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Friday, March 1, 2013

Payables & Debt Management Progress...

In anticipation of our year end (10K) report and filing (due March 15), the Company will be providing a detailed blog post today regarding the resolution / settlement and activitities relating to the debt burden incurred as a result of the 2010 acquisition and release of "Twelve."  As those who actually read the filings will know, ALL of the company's problematic debts since 2010 are directly tied-into the massive licensing fee and massive theatrical P&A expense incurred with this one title.  Accordingly, resolving the major "Twelve" debts into manageable payment plans has been an important achievement for HHSE, and will facilitate focus onto the more profitable product lines and activities. 



1).   GAUMONT (Film Rights Licensor) - Due to ongoing revenue streams from 20th Century Fox, added with recent TV licenses and a new Subscription Video-on-Demand contract, the parties are now confident that the balance of the Gaumont license fee will be retired this year from sales revenues.  The total amount of the license fee was $1.75-million.

2).    ANDERSONS (Partial P&A Lenders) -- A settlement agreement has been reached to retire the principal balance still due ($180,000) and applicable interest.  The court date for April will be mutually taken off calendar.

3).    SOUTHERN STAR (Partial P&A Lenders) -- A term payment agreement has been reached to resolve the principal balance due ($60,000) and applicable interest.

4).    42 WEST -- A settlement agreement was reached regarding their claim for publicity fees beyond the contracted amount, and the matter is being taken off the court calendar.

5).    BEDROCK VENTURES -- A settlement agreement has been reached regarding the funds advanced by Bedrock towards the Gaumont licensing fee for "Twelve."  Company anticipates payments to commence next week under a structured note with a term of approximately two years.

6).    TECHNICOLOR -- A settlement agreement was made with Technicolor, with a balance still due of approximately $50,000 (comprised of three more, quarterly installments).

7).    TRIBUNE ENTERTAINMENT NEWSPAPERS -- Company is still working on a structured payment plan to retire approximately $50,000 in debts still owed for "Twelve" newspaper ads, of which the L.A. Times represents about $30,000.

When all the "TWELVE" debts are completed, the Company will have paid a $1.75-million licensing fee, and over $2-million in marketing and releasing costs.  Ouch!  Thankfully, the core business of (mostly) direct-to-video titles is high-margin and has enabled the Company to maintain a good market presence and functional cash-flow over the past two years.  Once freed of this distraction and debt burden, we think the Company will soar, as we will be able to reallocate resources to more profitable activities than debt retirement.  Future "big theatrical releases" will NOT be internally funded for release!