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Friday, May 16, 2014

Quick footnotes to Q1

Some shareholder inquiries about Q1, all regarding the absence of footnotes to clarify some issues. We will post to the OTC an update with footnotes. Meanwhile, here's some super short answers to the list of questions received:

1. Revenues - HHSE has voluntarily held back over $400k from AR as a reserve against potential returns. Although we are confident that our settlement with Phase 4 is a complete release, the proper audit protocol is to hold back a reserve for the underlying duration of the original P4 agreement.

2. Low Salaries - Parkinson and Shefte continue to defer income; what's showing on the Q1 G&A is only the modestly paid support staff. Parkinson and Shefte deferral increase can be seen on the Balance Sheet. Regarding payroll taxes for the support staff, these are included in the line item for employees as we use an outside payroll service that charges salary and taxes combined.

3.  Cash Flow from Intl Presales - no , these presales do not generate immediate cash flow to HHSE. They are pledged to film production costs.

4. Increase in Bank Debt - actually, there was no increase in debt, but a change in reporting the TCA transaction. Since an agreement was made as of 3-31 to terminate the revolving line from TCA, we were advised to immediately recognize the obligation (and we're informed that, under GAAP rules, we likely should have recognized the loan previously, even though it was revolving debt).