Dear HHSE Friends & Shareholders - There have been questions about the HHSE Library Valuation and its impact on the Form 10 registration filing and audits.
There has also been some ludicrous misinformation on one of the more popular "chat boards" where truthfulness and accuracy (and apparently grammar and linear-thought) are not required!
In respect of the legitimate shareholder inquiries, we can release some data about the Form 10 filing and Library footnotes. First of all, we are pleased to announce that a new library valuation will be conducted at the end of 2014. The primary purpose of conducting the new library report is to make the adjustments to add in the 60+ titles that are not currently valued in the previous library report. Adjustments will also be made to account for increasing Video-On-Demand Revenues vs. packaged goods. The new library valuation will NOT impact our imminent filing of the Form 10 and audits... we just wanted to let shareholder's know that it's just being done again "in the future" for 2015 uses.
Over the past three years, Hannover House has been "deleting" title values from the Library report as the distribution rights for certain items have expired (twelve titles in total have been removed from the valuation report). However, the company has NOT been adding back-in the valuation of all the new titles, including the items listed below (39 titles plus 23 items licensed from PEG). The reason that no values have been assigned to these 62 newly added items is that under G.A.A.P. rules, the valuation must be independently determined by a non-affiliated and qualified party. The company itself cannot assign values.
Additionally, and impacting the value of the new titles even more, HHSE has been negotiating to acquire "more" rights than just home video... and to include Television and V.O.D. in almost every case, and Theatrical and International when appropriate or available. Accordingly, we are informed that the company will be required to "footnote" that the valuation set forth in the prior film library valuation is likely significantly under-valued, based on these new items.
It's also important to note that only "fully delivered" titles are allowed to be included in the library valuation report. So the six current productions (which collectively have a film-investment cost of $21.5-million!), are NOT YET included in the company's film library. Some of them WILL be added to the new report (which is being done by one of the "top three" specialty firms).