Helios and Matheson Analytics Inc (HMNY)

[coneidasin]

NASDAQ HAS AUTHORITY TO REJECT 2d REVERSE SPLIT

Everyone should be familiar with the official publications from the NASADQ LISTING CENTER. Publication "1516" strongly indicates that a second reverse split, under the circumstances surrounding HMNY - with regard to severe prior dilution - will be rejected by NASDAQ to protect the public interest. See below:

NASDAQ REVERSE SPLIT DISCRETIONARY AUTHORITY: PUBLICATION 1516, April 24, 2016

Is there a limit to the number of times a listed company may effect a reverse stock split to maintain or regain compliance with the bid price requirement?

"Identification Number 1516"

While Nasdaq rules do not impose a specific limit on the number of times a listed company may effect a reverse stock split to maintain or regain compliance with the bid price requirement, a series of reverse stock splits may undermine investor confidence in securities listed on Nasdaq, especially where the reverse stock splits follow dilutive transactions. Accordingly, Nasdaq may determine that it is not in the public interest to maintain the listing of a company that has effected a series of reverse stock splits, even if the company is in compliance with the minimum price requirement as a result of those reverse stock splits. Similarly, Nasdaq may determine that a series of dilutive transactions, which result in a sustained decline in the securities price, raise public interest concerns, even where the company otherwise complies with all applicable rules, such as the shareholder approval and notification requirements.

A company considering whether a reverse stock split or proposed transaction raises such concerns is encouraged to contact its Listing Qualifications analyst by phone at [phone] to discuss the transaction prior to entering into a definitive agreement.

Publication Date*: 4/24/2018 Mailto Link
Identification Number: 1516

HMNY executives know this, and therefore they cannot present the use of a reverse split to the public/shareholders in any way that attempts to convince them to vote for a second reverse split. They know it is not likely to raise the share price above $1 for ten days, since it failed miserably the first time and the whole world now knows HMNY investors lost 99%. NASDAQ is aware of this and this situation is TAILOR MADE for Publication 1516 to control. There is no better example of a fact pattern more relevant to NASDAQ PUBLICATION 1516.

Furthermore, Federal Law protects the public against false or misleading statements. Therefore, HMNY executives are not free to suggest a reverse split will help their cause in staying listed on NASDAQ.

Finally, and perhaps most important, the proxy card for the original reverse split stated that this was a "one time" reverse split. It's not even clear that a second reverse split could be voted on at all. New investors relied on that language used in the proxy card, then reused in the filings. A "one time" reverse split was authorized. Because of the chosen wording, only one reverse split should ever take place. But if somehow there were to be a second reverse split proposed, it could only be accomplished through another shareholder vote with proper notification to the public and to NASDAQ. HMNY cannot just do it again on their own.

So, a second reverse split is not possible without a shareholder vote, and maybe it's not even possible with a shareholder vote. I know I relied on that "one time" language to invest in HMNY post reverse split, thinking the proxy card language was permanently binding. I have not found another proxy card authorization that uses that term "one time" with regard to a reverse split. I have seen it used for executive bonuses, which I do not think can be increased if they were authorized for "one time". Therefore, the same restriction should apply to a reverse split.

But on this point, I am not sure how the law would handle it. I would be inclined to go to court to stop a second reverse split via injunction and then just let the court decide.

The Nasdaq listing agent would be insane to approve a second reverse split. While it's true, NASDAQ cannot prevent any company from doing multiple reverse splits, Publication Number 1516 shows that NASDAQ can delist the stock even if a second reverse split raises the minimum bid to $1 for more than ten days.

Knowing all of this, HMNY executives are subject to CFR 240.14a-9:

§ 240.14a-9 False or misleading statements.

(a) No solicitation subject to this regulation shall be made by means of any proxy statement, form of proxy, notice of meeting or other communication, written or oral, containing any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter which has become false or misleading.

Since HMNY meets all of the other requirements for listing, it appears a second 180 day extension would be granted. Therefore, HMNY ought to be looking at ways to assure the public of dilution ending and that the company will be profitable. Two things will do that:

1. Retiring shares and/or calling for a shareholder vote to reduce authorized shares.

2. ... to be continued