Seven Arts Entertainment Announces Cancellation of Proposed Convertible Debenture and Confirms No Current Plans to Implement a Reverse Stock Split

Seven Arts Entertainment Inc. SAPX announced today that it had terminated negotiations for a $3,000,000 convertible debenture, the proceeds of which were to have been used for reacquisition of approximately twelve of the Company's motion pictures controlled by an existing lender. The Company terminated negotiations in light of the current market price of the Company's common stock that would have resulted in an unacceptable level of dilution to the Company's common stockholders. At present, the Company's common stock is trading at a market price of approximately 20% of the Company's current stockholders' equity per share. As a result of this decision, the Board of Directors of the Company will not exercise the authority given to it by passage of Resolution No. 5 at the Company's stockholder meeting on March 27, 2012, described in CEO Peter Hoffman's letter to stockholders of April 2, 2012 as Item 5 in connection with this proposed convertible debenture.