HHSE managers were asked at the Shareholder's Meeting to prognosticate on the activities for 2013 and the predicted impact that such activities might have on the Company's share price.
While neither Parkinson nor Shefte could be considered psychics, both had a bullish forecast for HHSE in the coming year, and did make some predictions:
a). Revenue Growth -- Both predicted significant overall revenue growth in 2013 both in terms of gross sales and net pre-tax income;
b). Debt Reductions -- Both predicted that the management of debts would become less of a corporate distraction as ongoing cash flow revenues -- combined with properly timed debt-conversion actions under improved PPS levels -- would help control the problematic creditor matters. In anticipation of improving conditions as well as the ongoing need for debt management, the Company has initiated a conversion agreement with Graham Financial to retire $300,000 in aged debts, and has authorized the release of 14.5-mm shares. While the shares have been authorized and issued, it's important to note that NONE have been sold, and this debt conversion issuance is fully intact.
c). Authorized Shares -- Both confirmed that the A/S reduction of 100-mm shares was effective Jan. 1, 2013, and that the Company felt that the existing treasury stock was sufficient to handle equity activities.
d). Salaries & Debts -- Both confirmed the reduction of more than 50% of base salaries for Parkinson and Shefte, and an additional reduction in overhead of approx. $10,000 per month going into Q1; additionally, subject to a tax impact opinion, both Parkinson and Shefte agreed to significantly waive and forgive "deferred salaries" otherwise accrued but not paid out to them.
e). Operational Improvements -- Both expressed enthusiasm for a variety of operational developments including an expansion of Video-on-Demand activities, improvements in the wholesale and direct distribution of home entertainment products, and joint-ventures for the financing of major productions (and theatrical releases) through non-recourse structures.
It's only fair to report that both Parkinson and Shefte also expressed concern over the Company's debt load from the film "Twelve" and the myriad of creditor lawsuits that were spawned from that under-performing release. While settlements have been made with all major creditors, the maintainence of said payment plans has been an ongoing challenge to manage, and often, a distraction of management time and resources. The retirement of these old debts will free management to focus on growing the company's revenues, maintaining timely reporting and maximizing shareholder value.
What will happen to the PPS of HHSE in the next 30-to-90 days? Who has a crystal ball or a direct telephone line to Kreskin? What we do know is that the daily fundamentals of HHSE operations are moving in the right direction -- and that logically, the PPS should follow.
