Published 12:07 pm PDT, Tuesday, July 24, 2018
- MoviePass’ parent company, Helios & Matheson, is doing a massive reverse stock split that will give investors one share for every 250 they currently own.
- The stock has declined dramatically from a high of nearly $40 to just $0.09 this week.
- Follow HMNY’s stock price in real-time here.
MoviePass’ parent company on Tuesday announced a big move designed to keep it from being delisted by the Nasdaq stock exchange.
oviePass Director And Shareholder Accused Of Defrauding InvestorsMoviePass Shareholder Accused Of Defrauding Investors Many wonder if the movie-theater subscription service and its parent company, Helios and Matheson Analytics, can survive. Their monthly losses have risen to $45 million. Now, questions about one of its directors and major shareholders are making the rounds. Muralikrishna Gadiyaram is CEO of HMNY’s former Indian parent company. Gadiyaram’s financial situation in India is so terrible the government has frozen his bank accounts. Due to fraud accusations, the company of which he is CEO was court ordered to liquidate its assets. So what does this mean for MoviePass subscribers? That’s uncertain. But at best, the revelation further taints MoviePass’s reputation, frightening investors. At worst, members will have to wait and see.
The company, Helios & Matheson, will be performing a reverse stock split, in which it will reduce its number of shares outstanding by a factor of 250. Shareholders will receive one share for every 250 they currently hold. At Tuesday’s prices, one share originally worth $0.09 would be worth $22.50. The announcement came just one day after Helios and Matheson shareholders gave their approval for the company to carry out such a measure.
At a specially-convened shareholder meeting on Monday, investors approved two measures designed to help the company avoid being kicked out of the stock exchange, something the Nasdaq warned would be possible, if the embattled company did not get its share price above $1 and its market value above $50 million.
Shareholders also approved an increase in the company’s outstanding common stock from 500 million to 5 billion at the meeting.
“We believe this is an important step that will facilitate our access to capital over the next several years and enable us to implement our growth plans for MoviePass, MoviePass Films and MoviePass Ventures, and will enable us to pursue potential acquisitions to grow our business,” Ted Farnsworth, HMNY’s chief executive, said in a press release. “With greater access to capital, we expect to solidify our position as the Number 1 movie theater subscription service in the U.S. and continue to revolutionize the movie industry.”
However there is still a risk that the company could be delisted if it does not raise its market value — something the reverse stock split will not change — above $50 million, as per Nasdaq’s requirements.
At the special meeting on Tuesday, Farnsworth told the crowded room of investors that MoviePass data shows it can easily control which theaters moviegoers choose. “Make no bones about it, this is an all out war,” he said.
HMNY’s stock price is down 99% from its October high of more than $38. That was hit shortly after the company acquiring a 92% stake in the MoviePass subscription service.
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