Sports and Entertainment Marketing Group ("SEMG") prepared a listing of all the inventory acquired from Art to Go (See Appendix B). The Inventory consisted of over 25,000 items of sports memorabilia and artwork. These items were analyzed and reviewed for sale prices and replacement costs of similar products. The fair value was estimated at the current wholesale price of the items, assuming they are in “good” to "excellent condition" and have a certificate of authenticity attached. Value of memorabilia is a function of quality, authenticity, and is subject to market changes, and typically is slow moving inventory. Representations regarding the quality and authenticity were made by the Company but have not been verified. The following assumptions were used to value each of these Inventory assets:1.
SEMG provided their estimate of wholesale value. They valued the entire Inventory at$10,389,046.2.
Retail pricing was obtained from nine different sources that carried similar or identical items. These included artrev.com, artshopnc.com, bigapplecard.com, cjrfinearts.com,ebay.com, goingprosports.com, grandstandsports.com, skylinepictures.com, andsportsmemorabilia.com.3.
Most of these sources guaranteed authenticity and provided certificates of authenticity or offered money back guarantees.4.
Many of these sources guaranteed best pricing.5.
Retail value was discounted to wholesale based on wholesale being 50% of retail. Our view of markups in this industry indicated that the wholesale discount off retail was 45-50%.6.
Two of the largest valued items by SEMG could not be verified due to the limitation on the details and description of the inventory. This included the 5,000 piece "Assorted Walt Disney animation cells" valued at $950,000 and the 3,200 piece "Dr. Ferdie Pacheco signed artworks - assorted prints" valued at $400,000.
Citadel EFT – Inventory Assets Valuation
2/9/2013
DSE
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7.
We found significant variances in value on 13 items that accounted for 93% of the variance between the SEMG value and our valuation. This included 750 pieces of "Leroy Neiman fight designed poster of the Larry Holmes vs. Ernie Shavers fight at Ceasars Las Vegas 1979 signed by all three" (variance in value of $731,250) and 1,839 pieces of "8x10 autographed photo of Muhammad Ali" (variance in value of $617,705).8.
On the 12,163 items, approximately half the inventory, that DSE was able to find comparable retail pricing, the fair value variance was nearly 58% lower than SEMG value. We applied the same discount to the full inventory as summarized in the followingtable:9.
Adjustment for unpriced assets:
Items Priced at Retail12,163 SEMG Wholesale Price7,261,452 DSE Wholesale Price4,224,908 Variance(3,036,544) Percent of SEMG Wholesale42%
In cases where our wholesale estimates exceeded SEMG estimates, SEMG estimates were used. The following table shows our estimated fair market wholesale value of the Assets prior to any adjustment for un-priced items:
Market Data 
Markets 
AI
