Helios And Matheson Plunges Amid Plans To Seek Approval For Reverse Stock Split

Shares of MoviePass parent Helios and Matheson Analytics (HMNY) continued their plunge on Monday after a filing with the Securities and Exchange Commission showed that the company will seek approval for an up to 1-for-500 reverse stock split. The filing follows Helios and Matheson’s 1-for-250 reverse stock split in July and comes amid the financial bleeding of its earlier business model.

NEW REVERSE STOCK SPLIT: In a regulatory filing on Monday, Helios and Matheson said it will hold a special meeting with stockholders in October to approve an amendment for a one-time reverse stock split of up to 1-for-500 shares. The parent of movie-ticket subscription service MoviePass announced a 1-for-250 share reverse stock split on July 24, which began trading on a split-adjusted basis on July 25. In this filing, Helios and Matheson said this new stock split could range from 1-for-2 to 1-for-500.

WHAT’S NOTABLE: The proposed reversed stock split is the latest attempt by Helios and Matheson to reinvigorate the stock, which is at risk of being delisted from the Nasdaq if it continues to trade below $1 with a market cap under $50M. In July, the company disclosed in a regulatory filing it had to borrow $5M in cash after the MoviePass app temporarily shut down. MoviePass CEO Mitch Lowe announced in an all-hands meeting in late July that it would limit ticket availability to upcoming blockbuster movies during the first two weeks and implied that the practice of not offering tickets to major movies would continue for the foreseeable future. The company said other actions that have been implemented are currently cutting the monthly burn by 60% included a future increase of the standard pricing plan to $14.95 per month. Ted Farnsworth, chairman, and CEO of Helios said the changes “are meant to protect the longevity of our company and prevent abuse of the service. While no one likes change, these are essential steps to continue providing the most attractive subscription service in the industry.” In late August, MoviePass director Carl Schramm resigned from the company’s board, alleging that management kept him in the dark about crucial information and made it impossible for him to do his job. Schramm cited “concerns about the corporate governance” at the company and said a “number of business decisions” were presented to the board without enough time for them to review documents.