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efta-efta00729361DOJ Data Set 9OtherRich Kahn
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efta-efta00729361
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Rich Kahn
HBRK Associates Inc.
PO Box 400
New York, NY 10150
September 26, 2009
Rich,
In follow up to our last meeting I am providing you with reports discussed that will show you how we
intend to position MC2 Model Management as we enter 2010. We have reduced our operational
expenses in both offices in order to have a 4.5 million dollar gross billing breakeven point for the
calendar year 2010. We look to the 4th quarter for a strong finish to round out the year with a 6.9
million dollar consolidated gross billing for the 2009 calendar year. Reaching this goal will have us close
2009 without a consolidated net operating loss or a nominal one if any.
We look to the 41h quarter with optimism as the economy has slowly been starting to move again in the
2nd half of 2009 and we have seen this mirrored in the production and planning of retail advertising.
We recognize that we will be challenged in the 41h quarter to meet our goals but are finishing 2009 in
what we believe is a healthy position for the future with a reduction in expenses that allows the
company to maintain the current income level and still have room to increase revenue for 2010.
At present we have retained Monte Engler of the law firm Phillips Nizer in order to begin the resolution
of our open tax issue. We are discussing and putting together a plan in order to service this liability
over time. As we have just begun this process it is difficult to make any further forward looking
statements; however, we will attempt below to factor that liability into the repayment of our line of
credit. It is obviously imperative for us to meet our obligations to the government in order to continue
to operate the business and service our debt to the line of credit.
During the 4th Quarter of 2009 we will make our best efforts to pay back as much as we can toward the
line of credit. Below I am outlining a proposed payment plan for 2010, and onward, based on the
following gross billing estimates; providing that we are able to set an annual payment plan with the IRS
for $240,000 per year.
EFTA00729361
Available for Debt
Reduction
Gross
Billings
Gross Profit
(27.5%
Margin)
Projected Net Income
IRS
Line of
Credit
4,500,000
1,237,500
5,500,000
1,512,500
270,000
240,000
30,000
6,000,000
1,650,000
410,000
240,000
170,000
6,500,000
1,787,500
550,000
240,000
310,000
7,000,000
1,925,000
640,000
240,000
400,000
7,500,000
2,062,500
740,000
240,000
500,000
8,000,000
2,200,000
790,000
240,000
550,000
8,500,000
2,337,500
890,000
240,000
650,000
9,000,000
2,475,000
940,000
240,000
700,000
Fluctuations and variances of the above figures are pending the finalization of an agreement with the
IRS that is being prepared for initiation. I've posted more conservative numbers as our profitability
increases taking into account the necessity for key employee bonuses, the potential for slightly more
support staff, and possibility of an increased need for promotion and travel.
Realistic performance estimates for 2010 fall in the range of 6.5MM to 7.5MM. Looking forward this
should allow us to service our IRS debt and repay the line of credit within 36 months conservatively or
sooner depending on the businesses performance and productivity. In the event that we are not able
to broker the deal we wish to with the IRS and the company performs on the conservative end of the
above estimates it could be reasonable forecast a repayment schedule taking as long as 48 months.
Sincerely,
Jeff R Fuller
EFTA00729362
EFTA00729363
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