Mass Hysteria Entertainment Co. (fka MHYS)

[jdwintx]

FIVE REASONS MHYS IS 0001 NO BID
(Independent, Credible and Fully Verifiable Links Included)

The following information is quite detailed (lengthy), fully verifiable and based on actual information and not opinion unless stated as such. This is meant to be informative and respectful. I will gladly address any comments concerning any specific point. And I invite anyone to provide any credible, independent and verifiable link to contradict any of the information provided. However, I will neither acknowledge or reply to simple dismissive, offensive or abusive personal opinion or personal attack.

That said, I know some here seem to think the number of shares a trader holds or an individual opinion somehow impacts the pps of MHYS. And I understand how that might be important to discuss if the number of shares someone owns was reflected in a FORM (sc 13G) advising the SEC of ownership at or above 10% of the total shares in the company. By the way the last such form was filed on July 6th, 2015 by Curt Kramer of the Vis Vires Group.
http://ih.advfn.com/p.php?pid=nmona&article=67596865
Here I should note that only days after the form above was submitted, MHYS raised the A/S to 30 Billion and reported a 8.5+ Billion O/S as of its last filing in August of 2015.
https://www.sec.gov/Archives/edgar/data/1388488/000138848815000029/f10q53115mhys.htm
So unless a single shareholder has at least 3,000,000,000 shares of MHYS (that's 3 Billion), I don't personally see why the number of shares they own or their personal opinion is in any way relevant to any debate or reasonable discussion. That for the simple fact they would have no real impact on the company regardless whether they wished to buy, sell or hold their personal investment.

Instead, it should be clear what is important is the Business status and operation of the company. Let's take a moment and review the things we all know are simply indisputable.

1. The Company Business License is in DEFAULT as of 11/30/2015. And unless the company pays the late fees and filing fees complete with an updated Annual List totalling $11,800.00 by November 30, 2016. The Business License will be REVOKED.
http://nvsos.gov/sosentitysearch/CorpDetails.aspx?lx8nvq=yAuRBU9FyxYEYXoQkprLKA%253d%253d
http://nvsos.gov/sosentitysearch/FeeDetails.aspx?ctok=yAuRBU9FyxYEYXoQkprLKA%253d%253d

Now the amount due is quite small. But I do not believe anyone can argue that it is a positive if any company is not current with their State of Incorporation. Instead, I think it's reasonable to assume that most investors would obviously feel a non current status is a red flag and reason not to invest.

2. MHYS has not filed with the SEC since August 25th of 2015. This not only includes almost a full year of delinquent Quarterly reports, but the Annual report as well.
https://www.sec.gov/cgi-bin/browse-edgar?company=Mass+Hysteria+Entertainment&owner=exclude&action=getcompany

The result of these multiple failures to file with the SEC has resulted in the OTC placing the red STOP sign and Investor Warning on its Website.
http://www.otcmarkets.com/stock/MHYS/quote

Again, I don't believe anyone can actually argue that an OTC Warning advising investors that a company is seriously non compliant and may even be hiding material facts is a positive. Instead, I think it's reasonable to assume investors would view such a warning as yet another red flag and reason not to risk their money.

3. MHYS CEO Daniel Grodnik last communicated with shareholders in an open letter on April 25th, 2015.
http://www.masshysteriafilms.com/MHYSCEOlettertostockholdersApril15.pdf

This represents a serious lack of Company communication with stockholders. But more importantly, in his letter Mr. Grodnik stated, "Also, we are looking at tightening up the float. The Company has gone through a dilutive period that started with restricted shares tendered as collateral for Daughter Of God. The truth is, we couldn’t have done the transaction without the shares; but, in retrospect, they opened the door to a Company with too many shares in the marketplace."

Now that's important because he clearly states the number of shares is detrimental to the company. Please note that at the time of that letter the A/S was 15 Billion, and known O/S approximately 4.25 Billion. Mr. Grodnik correctly identified the Share Structure as too large in the marketplace. And this without question was meant to reassure stockholders that he was keenly aware the S/S was too high and in need of correction. However, instead of addressing the problem, Mr. Grodnik made the decision to increase the S/S instead on August 12th, 2015 to 30 Billion A/S and a known O/S of more than 8.5 Billion. This was also the third increase in authorized shares within a 12 month period.
http://nvsos.gov/sosentitysearch/corpActions.aspx?lx8nvq=yAuRBU9FyxYEYXoQkprLKA%253d%253d&CorpName=MASS+HYSTERIA+ENTERTAINMENT+COMPANY%2C+INC.

But unfortunately this was not the only item in his letter where he misled shareholders by first identifying a known problem and then adding to it. Also in his April letter Mr. Grodnik stated, "Hopefully, if we can begin to generate revenue from our recently produced films, the Company will finally be able to stand on its own two legs without taking on additional convertible debt, which will mitigate the large dilution we’ve all been experiencing lately."

Remember, Mr. Grodnik correctly identified two serious issues. The first "convertible debt", and the 2nd "dilution" resulting in large part because of the convertible debt. Here it's important to recognize he had stated, "The Company has gone through a dilutive period that started with restricted shares tendered as collateral for Daughter Of God."

This clearly shows that the first and second film had already been financed through the use of Convertible Debt as he specifically mentions the 2nd Film (Daughter of God), which was later renamed, "Exposed". And he clearly states he realizes that utilizing convertibles led to dilution and the loss of stockholder value, stating, "Unfortunately, the amount of shares in the marketplace has kept us on the floor no matter what good news we report." And, "Hopefully, if we can begin to generate revenue from our recently produced films, the Company will finally be able to stand on its own two legs without taking on additional convertible debt, which will mitigate the large dilution we’ve all been experiencing lately."

The important words there being, "without taking on additional convertible debt, which will mitigate the large dilution we’ve all been experiencing lately."

Reading those words indicates a full understanding of the negative impact of both convertible debt and dilution. Yet according to the last 10Q filing, Mr. Grodnik not only doubled the SS as mentioned earlier, but also failed to advise stockholders that he had already elected to add more convertible debt creating further dilution and loss of stockholder value while failing to advise stockholders of those decisions.

Specifically,
On January 19, 2015, the Company issued a 10% convertible promissory note in the aggregate principal amount of $31,500. ....
On February 26, 2015, the Company issued a 10% convertible promissory note in the aggregate principal amount of $15,000. ...
On March 1, 2015, the Company issued a 8% convertible promissory note in the aggregate principal amount of $32,500...
On March 25, 2015, the Company issued a 10% convertible promissory note in the aggregate principal amount of $13,500...
On March 30, 2015, the Company issued a 10% convertible promissory note in the aggregate principal amount of $24,000. ...
https://www.sec.gov/Archives/edgar/data/1388488/000138848815000029/f10q53115mhys.htm

And those new notes are in addition to the existing notes he referred to in his April 2015 letter. Which without question was a misrepresentation to all shareholders. And one of the primary reasons that yet another significant period of dilution was experienced, resulting in the pps falling to 0001 and No Bid when combined with the increased A/S.

4. Limited Release Movies and Lack of Publicity. Here I realize that some may argue that MHYS films may at some point earn actual revenue. However, as of this date no profit (revenue above budget/break even) has been reported by MHYS, or any distributor or studio involved. Until and if such revenues are actually reported, investors must rely on the information provided by industry sites such as Box Office Mojo or TheNumbers.Com. And both of those sources continue to report that GROSS revenues do not indicate any profits whatsoever from any of the three movies released as of this date.
http://www.the-numbers.com/movie/Heist-(2015)#tab=video-sales
http://www.the-numbers.com/movie/Exposed-(2015)#tab=summary
http://www.the-numbers.com/movie/Mothers-and-Daughters#tab=summary

It is also well known that none of the movies received any PR by MHYS prior to, during or after their release while appearing in US Theaters for only one to two weeks with same day video on demand release. And I think it's safe to say there can be little argument that when the public is unaware of a movies existence, the sales even in the on demand, rental, and even DVD realm is severely limited.

5. Future uncertainty and legal issues. Everyone has an opinion regarding Dan Grodnik's involvement with other companies such as Aloe Entertainment, Moon River Studios and REMARK Pictures. But what can not be argued is the lack of information concerning our CEOs involvement with each and how it impacts MHYS creates uncertainty and confusion. Both well known to be negatives in the investment world. And issues that only Dan Grodnik can and must address to encourage investment.
http://www.aloeentertainment.com/about.php
http://finance.yahoo.com/news/mass-hysteria-entertainment-changes-company-135500809.html
http://www.prnewswire.com/news-releases/moon-river-studios-announces-head-of-film-production-and-packaging-300181621.html

Future movie production and distribution are also true concerns. This due to the fact the company had scheduled future movie production at Moon River Studios which only recently ceased operation before even building its complex in Georgia as expected. And the lack of a known Distributor for any future MHYS film. I do not want to imply distribution can not or will not be found for any future film. However, the actual Distributor is important. There are after all significant differences between Lionsgate Premiere, Hannibal Classics and Grindstone Entertainment which were involved in the first two films. And the much smaller Screen Media Films which distributed the 3rd.
http://www.boxofficemojo.com/movies/?page=intl&id=heist2015.htm
http://www.boxofficemojo.com/movies/?page=intl&id=exposed2015.htm
http://www.boxofficemojo.com/studio/chart/?yr=2016&view=company&studio=pantelion.htm
http://www.boxofficemojo.com/studio/chart/?yr=2016&view=company&studio=screenmedia.htm

And finally, the uncertainty of pending litigation involving Dan Grodnik, Mary Aloe, Seth Kramer, Curt Kramer, Vis Vires Group, KBM Worldwide, Moon River Studios and others remain troublesome. Again, people can debate each case and express their own personal opinions whether good or bad. But the reality is uncertainty, and uncertainty especially relating to unresolved legal actions is not a positive motivating factor in investment.
https://pmcdeadline2.files.wordpress.com/2016/02/chuck-wepner-the-bleeder-lawsuit-wm-deletions.pdf
https://www.pacermonitor.com/public/case/10462212/KBM_Worldwide,_Inc_v_Mass_Hysteria_Entertainment,_Inc_et_al
https://www.pacermonitor.com/public/case/10462213/Vis_Vires_Group,_Inc_v_Mass_Hysteria_Entertainment,_Inc_et_al
http://www.wtoc.com/clip/12462793/wtoc-prime-moon-river-runs-dry

In closing, let me be clear the information above is not presented to either encourage or discourage investment into MHYS. It simply represents the significant DD I have collected over a long period of time. And is presented so that present and even future investors may be better aware of the company and the challenges it faces, as well as seeking to explain the current Business condition identifying a few reasons for the current 0001 ASK and NO BID status. And certainly a better basis of making a wise trading decision than merely stating a stock will rise or fall based solely on personal opinion or speculation. GLTA