HHSE "Current" Status at OTC & Additional Clarifications

Greetings HHSE Friends - many shareholders have expressed frustration at the prolonged delay in getting the "Yield" sign removed from the HHSE OTC Markets page, even though the company has complied with the new disclosure formatting process. We were told by OTC Markets personnel yesterday that HHSE had forfeited our priority review status for 12-31-2020 due to having TWO of our prior 12-31-2020 reports reviewed and rejected (the first for being in the prior format, and the second for listing information not requested). We refiled the 12-31-2020 OTC annual report (and kept it limited to the specific items that they feel are worth reporting); yet, two weeks later we're still listed as "Yield."  The response from OTC Markets yesterday was to accelerate and file the Q1 results ASAP, and that this action will get HHSE back to the top of the compliance review list.  Accordingly, we are completing this filing now - and hope to post it tonight.

There are additional issues of inquiry and concern from Shareholders over the past few days, which we will briefly address below:

1).  LEWIN LAWSUIT - Shareholders may remember that the investor in the movie "Dancin' It's On" filed a lawsuit against Hannover House (and officers), despite having no agreement with the company or officers (the company only has an agreement with the producer / licensor of the movie). In any event, despite hiring NY counsel (Michael Drobenare) to move for dismissal in the New York courts, we were surprised to find out months later that attorney Drobenare actually moved to "strike" our answers (without prior approval or notification). The result was that the company and officers ended up on the wrong side of a default judgment from a party with whom no contract or agreement existed. Fast-forward to April 2021, and we find that a local collection agent / attorney in Arkansas is now rattling-the-sword to attempt enforcement of this foreign (NY) default.  Accordingly, we have now engaged Arkansas counsel to move to set-aside the judgment / stay enforcement, and coordinate in moving to strike the New York Judgment. Due to the facts being on HHSE's side (i.e., no agreement or contract) - and strengthened by the Arkansas limitation on the enforcement of a sister-state default judgment - we feel confident that the outcome will be in HHSE's favor.

2).  LISA HIGGINS, CPA - In 2019, Fred Shefte met with Lisa Lashley Higgins about having her tax firm prepare and file the HHSE consolidated 1120 Federal Tax Returns for 2018 (and later, added for 2019 and 2020). Lisa agreed to accept HHSE as a tax client. However, she suggested that these tax filings (even though already late), should be delayed until AFTER the PCAOB auditing firm completes the F10 reviews for HHSE. Lisa correctly predicted that some items and aspects of the HHSE accounting would need revision to conform to GAAP and Sarbanes-Oxley requirements, and that filing cash-basis tax returns that might not later conform with the audited reports could create an issue for both the IRS and the Securities and Exchange Commission.  Accordingly, despite Lisa's willingness to handle the company's tax returns, she has not yet performed this service as we are still making formatting changes to the worksheets provided to the F10 auditors.  Due to previous attempts by "HHSE Critics" (aka Stock Short Sellers / Bashers), to sabotage and otherwise interfere with the previous PCAOB auditing firms that HHSE engaged, the disclosure of the current PCAOB auditing firm has been intentionally delayed until the maximum possible date - to occur as close as possible to the F10 filing. 

3).  HANNOVER HOUSE FILM & TELEVISION LIBRARY - Although it seems self-evident to anyone with knowledge of the film industry, the HHSE Film & Television Library is NOT a giant building full of DVDs and is NOT an asset which can be sold or otherwise liquidated in order to achieve its valuation. A film library is the projected value that the items being handled by a company should ultimately receive over the length of each title's agreement with that company.  It's a projection that assumes current market sales patterns and projects these out over time to reach the "ultimate" valuation. In the case of the HHSE film library, the valuation report is now stale (it's over 10-years old), and there has been a paradigm shift during that time wherein the tiny sums predicted for Digital Streaming have offset (and in some instances) even surpassed the prior "huge" amounts listed for projected DVD and BluRay sales (which revenue streams are now insignificant). Additionally, and as is almost always the requirement for indie producers placing a title with an indie distributor, the rights conveyed to HHSE terminate if HHSE ceases to operate, if HHSE attempts to "sell" the agency rights granted from each supplier, or if "key man" Eric Parkinson leaves the company for any reason. These conditions protect the producers / owners of the titles from the possibility that an adversarial creditor might try to force a sale of the HHSE agency rights... or if the company ceases to operate... or if Eric Parkinson is abducted by aliens and there's only a collections agent remaining at HHSE to try to market the producer's asset over the next 10-years.  The company DOES need a new and updated Film & Television Library Report.  We haven't done it yet due to the cost ($40,000); however, we DO plan to proceed with a new and updated Library Report (from one of the top three specialty firms), with proceeds from the Company's S1 Offering.  

Most of the HHSE titles are under Sales Agency agreements, which do not convey a transference or license of the film's rights or underlying copyrights, but which authorize HHSE to make copies of the titles in the fulfillment of the HHSE duties as Sales Agency.  Again, these are standard provisions that a majority of the owners of films require before engaging a sales agency distributor. 

The LIBRARY OF CONGRESS and the U.S. COPYRIGHT OFFICE is an actual PHYSICAL SPACE holding tonnage of editions of a wide-range of media properties and documents.  A Film Industry Library is NOT a physical place or repository:  it is an informed projection of what a collection of titles is expected to generate over the length of those titles' rights to the distributor or sales agency. The value of a Film Library is predicated upon the ongoing operation of the sales agency and key personnel at that agency. 

FWIW (For What It's Worth) - HHSE has been successful in acquiring sales rights to titles due to the sales track record of CEO Eric Parkinson.  Beginning his video distribution career in 1984 with the "Summer Olympic Highlights" video (the first title in 2-years to knock the Jane Fonda Workout out of the #1 position on the Billboard Magazine Top Videos Charts), Parkinson has handled the release of over 1,350 titles to the video market. He has had eight # 1 Billboard hits and 137 titles qualifying for R.I.A.A. Gold or Platinum Selling Status.  In 1991, his re-release of "TERMINATOR" (timed for the theatrical launch of T2) generated 2.8-million unit sales to launch Hemdale Home Video;  and his bold launch into "Sell-Thru" pricing of new release titles in 1995 sold another 6-million videos combined of Little Nemo, The Magic Voyage, The Princess & The Goblin and Savage Land.  In 2004, when Walmart first launched the "$5 Budget Bin" - titles handled by Parkinson / Hannover House put the unit volume into the top ten of all Walmart DVD suppliers (and at one time, Parkinson titles were 7 of the 10 top selling titles at Walmart based on unit sales). This history for Parkinson - from 1984 through the hey days of DVD - have proven to be a powerful magnet for the company to find successful engagement as a Sales Agency / Distributor for independent films.  As the world moves into the Digital Streaming media over physical devices, the Parkinson track record has again proven to motivate MyFlix supplier studios into agreeing to join in this one-stop digital superstore concept.  

It's expensive (and frustratingly complex and time-consuming) to launch a site such as MyFlix. But watch what happens to HHSE when this new superstore is opened-for-business!

OTC Markets Compliance & Status Restoral

 Dear HHSE Friends & Followers - we have been told by the OTC Markets that our "Current" status should be restored ASAP (but may not show on the site as such until tomorrow morning), as we have conformed to the new disclosure formatting.

We have intentionally delayed the release of significant and exciting news until our "Current" status is restored... as we felt that the "Yield" sign might temper enthusiasm from potential new shareholders driven to look into HHSE as a result of our news. 

In the meantime, condolences to anyone who is selling now... and kudos to those who are getting bargain priced shares.  

UPDATE:  FRIDAY, APRIL 16, 11:55-pm CST - We have just been informed by the OTC Markets that our REVISED filing needs to be EDITED  and RE-FILED yet again, to remove "disclosure information not required under the new formatting rules." So this is happening now.  

TUESDAY MORNING UPDATE (April 20, 2021) - Obviously, the OTC Markets are taking longer than their prediction last Thursday, due in part to Hannover's "too much information" requiring the re-edit and reposting of the 12-31-2020 filings this past weekend. Our OTC Counsel (Morgan Petitti) confirmed that it appears that the most recent filing met the new format standards, and as such, she released the annual attorney compliance letter. The restoral of the "CURRENT" reporting status is essential before our newswire press release, as we would not want to draw new attention to HHSE and have interested parties look at the OTC page and see a "Yield" sign instead of Current.  We are told that it's in motion... yet, like the kids in the back seat of the car, the suspense of "are we there yet?" can be frustrating.  We will maintain a polite but steady pressure onto OTC. 

New Format & Disclosure Requirements for OTC Markets "Current" Reporting Standards

 Dear HHSE Friends - as of March 1, 2021, the OTC Market changed (once again) both the format and breadth of disclosure information required in order to maintain "current" reporting status. Unfortunately, we did not see the format changes when our 12-31-2020 report was filed on March 8... and as a result, we have now been declared deficient or otherwise outside of compliance to the new standards.

Accordingly, we will revise the 12-31-2020 Annual Filing for the OTC markets immediately and resubmit. Separately for those who has asked, the annual attorney letter to the OTC Markets is not due until April 30, 2021. Also, the need for OTC filings is rendered moot with the company's full S.E.C. registration.

Part of the new disclosure rules will include additional items which were previously disclosed, but not via the methodology the new requirements mandate. So, there will be some non-newsworthy items posted under the OTC News listings merely to comply with the newly revised reporting standards.

REGARDING THE PLANNED PRESS RELEASE FOR TODAY - We have elected to hold the press release until tomorrow. One of the executives that we have been negotiating with to join MYFLIX is still under a non-compete provision with a prior employer (an SVOD industry leader). While neither HHSE nor the individual believe that a hiring by MyFlix violates this post-employment restriction, we do not feel that the publicity or distraction of a legal battle is in the best interests of MyFlix at this time.  Tomorrow's news will address other exciting and relevant topics....  WEDNESDAY NIGHT UPDATE (midnight Central Time) -The Press Release planned for today was held for PRE-MARKET tomorrow (Thursday); however, it is now midnight Central Time, and an OTC Markets disclosure that precedes the wire services press release is still not posted onto the OTC Markets website. We will push forward for the publication of both items early Thursday morning and for expeditious processing by the OTC.  It’s frustrating that these new OTC Markets disclosure and formatting requirements are currently impeding the timely flow of information to our shareholders. Hold tight, it’s all in motion. THANKS!!

Onward....

Film Production in Oklahoma is back in full swing now - with the entire Cast & Crew of "WILDFIRE" now having received the COVID-19 Vaccination (although, unlike the above photo - and under S.A.G. safety protocols - the "WILDFIRE" team is still wearing masks and practicing social distancing, except for performers on camera). 

Good Friday Updates - HHSE, MyFlix and More...

Greetings HHSE Friends and Followers - Happy Good Friday / Easter and Passover Weekend to those for whom such good wishes apply.  Spring is in the air... a COVID Vaccine is in wide distribution, and HHSE and MyFlix are on a path for substantial success.  Yes, 2021 is turning into the antithesis of the frozen-in-time quarantines of last year... and we could not be more ready to get back on track.

Yesterday, we alluded to a significant news break in today's blog... THIS blog, in fact.  After sending a draft this morning to the HHSE counsel for approval, we were asked "why" would we be presenting this information AT THIS TIME and under a BLOG POST as opposed to the mass visibility of a newswire release?  Good questions for which there are no good justifications.  We do have significant and substantial news that our counsel feels should be treated with the respect that such developments deserve... and that a Good Friday Blog would be a wasted opportunity to have a positive impact to the company's visibility, credibility and shareholder enthusiasm.

So, we will move these items into mainstream newswire releases beginning Tuesday.  Meanwhile, we can provide shareholders with some updates on less substantial issues.

1).  MYFLIX Gaming & Educational Portals - We are moving "up" the coordinated launch of these two key MyFlix Features to correspond more closely to (or simultaneously to) the launch of the MyFlix passive-streaming service.  The rationale' for this move will be clarified in an updated MyFlix mission statement, as detailed in the Company's Form 10 and S1 Offering documents.

2).  MYFLIX Exclusives & Premiere Programming - New financing structures will enable MyFlix to also offer key titles on an "exclusive" basis, including first-release premiere programming.  This was not previously contemplated due to the costs for exclusives or premiere titles.  The structure and rationale' for such a move is also detailed in the Company's Form 10 and S1 Offering documents.

3).  MYFLIX Principals and Advisors - We have recruited proven executives from successful streaming services to join the MyFlix team in either executive or advisory positions - which we believe will add operational insights and venture credibility to the MyFlix launch. 

4).  MYFLIX - SVOD Subscribers Goal - Based on the quantity of titles for MyFlix, as well as the unique special features the site and APP will offer - the company feels that it's realistic and obtainable to have over 1-million "monthly" subscribers within a year (paying approx. $9 / month), with an annualized gross revenue basis of $108-mm.  This forecast goal is based in part by the success of ACORN and AMC channels (see article below), which now has over 4-million monthly subscribers at $5.99 each (about $300-mm annual gross).

MORE TO COME>>>

Have a great weekend and an awesome April!

NEW PRODUCTION VENTURE:

HHSE is providing seed capital for the development of "NATIVE FABLES" (working title) - a live-action, feature anthology based on popular legends of the Cherokee Nation and Indigenous Peoples of North America.

DID YOU KNOW THAT....?

ANNE HECHE and VINCE VAUGHN co-starred together in both "Psycho" (Universal, 1998) and "Return To Paradise" (Polygram, 1998).  Each of these two screen legends has appeared in principal roles in movies that have collectively generated over ONE-BILLION-DOLLARS each at the worldwide box office... making them into not only well-known stars, but bankable commercial talents. 

Acorn TV: Everything You Need to Know About the SVOD Service Battling BritBox for Control of the U.S. Anglophile Market

By Marc Berman, Next TV Staff February 02, 2021

Bolstered by a strong library of British movies and shows, AMC Networks streaming service has 1 million users. But its BBC-backed competitor is coming fast

Acorn TV has found a niche as the first streaming service focused on the best of British TV for a North American audience. And it hasn’t been afraid to feature programming that skews to an older audience. 

In September 2019, the subscription video on demand (SVOD) service, now owned by AMC Networks, surpassed 1 million subscribers. (AMC Networks said it expected its SVOD services—Acorn TV, Shudder, Sundance Now and ALLBLK services—will have 4 million combined subscribers by the end of 2020.)

Not bad for a niche SVOD service. The big question: Can Acorn TV keep growing in a U.S. market that now also has BBC-backed BritBox competing for Anglophile audiences?

OTT SPOTLIGHT

Acorn TV Servicing Streaming Audiences With British-Themed Fare

“Acorn had the foresight to see an opportunity with direct-to-consumer streaming and got in early, so we have been working in this content category for more than two decades,” Acorn TV General Manager Matthew Graham told Next TV. “We have an understanding of consumer interactions and expectations and, with that, an understanding of the technology required to deliver a great service.”

For anyone who craved authentic U.K. television programs—titles like Upstairs, Downstairs, Brideshead Revisited and Agatha Christie’s Poirot—Acorn TV became synonymous with high-end dramas and mysteries, in particular, those often overlooked by the broadcast and the cable networks.

This also includes Acorn TV’s Queens of Mystery, a recent Emmy nominee. 

“In this new environment, consumers have a lot more choice, and there is the ability to put together a la carte entertainment options that match-up to the specific interests of our customers,” Graham added. “We know exactly what are subscribers like to consume and we focus on that.”

Roots in VHS

Acorn Media Group was born Atlas Video in 1984 in the basement of founder Peter Edwards, who worked as a communications consultant and NBC News employee. 

Edwards started Acorn as a way to market historical and travel documentaries. In 1994, Acorn's focus shifted to British television on home video and the company was renamed Acorn Media Group. Targeting the UK, North America and Australia, Acorn first sold its titles on VHS cassette, before moving like everyone else to DVD and Blu-ray. In fact, Acorn thrived in the DVD age, packaging box sets of popular British TV shows for the retail shelves of distribution outlets including Walmart.

As for the SVOD service that would be called Acorn TV, it launched as a subsection of Acorn’s direct to consumer e-commerce website in 2011, eventually moving to prominence as disc sales succumbed to video streaming.

In 2012, Robert Johnson formed RLJ Entertainment, which was a combination of Acorn Media Group and media company Image Entertainment, to create a library of digital and video content globally with more than 5,300 feature film and television titles. 

In 2013, Acorn TV was relaunched as a standalone streaming service with expanded content offerings and monthly and annual subscription options. Most of the inventory from Acorn TV comes from the UK, but there are now also options produced in Canada, Australia, Ireland, Mexico, Spain and New Zealand.

When AMC Networks acquired a majority stake in RLJ Entertainment in 2016 for a reported $60 million, it did so primarily for the home entertainment distributor’s two SVOD services— Acorn TV and Urban Movie Channel (now ALLBLK)—and control of the Agatha Christie Limited intellectual property.

Acorn TV charges U.S. subscribers $5.99 a month for full access to its streaming smorgasbord, with a seven-day free trial to check out if they’re not happy. Acorn TV supports apps for Roku, Amazon Fire TV, Apple TV (tvOS version) and Google Chromecast and Android TV OTT devices, as well iPhone/iPad, and Android mobile and tablets. Acorn TV is also playable on laptops, desktops, and tablets via browser (Acorn recommends Google Chrome).

Notably, Acorn TV is also natively integrated into Comcast's X1 video platform. 

An Emerging Originals Strategy

“True to our mission, one of the biggest changes for us is the investment in the content itself,” Graham said. “So, over the past several years we have started not only to co-produce, but to commission series explicably for Acorn TV. Our strategy remains on a specific mixture of premium dramas, with great writing, great acting and interesting places that appeals to a sophisticated audience.”

“As long as we stick to that, as a channel and as a brand, Acorn TV will offer a notable alternative,” he added. “We know exactly who we are.”

Recent additions to the Acorn TV programming options are Aussie mystery series My Life is Murder, with Lucy Lawless; British police drama London Kills (Series 1 and 2); 1960s-set Ms. Fisher’s Modern Murder Mysteries; and British true crime drama Manhunt.

Coming up, Acorn TV will feature five new acquired series: Irish period mystery drama Dead Still; British mystery Agatha Raisin; Irish dramedy The South Westeries; New Zealand thriller The Sounds; and Irish comedy Finding Joy (Series 2). Returning series available on Acorn TV are Australian drama Mystery Road (Series 2), Irish thriller Blood (Series 2), UK drama Line of Duty (Series 6), British school dramedy Ackley Bridge; New Zealand detective drama The Brokenwood Mysteries; French crime drama Balthazar; Canadian drama Murdoch Mysteries; and Swedish drama Rebecka Martinsson.

Emerging Competition From BritBox

Acorn TV no longer has a U.S. subscription streaming market with British taste to itself. In early March 2020, BritBox—the SVOD service jointly launched by BBC and ITV in North America in 2018—has itself surpassed 1 million users. 

On the flip side, AMC Networks took Acorn TV, its subscription streaming service featuring British TV, to the U.K. in April.

For his part, Graham said Acorn TV looks at the fast-moving competition from BritBox the same way it would any other digital or linear competitor. Graham believes Acorn TV has an edge, with its program acquisitions generally being more recognizable than those of BritBox.

New Hires / Management & Advisors for HHSE & MyFlix

Greetings HHSE Friends & Followers - As mentioned in a recent blog, HHSE is adding new staff and management - as well as advisors/directors - to enhance our administrative efficiencies.  At present, HHSE C.E.O. Eric Parkinson has been handling the added duties as President. However, final negotiations are in motion for these key, new positions:

1).  HHSE President

2).  MyFlix Senior VP

3).  HHSE Director & Financial Advisor

We feel that the announcement of new management and advisors will have a better impact if combined into a single release and disclosure, as each of the parties we expect to bring on has specialized skills and historic achievements that complement those skillsets of the others.

There's a saying about "which is the most important leg of a three-legged stool?"  The answer is that all three legs are essential for the stool to properly stand.  Accordingly, we feel that a combined announcement of our new team members will present a clearer picture of the viability of our launch strategy.

The HHSE Share Price continues to be pounded by the dual force of "false paints" (wherein some manipulative bozo buys less than $1 worth of shares to create the illusion of millions of dollars in loss of market cap) - combined with the unexplained and baseless "buying-obstacles" imposed by E-Trade (wherein, purchasing HHSE shares via E-Trade must be achieved by calling into a broker... thus losing critical timing benefits for buyers).  

Although HHSE has reached out three times in writing to the E-Trade Compliance Department for clarity as to why they are singularly punishing their customers, we have not yet received any form of response.  Some HHSE longs speculate that E-Trade itself could be "short" on the HHSE stock, and is using their buying brakes to pressure DOWN the PPS.  If this proves to be true, then HHSE shareholders will be the beneficiaries of a major securities violation windfall action.  As this is a concern, HHSE has informed the S.E.C. of the unmotivated buying obstacles imposed by E-Trade, and we have been informed by that it's "being looked into." Meanwhile, other on-line, retail brokers have not created such buying obstacles. So, maybe it's time to some traders to move their accounts - rather than have some "big brother" with an agenda dictate what you can or cannot buy?  

There's much more to share and update... but we will hold this additional information until tomorrow. Besides the fact that today is "April Fools Day" and any announcements could be scrutinized as such... we felt that the timing of news tomorrow will make for a more appropriate Good Friday.

Good stuff brewing...