Friday (Aug. 31) Updates on HHSE / MyFlix & Other Activities

Greetings HHSE Friends & Followers - Here's a super quick recap on some key items of interest to shareholders (based on emails to management):

1).    TIMING OF AUDIT COMPLETION - At the request of our auditors, we have been told that forecasting a specific date for the posting of the Form 10 Registration filing would likely result in a "comment" of concern from the S.E.C.  Why?  Because publicly stating a specific date creates stock trading advantages for those buying in anticipation of the date, or those that work against the best interests of the Company by hoping that an announced date is not met.  That said, we can state that the process of audit continues in motion, and that the additional steps of XBRL formatting for EDGAR compatible upload are also in motion.

2).    RELEASE UPDATES - Well, it's technically TWO WEEKS before the Sept. 14 opening in theatres of "THE RIOT ACT."  But in the film distribution business, this means that we are crazily handling umpteen issues (from masters, to Ads, to P.R., to talent travel for our premieres, etc...). Busy times... and two weeks after that?  DOGPATCH U.S.A. opens in theatres.  Also consuming marketing and prep time are the Q4 home video releases for various projects / clients.  Lots on our plates!

3).    LEGAL UPDATES - We understand that the legal strategies being pursued by HHSE regarding disputed matters can be unclear at times to shareholders. The short answer is that we cannot publicly state our various actions in matters without inadvertently alerting opposing counsel. Suffice it to say that our strategies in the matters listed below are on target for resolution to HHSE's favor:

3a).  Crimson Forest - There is action by HHSE to pursue claims against Crimson Forest for their unmotivated withdrawal from the corporate merger of 2017. In a related matter, the Crimson Forest-JSJ court appearance for Arkansas today was withdrawn by JSJ.

3b).  JSJ - The Company has a solid strategy to stop the JSJ foreign judgment activities and prevail in the matter... which is in motion.

3c).  BEDROCK - The Company also has a solid strategy to stop the Bedrock foreign judgment activities and prevail in the matter... which is in motion.

The specifics of the Company's legal strategies in these three matters will be revealed once filed with the appropriate courts of jurisdiction.

4).   MYFLIX - It would take hours to provide an update on everything with MyFlix...hours which HHSE management cannot allocate at this time (today).  Likely, a more detailed update will be posted on Labor Day, which tends to be a less busy day for phone calls to the office and other distractions.  UPDATE - Tuesday, Sept. 4 - WE ARE AWAITING "APPROVAL" FROM OUR WEB DESIGN VENDOR REGARDING THE MYFLIX UPDATE SENT TO THEM ON SATURDAY (INTENDED AS AN UPDATE TO SHAREHOLDERS).  APPARENTLY, THEIR FIRM RECOGNIZES HOLIDAYS AND WEEKENDS (!!!), AS THEY SAID THAT THEY WILL RESPOND THIS AFTERNOON. 

HAVE A GREAT WEEKEND!

Cardboard Character Cut-Outs for THE RIOT ACT Theater Lobby Standees come in both "REGULAR" and "HOBBIT" sizes!!

OTC Markets Update re: HHSE / Q2

Good Morning HHSE Friends & Followers - Despite renewing our OTC Markets subscription in a timely manner, our "account access" needed for the posting of the Q2 report still has not been restored. We have been working with the OTC Markets staff on this for the past week, providing them with tracking information to help locate the wire-transfer payment and apply it to our issuer account. They are promising restoration by the end of the day.

Meanwhile, we are making terrific progress on a wide range of fronts... from the MyFlix build-up, to theatrical release activities for THE RIOT ACT and DOGPATCH. Still in the "waiting cycle" with respect to any additional comments or issues for our audit (and how that impacts the Form 10 registration). But while we are waiting, we are dancing with delight at the first ten days of sales success through SONY PICTURES HOME ENTERTAINMENT with the release of HHSE's "BONOBOS: BACK TO THE WILD."  The title continues in its second week to be a top performing Documentary feature on most major platforms... and with respect to physical DVD units placed at retail, the title has enjoyed about 27% sell-thru in the first 10-days.  We feel this bodes well for upcoming promotions, including a HOLIDAY timed release of GETTING GRACE (and a holiday-timed "Budget Bin" promotion for BATTLECREEK with a new package campaign), among other titles and activities.

LOVED the terrific write-up that FANDANGO created in support of "THE RIOT ACT" - and we obtained their permission to use this as the official Press Kit Synopsis!

https://www.fandango.com/the-riot-act-213444/movie-overview

ONWARD!

Pre-Launch Status & General Updates for the MYFLIX Streaming Venture

Good Morning HHSE Friends & Followers - On the "content" side of the venture, upload activities continue on the first 1,200 titles for the MyFlix site, and we anticipate moving into the next set of masters (2,000+ titles) by the end of this week. Regarding "marketing" - HHSE is in pre-production of two MyFlix videos that explain and promote the service. Filming is expected to occur within the next three weeks. Other marketing efforts include a seven (7) faceted campaign that also include traditional advertising (both paid and barter), social media, influencers / taste-makers, mainstream publicity, targeted P.R. and national media.

As some longs will recall, HHSE pursued two previous paths for the launch of the streaming site. In 2014, extensive research was made for the "VODWIZ" site (prior name) to be hosted in the Arkansas Technology Center through a bank of high-speed computers attached to the internet via fiber optics and backed-up with remote stations in geographically diverse locations. The costs for this operational concept proved prohibitive... so the company looked at a "hosting" arrangement with a third-party supplier (Nanotech) that over a protracted two-year time-span simply did not prove to be a viable fit. Ultimately, the opportunity to be hosted through Amazon - utilizing their vast digital network and infrastructure - revitalized the venture's viability and dramatically reduced the MyFlix start-up costs.  

But it's still very costly to acquire the rights and upload film masters - to build a consumer friendly site - and most importantly, to PROMOTE the site so that consumer traffic drives the revenue streams. 

This is why HHSE has entered into an off-balance sheet financing agreement for MyFlix: a structure which provides the funding for the venture's creation and launch, while preserving HHSE's right to earn full ownership. Similar to a home mortgage, HHSE owns MyFlix, subject to the retirement of the note (which balance is to be repaid to the lenders from the share of incoming revenues otherwise designated for HHSE). On the HHSE Registration Statement, disclosures and balance sheet, the loan proceeds paid towards the creation and launch of MyFlix will be recognized as a HHSE loan payable, secured for the benefit of the lenders by the assignment of incoming revenues from MyFlix.

HHSE Management felt that this form of traditional lending structure offered a cleaner financing mechanism than more complex fundings that involved stock issuances (which stock-based financing structures have proven to be unpopular with shareholders).  The concept of having the MyFlix venture "pay for itself" and through cash-flow made sense for a variety of reasons which will be further detailed in the Registration Statement.  

HHSE's enthusiasm for the viability of this new MyFlix division grows with each day of progress in the build-up and launch activities... and we feel vindicated to have learnt from prior missteps and taken this wise course toward success. 

Stay Tuned!

SONY picks Winning KEY ART for "SLEEPER CELL: THE ALGERIAN"

Happy Friday to our HHSE Friends - We are pleased to present the FINAL DVD art as selected by the SONY Team for our December 4th Home Video and V.O.D. Release of "SLEEPER CELL: THE ALGERIAN."  Hey, it wouldn't be the holidays without a good terrorism movie, right?!  Sort of in the "Die Hard" tradition...

ONWARD!

HHSE Presents: AMERICA UNITED: In Support of our Troops

Greetings to All - Well, with this being an ELECTION YEAR, the one issue that most members of the two main political parties can agree on is that we all SUPPORT OUR TROOPS!  Accordingly, HHSE is pleased to present the ABC-TV Special Concert:  "America United: In Support of our Troops" - Featuring JANET JACKSON, ZZ TOP, SNOOP DOGG and many more top artists and comedians.

So, how do you create a DVD package for such a star-studded collection?  If you show an image of ONE artist, but not ALL, then is that an unintended disrespect?  

But how could you show ALL on a DVD box art image that's barely 7-inches tall X 5-inches wide?  Perhaps the best solution is a CONCEPT CAMPAIGN that concentrates on the TROOPS as opposed to the individual performers?  Here are some art ideas that HHSE put together in-house that we will present to ABC and the program producers for feedback:

High-Traffic APPLE TRAILERS Site Features THE RIOT ACT Trailer

HHSE is pleased to announce that APPLE  TRAILERS has selected our RIOT ACT Trailer for premium placement and promotions effective Tuesday, August 7.  This is good timing in support of the film's Sept. 14 theatrical launch.  Check it out!

https://trailers.apple.com/trailers/independent/the-riot-act/

General HHSE / MYFLIX Updates - Monday, August 6, 2018

Greetings HHSE & MyFlix FANS & FOLLOWERS - 

UPDATE ON LONG-TERM CORPORATE STRATEGY - HHSE management has been contacted by several "long" shareholders with the inquiry regarding LONG-TERM STRATEGY for both the core business (traditional film distribution) and the NEW business (digital streaming / MyFlix). As the market for lower-end films continues to diminish (i.e., lower-budgeted films without notable star casts), the merits of the HHSE plan to pursue "event" level features becomes more obvious. The sort of films that are driving theatrical box office have the same elements that are driving home video, streaming, television and international sales. Movies like "MOTHER GOOSE: JOURNEY TO UTOPIA" and "THE LEGEND OF BELLE STARR" are event-level theatrical features with major star casts.  HHSE has known this for years, and struggled to secure the multi-millions of dollars required to bring each of these films to the screen. The challenges have been daunting, including:

a).  Difficulties in obtaining "bankable" foreign presales (i.e., a prior contract with Odyssey Pictures for a $2-mm Minimum Guarantee against foreign royalties for "Mother Goose" met with banking resistance to the point of futility).

b).  Skepticism Regarding likely Production Values - Until HHSE could show the production quality obtainable in Arkansas for amounts that by film industry standards were considered "small," the company met with presale and private investor skepticism that a quality film could be produced for the amounts that HHSE was arranging. Now, with films like "THE RIOT ACT" as available evidence - and the boom of production in Arkansas due to State incentives and low-cost crews and accommodations - the HHSE budgets for "Mother Goose" and "Belle Starr" are no longer being viewed as "too low to be viable" but as "too reasonable to not pursue." 

c).  General Corporate Status - Without being a fully reporting company, and plagued with nuisance lawsuits from the "old" business model for HHSE, both private investors and banks have taken pause at times when HHSE is presented as the distributor for these locomotive, windfall-generating event pictures. The solution to these concerns includes the current registration filing and uplist, a continued elimination of nuisance litigation and balance sheet debts, and a series of significant distribution partnerships from theatrical to international.

It is HHSE's belief that ONE title like "MOTHER GOOSE: JOURNEY TO UTOPIA" is capable of generating over $40-mm in gross revenues... or more than TEN TIMES what HHSE generates in a 10-Year Period with the smaller titles of the prior business model. For these reasons - the long-term goal of major features as the locomotives will drive the core distribution business... while the exciting new venture of MyFlix streaming will be the tail that wagged the dog as a complementary venture. 

COMPLIANCE & AUDIT UPDATES - Progress continues to be made in the audit compliance issues and general status of the Form 10 Registration. Q2, 2018 filing will be made on or before the August 14 OTC Markets Guidelines (a filing which was held from prior release in order to conform as much as possible to current status news and audit adjustments).

MYFLIX - On-boarding of titles for this impressive streaming site continues, while marketing & P.R. efforts for the upcoming launch  consume the majority of management focus. The company's trademark filing was approved, which was an important step towards empowering HHSE attorneys to halt any "squatters" that are attempting to utilize the MyFlix brand name (we are aware of two current attempts that will be pursued for halting). An outside firm has been engaged for the creation and placement of the MyFlix APP (onto all major platforms and hardware devices)... and a website compliance meeting is scheduled for late August in order to test the functionality of the MyFlix operational infrastructure. At this point, a public launch to consumers in mid-to-late September is looking more realistic. It's understandable (now) why the Disney streaming site allowed themselves 18-months of development (they launch in March, 2019). 

LEGAL ISSUES - Responsive filings have been made in the Crimson Forest matter; at the recommendation of counsel, HHSE has been advised to not elaborate on the company's legal strategy on this publicly-accessible blog. 
Regarding Origin Films, the Motion to Dismiss was rejected, so this matter will proceed to trial at some time over the next two weeks. Based upon the contracts and math, HHSE believes that a reasonable review of the accounting reports will result in another victory for HHSE: an adjudication based solely on reality. HHSE has prevailed in the past three matters in which producers chose to ignore the terms of the agreements, and instead sued for "fictional" amounts they incorrectly claimed were owed. As stated previously in this blog, the long-term solution for HHSE to avoid this sort of baseless and frivolous action in the future is to avoid dealing with inexperienced producers and low-end programming. 

NEW THEATRICAL UPDATES - Materials preparation and marketing support are underway for TWO theatrical releases coming in September.  On Sept. 14, THE RIOT ACT will open in approx. 10 theatres in Arkansas and 10 theaters in Top 10 DMA markets... each theatre will have focused marketing support, including lobby standees.  If the film's opening weekend results in holdovers, then a plan to expand to additional markets will be immediately implements.  On Sept. 28, DOGPATCH USA will open in Arkansas theatres, along with NY and LA exclusives. This documentary feature tells the story of the now-defunct theme park which was based on characters from the Lil' Abner comic strip by Al Capp.

OPPORTUNITIES IN THE ARKANSAS PRODUCTION BOOM? - As N.W. Arkansas businesses enjoy the $70+ million in production funds currently being spent by HBO on Season 3 of "True Detective," the availability of experienced crews has grown significantly - while the supply of cinema production equipment has been squeezed out. There is talk of additional HBO funded productions. But regardless, with two smaller-budgeted features in the works for HHSE - and two "event level" features being pursued - HHSE is beginning to investigate the opportunity to allocate some portion of the current off-balance sheet production funding to build-up production equipment inventory and to possibly enjoy third-party rentals when such gear is not in use. This concept is still in the research stage, but appears to make sense based on the lucrative State of Arkansas incentives, the current commitments for funding of two new features and the prospective production of the two "event" features.