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Friday, June 30, 2017

Shareholder Q&A - Pre-Holiday Weekend Post

Good Morning HHSE Friends & Followers - and Happy Pre-Fourth-Of-July Mega Weekend!

Over the past few weeks, HHSE / Crimson managers have received a variety of emails from shareholders asking for greater specificity regarding issues of the merger, operations and strategy.  These questions have been consolidated into TEN (10) key subject lines and are briefly addressed below, following a review with counsel as to breadth of disclosure and appropriateness.

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1).  WHEN WILL THE STOCK-FOR-STOCK SWAP OCCUR - At this point, we have achieved the requirements to enable us to functionally 'do the swap" at any time (and simultaneously file the final docs with the Nevada S.O.S., and OTC Markets). There are no further regulatory obstacles impeding this final step. However, Crimson Forest is still "not fully current" with their S.E.C. reporting / filing... and we are advised that we cannot change the ticker symbol until "current reporting status" is restored. We do not want to do a stock-for-stock swap of HHSE shares into "CRIM" only to have to repeat some steps days later under the newly approved and issued ticker symbol. Plus, we feel it would be a psychological detriment to exchange robustly trading HHSE shares for Crimson stock while a "STOP" sign still exists on the current Crimson Forest Entertainment Group OTC listings page.

2).  WHAT IS THE TIMING AT THIS POINT?  HHSE / Crimson engaged a superb PCAOB auditing firm that will be submitting the review letters for 2-28-16 and 2-28-17.  This firm imposed some formatting requirements onto the workbooks and back-up for Crimson, which have been handled by a competent outside CPA firm (unaffiliated with either HHSE / Crimson or the auditing firm). Under PCAOB rules and Sarbanes-Oxley procedures, the internal control requirements rise above a consumer-level of QuickBooks and Excel formatting. So we were very excited to have this formatting step completed by a competent team of CPAs. Although our auditing firm has specifically requested that we not predict a particular "day" that they will release the report to us for inclusion in the Crimson filings, we are authorized to say that everything is on track for this to be completed "at some point during July."  FYI, July starts tomorrow, and ends in about four weeks from now.

3).  ARE THERE ANY MAJOR VENTURES READY TO "JOIN THE FOLD" FOLLOWING THE STOCK-SWAP?  Yes, several supplier issues, a major distribution venture, several mid-to-large level funding deals (including P&A Marketing, and VODWIZ), and one very significant corporate acquisition.

4).  WILL THE END-FORMULA OF SPLIT (Presently disclosed as being about 57.5% for HHSE and 42.5% for CRIMSON), STAY THE SAME?  No, during the course of the filings and various review procedures (including valuation analysis), the value of HHSE vs. Crimson has changed in HHSE's favor... so the final split will be more beneficial to HHSE shareholders.


Basement, Belle Starr, Delirium, Final Minute, Kung Fu Cowboys, Mother Goose, Shimmer, Shuck & Jive, True Freshman?

Each of these films is in various stages of development, pre-production or production. In respect of our filmmaking teams, investors and co-production partners, we feel that updates for each deserve a separate and more thorough forum than a general blog post summary.


American United In Support of our Troops, Blood Feast, Dinosaurs of the Jurassic, Extraordinary Mission, Identity Crisis, Ride United, Shockwave, Spices of Liberty, Time Matrix, Where's The Dragon?

Blood Feast, Time Matrix and Where's the Dragon are all upcoming summer theatricals.  The other titles are slotted already into our Q3 / Q4 release schedule for home video / VOD.  Each merits their individual New Release announcement.


Yes, four high-profile, very commercial titles have been acquired for 2017 theatrical release, each meriting separate announcements and fanfare.  Each of these titles will also be handled by HHSE / Crimson for home video, VOD, SVOD and Television release (for 2018). Additionally, there are three "specialty" titles that were acquired in Cannes that have not yet been announced - but are expected to be released theatrically in Q4 or Q1 2018.

8).  WITH TCA FULLY DISMISSED, ARE THERE ANY OTHER "MATERIAL" LAWSUITS IMPACTING THE COMPANY?   While there are still some clean-up issues regarding the resolution settlements with Andersons, Bedrock, JSJ and a few supplier-creditors, Management does not see any of the remaining issues as falling outside of managerial control or the ordinary course of operating a business of this nature.

9).  IS THE FINANCING FOR ALL OF THE ENHANCED THEATRICAL RELEASE ACTIVITIES NOW UNDERWAY COMING FROM "CRIMSON" SOURCES OUT OF CHINA?  Not at this time.  All of the P&A for the next eight (8) significant releases under HHSE / Crimson is being provided by either the producer clients directly, or through a marketing-fund venture (secured against title-specific revenues). The financing associates and affiliates of Crimson Forest in China are primarily interested in title-specific pre-sales of distribution rights into China, which provides a financing mechanism for the films to be produced and distributed by HHSE / Crimson in all other worldwide territories.

10).  BOTH OF THE CORPORATE WEBSITES FOR HHSE AND CRIMSON ARE VERY INCOMPLETE AND OUTDATED AT THIS POINT...WHEN WILL HHSE AND CRIMSON HAVE FULLY UP-TO-DATE WEBSITES, DESCRIBING THE COMPANIES, THE STAFF, THE RELEASES?  We expect that during July, both the Hannover House.com and CFF.TV sites will be fully updated, and "cross-connected" so that visitors to EITHER site will have access to both catalogs and content.