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Tuesday, September 30, 2014

Redwood Management completes conversion of TCA debt settlement

While HHSE wishes the timing were about two weeks into the future, the reality is that Redwood Management took advantage of the artificially low PPS for Hannover House and elected to convert their final traunch of shares under the previously announced TCA settlement.  We are told that Redwood plans to hold these shares in anticipation of major corporate events about to unfold for HHSE that should enable the PPS to rapidly ascend.

HHSE management knows that the idea of MORE shares being in the float today is the last thing that our longs want to hear.  HHSE agreed to not pursue any new debt conversions, as this previously entered August settlement with TCA was already responsible for over 20-mm new shares.  It's bad timing to have issued another 12-mm+ shares at this time... but this was not in HHSE's control.  Redwood had the option to convert at anytime prior to Nov. 15, and they chose RIGHT NOW (actually, on Sept. 26) due to the absurdly low, temporary pricing for the stock.  They saw an opportunity for multiple returns as the PPS recovers, and we understand that motivation. 

We realize that this is not what any of our longs wanted to hear or to happen right now. But we will always tell you exactly what is happening, exactly like it is. The TCA deal was a burdensome and nonfunctional deal for HHSE and we needed to get it removed as a financing obstacle.  Redwood purchased the largest share of their debt under a conversion that enabled them to receive shares from Sept. 1 to mid-November.  In retrospect, it might have been better to simply issue ALL shares on the initial closing day.  But HHSE thought we were protecting the flow of new shares into the market with a staggered release. With the PPS now at a 2-year low, more shares seems poorly timed for all parties except Redwood. They are aware of our pending filings and new activities and see an opportunity for significant gains. We understand this motivation, but are still sick-to-our stomachs about the timing.

AS PROMISED - HHSE will be filing a new Form 8 CONFIRMING that there are no new debt conversions to occur prior to the filing of the Form 10 registration (and probably not even then).