmed WAS received by the S.E.C. Edgar Database, for publication tomorrow), was also published onto the OTC Markets this afternoon. So with the markets closed during the time that the incomplete draft was posted, no one would have been damaged by trades by relying upon the wrong draft. Apologies, it was an innocent mistake.
Next, let us address some of the key issues that the Q2 filings present.
1). INTERNATIONAL SALES - HHSE has been advised that we should defer posting revenues from international presales for projects that are:
a). Not 100% funded; and,
b). Not already in production;
Contrary to some chat board comments, having a "completion bond" is not a requirement for posting revenues for productions (however, in most cases, a completion bond is a requirement for traditional bank financing of productions). Accordingly, we are NOT recognizing any new international presale activities, and only reporting co-production revenues for two, fully funded (and "in production" features). The biggest title in queue to impact our revenues is "MOTHER GOOSE" which we hope will be fully funded in the next few months.
2). VODWIZ Revenues - HHSE is charging our producer-clients for staff time and materials relating to creating metadata files and master dubs for each title. The revenues in Q2 from VODwiz are related to this service, and not to consumer transactions. The consumer campaign is being launched at the end of August, so "consumer" revenues are expected to show for our Q3 report (period ending Sept. 30, 2014).
3). CORE VIDEO ACTIVITIES - Our Q2 for direct-to-video was down in Q2, which can be attributed entirely to street date delays on "SPRING BREAK MURDERS" and "POSSESSION: THE INGLODA WITHIN." These are good titles for Walmart, but "not strong enough" to demand shelf space when HHSE requests. In these cases, these two titles are in release at Walmart Canada, but have been delayed for placement into Walmart USA. We're very excited about the distribution pipeline and infrastructure that our new VP of Sales, Tom Sims is implementing. However, he works several months "in advance," and we just wrapped DECEMBER placements two weeks ago, and are now working on January. With secondary titles, it's essential to give the major accounts plenty of time to find shelf placements... so we are supporting Tom's efforts in getting HHSE multiple new release titles into the marketplace.
WHAT'S ON OUR PLATES THIS WEEK?
* Big push to finalize the marketing buy and support campaigns with Redbull for ON ANY SUNDAY: THE FINAL CHAPTER (opens Nov. 7th on about 261 screens from HHSE).
* Big push to get studio supply partners to ship master elements for VODwiz titles to Nanotech for uploading.
* Big push to add a "business-to-business" feature on the HHSE website so that Tom Sim's key accounts can access artwork, trailers, listing data and more directly from our site.
* Helping TXSTAR with the star casting on "BRIDGE TO REDEMPTION" - a fully funded thriller that we plan to formally announced to the international market at the AFM / IFTA market in Santa Monica in November.
Will blog throughout the week... !!