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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.


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.