MoviePass Owner Seeks Another Reverse Stock Split to Avoid Delisting

Helios & Matheson is at risk of being delisted from the Nasdaq if shares aren’t lifted above $1 by Dec. 18

Last Updated: September 17, 2018 @ 1:31 PM

MoviePass parent company, Helios & Matheson, is again pushing its share holders to approve a reverse stock split in an attempt to bolster the company’s shares and put off being delisted from the Nasdaq exchange, one of the first warning signs of bankruptcy for a public company.

Helios & Matheson said in a filing with the Securities and Exchange Commission on Friday that it will hold a special meeting of shareholders on Oct. 18. At that meeting, shareholders will vote on a one-time reverse stock split of Helios & Matheson’s common stock in a ratio of 1 share-for-2 shares up to a ratio of 1 share-for-500 shares.

The company’s board of directors voted unanimously to adopt the proposal, recommending that shareholders approve the split.

“The board believes that a reverse stock split will likely be necessary to regain compliance with Nasdaq’s minimum $1.00 bid price requirement prior to the current deadline,” the company wrote in its SEC filing.

As it stands, Helios & Matheson is at risk of being delisted from the Nasdaq if it’s not able to boost its share price above $1 by Dec. 18. Shares are currently trading just above one cent.

Shares traded as high as $32.90 last October.

According to Nasdaq listing rules, when a company’s stock has been trading below $1 for 30 consecutive days, it is in jeopardy of being delisted.

This will be the second time in just a few months that Helios & Matheson will vote on a reverse split to boost shares. The company’s stock was trading below $1 over the summer before shareholders voted in late July to approve a 1-to-250 reverse stock split.

The plan helped boost the stock momentarily, but shares dropped back below $1 a week later.

In addition to reverse stock splits, Helios and Matheson has accumulated debt in attempts to stabilize the business and boost the stock price.

In July the company said it planned to raise $1.2 billion by offering stock, debt, warrants, units and/or subscription rights in order to keep the struggling movie theater ticket subscription service going. And in June Helios & Matheson announced plans to raise at least $164 million through secured convertible notes and issue up to 20,500 shares of the company’s stock.

MoviePass and its parent company have been treading water for most of the years, since Helios & Matheson dumped millions of dollars into the service in order to facilitate its rapid growth.

In its most recent quarterly filing with the Securities and Exchange Commission, Helios & Matheson said it had a net loss of $63.4 million for the three months ending June 30.

The company also said it had roughly $15 million in cash on hand at the time.

In August, MoviePass board member Carl J. Schramm resigned, saying that the ticketing company withheld important financial information and made influential decisions without the board’s input.

MoviePass said in a statement following his resignation that it was unaware of any information requested by Schramm that he did not receive, and that nothing was being withheld.