Hannover House Inc (HHSE)

[HHSEwealth]

The second item on the Form 8-k is not going to feel positive on the surface. But upon further analysis, we're confident that reasonable minds will concur. The credit line venture entered into with TCA Global Master Fund last May never worked to the satisfaction of Hannover House. Furthermore, the structure of the UCC Security Interest held by TCA under the venture created obstacles for Hannover House to close other financing opportunities - including the banking of valuable international pre-sale agreements for major features. In order for Hannover House to proceed with the bigger projects, some sort of settlement and resolution with TCA was required - and as a means to provide the initial cash payment that TCA demanded ($150,000) - a debt-conversion arrangement was structured through Redwood Management. This resulted in the release of approx. 18-mm shares to Redwood, and the return of 10-mm shares previously held by TCA as collateral.

While the timing of this transaction arguably could not be worse - due to current low pricing in the PPS - the need to release the TCA security interest was paramount in order for Hannover House to continue forward progress on the major titles that we feel will drive the company's revenues and stature in 2015.

The remaining balance due to TCA (approx. $300,000) will be paid in cash by Hannover House from producer fees contained within existing financing contracts for two major feature productions.