Here are some nice fat lies about the whole TCA situation.
Tuesday, July 21, 2015
4). CASH FLOW AND TCA GLOBAL - The loan that HHSE received in May, 2013 from TCA Global Master Fund continues to haunt the company and impede our operations with legal and cash flow encumbrances. Collections from Q1 sales have been sluggish, due in large part to the sale of wholesaler Anderson Merchandisers to Alchemy / MMS (with Anderson fulfilling Walmart orders for HHSE and Medallion titles, and thus representing the largest portion of packaged goods receivables). In the meantime, TCA has been pushing for default conversions of due to HHSE's current inability to meet their monthly payment demands (which are at $50,000 per month - but when added to a cash flow cycle that requires significant monthly funding for for new release video manufacturing and fulfillment - the available resources to HHSE management have been crunched). The Security Liens and Encumbrances imposed by the TCA deal are effectively like "handcuffs" onto HHSE management, making it nearly impossible to "juggle" and manage while one's hands are tied.
The TCA structure has been a horrible experience and one that we would not wish onto any reasonable persons. In many respects, the deal structure appears to be designed to impede the borrower's ability to repay with cash, in favor of TCA's default bonus provisions and mandatory share conversions. Their U.C.C. lien creates a cloud over the company's ability to secure new lending, and their claim to be eligible to all receivables (as opposed to just those specific titles listed in the loan agreement), casts a shadow over each collected deposit. Maybe someday, federal regulators will be stricter or prohibit such lending practices? One can only hope. Meanwhile, HHSE became trapped under this structure, and is still about $150,000 away from managerial freedom (we've paid over $300,000 already). TCA is pushing hard right now for another $50,000 forced debt conversion transaction. So on the eve of a positive story in the Wall Street Journal, HHSE is being held down in the muck to wrestle out a prompt ending to the TCA woes. It's been exhausting. But fortunately, we're near the end of that venture.
