Helios and Matheson (NASDAQ:HMNY) is a company in distress. The firm is struggling with monstrous debts, a financial drain subsidiary-MoviePass and a distinct possibility of being locked out of NASDAQ for non-compliance.
Helios and Matheson Stock
Helios and Matheson’s stock has been shading value for the better part of the year. Despite multiple warnings by NASDAQ, the company has failed to raise its stock to $1. The stock closed at $0.013, down 7.75% from the opening price of $0.014 in the last trading session. The stock witnessed a trading volume of over 36 million with an average volume of 64 million. The company closed the session with a market value of $36.53 million.
Source:Stockcharts.com
Cancellation of convertible notes
Nonetheless, company recently pulled a strategic maneuver with its creditors to sell its shares previously reserved for convertible notes. According to the terms of the agreement, the company would reduce its outstanding debt from $44.5 million to a reasonable $11.3 million. By extension, holders of the convertible notes –debts redeemable in company’s stock –will be issued with non-convertible notes.
Holders of the convertible notes restricted the company from liquidating its 2.6 billion shares reserve. With the new arrangement, Helios and Matheson can now sell the shares to generate more cash needed to run its operations. The creditors agreed to waiver half of the debt in case the company decided to settle it early, thus, for an early payment Helios and Matheson would need to pay only $5.7 million.
The agreement with creditors brings significant relieve to a company that had earlier warned investors about doubt of its continuity. The company spent over $100 million in the previous fiscal quarter on its subsidiaries and only had a meager $4.9 million in cash to operate on. On the brighter side, Helios and Matheson now has a stash of over 5 billion shares to sell although at a diluted stock price.
Risk of being delisted from NASDAQ
However, as earlier mentioned, Helios and Matheson’s efforts to cancel the convertible notes would go down to waste now that NASDAQ is threatening to delist its stock. The company’s stocks slipped below the $1 mark in May and despite the July reverse splitting no significant rise has been noticed.
In other news, Helios and Matheson has turned its attention to MoviePass. The company plans to turn the struggling entity to a desired “cash cow” in 2019. MoviePass has unveiled a three-tier pricing structure for 2019. The new system comes with three options of; Select Plan, All Access Plan and the Red Carpet plan. The Select Plan is a reflection of the MoviePass’ existing plan- offers limited set of films for $9.95/month. For only $14.95, subscribers of the All access plan will have access to all standard 2D movies plus Opening weekends. Lastly, for $19.95 one is eligible for the Red Carpet Plan offering access to IMAX / 3D movies per month.
As the company repositions itself for the New Year, it is unclear as to whether the new price structure alone will help repair its tainted brand. The company barely managed to appear in top entertainment category for the top 600 free iPhone Apps.