Hannover House Inc (HHSE)

[speckulater]

TDGI Assets Valuation



Perhaps some time next week, TDGI will have some of the official Audited Financials. There will be greater transparency of the Company for investors. While we are waiting I thought I would take another look at the TDGI Properties Library and other Assets.


"Notwithstanding the goodwill value of the Company’s distribution pipeline and favorable revenue forecasts, Hannover House owns or controls significant assets, including a large film library, DVD and book product inventories and motion picture production equipment and facilities. As of Dec. 1, 2009, Hannover owned or controlled a significant library of film, video, television and literary properties, with approximately seventy-five (75) items in current release. The unaudited and unreviewed balance sheet for Hannover listed total assets of $21,112,938, including a library valuation of $16,015,670 (the value of the Hannover library does not include recently acquired titles and other libraries added since Dec. 1, 2009)."
http://www.otcmarkets.com/otciq/ajax/showFinancialReportById.pdf?id=27997

Is the Library Valuation reasonable? $16 Million Library Valuation divided by 75 Items = A Value of about $213,333 Per Item in the Library. Seems realistic to me.

The Production Equipment and Library are Assets valued at $21 Million that TDGI owns and has value to its shareholders. IF TDGI were to cease Operations tomorrow, the $21 Million in Assets could be Liquidated and divided up among the shareholders. ($21 Million Assets / 461.2 Million shares = $0.0455). So, the TDGI Assets on December 1, 2009 had a Cash Value to TDGI shareholders of 4.5 Cents Per Share.

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After December 1, 2009 TDGI added many Titles to the Library. As verified in TDGI Press Releases and Amazon.com Listings TDGI introduced or is in the process of introducing about 80 Items to the TDGI Library. The following PR's detail the new Items, with the number of New Items being added highlighted in red.

12/10/09 1
Target Development Group and Hannover House Acquire Acclaimed Suspense-Thriller, "Sensored":
http://www.marketwire.com/press-release/Target-Development-Group-Hannover-House-Acquire-Acclaimed-Suspense-Thriller-Sensored-1179995.htm

12/11/09 8
Target Development Group and Hannover House Announce Eight New Titles for Q1 Release:
http://www.marketwire.com/press-release/Target-Development-Group-and-Hannover-House-Announce-Eight-New-Titles-for-Q1-Release-1180241.htm

12/16/09 61 ( Eventually 81 Titles) from the TDGI Filings: "As of Jan. 15, 2010, the total number of titles within the Elite Entertainment and FOCUSFilm libraries totaled 61 titles. Additionally, both companies plan to provide Hannover with new releases in 2010 and 2011, which are expected to add approximately 20 additional titles to the venture." Target Development Group and Hannover House Enter Into Film Library Ventures With Elite Entertainment and FOCUSfilm Entertainment:
http://www.marketwire.com/press-release/Target-Development-Group-Hannover-House-Enter-Into-Film-Library-Ventures-With-Elite-1181205.htm

12/18/09 10
Target Development Group, Hannover House Acquire 10 Video Titles:
http://www.marketwire.com/press-release/Target-Development-Group-Hannover-House-Acquire-10-Video-Titles-1181620.htm

Effectively, the 80 New Items PR'd in mid December 09 doubled the size of the TDGI Library. Considering some of the new additions are new releases, a higher Level Title, and a more recent date, it is not unreasonable to estimate the value of the TDGI Libray is twice what it was in September 09. So, $16 Million doubled plus the $5 Million Production Equipment is now $37 Million. A Value to TDGI shareholders of about 8 Cents Per Share ($37 Million / 461.2 Shares). It must be noted that in the majority of new Properties, TDGI negotiated Distribution Pacts, as such I have no idea whether they bring a partial or full Value to the Library, however, it is safe to say the Value of the Library has increased significantly.

Conservatively, based on Assets alone TDGI has a value to shareholders of between .04 and .08 per share. This is Assets value ONLY. IF TDGI were to close their doors tomorrow, these Assets could be sold and liquidated, and provide a cash value to TDGI shareholders of between .04 and .08 per share of TDGI stock.

This does NOT include any Revenue and Profits from DVD Sales and Rentals ("Base Business"). This does NOT include any Revenue and Profits from the 6 Theatrical Releases. TDGI has Forecasted from just the Base Business alone, Revenue of $17 Million and Profits of $3.75 Million for 2010. To get a true, fair value for TDGI stock you would have to calculate 2010 Profits into a Earnings Per Share Value (about $0.0081 EPS, using 20 PE Multiple gives a TDGI stock price of $0.16) and then ADD the EPS Value to the TDGI Assets Value. Which would be between $0.20 and $0.24 per share.

Lastly, the TDGI current Asset Valuation does NOT include the Value of the Theatrical Releases "Racing Dreams", "Twelve", "The Wild Hunt", "Thru The Moebius Strip", "The Countess", the 2 yet unnanounced major Theatrical Titles, and 5 yet to be introduced Books.

When you do the DD and perform the evaluations, you begin to realize just how undervalued TDGI really is. For those of us that have established a position in TDGI, all we have to do is sit back, relax and wait till other investors "wake up and smell the coffee". You are fortunate to be among a limited number of astute investors that realizes the fair value of TDGI. It is just a matter of time till other investors figure out the real value of TDGI, then we are golden.




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