Act Of Desperation? Helios And Matheson Wants To Spin Off MoviePass As Separate Company

In its latest effort to remain solvent, Helios and Matheson Analytics Inc HMNY announced Tuesday that it plans on spinning off its struggling MoviePass business into its own public company.

What Happened?

Helios said in a press release that its board has approved a preliminary plan to create a new film production, marketing and exhibition subsidiary, MoviePass Entertainment Holdings, which would take ownership of MoviePass. The new company would then be spun-off into a seperate public company, with Helios shareholders receiving shares of the new company as a dividend.

Why It’s Important

Since acquiring MoviePass back in December 2017, Helios has been hemorrhaging cash and its share price has collapsed. Despite a string of changes to the pricing and benefits of the MoviePass monthly subscription, the company has yet to find a profitable recipe. In the most recent quarter, Helios reported a net loss of $132.47 per share and said it has “substantial doubt” about its ability to continue operating beyond Aug. 14, 2019.

Helios said Tuesday that cutting ties with MoviePass could help improve investor sentiment.

“HMNY largely has become synonymous with MoviePass in the public’s eye, leading us to believe that our shareholders and the market perception of HMNY might benefit from separating our movie-related assets from the rest of our company,” Helios CEO Ted Farnsworth said in a statement.

Helios stock is down 99.9 percent in the past three months.

What’s Next?

Helios shareholders will be watching to see if and when the company can complete the MoviePass spin-off. In the meantime, shareholders will vote on a 500-to-1 reverse stock split — the company’s second reverse split since July — at an upcoming shareholder meeting. In addition, shareholders will be watching for news from the New York attorney general's office, which recently launched a probe into whether Helios management misled investors about the company's finances.

Related Links:

One Year Later: The Rise And Fall Of Helios And Matheson

Helios And Matheson Again Warns There's 'Substantial Doubt' It'll Be In Business Next Summer Without More Cash

Photo courtesy of Helios and Matheson.