Item
1.01. Entry into a Material Definitive Agreement
On
March 12, 2017, subject to regulatory approval and other financial considerations, the Board of Directors of Crimson Forest Entertainment
Group, Inc., a Nevada corporation (“
Crimson
”), and the Board of Directors of Hannover House, Inc., a Wyoming
corporation (“
HHSE
”), signed a Memorandum of Understanding to indicate the mutual intent to merge the operations
of the two companies through a stock-for-stock swap. Based on reasonable valuations for both Crimson and HHSE, including current
assets, new projects and goodwill, after approval of the merger the existing shareholders and managers of HHSE will collectively
own approximately 57.1% of the combined stock, and the existing shareholders and managers of Crimson will collectively own approximately
42.9% of the combined stock. HHSE assets, including goodwill were valued at $17,029,250 and Crimson assets, including goodwill
were valued at $12,870,750.
Per
the terms of the Memorandum of Understanding, Crimson shall be required to promptly file all required quarterly and annual reports
to restore its current trading status as a fully reporting equity. Upon the completion of these corporate compliance matters,
Crimson and HHSE shall initiate the stock-for-stock swap and redemption. Based on the terms of the merger, HHSE shareholders will
receive Crimson shares at a premium-to-market valuation. The effective date when the two companies expect to be operating on a
defacto basis as a merged entity is May 1, 2017. Crimson and HHSE anticipate that regulatory approval of the merger shall occur
shortly thereafter, and that full reporting compliance shall occur on or about May 15, 2017, after which time, HHSE shares shall
be exchanged for Crimson shares at a market-to-value premium to be determined at the date of the redemption based on market pricing.
Following
the merger, Crimson shall proceed with new financing for the combined entity, including presale funding for several high-profile
feature films and general operating and releasing capital. Principal Officers, Directors and Managers for the combined company
shall be Jonathan Lim (Chairman), Eric Parkinson (C.E.O.), Fred Shefte (President) and Tom Sims (Vice President).
In
addition to seeking regulatory approval for the merger, Crimson has also applied with FINRA for approval of a new stock-trading
ticker symbol, to differentiate the new (post-merger) company and operations from the prior activities of Crimson as primarily
a production-oriented company.
The
foregoing is a general description of the stock-for-stock swap Merger plan; it does not purport to be complete and is qualified
in its entirety by reference to the Memorandum of Understanding (the “
MOU
”), which is attached as Exhibit 1.1
to this Current Report on Form 8-K and incorporated in this report by reference.
A
copy of the joint press release issued by Crimson Forest Entertainment Group, Inc. and Hannover House, Inc. announcing the mutual
intention to merge operations into one company, and the effectiveness of the Memorandum of Understanding is attached hereto as
Exhibit 2.1 and incorporated herein by reference.
ADDITIONAL
INFORMATION AND WHERE TO FIND IT
The
Merger of these two companies as described in this filing and Exhibits has not yet been approved by FINRA or other applicable
regulatory authorities, including but not limited to the United States Securities and Exchange Commission (the “
SEC
”)
and the OTC Markets (the “
OTC
”). Investors and security holders are urged to read both the MOU and the Long-Form
Merger Agreement (the “
LFMA
”) that CFEG and HHSE anticipate completing and filing covering the terms as described
in the MOU, and other additionally required terms and language to meet compliance requirements. CFEG and HHSE anticipate completion
of the LFMA on or before May 15, 2017. Investors and security holders may obtain free copies of these statements (when available)
and other materials filed with the SEC at the website maintained by the SEC at www.sec.gov, or by directing requests for such
materials to the information agent for the Merger transaction, which will be named in the LFMA.