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Friday, January 9, 2015

Friday Updates

Good morning HHSE friends and followers - here are a few updates of issues that Shareholders have asked about in the past day or two, presented here in no specific order:

1).  CREDIT LINE - Agreements with lenders for three separate components of specific financing have been completed.  One component is for a film licensing loan, secured against title specific receivables.  A Second component is a blanket accounts receivable loan secured against new releases not previously covered by prior title specific security interests.  The Third and final component is a theatrical services venture which provides operating overhead for the company in exchange for preferential fee structures and recoupment positioning on specific (upcoming / not-yet-announced) theatrical titles.  As stated previously, details of these funding ventures are included in the Form 10 registration filing.

2).  PRIORITY PROJECTS - Over the past few months, HHSE managers have been extraordinarily busy with a long list of projects - any one of which arguably could be considered a "priority" and "full-time" task. Ventures that have taken-up management time over the prior few months include:

a).  Theatrical Release of "ON ANY SUNDAY" - obtaining, and holding, theatre screens for a motorsports documentary around Thanksgiving proved quite challenging and time-consuming;

b).  Preparations for 26 Video Releases - the Q1 - through May 2015 video schedule required the mastering, packaging, announcements, solicitation and fulfillment of more video releases than the Company released in the prior two calendar years;

c).  Form 10 Registration & Audits - The drafting and review of this voluminous registration statement was a daunting and time-consuming task.  The level of detail, disclosure and disclaimers required far exceeds OTC market drafting requirements, requiring multiple drafts and redrafts.  Fortunately, this is a one-time event, creating a mega registration for a 20+ year operating company.

d).  Pursuit and Closing of Credit & Funding Ventures - The new release activities required substantial out-of-pocket costs for preparation.  In order to maintain the new pace being established, the Company sought out the various credit funding opportunities as described above.  Again, the volume of paperwork required for each funding venture was significant - and the time required was substantial.

e).  Production & Pre-Productions for Locomotive Titles - With five announced production projects in various stages of pre-production, production or post-production, time and energy have also been required to maintain this momentum.

3).  NEXT-UP PROJECTS - With the heaviest workload for the January DVD/BluRay shipments now underway - and the Form 10 document completed - the Company priorities can now be shifted back to:  a). The VODWIZ launch; b). The Spring and Summer Theatricals;  c). The Film Production Slate; and d).  Strategic growth through continued expansion of the Company's core business.

The past few months have been manic... the workload at a frantic pace, and frankly, too much for too few to handle sustainably.  The cash flow from the current (record!) sales of core video products will enable HHSE to seek a few, top-shelf managers to handle divisional activities that require full-time focus.  The sales results that Tom Sims and his sales support staff have begun to generate is proof that competent managers handling VODWIZ, Productions, Corporate Governance and Theatrical are each merited and are each likely to elevate the Company to a new level of revenues and efficiencies.

Deadlines - even self-imposed and voluntary ones - should not be missed (or, perhaps, not announced); but even the world's most competent managers are still limited to functioning within a 24-hour day, and as such, even the best are limited in their ability to handle everything under the sun on their own or with a limited staff.

HHSE managers acknowledge that many of our shareholders are frustrated, angry and impatient with respect to the missed date goals in filing the Form 10 registration.  HHSE clearly missed-the-mark on how time-consuming and complex that project would prove to be - especially in the midst of all of the other time-consuming and complex projects that have been described above (but which have contributed to re-positioning the company for a great future).  While HHSE managers cannot predict the future price of the stock, we can predict and state that the actual activities of the Company are moving in a positively upward trajectory.  Each of the corporate governance goals set forth by the Company will be fulfilled, and we hope that the stock price will follow in the logical ascension with the current growth in revenues.

Have a great weekend... meanwhile, here's "teaser art" on a few of the already announced limited-release theatrical titles for this Spring (home videos in Summer / Fall 2015).