Eric & Fred are schooling us in Business School 101, How to make amazing deals for your shareholders: The TDGI/Hannover Way!
Deal Number One
Hannover has entered into a distribution venture with Elite Entertainment and FOCUSFilms for the sales, marketing and general distribution of their properties into the USA home video (DVD and Blu-Ray) markets, and to domestic Video On-Demand and Television markets on an “as available” basis for selected titles within the Elite and FOCUSFilm libraries.
81 more titles doubling Hannovers Library
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.
Recoupable advance means Hannover gets back all the money they put out right off the top from the DVD sales.
Excluding marketing, replication and fulfillment costs, the costs for this acquisition to Target-Hannover is $333,000 structured as a recoupable advance payment against revenues otherwise due to Elite Entertainment and FOCUSFilms.Target-Hannover has commenced payments under this agreement, and will continue to fund additional installments for this acquisition from existing cash flow and existing corporate financing.
$6.3 million in sales, $1.26 profit plus recoupment of all money put out by Hannover
For 2010 and 2011, Target Hannover forecast sales from these two libraries along with the new release titles being provided from these two companies is expected to generate approximately $6.3-million in gross revenues, with fees and other margins to Target-Hannover of approximately $1.26-million (plus recoupment of all costs, including the acquisition advance).
Deal number two: In December, Hannover executed agreements with Central Film Company and Plaza Entertainment authorizing Target-Hannover to be the USA distributor for a total of ten new release video titles.
Only expense for Hannover, the money they put out to do the art and burn the DVD's to sell. They get all this money back off the top from the sales
The acquisition cost for these titles was limited to art and master delivery material expenses.
$1.5 million revenue, $375,000 profit plus recoup all expenses
For 2010 and 2011, Target-Hannover forecast sales from these ten titles to generate approximately $1.5-million in gross revenues, with fees and other margins to Target-Hannover of approximately $375,000 (plus recoupment of all costs).
$7.8 million in revenue and profits of $1.6 million plus recoupment by Hannover of all the money they put out for these two deals. There's that 22% profit margin again. Total cost to Hannover to acquire these two deals, ZERO after recoupment of the money Hannover put out.
That's good business, that's what the deal put together by a winner looks like.....That's the TDGI way now with Eric and Fred running things.
VI-a). Base Business Forecasts for 2010 – Based upon the Company’s current release slate of 30 video releases, 4 theatrical titles and 5 books in 2010 (as well as revenues to be derived from the Company’s existing library plus the Elite Entertainment and FOCUSFilm libraries),
Management forecasts $17-million as “Base Business” gross revenues for 2010, with pre-tax margins of approximately $3.75-million.
VI-b). Key Title Anticipated Forecasts for 2010 – Subject to the Company’s successful closing of the financing venture for the P&A Fund (or any other comparable financing venture), and subject to the acquisition of at least two of the key titles now being pursued for national theatrical release,
Target-Hannover believes that an additional $22-million in gross revenues (generating an additional $4.8-million in pre-tax margins) is realistically obtainable to be added to the Company’s base Business Forecasts for 2010.
They already landed one of those two key titles for national theatrical release with the deal they announced for the movie "Twelve". HTYMP made two.
$39 million revenue, $8.55 million pre-tax margins. EPS of just under .02 per share. PE of 25X gets me a TDGI share price of .50 (Throw in Hemdale deal closing and some other big project drops into their lap this year, then $1.00 per share is not impossible based on last years earning and on this years projections we got from Hannover management.
General Operations, Administration and Overhead – The executives and managers of Target-Hannover House believe that the Company’s Overhead and G&A costs are extremely conservative and significantly lower than the entertainment industry average. This lowered expense for basic overhead should enable Target-Hannover to realize greater profit margins than its competitors, and in doing so, deliver a greater value to the Company’s shareholders.
On December 15, 2009, the board of directors of Target accepted and approved the employment agreements that were already in place at Hannover House for the services of Eric Parkinson and D. Frederick Shefte. The Company also approved the hiring of middle management positions including a Director of Marketing, a Director of Sales and an Accountant-Controller, along with administrative support staff as needed. Notwithstanding the costs of these anticipated new hires, the estimated Overhead / Base G&A costs for Target-Hannover in 2010 (inclusive of salaries to key executives) are forecast at a total of $690,000. This 2010 overhead total has been included within the Base Business Forecasts listed above on line item V-a.
AI
