Helios and Matheson Analytics Inc. (NASDAQ: HMNY) is a provider of information technology services and solutions, offering a range of technology platforms focusing on big data, artificial intelligence, business intelligence, social listening, and consumer-centric technology. Its holdings include RedZone Map™, a safety and navigation app for iOS and Android users, a community-based ecosystem that features a socially empowered safety map app that enhances mobile GPS navigation using advanced proprietary technology.
Just over a month ago, in August 2017, the company announced it would acquire a majority interest in MoviePass. MoviePass enables subscribers to see unlimited movies, in theaters for a $9.95 monthly fee. Movie Pass has announced that subscriptions have grown to over 400,000 from the 20,000 it had when HMNY announced the acquisition. HMNY stock was at $2.60/share when the acquisition was announced and is currently trading at $4.50/share.
In August 2017, HMNY acquired a majority stake in Movie Pass. MoviePass provides film enthusiasts the ability to attend unlimited movies. The service, now accepted at more than 91% of theaters across the United States, including AMC, Regal, and Cinemark theaters, along with independent theaters. The MoviePass app enables subscribers to see unlimited movies, in theaters with no blackout dates; no contracts; just a low flat $9.95 monthly fee.
MoviePass is led by Netflix co-founder and former Redbox president Mitch Lowe. Film marketing executive and producer Stacy Spikes co-founded MoviePass in 2011. Early investors include True Ventures, AOL Ventures and Chris Kelly, MoviePass’ largest investor and former Chief Privacy Officer of Facebook.
At the time of acquisition Movie Pass had about 20,000 subscribers. HMNY just announced that one month later (September 14, 2017) that subscriptions had surpassed 400,000.
In May 2017, HMNY acquired the licensing rights to IsItYou’s facial recognition technology in the field of crime and terrorism. The technology will be integrated with RedZone’s navigation app, RedZone Map, which is used for situational awareness to improve safety. As per the company, “Through artificial intelligence and facial recognition technology, we will seek to develop the capability to identify dangerous people entering an area and notify our users in real time.”
On May 25, 2017, Zone completed the acquisition of all the assets of Trendit Ltd., an Israel-based technology company, including certain patented technology, for cash compensation of $195,143. Zone plans to integrate the patented technology with the Redzone Map app, in order to enable the app to track and analyze real-time crowd behavior, migration, and trends. The patented technology predicts population behavior, along with population size, origin, and destination, with an accuracy rate of 85%-90%, and tracks demographic segmentation of a population using a population sample of 15%, together with anonymous cellular signals and demographic big data.
The technology acquired collects data from regular cellphone activity, which it tracks and compares with extensive social/economic databases. Zone believes the technology will enable the Redzone Map app to accurately determine crowd size, social/economic status and where a crowd is moving. Zone plans to use this patented, highly-sophisticated analytical technology to alert RedZone Map app users of potential threats to their personal safety and to inform law enforcement and government officials of the location and migration patterns of known criminal or terrorist individuals and groups.
In November 2016, HMNY merges with Zone Technologies, Inc., creators of the Red Zone Map. RedZone is a state-of-the-art mapping and spatial analysis company with operations in the U.S. and Israel. It has created a community-based ecosystem that features a socially empowered safety map app that enhances mobile GPS navigation using advanced proprietary technology to guide users to their destinations, giving them a choice of a safer route vs. a riskier route. The app incorporates a social media component, which allows for “it’s happening now” crime reporting coupled with real-time crime data from more than 1,400 local, state, national and global sources. RedZone Map is currently available to iOS and Android users.
About Helios and Matheson
Helios and Matheson Analytics Inc. (HMNY) is a provider of information technology services and solutions, offering a range of technology platforms focusing on big data, artificial intelligence, business intelligence, social listening, and consumer-centric technology. Its holdings include RedZone Map™, a safety and navigation app for iOS and Android users, a community-based ecosystem that features a socially empowered safety map app that enhances mobile GPS navigation using advanced proprietary technology. Through TrendIt, Helios and Matheson has acquired technology addressing crowd and migration patterns and consumer behavior in real-time. The patented technology predicts population behavior, along with a crowd’s population size, origin, and destination. HMNY is headquartered in New York, NY.
Q1 Financial Review
Revenues of USD 1.36 million, Net Earnings of USD -6.50 million.
Gross margins narrowed from 28.14% to -13.13% compared to the same period last year, operating (EBITDA) margins now -289.21% from -7.15%.
Year-on-year change in operating cash flow of -1,352.23% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 28.14% to -13.13%. Operating margins (EBITDA margins) went from -7.15% to -289.21% in this period. For comparison, gross margins were -3.20% and EBITDA margins were -125.81% in the previous period.
The company’s working capital days have fallen to 30.89 days from 73.17 days for the same period last year.
The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from -7.31% to -320.94% and (2) one-time items that contributed to a decrease in pretax margins from -7.26% to -476.20%.
HMNY is expected to release its Q2 financial results on, or about, September 25, 2017.
Stock Influences and Risk Factors
Exponential subscription growth from the MoviePass acquisition is possible and may lead to other opportunities;
The business model MoviePass is developing could have a significant impact on the media and entertainment industry;
Ongoing investment in new technology is inherently risky, and could disrupt the business;
The company’s ability to protect their intellectual property is not certain;
Infringement on the proprietary rights of others could cause a competitive disadvantage and any related litigation could be time consuming and costly.
In intra-day trading on September 19, 2017, HMNY shares were at $4.50 (+29.31%) with heavy trading volume of 4.4 million shares. The RSI (14 day) is 74.21.
HMNY shares have crossed their 50-day ($2.88) and 200-day ($3.04) moving averages in a bullish manner.
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