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Helios & Matheson North America Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 16, 2010 04:26PM

Helios & Matheson North America Inc. (HMNA) filed Quarterly Report for the period ended 2010-06-30. Helios & Matheson North America Inc. has a market cap of $2.68 million; its shares were traded at around $0.87 with and P/S ratio of 0.18.



Highlight of Business Operations:

Operating Expenses. Operating expenses are comprised of Selling, General and Administrative (“SG&A”) expenses, and depreciation and amortization. SG&A expenses for the three months ended June 30, 2010 were $1.1 million compared to the 2009 comparable period level of $1.3 million. The decrease in SG&A expenses is associated with various cost reduction initiatives including, but not limited to, a reduction in employee headcount and pay rates. Depreciation and amortization expenses decreased $21,000 from $35,000 for the three months ended June 30, 2009 to $14,000 for the three months ended June 30, 2010.

Taxes. Taxes for the three months ended June 30, 2010 were $5,000 compared to $4,000 for the three months ended June 30, 2009. For the three months ended June 30, 2009, the Company recorded a tax provision of $5,000 for minimum state taxes which was partially offset by ($1,000) related to provision to return adjustments from the filing of state and federal tax returns compared to a tax provision of $5,000 solely for minimum state taxes for the three months ended June 30, 2010.

Operating Expenses. Operating expenses are comprised of Selling, General and Administrative (“SG&A”) expenses, and depreciation and amortization. SG&A expenses for the six months ended June 30, 2010 were $2.2 million compared to the 2009 comparable period level of $3.0 million. The decrease in SG&A expenses is associated with various cost reduction initiatives including, but not limited to, a reduction in employee headcount and pay rates. Depreciation and amortization expenses decreased $39,000 from $70,000 for the six months ended June 30, 2009 to $31,000 for the six months ended June 30, 2010.

Taxes. Taxes for the six months ended June 30, 2010 were $9,000 compared to $11,000 for the six months ended June 30, 2009. For the six months ended June 30, 2009, the Company recorded a tax provision of $9,000 for minimum state taxes which was increased by $2,000 related to provision to return adjustments from the filing of state and federal tax returns compared to a tax provision of $9,000 solely for minimum state taxes for the six months ended June 30, 2010.

The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At June 30, 2010, the Company had approximately $1.1 million of cash and cash equivalents on hand as compared to $1.4 million at December 31, 2009. The Company has a line of credit up to $1.0 million with Keltic based on the Company’s eligible accounts receivable balances which is subject to certain financial covenants that shall apply only if the Company has any outstanding obligations to Keltic including borrowing under the facility. The combination of an outstanding balance at the end of any fiscal quarter and earnings before taxes, depreciation and amortization of less than $25,000 for that quarter will cause a default under the Loan Agreement and may require the Company to obtain a waiver from Keltic or limit the Company’s access to the line of credit. The Keltic line of credit, which was set to expire on December 31, 2009, has been extended through December 31, 2010 with no material changes in terms and conditions. For the twelve month period ended December 31, 2009 the Company reported a net loss of ($2.1) million. For the six month period ended June 30, 2010, the Company reported a net loss of ($790,000). Beyond December 31, 2010, there is no guarantee that the Company will be able to renew or replace its current financing upon expiration on commercially reasonable terms or at all. The ability of the Company to continue as a going concern is dependent on the Company achieving profitable operations and or obtaining additional sources of financing in the future.

On May 17, 2010, the Company received a letter from NASDAQ regarding compliance with NASDAQ Listing Rule 5550(b)(1) which requires a company to maintain a minimum of $2,500,000 in stockholder’s equity for continued listing. The Company received communication from NASDAQ that its stockholders’ equity of $2,251,670 as of March 31, 2010, fell short of the minimum required stockholders’ equity of $2,500,000. Additionally, the Company did not meet the alternatives of market value of listed securities or net income from continuing operations. NASDAQ communicated to the Company that it had 45 calendar days from May 17, 2010 to submit a plan to regain compliance with the Rule. On August 4, 2010, the Company entered into and consummated a private placement Securities Purchase Agreement with HM Inc, a Delaware corporation and wholly-owned subsidiary of Helios and Matheson Parent, pursuant to which HM Inc. purchased 2,739,726 shares of the Company’s common stock at a price of $0.73 per share, equal to the closing bid price of the Company’s common stock on August 3, 2010, for a total investment of $2,000,000. The investment by HM Inc. was part of a plan submitted by the Company and accepted by NASDAQ to regain compliance with NASDAQ’s minimum stockholder’s equity requirement. As a result of the private placement, which closed on August 5, 2010, the Company believes that it has regained compliance with NASDAQ Listing Rule 5550(b)(1).

Read the The complete Report



Stocks Discussed: HMNA,
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