PROSPECTUS SUPPLEMENT
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Filed Pursuant to Rule 424(b)(5)
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To prospectus dated February 9, 2018
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Registration No. 333-222685
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Up to $150,000,000 of Common Stock
We have entered into an equity distribution
agreement with Canaccord Genuity LLC relating to shares of our common stock offered by this prospectus supplement. In accordance
with the terms of the equity distribution agreement, under this prospectus supplement we may offer and sell shares of our common
stock, par value $0.01 per share, having an aggregate offering price of up to $150,000,000 from time to time through Canaccord
Genuity LLC, acting as sales agent.
Sales of our common stock, if any, under
this prospectus supplement will be made by any method that is deemed an “at-the-market offering” as defined in Rule
415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly
on or through the Nasdaq Capital Market, the existing trading market for our common stock, sales made to or through a market maker
other than on an exchange or otherwise, in negotiated transactions at market prices prevailing at the time of sale or at prices
related to such prevailing market prices, and/or any other method permitted by law, including in privately negotiated transactions.
While there is no requirement that Canaccord Genuity LLC sell any specific number or dollar amount of securities, it will act as
sales agent on a best efforts basis and use commercially reasonable efforts to sell on our behalf all of the common stock requested
to be sold by us, consistent with its normal trading and sales practices, on mutually agreed terms between Canaccord Genuity LLC
and us. There is no arrangement for funds to be received in any escrow, trust or similar arrangement.
Canaccord Genuity LLC will be entitled to
compensation at a fixed commission rate of 5.0% of the gross sales price per share sold. In connection with the sale of our common
stock on our behalf, Canaccord Genuity LLC will be deemed to be an “underwriter” within the meaning of the Securities
Act and the compensation of Canaccord Genuity LLC will be deemed to be underwriting commissions or discounts.
Our common stock trades on the Nasdaq Capital
Market under the symbol “HMNY”. The last reported trading price of our common stock on April 17, 2018 was $3.96 per
share.
Investing in our securities involves
a high degree of risk. See “Risk Factors” beginning on page S-8 of this prospectus supplement and page 7 of the accompanying
prospectus.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of our common stock or passed on the adequacy or accuracy
of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
The date of this
prospectus supplement is April 18, 2018.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS SUPPLEMENT
In this prospectus supplement, unless the
context otherwise requires, references to “we,” “us,” “our,” “our company,” “the
Company” or “Helios” refer to Helios and Matheson Analytics Inc. and its subsidiaries.
This prospectus supplement and the accompanying
prospectus relate to the offering of shares of our common stock. Before buying any of the shares of common stock offered hereby,
we urge you to carefully read this prospectus supplement and the accompanying prospectus, together with the information incorporated
herein by reference as described under the headings “Where You Can Find More Information” and “Information Incorporated
by Reference”. These documents contain important information that you should consider when making your investment decision.
This prospectus supplement contains information about the common stock offered hereby and may add, update or change information
in the accompanying prospectus.
You should rely only on the information
that we have provided or incorporated by reference in this prospectus supplement and the accompanying prospectus. Neither we nor
Canaccord Genuity LLC (nor any of its affiliates) have authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not rely on it.
We are not making offers to sell or solicitations
to buy our securities in any jurisdiction in which an offer or solicitation is not authorized or in which the person making that
offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make an offer or solicitation. You should
assume that the information in this prospectus supplement and the accompanying prospectus or any related free writing prospectus
is accurate only as of the date on the front of the document and that any information that we have incorporated by reference is
accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus supplement,
the accompanying prospectus or any related free writing prospectus, or any sale of a security.
This document is in two parts. The first
part is this prospectus supplement, which adds to and updates information contained in the accompanying prospectus. The second
part is the accompanying prospectus which provides more general information, some of which may not apply to this offering. Generally,
when we refer to this prospectus supplement, we are referring to both parts of this document combined. To the extent there is a
conflict between the information contained in this prospectus supplement and the information contained in the accompanying prospectus,
you should rely on the information in this prospectus supplement.
This prospectus supplement and the accompanying
prospectus contain summaries of certain provisions contained in some of the documents described herein, but reference is made to
the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies
of some of the documents referred to herein have been or will be filed as exhibits to the registration statement of which this
prospectus supplement is a part or as exhibits to documents incorporated by reference herein, and you may obtain copies of those
documents as described below under the headings “Where You Can Find More Information” and “Information Incorporated
by Reference”.
The industry and market data and other statistical
information contained in this prospectus supplement, the accompanying prospectus and the documents we incorporate by reference
are based on management’s estimates, independent publications, government publications, reports by market research firms
or other published independent sources, and, in each case, are believed by management to be reasonable estimates. Although we believe
these sources are reliable, we have not independently verified the information. None of the independent industry publications used
in this prospectus supplement, the accompanying prospectus or the documents we incorporate by reference were prepared on our or
our affiliates’ behalf and none of the sources cited by us consented to the inclusion of any data from its reports, nor have
we sought their consent.
DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus supplement and the accompanying
prospectus, including the documents that we incorporate by reference, may contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).
Forward-looking statements
in this prospectus supplement and the accompanying prospectus include, without limitation, statements related to our financial
and operating performance, our plans, strategies, objectives, expectations, intentions and adequacy of resources. Certain important
risks, including those discussed in the risk factors set forth under “Risk Factors” of this prospectus supplement,
could cause results to differ materially from those anticipated by some of the forward-looking statements. Some, but not all, of
these risks include, among other things:
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our ability to successfully develop the business model
of MoviePass Inc. (“MoviePass”), our majority-owned subsidiary;
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our ability to integrate the operations of MoviePass into
our operations;
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our capital requirements and whether or not we will be
able to raise capital when we need it;
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changes in local, state or federal regulations that will
adversely affect our business;
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our ability to retain our existing clients and market and
sell our services to new clients;
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whether we will continue to receive the services of certain
officers and directors;
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our ability to protect our intellectual property and operate
our business without infringing upon the intellectual property rights of others;
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our ability to effectively react to other risks and uncertainties
described from time to time in our filings with the Securities and Exchange Commission, such as fluctuation of quarterly financial
results, reliance on third party consultants, litigation or other proceedings and stock price volatility; and
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other uncertainties, all of which are difficult to predict
and many of which are beyond our control.
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In some cases, you can identify forward-looking
statements by terminology such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’
‘‘could,’’ ‘‘expects,’’ ‘‘plans,’’ ‘‘intends,’’
‘‘anticipates,’’ ‘‘believes,’’ ‘‘estimates,’’ ‘‘predicts,’’
‘‘potential,’’ or ‘‘continue’’ or the negative of such terms or other comparable
terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. We do not undertake any obligation to publicly update or review any forward-looking
statement.
PROSPECTUS SUPPLEMENT SUMMARY
OUR BUSINESS
This is only a summary and may not
contain all the information that is important to you. You should carefully read both this prospectus supplement and the accompanying
prospectus and any other offering materials, together with the additional information described under the heading “Where
You Can Find More Information”.
About Helios and Matheson Analytics
Inc.
Overview
We provide information technology services
and solutions including a range of technology platforms focusing on big data, artificial intelligence, business intelligence, social
listening, and consumer-centric technology. More recently, to provide greater value to our stockholders, we have sought to expand
our business primarily through acquisitions that leverage our capabilities and expertise.
On November 9, 2016, we acquired Zone Technologies,
Inc. (“Zone”), a state-of-the-art mapping and spatial analysis company, and on December 11, 2017, we acquired a majority
interest in MoviePass Inc. (“MoviePass”), whose primary product offering is MoviePass™, the nation’s premier
movie theater subscription service. Since December 2017, we have acquired additional shares of MoviePass common stock and as of
the date of this prospectus supplement, we own approximately 91.8% of MoviePass’ outstanding common stock (excluding shares
underlying MoviePass options and warrants).
On April 4, 2018, we acquired Moviefone
assets from Oath Inc. (formerly, AOL Inc.), an entertainment service owned by Oath Inc., a wholly-owned subsidiary of Verizon Communications
Inc. Moviefone provides over 6 million monthly unique visitors full access to the entertainment ecosystem, from movie theaters
to streaming content.
MoviePass
MoviePass was incorporated in Delaware in
2011 and is the leading movie theater subscription service in the United States that allows members to see a new movie every day
in theaters nationwide for a low fixed price. Once they sign up for the MoviePass service online, subscribers are prompted to download
the MoviePass application on their smart phones and are then mailed a MoviePass debit card. The MoviePass application shows subscribers
the show times of all the movies that are currently showing at the local movie theaters listed in the MoviePass application. Once
they have received their MoviePass debit card, subscribers can use the debit card to purchase up to one movie ticket per day at
any of the movie theaters listed in the MoviePass application without paying any additional costs.
During the four months after MoviePass’
announcement of its $9.95 per month subscription plan in August 2017, MoviePass grew to over 1,000,000 total paying subscribers
including those on either its monthly or annual plans. This represents strong growth when compared to other subscription-based
companies, such as Spotify, Hulu, ClassPass and Netflix, which achieved 1,000,000 subscribers in over 5, 10, 17 and 39 months,
respectively, estimated based on information available publicly from various news and other sources. MoviePass surpassed 1,500,000
paying subscribers in January 2018 and 2,000,000 paying subscribers in February 2018.
In March 2018, MoviePass
announced that, for a limited time, it would offer its annual subscription to new subscribers for $6.95 per month, paid annually
and with a one-time processing fee of $6.55.
MoviePass
is led by Mitch Lowe, its Chief Executive Officer, Sanjay Puri, its Chief Strategy Officer, Bernadette McCabe, its Senior Vice
President of Exhibitor Relations, Mike Berkley, Chief Product Officer, Khalid Itum, Vice President of Business Development and
Chris Kelly, its Chairman. The Company intends to combine its data and artificial intelligence technology with MoviePass’
technology. With our big data and artificial intelligence platforms and other technologies that we own, we believe we will be able
to bring a significant technological advantage to MoviePass.
MoviePass Ventures
MoviePass Ventures, LLC (“MoviePass
Ventures”) was formed as a Delaware limited liability company in January 2018 and is a wholly-owned subsidiary of the Company.
MoviePass Ventures aims to collaborate with film distributors to share in distribution fees while using the data analytics MoviePass
offers for marketing and targeting services for MoviePass’ paying subscribers using the platform. In April 2018, MoviePass
Ventures entered into an Acquisition Co-Financing and Distribution Agreement with Orchard Enterprises NY, Inc. for the purpose
of co-funding the acquisition, advertising and promotion of MoviePass Ventures’ first film, titled “American Animals,”
which premiered at the 2018 Sundance Film Festival.
Moviefone
We believe the Moviefone acquisition will
help MoviePass continue to grow its subscriber base and expand its marketing and advertising platform for its studio and brand
partners. We also believe Moviefone will allow us and MoviePass to provide relevant and appealing content to moviegoers while simultaneously
increasing the value of the Moviefone brand.
MoviePass and MoviePass Ventures Market Opportunity
Movie going is embedded in American
society and enjoyed by people of all races, ages and socio-economic levels. The 2016 Theatrical Market Statistics Report issued
by the Motion Picture Association of America (the “MPAA Report”) reports that more than three quarters (76%) of the
U.S./Canada population aged two or older, or 263 million people, went to a movie at the cinema at least once in 2017. According
to the MPAA Report, the typical moviegoer bought 4.7 tickets per year in 2017, for a total of $1.24 billion in tickets sold in
2017. Moreover, according to the MPAA Report, 12% of the U.S./Canada population are frequent moviegoers who attend the cinema once
a month or more. These individuals are responsible for 49% of all tickets sold. More than half the population are occasional moviegoers
(53%), who are also responsible for 49% of all tickets. In 2017, 24% of the U.S./Canada population did not attend the cinema.
MoviePass intends to encourage
increased attendance at movie theaters with the subscription model by targeting the occasional movie goer (those who attend less
than once a month) who represent 82% of the total movie going market.
MoviePass’ current buying
power at U.S. movie theaters represents approximately 4.8% of the U.S. box office, with MoviePass buying approximately one in every
seventeen tickets in the United States. Its strong subscriber trends and potential for customer engagement drive several revenue
opportunities. The value proposition to consumers to obtain low-cost access to regular theater attendance can benefit key constituents
and customers of MoviePass’ business: exhibitors, studios, distributors and consumers themselves. Through its continued efforts
at targeting and improving the consumer experience, MoviePass aims to maintain its strong subscriber growth and to leverage such
growth with its key constituents to improve operational efficiencies, create cross-platform synergies and create multiple growing
revenue streams.
MoviePass Ventures aims to leverage the
Company’s and MoviePass’ ability to increase attendance in movie theaters to improve marketing efforts and work directly
with distributors to drive consumers toward particular independent films and to share in the economic performance of such films.
Competition
MoviePass and MoviePass Ventures
The market for filmed entertainment
ticketing services is intensely competitive and subject to rapid change. MoviePass’ potential competitors include Atom Tickets,
MovieTickets.com, Fandango, AMC Entertainment Holdings Inc.’s AMC Stubs program, Regal Entertainment Group’s Regal
Crown Club and Cinemark Holdings, Inc.’s Movie Club, as well as other potential exhibitors offering their own subscription
services or loyalty programs. In addition, Sinemia Inc. offers a movie theater subscription service that functions similarly to
MoviePass.
AMC Stubs is a loyalty program
offered by AMC Entertainment Holdings Inc. with approximately 10.8 million household members. Movie goers can join the loyalty
program as either a basic member for free or a premiere member for $15. The basic membership offers free popcorn refills, up to
a $2 discount on tickets on Tuesdays, $5 rewards for every 5,000 points (points are earned at a rate of 20 points for every $1
spent), waived online ticket fees and free popcorn on the member’s birthday. Premiere members receive a $5 discount on tickets
on Tuesdays, earn 100 points for every $1 spent and all the other benefits that come with the basic membership.
Regal Entertainment Group also
offers a loyalty program with approximately 14 million active members called the Regal Crown Club. The program only has one membership
option and is free to join. Regal Crown Club members earn credits for every $1 they spend on movie tickets and at concession stands.
Points can be redeemed for rewards via the use of a physical card or a virtual card with Regal’s mobile app. Rewards include
free concession items, merchandise, movie tickets and more.
On December 5, 2017, Cinemark
Holdings Inc. launched Movie Club. Movie Club is a monthly subscription plan that allows subscribers to buy one movie ticket a
month for a discounted price of $8.99. Members of Movie Club can roll over unused tickets from month to month and receive a 20%
discount on items bought at concession stands. Movie Club membership is only valid at Cinemark theaters.
Many of these competitors have
longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and
other resources than MoviePass does. Some of these competitors have adopted, and may continue to adopt, aggressive pricing policies
and devote substantially more resources to marketing and website and systems development than MoviePass does. In addition, MoviePass’
competitors may form or extend strategic alliances with studios, exhibitors and distributors that could affect adversely MoviePass’
ability to compete on favorable terms.
As a new entrant into film distribution,
MoviePass Ventures will have competitors with longer operating histories in the distribution of independent films, deeper ties
with industry executives and film producers, and greater financial, marketing and other resources than MoviePass Ventures. MoviePass
Ventures will also face competition from larger film distributors which focus on higher budget film production and distribution.
MoviePass Intellectual Property
MoviePass uses a combination
of trademark, copyright and trade secret laws and confidentiality agreements to protect its proprietary intellectual property.
MoviePass has a registered trademark for the MoviePass name. MoviePass owns U.S. Patent Nos. 8,484,133, 8,612,235, and 9,135,578.
MoviePass has filed applications for additional trademarks and two patents. MoviePass’ outstanding trademark and patent applications
may not be allowed. Even if these applications are allowed, they may not provide MoviePass with a competitive advantage. Competitors
may challenge successfully the validity and scope of MoviePass’ patents and trademark(s). MoviePass’ trademark(s),
trademark applications, patents, and patent applications may not provide MoviePass with a competitive advantage. To date, MoviePass
has relied primarily on proprietary processes and know-how to protect its intellectual property related to its Web site, mobile
application and fulfillment processes.
From time
to time, MoviePass may encounter disputes over rights and obligations concerning intellectual property. MoviePass believes that
its service offering does not infringe the intellectual property rights of any third party. However, it cannot assure you that
MoviePass will prevail in any intellectual property dispute.
MoviePass/Fandor/Costco Subscription Offer
On December 12, 2017, MoviePass
and Fandor, the streaming service with the largest collection of independent films, documentaries, international features and shorts,
announced that both companies partnered with Costco Wholesale Corporation (“Costco”) to offer a one-year subscription
plan for a flat fee of $70.00 paid in advance. The subscription plan for both services was made available exclusively to Costco
members for a limited time and covers a year of membership for both MoviePass and Fandor. The subscription plan was extended through
February 2018.
MoviePass/Fandor
In February 2018, MoviePass and
Fandor launched a limited-time annual subscription plan to allow movie-goers to see a new movie in a movie theater every day for
a year, and have access to the full Fandor content library for a year, for a flat fee of $105.35 paid in advance ($7.95 per month
plus a one-time $19.95 processing fee less $10 of revenue share with Fandor).
Zone Spin-Off
In March 2018, we announced that
our Board of Directors approved a plan to spin-off Zone, our wholly-owned subsidiary. Following the spin-off, Zone would become
an independent publicly traded company that we would expect to also be listed on Nasdaq. The spin-off is subject to numerous conditions,
including, the effectiveness of a Registration Statement on Form S-1 to be filed with the Securities and Exchange Commission and
the approved listing of Zone’s common stock on Nasdaq.
Pursuant to the spin-off, we
plan to distribute shares of Zone common stock as a dividend to persons who hold our common stock as of a record date to be determined.
We expect to set a record date to determine the stockholders entitled to receive shares of Zone in the spin-off for approximately
20 to 40 days before the effective date of the spin-off. Holders of any of our convertible notes and warrants outstanding as of
the applicable record date may be entitled to participate in the dividend of Zone shares in the spin-off in accordance with the
terms of such notes and warrants. The strategic goal of the spin-off is to create two separate companies, each of which can focus
on its own strengths and operational plans and be publicly traded. There is no assurance that we will be able to complete the spin-off,
and our Board of Directors may at any time decide not to proceed with the spin-off.
Proposed Public Offering
On April 18, 2018, we filed with the Securities
and Exchange Commission a prospectus supplement to commence a best efforts underwritten public offering, subject to market and
other conditions, to issue and sell shares of our common stock and warrants to purchase shares of our common stock (the “April
2018 Offering”). The shares of common stock and warrants to purchase shares of common stock are being offered as units. There
can be no assurance as to whether or when the April 2018 Offering may be completed, or to the actual size or terms of the April
2018 Offering. We intend to use the net proceeds from the April 2018 Offering for the same purposes as the proceeds from this offering.
Financial Update
Our cash and cash equivalents balance as
of March 31, 2018 was approximately $42 million. The cash and cash equivalents balance as of March 31, 2018 does not include approximately
$15 million deposited with our primary merchant processor as a reserve fund of a portion of the payments received for annual and
other extended term subscription plans, which amount is classified as accounts receivable on our balance sheet and is expected
to be disbursed to us during the course of 2018.
As of April 15, 2018, there is no remaining
amount of unrestricted principal owed under the convertible notes we issued in November 2017 and January 2018, but we owe $2,089,439
in interest and certain make-whole obligations under such notes.
Corporate Information
Our executive offices are located at The
Empire State Building, 350 Fifth Avenue, New York, New York 10118, and our telephone number is (212) 979-8228. Additional information
about us is available on our website at www.hmny.com. The information contained on or that may be obtained from our website is
not, and shall not be deemed to be, a part of this prospectus supplement. Our common stock, par value $0.01 per share, is currently
traded on the Nasdaq Capital Market under the ticker symbol “HMNY”.
For a description of our business, financial
condition, results of operations and other important information regarding us, we refer you to our filings with the Securities
and Exchange Commission incorporated by reference in this prospectus supplement. For instructions on how to find copies of these
documents, see “
Where You Can Find More Information
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THE OFFERING
Common Stock offered by us
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Our common stock having an aggregate offering price of up to $150,000,000.
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Common Stock outstanding after this offering
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88,626,085 shares of common stock (as more fully described in the notes following this table), assuming the sale by us of 35,629,454 shares of common stock in this offering at an assumed offering price of $4.21 per share, which was the last reported sale price of our common stock on the Nasdaq Capital Market on April 16, 2018, for aggregate proceeds of up to $150,000,000. The actual number of shares issued will vary depending on the sales price under this offering.
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Manner of offering
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“At-the-market” offering that may be made from time to time through our sales agent, Canaccord. See “Plan of Distribution” on page S-14.
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Use of proceeds
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We may use the net proceeds from the sale of the common stock offered by us under this prospectus supplement to increase our ownership stake in MoviePass or to support the operations of MoviePass and MoviePass Ventures; to satisfy a portion or all of any amounts payable in connection with the convertible notes issued on November 7, 2017 and January 23, 2018, to the extent that they remain outstanding; and for general corporate purposes and transaction expenses. We may also use the proceeds to make other acquisitions. See “Use of Proceeds” on page S-12.
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Risk factors
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You should read the “Risk Factors” section of this prospectus supplement and in the documents incorporated by reference in this prospectus supplement for a discussion of factors to consider before deciding to purchase our common stock.
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Nasdaq Capital Market Symbol
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“HMNY”
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The number of shares of common stock to
be outstanding after this offering is based on 52,996,631 shares of common stock outstanding as of April 15, 2018, and excludes,
in each case as of April 15, 2018:
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2,610,000 shares of common stock available and reserved for issuance pursuant to the Helios and Matheson Analytics Inc. 2014
Equity Incentive Plan;
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810,401 shares of common stock that may be issued upon the exercise of warrants by Palladium Capital Advisors LLC;
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5,136,355 shares of common stock reserved for issuance to various officers, directors, employees and consultants;
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4,000,001 shares of common stock issuable to MoviePass upon receipt of approval by our stockholders and conversion of the convertible
promissory note in the principal amount of $12,000,000 issued by us to MoviePass upon completion of our acquisition of a majority
stake in MoviePass;
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10,694,178 shares of common stock issuable upon the conversion of restricted principal and related interest and make-whole
payments under the convertible debt for which an equivalent amount owed to us under the applicable investor notes has not yet been
paid to the Company. Such restricted principal amount may not, as of the date of this prospectus supplement, be converted into
any shares of common stock;
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28,330,769 shares of common stock issuable upon the exercise of warrants issued in public offerings
in December 2017 and February 2018;
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2,550,154 shares of common stock issuable upon the exercise of warrants issued to Oath upon the
closing of the Moviefone Acquisition;
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500,000 shares reserved for issuance to Helios and Matheson Information Technology Ltd. in exchange
for entering into prior lockup agreements and a new 12-month lockup agreement;
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192,991 shares of common stock
reserved
for an institutional investor to be issued in exchange for the waiver of certain rights;
and
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shares of common stock, warrants and shares of common stock issuable upon exercise of warrants,
that may be issued in the concurrent April 2018 Offering.
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RISK FACTORS
Investing in our common stock involves
a high degree of risk. Please see the risk factors set forth in Part I, Item 1A of our most recent Annual Report on Form 10-K and
Part II, Item 1A of our most recent Quarterly Report on Form 10-Q and other filings we make with the Securities and Exchange Commission,
which are incorporated by reference in this prospectus supplement. Before making an investment decision, you should carefully consider
these risks as well as other information we include or incorporate by reference in this prospectus supplement. The risks and uncertainties
we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently
deem immaterial may also affect our business operations. These risks could materially affect our business, results of operations
or financial condition and cause the value of our securities to decline.
Risks Related to this Offering and
our Common Stock
The anticipated proceeds from the concurrent April 2018
Offering, along with our cash and cash equivalents, may not be sufficient to fund our operations for the near future and we may
not be able to obtain additional financing.
As of March 31, 2018, we had
approximately $42 million in cash and cash equivalents. We believe that our average cash deficit has been approximately $20
million per month from September 30, 2017 to March 31, 2018. Our future capital requirements and the period for which we
expect our existing resources to support our operations may vary significantly from what we expect. Further, if we use all or
a portion of the anticipated net proceeds for acquisitions, we will need additional capital to support our operations during
such period. Our monthly spending levels will vary based on the integration of MoviePass and our ability to develop the
MoviePass business model. Because the length of time and activities associated with the integration and development of
MoviePass is highly uncertain, we are unable to estimate the actual funds we will require. The anticipated proceeds from the
April 2018 Offering, along with our cash and cash equivalents, may not be sufficient to fund our operations for the near
future and we may not be able to obtain additional financing. If we are unable to obtain sufficient amounts of additional
capital, we may be required to reduce the scope of our planned growth or otherwise alter our business objectives and
operations, which could harm our business, financial condition and operating results.
Any failure to maintain effective internal control over
our financial reporting could materially adversely affect us.
Section 404 of the Sarbanes-Oxley Act of
2002 requires us to include in our annual reports on Form 10-K an assessment by management of the effectiveness of our internal
control over financial reporting. Our management assessed our internal control over financial reporting as of December 31, 2017.
Based on such assessment, we concluded that our internal control over financial reporting was not effective as of December 31,
2017 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external reporting purposes in accordance with U.S. generally accepted accounting principles. The material weakness we have
identified is as follows:
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Due to the significant number of transactions that occurred during the fourth quarter of 2017 including, but not limited to,
the acquisition of MoviePass and the related financing arrangements, it was determined that we had inadequate monitoring controls
in place related to our financial reporting, debt and equity related transactions and other management oversight procedures due
to the lack of sufficient accounting resources to complete an effective review of the various complex and significant transactions.
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The MoviePass acquisition on December 11,
2017 and the post-acquisition integration related activities represents a material change in our internal control over financial
reporting. We are in the process of evaluating the impact of the acquisition on our internal control over financial reporting as
well as the necessary controls and procedures to be implemented.
Our internal control over financial reporting
will not prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will
not occur or that all control issues and instances of fraud will be detected. If we are not able to comply with the requirements
of Section 404 in a timely manner, if we do not remedy the current material weakness or if we identify additional material weaknesses
in our internal controls, investors could lose confidence in the reliability of our financial statements, the market price of our
stock could decline and we could be subject to sanctions or investigations by the SEC, or other regulatory authorities.
The sale of a substantial amount of our common stock
in the public market and the issuance of shares reserved for issuance to consultants and upon conversion of convertible instruments
could adversely affect the prevailing market price of our common stock.
As of April 15, 2018 we had 52,996,631 shares
of common stock issued and outstanding and the closing sale price of our common stock on April 17, 2018 was $3.96.
The issuances of convertible notes in December,
2016, February, 2017 Notes, and August, 2017 (collectively, the “Notes”) and the subsequent transactions, resulted
in a high volume of activity for our securities. While no obligations are currently outstanding under the Notes, we may engage
in similar transactions, which transactions may include registration rights. The registration of such additional securities and
the potential for high volume trades of our common stock in connection with these financings may have a downward effect on our
market price. In addition, in connection with the Notes, we issued five-year warrants to a financial advisor, of which 810,401
are currently exercisable. Future issuance of our common stock upon exercise of these warrants may have a further negative impact
on our stock price.
Further, as a result of the issuance of
additional convertible notes on each of November 7, 2017 and January 23, 2018, 9,639,043 shares of our common stock may be issuable
upon conversion of outstanding debt. We have repaid in cash all unrestricted principal in the amounts of $20,650,000 and $25,000,000
under the November 7, 2017 and the January 23, 2018 notes, respectively, as a result of which no unrestricted principal remains
outstanding as of the date of this prospectus supplement. As such, the 9,639,043 shares noted above represent shares issuable upon
conversion of restricted principal under such convertible debt for which an equivalent amount owed to us under the applicable notes
has not yet been paid. Such restricted principal may not, as of the date of this prospectus supplement, be converted into any shares
of our common stock. However, if holders of these notes provide additional payments to us under these notes, these shares will
no longer constitute restricted principal and may be issuable by us to the holders.
Finally, as of April 15, 2018, we have reserved
for issuance, but not yet issued, a substantial amount of additional shares that are included in “Summary – The Offering
– Common stock outstanding after the offering.” The issuance of shares we are obligated to issue, the issuance of shares
we may issue in connection with conversion or exercise of our outstanding convertible instruments and shares we may issue in the
April 2018 Offering may result in a higher volume trading of our securities, which may increase dilution of existing investors
and further depress the market price of our common stock, which may negatively affect our stockholders’ equity and our ability
to raise capital on terms acceptable to us in the future.
In connection with the acquisition of MoviePass,
we issued a $12,000,000 convertible promissory note to MoviePass. If converted into shares of our common stock, the ownership of
our stockholders will be substantially diluted.
On December 11, 2017, we issued a convertible
promissory note in the principal amount of $12,000,000 to MoviePass as partial consideration for our acquisition of a majority
stake in MoviePass (the “MoviePass Note”). Upon receipt of approval from our stockholders in accordance with Nasdaq
Listing Rule 5635, the entire unpaid and outstanding principal amount and any accrued unpaid interest thereon under the MoviePass
Note will convert automatically into an aggregate of 4,000,001 shares of our common stock. This amount of shares represents approximately
7.6% of the number of shares we had outstanding on April 15, 2018. If we obtain stockholder approval and issue these shares, the
ownership of our current stockholders will be substantially diluted.
The price of our common stock has been volatile,
and the market price of our common stock may decrease.
The per share price of our common stock
has been volatile. Since January 1, 2017 the per share closing price of our common stock has been as low as $2.23 on May 16, 2017
and as high as $32.90 on October 11, 2017. Market prices for securities of technology companies have historically been particularly
volatile. The factors that may cause the market price of our common stock to fluctuate include, but are not limited to:
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our ability to derive financial benefits from our ownership stake in MoviePass;
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the ability of MoviePass to become cash flow positive or profitable;
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the ability of MoviePass Ventures to enter into economic arrangements with film distributors and derive economic benefits from
such arrangements;
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our ability to recruit and retain qualified IT personnel;
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changes in the perception of investors and securities analysts regarding the risks to our business or the condition of our
business;
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changes in our relationships with key clients;
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changes in the market valuation or earnings of our competitors or companies viewed as similar to us;
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changes in key personnel;
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changes in our capital structure, such as future issuances of securities or the incurrence of debt;
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the granting or exercise of employee stock options or other equity awards; and
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general market and economic conditions.
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In addition, the equity markets have experienced
significant price and volume fluctuations that have affected the market prices for the securities of technology companies for a
number of reasons, including reasons that may be unrelated to our business or operating performance. These broad market fluctuations
may result in a material decline in the market price of our common stock and you may not be able to sell your shares at prices
you deem acceptable. In the past, following periods of volatility in the equity markets, securities class action lawsuits have
been instituted against public companies. Such litigation, if instituted against us, could result in substantial cost and the diversion
of management attention.
While we are no longer a controlled company, Helios
and Matheson Information Technology Ltd., Theodore Farnsworth and Oath, our three largest stockholders (the “Principal Stockholders”),
together, as of the date of this prospectus supplement, own approximately 11.1% of our issued and outstanding voting securities.
This concentration of stock ownership gives them substantial influence over us and could delay or prevent a change in corporate
control.
As the holders of approximately 11.1% of
our common stock, the Principal Stockholders may substantially influence the outcome of matters submitted to our stockholders for
approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets.
In addition, the Principal Stockholders have significant influence over our management and affairs, particularly Mr. Farnsworth,
who is our Chief Executive Officer and the Chairperson of our Board of Directors. This concentration of ownership might harm the
market price of our common stock by:
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delaying, deferring or preventing a change in control;
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impeding a merger, consolidation, takeover or other business combination involving us; or
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discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.
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You will experience immediate and substantial dilution
in the book value per share of the common stock you purchase.
Because the price per share of our common
stock being offered will be higher than the book value per share of our common stock, you will suffer substantial dilution in the
net tangible book value of the securities you purchase in this offering. See the section titled “Dilution” below for
a more detailed discussion of the dilution you will incur if you purchase common stock in this offering.
Because our management will have broad discretion
and flexibility in how the net proceeds from this offering are used, we may use the net proceeds in ways in which you disagree.
We currently intend to use the net proceeds
from this offering to increase our ownership stake in MoviePass or to support the MoviePass or MoviePass Ventures operations and
business plans; to satisfy a portion or all of the amounts payable in connection with the convertible notes issued on November
7, 2017 and January 23, 2018, to the extent that they remain outstanding; and for general corporate purposes and transaction expenses.
We have not allocated specific amounts of the net proceeds from this offering for any of the foregoing purposes. Accordingly, our
management will have significant discretion and flexibility in applying the net proceeds of this offering. You will be relying
on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity, as part
of your investment decision, to assess whether the net proceeds are being used appropriately. It is possible that the net proceeds
will be invested in a way that does not yield a favorable, or any, return for us. The failure of our management to use such funds
effectively could have a material adverse effect on our business, financial condition, operating results and cash flow.
It is not possible to predict the aggregate proceeds
resulting from sales made under the equity distribution agreement.
Subject to certain limitations in the equity
distribution agreement and compliance with applicable law, we have the discretion to deliver a placement notice to Canaccord at
any time throughout the term of the equity distribution agreement. The number of shares that are sold through Canaccord after delivering
a placement notice will fluctuate based on a number of factors, including the market price of our common stock during the sales
period, the limits we set with Canaccord in any applicable placement notice, and the demand for our common stock during the sales
period. Because the price per share of each share sold will fluctuate during the sales period, it is not currently possible to
predict the aggregate proceeds to be raised in connection with those sales.
The common stock offered hereby will be sold in
“at the market offerings,” and investors who buy shares at different times will likely pay different prices.
Investors who purchase shares in this offering
at different times will likely pay different prices, and so may experience different levels of dilution and different outcomes
in their investment results. We will have discretion, subject to market demand, to vary the timing, prices, and number of shares
sold in this offering. In addition, subject to the final determination by our board of directors, there is no minimum or maximum
sales price for shares to be sold in this offering. Investors may experience a decline in the value of the shares they purchase
in this offering as a result of sales made at prices lower than the prices they paid.
USE OF PROCEEDS
We may issue and sell common stock having
aggregate sales proceeds of up to $150,000,000 from time to time. The amount of proceeds from this offering will depend upon the
number of shares of common stock sold and the market price at which they are sold. There can be no assurance that we will be able
to sell any shares under or fully utilize the equity distribution agreement with Canaccord as a source of financing. Because there
is no minimum offering amount required as a condition to close this offering, the actual total public offering amount, commissions
and proceeds to us, if any, are not determinable at this time.
We
may use the net proceeds from the sale of Units offered by us under this prospectus supplement to increase our ownership stake
in MoviePass or to support the MoviePass or MoviePass Ventures operations and business plans, and for general corporate purposes
and transaction expenses. We may also use the proceeds to make other acquisitions.
It is also possible that we may
use a portion of the proceeds from this offering to satisfy a portion or all of any amounts payable in connection with the convertible
notes issued on November 7, 2017 and January 23, 2018 to the extent that they remain outstanding.
As of April 15, 2018, there is no remaining
amount of unrestricted principal owed under the convertible notes we issued on November 7, 2017. Any future outstanding amounts
of unrestricted principal under these convertible notes will accrue interest at a rate of 10% per year. Restricted principal under
these convertible notes accrues interest at the rate of 5.25% per year. These convertible notes will become due and payable on
November 7, 2019. The holders of these notes have an optional redemption right in the event that we complete an equity or equity-linked
financing (such as this offering), upon an Event of Default (as defined in such convertible notes), in the event of a Change of
Control (as defined in such convertible notes) or at any time following the seven month anniversary of the issue date of these
convertible notes. The restricted principal amount of these convertible notes will be offset against any amounts owed by the noteholders
to us pursuant to the promissory notes given by the noteholders to us as partial consideration for these convertible notes, in
connection with any such redemption. Upon redemption or conversion of these convertible notes, the noteholders are entitled to
the total amount of interest that would have accrued with respect to the total amount being converted or redeemed from the applicable
date of conversion or redemption through the maturity date, which we refer to as a “make-whole amount”. We used the
net proceeds received to date from these convertible notes to increase our equity ownership of MoviePass and for general corporate
purposes.
As of April 15, 2018, there is no remaining
amount of unrestricted principal owed under the convertible notes we issued on January 23, 2018. Any future outstanding amounts
of unrestricted principal under these convertible notes will accrue interest at the rate of 10% per year. Restricted principal
under these convertible notes accrues interest at the rate of 5.25% per year. These convertible notes become due and payable on
January 23, 2020. The holders of these convertible notes have an optional redemption right in the event that we complete an equity
or equity-linked financing (such as this offering), upon an Event of Default (as defined in such convertible notes), in the event
of a Change of Control (as defined in such convertible notes) or at any time following the six month anniversary of the issue date
of these convertible notes. The restricted principal amount of these convertible notes will be offset against any amounts owed
by the noteholders to us pursuant to the promissory notes given by the noteholders to us as partial consideration for these convertible
notes, in connection with any such redemption. Upon redemption or conversion of these convertible notes, the noteholders are entitled
to the total amount of interest that would have accrued with respect to the total amount being converted or redeemed from the applicable
date of conversion or redemption through the maturity date, which we refer to as a “make-whole amount”. We used the
net proceeds received to date from these convertible notes to increase our equity ownership of MoviePass, subject to the limitations
of Nasdaq Listing Rule 5635, and for general corporate purposes.
As of April 15, 2018, there is no remaining
amount of unrestricted principal owed under the convertible notes we issued in November 2017 and January 2018, but we owe $2,089,439
in interest and certain make-whole obligations under such notes.
In order to fund our operations for the
foreseeable future, we will require additional capital exceeding our cash on hand even after giving effect to the net proceeds
from the April 2018 Offering. In addition, actual costs and expenditures may exceed management's current expectations. It is unlikely
that we will generate sufficient operating cash flow to meet our business objectives. Accordingly, we will need to raise additional
capital in the future over and above the net proceeds from the April 2018 Offering.
As of the date of this prospectus supplement,
we cannot specify with certainty all of the particular uses of the net proceeds of this offering. Our management will have significant
flexibility in applying the net proceeds from this offering, and investors will be relying on the judgment of our management regarding
the application of these net proceeds. Pending the uses described above, we intend to invest the net proceeds from this offering
in short-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations
of the U.S. government.
DIVIDEND POLICY
We do not anticipate paying any cash dividends
in the foreseeable future. We expect to retain available cash to finance ongoing operations and the potential growth of our business.
Any future determination to pay dividends on our common stock will be at the discretion of our board of directors and will depend
upon, among other factors, our results of operations, financial condition, capital requirements, business prospects and other factors
our board of directors may deem relevant, and subject to the restrictions contained in any future financing instruments.
DILUTION
Our net tangible book value as of December
31, 2017 was approximately $(108.3) million, or $(4.51) per share. We calculate net tangible book value per share by dividing our
net tangible book value, which is tangible assets less total liabilities, by the number of outstanding shares of our common stock.
Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers of common
stock in this offering and the as adjusted net tangible book value per share of common stock immediately after giving effect to
this offering.
After giving effect to the sale by us of
7,425,000 Series A-1 Units and 11,675,000 Series B-1 Units under the February 2018 Offering at the public offering price of $5.50
per unit (which per unit price assumes the exercise of all pre-funded Series B-1 Warrants offered in the February 2018 Offering
for $0.001 per share), and after deducting the underwriting discounts and commissions and estimated offering expenses payable by
us, our pro forma as adjusted net tangible book value as of December 31, 2017 would have been approximately $(11.4) million, or
$(.27) per share.
After giving effect to the sale by us of
shares of our common stock in the aggregate amount of $150,000,000 in this offering at an assumed offering price of $4.21 per share,
the last reported sale price of our common stock on the Nasdaq Capital Market on April 16, 2018, and after deducting commissions
and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of December 31, 2017 would
have been approximately $128.8 million, or $1.64 per share. This represents an immediate increase in as adjusted net tangible book
value of $1.91 per share to existing stockholders and an immediate dilution of $2.57 per share to new investors purchasing our
common stock in this offering. The following table illustrates this dilution on a per share basis:
Assumed public offering price per share for this offering
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$
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4.21
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Historical net tangible book value per share as of December 31, 2017
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$
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(4.51
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Increase in pro forma net tangible book value per share after the February 2018 Offering
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$
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4.24
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Pro forma net tangible book value per share as of December 31, 2017 after the February 2018 Offering
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$
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(.27
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Increase in pro forma net tangible book value per share after this offering
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$
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1.91
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As adjusted pro forma net tangible book value per share as of December 31, 2017, after giving effect to this offering
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$
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1.64
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Dilution per share to new investors
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$
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2.57
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The foregoing table does not take into account
further dilution to new investors that could occur upon the exercise of outstanding options, restricted stock units and warrants
having a per share exercise price less than the assumed public offering price in this offering.
For purposes of calculating pro forma net
tangible book value, the above table is based on 23,981,253 shares of our common stock issued and outstanding as of December 31,
2017, and does not include the following:
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9,915,378 shares of common stock issued subsequent to December 31, 2017 for the acquisition of MovieFone, exercise of warrants,
conversion of notes payable and consultant and employee stock compensation;
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2,610,000 shares of common stock available and reserved for issuance pursuant to the Helios and Matheson Analytics Inc. 2014
Equity Incentive Plan;
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810,401 shares of common stock that may be issued upon the exercise of warrants by Palladium Capital Advisors LLC;
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5,136,355 shares of common stock reserved for issuance to various officers, directors, employees and consultants;
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4,000,001 shares of common stock issuable to MoviePass upon receipt of approval by our stockholders and conversion of the convertible
promissory note in the principal amount of $12,000,000 issued by us to MoviePass upon completion of our acquisition of a majority
stake in MoviePass;
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10,694,178 shares of common stock issuable upon the conversion of restricted principal and related interest and make-whole
payments under the convertible debt for which an equivalent amount owed to us under the applicable investor notes has not yet been
paid to the Company. Such restricted principal amount may not, as of the date of this prospectus supplement, be converted into
any shares of common stock;
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28,330,769 shares of common stock issuable upon the exercise of warrants issued in public offerings
in December 2017 and February 2018;
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2,550,154 shares of common stock issuable upon the exercise of warrants issued to Oath upon the
closing of the Moviefone Acquisition;
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500,000 shares reserved for issuance to Helios and Matheson Information Technology Ltd. in exchange
for entering into prior lockup agreements and a new 12-month lockup agreement;
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192,991 shares of common stock
reserved
for an institutional investor to be issued in exchange for the waiver of certain rights;
and
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shares of common stock, warrants and shares of common stock issuable upon exercise of warrants,
that may be issued in the concurrent April 2018 Offering.
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PLAN OF DISTRIBUTION
We have entered into an equity distribution
agreement with Canaccord under which we may issue and sell shares of our common stock having an aggregate gross sales price of
up to $150,000,000 from time to time through Canaccord acting as agent.
Upon delivery of a placement notice and
subject to the terms and conditions of the equity distribution agreement, Canaccord will sell our common stock by any method permitted
by law deemed to be an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act, including
sales made directly on the Nasdaq Capital Market, on any other existing trading market for our common stock or to or through a
market maker. Canaccord may also sell our common stock by any other method permitted by law, including in privately negotiated
transactions. We may instruct Canaccord not to sell common stock if the sales cannot be effected at or above the price designated
by us from time to time. We or Canaccord may suspend the offering of common stock upon notice and subject to other conditions.
We will pay Canaccord commissions, in cash,
for its services in acting as agent in the sale of our common stock. Canaccord will be entitled to compensation at a fixed commission
rate of 5.0% of the gross sales price per share sold. Because there is no minimum offering amount required as a condition to close
this offering, the actual total public offering amount, commissions and proceeds to us, if any, are not determinable at this time.
We have also agreed to reimburse Canaccord for certain specified expenses, including the fees and disbursements of its legal counsel,
in an amount not to exceed $50,000. We estimate that the total expenses for the offering, excluding compensation and reimbursement
payable to Canaccord under the terms of the equity distribution agreement, will be approximately $100,000.
Settlement for sales of common stock will
occur on the second business day following the date on which any sales are made, or on some other date that is agreed upon by us
and Canaccord in connection with a particular transaction, in return for payment of the net proceeds to us. Sales of our common
stock as contemplated in this prospectus supplement will be settled through the facilities of The Depository Trust Company or by
such other means as we and Canaccord may agree upon. There is no arrangement for funds to be received in an escrow, trust or similar
arrangement.
Canaccord will use its commercially reasonable
efforts, consistent with its normal trading and sales practices, to solicit offers to purchase the common stock under the terms
and subject to the conditions set forth in the equity distribution agreement. In connection with the sale of the common stock on
our behalf, Canaccord will be deemed to be an “underwriter” within the meaning of the Securities Act and the compensation
paid to Canaccord will be deemed to be underwriting commissions or discounts. We have agreed to provide indemnification and contribution
to Canaccord against certain civil liabilities, including liabilities under the Securities Act.
The offering of our common stock pursuant
to the equity distribution agreement will terminate automatically upon the sale of all of our common stock subject to the equity
distribution agreement or as otherwise permitted therein. We and Canaccord may each terminate the equity distribution agreement
at any time upon 10 days’ prior written notice.
Any portion of the $150,000,000 of common
stock included in this prospectus supplement that is not sold or included in an active placement notice pursuant to the equity
distribution agreement is available for sale in other offerings pursuant to the base prospectus, and if no shares are sold under
the equity distribution agreement, the full $150,000,000 of securities may be sold in other offerings pursuant to the base prospectus
and a corresponding prospectus supplement.
Canaccord and its affiliates have in the
past provided, and may in the future provide, various investment banking, commercial banking and other financial services for us
and our affiliates, for which services they have received, or may in the future receive, customary fees. Canaccord may receive
customary fees and commissions in connection with the April 2018 Offering. To the extent required by Regulation M, Canaccord will
not engage in any market making activities involving our common stock while the offering is ongoing under this prospectus supplement.
This prospectus supplement in electronic
format may be made available on a website maintained by Canaccord and Canaccord may distribute this prospectus supplement electronically.
LEGAL MATTERS
The validity of the issuance of the securities
offered hereby will be passed upon for us by Greenberg Traurig, LLP, Los Angeles, California. Canaccord Genuity LLC is being represented
in connection with this offering by Goodwin Procter LLP, New York, New York.
EXPERTS
Rosenberg Rich Baker Berman & Company,
independent registered public accounting firm, has audited our consolidated financial statements included in our Annual Report
on Form 10-K for the years ended December 31, 2017 and 2016, as set forth in their report, which is incorporated by reference in
this prospectus supplement and elsewhere in the registration statement in which this prospectus supplement is included, which report
includes an explanatory paragraph about the existence of substantial doubt concerning our ability to continue as a going concern.
Our consolidated financial statements for the years ended December 31, 2017 and 2016 are incorporated by reference in reliance
on Rosenberg Rich Baker Berman & Company’s report, given on their authority as experts in accounting and auditing.
The balance sheet of Zone Technologies,
Inc. as of December 31, 2015, and the related statements of operations, stockholders’ deficit, and cash flows for the period
then ended, have been audited by EisnerAmper LLP, independent registered public accounting firm, as stated in their report which
is incorporated by reference from the Company’s Form 8-K/A, Amendment No. 1, filed with the Securities and Exchange Commission
on September 20, 2016, which report includes an explanatory paragraph about the existence of substantial doubt concerning Zone
Technologies, Inc.’s ability to continue as a going concern. Such financial statements have been incorporated herein by reference
in reliance on the report of such firm given upon their authority as experts in accounting and auditing.
The balance sheets of MoviePass Inc. as
of December 31, 2016 and 2015, and the related statements of operations, stockholders’ equity, and cash flows for each of
the years then ended, have been audited by EisnerAmper LLP, independent registered public accounting firm, as stated in their report
which is incorporated by reference from the Company’s Form 8-K filed with the Securities and Exchange Commission on November
30, 2017 which report includes an explanatory paragraph about the existence of substantial doubt concerning MoviePass Inc.’s
ability to continue as a going concern. Such financial statements have been incorporated herein by reference in reliance on the
report of such firm given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange
Commission a registration statement on Form S-3 under the Securities Act, with respect to the securities covered by this prospectus
supplement. This prospectus supplement, which is a part of the registration statement, does not contain all of the information
set forth in the registration statement or the exhibits and schedules filed therewith. For further information with respect to
us and the securities covered by this prospectus supplement, please see the registration statement and the exhibits filed with
the registration statement. A copy of the registration statement and the exhibits filed with the registration statement may be
inspected without charge at the Public Reference Room maintained by the Securities and Exchange Commission, located at 100 F Street,
N.E., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for more information about
the operation of the Public Reference Room. The Securities and Exchange Commission also maintains an Internet website that contains
reports, proxy and information statements and other information regarding registrants that file electronically with the Securities
and Exchange Commission. The address of the website is http://www.sec.gov.
We are subject to the information and periodic
reporting requirements of the Exchange Act and, in accordance therewith, we file periodic reports, proxy statements and other information
with the Securities and Exchange Commission. Such periodic reports, proxy statements and other information are available for inspection
and copying at the Public Reference Room and website of the Securities and Exchange Commission referred to above. We maintain a
website at http://www.hmny.com. You may access our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and amendments to those reports filed pursuant to Sections 13(a) or 15(d) of the Exchange Act with
the Securities and Exchange Commission free of charge at our website as soon as reasonably practicable after such material is electronically
filed with, or furnished to, the Securities and Exchange Commission. Our website and the information contained on that site, or
connected to that site, are not incorporated into and are not a part of this prospectus supplement.
INFORMATION INCORPORATED BY REFERENCE
The Securities and Exchange Commission and
applicable law permits us to “incorporate by reference” into this prospectus supplement information that we have or
may in the future file with or furnish to the Securities and Exchange Commission. This means that we can disclose important information
by referring you to those documents. You should read carefully the information incorporated herein by reference because it is an
important part of this prospectus supplement. We hereby incorporate by reference the following documents into this prospectus supplement:
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our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as filed with the Securities and Exchange Commission on April 17, 2018;
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our Current Reports on Form 8-K filed with the Securities and Exchange Commission on January 9, 2018, January 11, 2018, January 19, 2018, January 26, 2018, February 8, 2018, February 13, 2018, March 14, 2018, March 15, 2018, and April 5, 2018 and our Current Report on Form 8-K/A filed with the Securities and Exchange Commission on February 9, 2018;
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the financial statements of Zone Technologies, Inc. for the period ended December 31, 2015 and the interim period ended June 30, 2016 included in our Current Report on Form 8-K/A filed with the Securities and Exchange Commission on September 20, 2016; and
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the financial statements of MoviePass Inc. for the year ended December 31, 2016 and the interim period ended September 30, 2017 included in our Current Report on Form 8-K filed with the Securities and Exchange Commission on November 30, 2017.
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Additionally, all documents filed by us
with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than any portions
of filings that are furnished rather than filed pursuant to Items 2.02 and 7.01 of a Current Report on Form 8-K), after the date
of this prospectus supplement and before the termination or completion of this offering shall be deemed to be incorporated by reference
into this prospectus supplement from the respective dates of filing of such documents. Any information that we subsequently file
with the Securities and Exchange Commission that is incorporated by reference as described above will automatically update and
supersede any previous information that is part of this prospectus supplement.
Upon written or oral request, we will provide
you without charge, a copy of any or all of the documents incorporated by reference, other than exhibits to those documents unless
the exhibits are specifically incorporated by reference in the documents. Please send requests to Helios and Matheson Analytics
Inc., Attn: Chief Executive Officer, The Empire State Building, 350 Fifth Avenue, New York, New York 10118, telephone number is
(212) 979-8228.
PROSPECTUS
$400,000,000
Common Stock
Preferred Stock
Warrants
Units
Subscription Rights
We
may from time to time offer and sell, in one or more offerings, up to $400,000,000 in any combination of common stock, preferred
stock, warrants, units and subscription rights. This prospectus provides you with a general description of the securities we may
offer and certain other information about our company. We may offer these securities in amounts, at prices and on terms determined
at the time of offering.
We
will provide you the specific terms of these offerings and securities in one or more supplements to this prospectus. We may also
authorize one or more free-writing prospectuses to be provided to you in connection with these offerings. Any prospectus supplement
and any related free-writing prospectus may also add, update or change information contained in this prospectus. You should carefully
read this prospectus, any applicable prospectus supplement and any related free-writing prospectus, as well as any documents incorporated
by reference, before you invest.
We
may offer these securities from time to time in amounts, at prices and on other terms to be determined at the time of the offering.
We may offer and sell these securities to or through underwriters, dealers or agents, or directly to investors, on a continuous
or delayed basis. The supplements to this prospectus will provide the specific terms of the plan of distribution. The price to
the public of such securities and the net proceeds we expect to receive from such sale will also be set forth in a prospectus supplement.
Our
common stock is listed on the Nasdaq Capital Market under the symbol “HMNY.” On January 24, 2018, the closing price
of our common stock as reported by the Nasdaq Capital Market was $9.15 per share.
An investment in
our common stock involves a high degree of risk. See “Risk Factors” on page 7 of this prospectus for more information
on these risks. We may include additional risk factors in an applicable prospectus supplement under the heading “Risk Factors.”
You should review that section of the prospectus supplement for a discussion of matters that investors in our securities should
consider.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is
February 9, 2018.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus is
part of a registration statement filed with the Securities and Exchange Commission (the “SEC”) using a “shelf”
registration process. Under this shelf registration process, we may offer to sell any combination of the securities described in
this prospectus in one or more offerings for an aggregate offering price of up to $400,000,000. This prospectus provides you with
a general description of the securities which may be offered. Each time we offer securities for sale, we will provide a prospectus
supplement that contains specific information about the terms of that offering. Any prospectus supplement may also add or update
information contained in this prospectus. You should read both this prospectus and any prospectus supplement, including all documents
incorporated herein or therein by reference, together with additional information described below under “Where You Can Find
More Information” and “Information Incorporated by Reference”.
The registration statement
that contains this prospectus (including the exhibits thereto) contains additional important information about us and the securities
we may offer under this prospectus. Specifically, we have filed certain legal documents that establish the terms of the securities
offered by this prospectus as exhibits to the registration statement. We will file certain other legal documents that establish
the terms of the securities offered by this prospectus as exhibits to reports we file with the SEC. You may obtain copies of that
registration statement and the other reports and documents referenced herein as described below under the heading “Where
You Can Find More Information”.
You should rely only
on the information contained or incorporated by reference in this prospectus and in any prospectus supplement. We have not authorized
any other person to provide you with different information. If anyone provides you with different or inconsistent information,
you should not rely on it. We are not making offers to sell or solicitations to buy the securities in any jurisdiction in which
an offer or solicitation is not authorized or in which the person making that offer or solicitation is not qualified to do so or
to anyone to whom it is unlawful to make an offer or solicitation. You should not assume that the information in this prospectus
or any prospectus supplement, as well as the information we file or previously filed with the SEC that we incorporate by reference
in this prospectus or any prospectus supplement, is accurate as of any date other than its respective date. Our business, financial
condition, results of operations and prospects may have changed since those dates.
In this prospectus,
unless the context otherwise requires, references to “we,” “us,” “our,” “our company”,
“the Company” or “Helios” refer to Helios and Matheson Analytics Inc. and its subsidiaries.
MARKET, INDUSTRY AND OTHER DATA
This prospectus, including
the information incorporated by reference, contains estimates, projections and other information concerning our industry, our business,
and the markets for certain products and services, including data regarding the estimated size of those markets and their projected
growth rates. Information that is based on estimates, forecasts, projections or similar methodologies is based on a number of assumptions
and is inherently subject to uncertainties, including those described in “Risk Factors” and elsewhere in this prospectus
and documents incorporated by reference in this prospectus, and actual events or circumstances may differ materially from events
and circumstances reflected in this information. You are cautioned not to give undue weight to such estimates, projections and
other information.
Unless otherwise expressly
stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared
by third parties and general publications. In some cases, we do not expressly refer to the sources from which this data is derived.
In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of
this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise
requires.
DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus and
any accompanying prospectus supplement, including the documents that we incorporate by reference, may contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Forward-looking statements
in this prospectus and any accompanying prospectus supplement include, without limitation, statements related to our plans, strategies,
objectives, expectations, intentions and adequacy of resources. Investors are cautioned that such forward-looking statements involve
risks and uncertainties including, without limitation, the following: (i) our plans, strategies, objectives, expectations and intentions
are subject to change at any time at our discretion; (ii) our plans and results of operations will be affected by our ability to
manage competition; and (iii) other risks and uncertainties indicated from time to time in our filings with the SEC. Important
factors that could cause actual results to differ materially from those indicated in the forward-looking statements include, but
are not limited to,
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the ability of MoviePass Inc. (“MoviePass”) to successfully develop its MoviePass business model;
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our capital requirements and whether or not we will be able to raise capital when we need it;
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changes in local, state or federal regulations that will adversely affect our business;
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our ability to retain our existing clients and market and sell our services to new clients;
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whether we will continue to receive the services of certain officers and directors;
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our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;
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our ability to effectively react to other risks and uncertainties described from time to time in our SEC filings, such as fluctuation of quarterly financial results, reliance on third party consultants, litigation or other proceedings and stock price volatility; and
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other uncertainties, all of which are difficult to predict and many of which are beyond our control.
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In some cases, you
can identify forward-looking statements by terminology such as ‘‘may,’’ ‘‘will,’’
‘‘should,’’ ‘‘could,’’ ‘‘expects,’’ ‘‘plans,’’
‘‘intends,’’ ‘‘anticipates,’’ ‘‘believes,’’ ‘‘estimates,’’
‘‘predicts,’’ ‘‘potential,’’ or ‘‘continue’’ or the negative
of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements
are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation
to publicly update or review any forward-looking statement.
OUR BUSINESS
This is only a
summary and may not contain all the information that is important to you. You should carefully read both this prospectus and any
accompanying prospectus supplement and any other offering materials, together with the additional information described under the
heading “Where You Can Find More Information”.
About Helios and Matheson Analytics Inc.
Overview
We provide information
technology services and solutions including a range of technology platforms focusing on big data, artificial intelligence, business
intelligence, social listening, and consumer-centric technology. More recently, to provide greater value to our stockholders, we
have sought to expand our business primarily through acquisitions that leverage our capabilities and expertise.
On November 9, 2016,
we acquired Zone Technologies, Inc. (“Zone”), a state-of-the-art mapping and spatial analysis company, and on December
11, 2017 we acquired a majority interest in MoviePass, the nation’s premier movie theater subscription service.
MoviePass
MoviePass was incorporated
in Delaware in 2011 and is a movie theater subscription service that allows members to see a new movie every day in theaters nationwide
for a monthly price of $9.95. Once they sign up for the MoviePass service online, subscribers are prompted to download the MoviePass
application on their smart phones and are then mailed a MoviePass debit card. The MoviePass application shows subscribers the show
times of all the movies that are currently showing at their local movie theaters. Once they have received their MoviePass debit
card, subscribers can use the debit card to purchase up to one movie ticket per day at any of the movie theaters listed in the
MoviePass application without paying any additional costs. During the four months after MoviePass’ announcement of its $9.95
monthly subscription plan in August 2017, MoviePass grew to over 1,000,000 total subscribers including those on either its
monthly or annual plans. This represents strong growth when compared to other subscription-based companies, such as Spotify, Hulu,
ClassPass and Netflix, which achieved 1,000,000 subscribers in over 5, 10, 17 and 39 months, respectively, estimated based on information
available publicly from various news and other sources. MoviePass surpassed 1,500,000 subscribers in January 2018.
MoviePass is led by
Mitch Lowe, its Chief Executive Officer, Stacy Spikes, its co-founder and Chief Operating Officer, Sanjay Puri, its Chief Strategy
Officer, and Chris Kelly, its Chairman. The Company intends to strengthen our management team and combine its data and artificial
intelligence technology with MoviePass’ technology. With our big data and artificial intelligence platforms and other technologies
that we own, we believe we will be able to bring a significant technological advantage to MoviePass.
MoviePass Market Opportunity
Movie going is embedded
in American society and enjoyed by people of all races, ages and socio-economic levels. As noted below, the 2016 Theatrical Market
Statistics Report issued by the Motion Picture Association of America reports an annual average of 246 million movie goers in North
America spending $11.4 billion on tickets annually. MoviePass intends to encourage increased attendance at movie theaters with
the subscription model by targeting the casual movie goer (those who attend less than once a month) who represent 85% of the total
movie going market. MoviePass conducted a study in two test markets using data on movie goers before subscribing to MoviePass and
data for movie goers in the first year after having MoviePass. The results from the study demonstrate that MoviePass drove a 100%
and 123% lift in movie attendance in each of these markets.
Source: Motion Picture Association of America
2016 Theatrical Market Statistics Report and Company Management.
MoviePass Competition
The market for filmed
entertainment ticketing services is intensely competitive and subject to rapid change. MoviePass’ potential competitors include
Atom Tickets, MovieTickets.com, Fandango, AMC Entertainment Holdings Inc.’s AMC Stubs program, Regal Entertainment Group’s
Regal Crown Club and Cinemark Holdings, Inc.’s Movie Club, as well as other potential exhibitors offering their own subscription
services or loyalty programs.
AMC Stubs is a loyalty
program offered by AMC Entertainment Holdings Inc. with approximately 10.8 million household members. Movie goers can join the
loyalty program as either a basic member for free or a premiere member for $15. The basic membership offers free popcorn refills,
up to a $2 discount on tickets on Tuesdays, $5 rewards for every 5,000 points (points are earned at a rate of 20 points for every
$1 spent), waived online ticket fees and free popcorn on the member’s birthday. Premiere members receive a $5 discount on
tickets on Tuesdays, earn 100 points for every $1 spent and all the other benefits that come with the basic membership.
Regal Entertainment
Group also offers a loyalty program with approximately 14 million active members called the Regal Crown Club. The program only
has one membership option and is free to join. Regal Crown Club members earn credits for every $1 they spend on movie tickets and
at concession stands. Points can be redeemed for rewards via the use of a physical card or a virtual card with Regal’s mobile
app. Rewards include free concession items, merchandise, movie tickets and more.
On December 5, 2017,
Cinemark Holdings Inc. launched Movie Club. Movie Club is a monthly subscription plan that allows subscribers to buy one movie
ticket a month for a discounted price of $8.99. Members of Movie Club can roll over unused tickets from month to month and receive
a 20% discount on items bought at concession stands. Movie Club membership is only valid at Cinemark theaters.
Many of these competitors
have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing
and other resources than MoviePass does. Some of these competitors have adopted, and may continue to adopt, aggressive pricing
policies and devote substantially more resources to marketing and website and systems development than MoviePass does. In addition,
MoviePass’ competitors may form or extend strategic alliances with studios, exhibitors and distributors that could affect
adversely MoviePass’ ability to compete on favorable terms.
MoviePass Intellectual Property
MoviePass uses a
combination of trademark, copyright and trade secret laws and confidentiality agreements to protect its proprietary intellectual
property. MoviePass has a registered trademark for the MoviePass name. MoviePass owns U.S. Patent Nos. 8,484,133, 8,612,235, and
9,135,578. MoviePass has filed applications for additional trademarks and patents. MoviePass’ outstanding trademark and
patent applications may not be allowed. Competitors may challenge successfully the validity and scope of MoviePass’ patents
and trademark(s). MoviePass’ trademark(s), trademark applications, patents, and patent applications may not provide MoviePass
with a competitive advantage. To date, MoviePass has relied primarily on proprietary processes and know-how to protect its intellectual
property related to its Web site, mobile application and fulfillment processes.
From time to time, MoviePass
may encounter disputes over rights and obligations concerning intellectual property. MoviePass believes that its service offering
does not infringe the intellectual property rights of any third party. However, it cannot assure you that MoviePass will prevail
in any intellectual property dispute.
MoviePass/Fandor/Costco Subscription
Offer
On December 12, 2017,
MoviePass and Fandor, the streaming service with the largest collection of independent films, documentaries, international features
and shorts; announced that both companies have partnered with Costco Wholesale Corporation (“Costco”) to offer a one-year
subscription plan for a flat fee of $89.99. The subscription plan for both services was made available exclusively to Costco members
for a limited time and covers a year of membership for both MoviePass and Fandor. The subscription plan was recently extended through
February 2018.
Corporate Information
Our executive offices
are located at The Empire State Building, 350 Fifth Avenue, New York, New York 10118, and our telephone number is (212) 979-8228.
Additional information about us is available on our website at www.hmny.com. The information contained on or that may be obtained
from our website is not, and shall not be deemed to be, a part of this prospectus. Our common stock, par value $0.01 per share,
is currently traded on the Nasdaq Capital Market under the ticker symbol “HMNY”.
For
a description of our business, financial condition, results of operations and other important information regarding us, we refer
you to our filings with the SEC incorporated by reference in this prospectus. For instructions on how to find copies of these documents,
see “
Where You Can Find More Information
.”
RISK FACTORS
Investing in our
securities involves a high degree of risk. Please see the risk factors set forth in Part I, Item 1A of our most recent Annual Report
on Form 10-K and Part II, Item 1A of our most recent Quarterly Report on Form 10-Q and other filings we make with the SEC, which
are incorporated by reference in this prospectus. Additional risk factors may be included in a prospectus supplement relating to
a particular offering of securities. Before making an investment decision, you should carefully consider these risks as well as
other information we include or incorporate by reference in this prospectus. The risks and uncertainties we have described are
not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may
also affect our business operations. These risks could materially affect our business, results of operations or financial condition
and cause the value of our securities to decline.
USE OF PROCEEDS
Unless
we state otherwise in an accompanying prospectus supplement, we intend to use the net proceeds from the sale of the securities
offered by us under this prospectus and any related prospectus supplement for general corporate purposes of Helios and its subsidiaries
and/or to support MoviePass operations. These purposes may include capital expenditures and additions to working capital. When
a particular series of securities is offered, the prospectus supplement relating to that series will set forth our intended use
for the net proceeds we receive from the sale of the securities. Pending the application of the net proceeds, we may invest the
proceeds in short-term, interest-bearing instruments or other investment-grade securities.
DILUTION
We will set forth in
a prospectus supplement the following information regarding any material dilution of the equity interests of investors purchasing
securities sold by the Company in an offering under this prospectus:
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the net tangible book value per share of our equity securities before and after the offering;
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the amount of the increase in such net tangible book value per share attributable to the cash payments made by purchases in the offering; and
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the amount of the immediate dilution from the public offering price which will be absorbed by such purchasers.
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DESCRIPTION OF THE SECURITIES THAT MAY
BE OFFERED
Description of Common Stock
The following
summary of the rights of our common stock is not complete and is subject to and qualified in its entirety by reference to our
certificate of incorporation and bylaws, copies of which are included as exhibits to our registration statement on Form S-3,
of which this prospectus forms a part. See “Where You Can Find More Information”.
We have 102,000,000
shares of capital stock authorized under our certificate of incorporation, consisting of 100,000,000 shares of common stock, $0.01
par value, and 2,000,000 shares of preferred stock, $0.01 par value.
As of January 17, 2018
we had 23,981,253 shares of common stock outstanding. Our authorized but unissued shares of common stock are available for issuance
without further action by our stockholders, unless such action is required by applicable law or the rules of any stock exchange
or automated quotation system on which our securities may be listed or traded.
Holders of our common
stock are entitled to such dividends as may be declared by our board of directors out of funds legally available for such purpose,
subject to any preferential dividend rights of any then outstanding preferred stock. The shares of common stock are neither redeemable
or convertible. Holders of common stock have no preemptive or subscription rights to purchase any of our securities.
Each holder of our
common stock is entitled to one vote for each such share outstanding in the holder’s name. No holder of common stock is entitled
to cumulate votes in voting for directors.
In the event of our
liquidation, dissolution or winding up, the holders of our common stock are entitled to receive pro rata our assets which are legally
available for distribution, after payments of all debts and other liabilities and subject to the prior rights of any holders of
preferred stock then outstanding. All of the outstanding shares of our common stock are fully paid and non-assessable. The shares
of common stock offered by this prospectus will also be fully paid and non-assessable.
Our common stock is
listed on the Nasdaq Capital Market under the symbol “HMNY”. On January 24, 2018, the last sale price of our common
stock was $9.15 per share. The transfer agent and registrar for our common stock is Computershare. Its address is 250 Royall
Street, Canton, Massachusetts 02021.
Description of Preferred Stock
Our certificate of
incorporation permits us to issue up to 2,000,000 shares of preferred stock in one or more series and with rights and preferences
that may be fixed or designated by our board of directors without any further action by our stockholders. We currently have no
shares of preferred stock outstanding.
Subject to the limitations
prescribed in our certificate of incorporation and under Delaware law, our certificate of incorporation authorizes the board of
directors, from time to time by resolution and without further stockholder action, to provide for the issuance of shares of preferred
stock, in one or more series, and to fix the designation, powers, preferences and other rights of the shares and to fix the qualifications,
limitations and restrictions thereof.
Description of Warrants
Warrants to Purchase Common Stock or
Preferred Stock
We may issue warrants
for the purchase of our common stock or preferred stock, which we refer to in this prospectus as “equity warrants”.
As explained below, each equity warrant will entitle its holder to purchase our equity securities at an exercise price set forth
in, or to be determined as set forth in, the related prospectus supplement. Equity warrants may be issued separately or together
with equity securities. The equity warrants are to be issued under equity warrant agreements.
The particular terms
of each issue of equity warrants and the equity warrant agreement relating to the equity warrants will be described in the applicable
prospectus supplement, including, as applicable:
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the title of the equity warrants;
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the initial offering price;
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the aggregate number of equity warrants and the aggregate number of shares of the equity security purchasable upon exercise of the equity warrants;
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if applicable, the designation and terms of the equity securities with which the equity warrants are issued, and the number of equity warrants issued with each equity security;
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the date on which the right to exercise the equity warrants will commence and the date on which the right will expire;
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if applicable, the minimum or maximum number of the equity warrants that may be exercised at any one time;
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anti-dilution provisions of the equity warrants, if any;
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redemption or call provisions, if any, applicable to the equity warrants;
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any additional terms of the equity warrants, including terms, procedures and limitations relating to the exchange and exercise of the equity warrants; and
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Holders of equity warrants
will not be entitled, solely by virtue of being holders, to vote, to receive dividends, to receive notice as stockholders with
respect to any meeting or written consent of stockholders for the election of directors or any other matter, or to exercise any
rights whatsoever as a holder of the equity securities purchasable upon exercise of the equity warrants.
Description of Units
We may, from time to
time, issue units comprised of one or more of the other securities described in this prospectus in any combination. A prospectus
supplement will describe the specific terms of the units offered under that prospectus supplement, and any special considerations
applicable to investing in those units. You must look at the applicable prospectus supplement and any applicable unit agreement
for a full understanding of the specific terms of any units. We will incorporate by reference into the registration statement of
which this prospectus is a part the form of unit agreement, including a form of unit certificate, if any, that describes the terms
of the series of units we are offering before the issuance of the related series of units. While the terms we have summarized below
will generally apply to any units that we may offer in the future under this prospectus, we will describe the particular terms
of any series of units that we may offer in more detail in the applicable prospectus supplement and incorporated documents. The
terms of any units offered under a prospectus supplement may differ from the terms described below.
General
We may
issue units consisting of common stock, preferred stock, warrants, subscription rights or any combination thereof. Each unit
will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a
unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is
issued may provide that the securities included in the unit may not be held or transferred separately, at any time, or at any
time before a specified date.
We will describe in
the applicable prospectus supplement and any incorporated documents the terms of the series of units, including the following:
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the designation and terms
of the units and of the securities comprising the units, including whether and under what circumstances those securities may be
held or transferred separately;
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any unit agreement under
which the units will be issued; and
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any provisions for the issuance,
payment, settlement, transfer, or exchange of the units or of the securities comprising the units.
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The provisions described
in this section, as well as those described under “Description of Common Stock,” “Description of Preferred Stock,”
and “Description of Warrants” will apply to each unit and to any common stock, preferred stock, or warrant included
in each unit, respectively.
Issuance in Series
We may issue units
in such amounts and in such numerous distinct series as we determine.
Enforceability of
Rights by Holders of Units
Each unit agent will
act solely as our agent under the applicable unit agreement and will not assume any obligation or relationship of agency or trust
with any holder of any unit. A single bank or trust company may act as unit agent for more than one series of units. A unit agent
will have no duty or responsibility in case of any default by us under the applicable unit agreement or unit, including any duty
or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any holder of a unit, without
the consent of the related unit agent or the holder of any other unit, may enforce by appropriate legal action its rights as holder
under any security included in the unit.
Title
We, the unit agent,
and any of their agents may treat the registered holder of any unit certificate as an absolute owner of the units evidenced by
that certificate for any purposes and as the person entitled to exercise the rights attaching to the units so requested, despite
any notice to the contrary.
Description
of Subscription Rights
We may issue subscription
rights to purchase common stock, preferred stock, or other securities. These subscription rights may be issued independently or
together with any other security offered hereby and may or may not be transferable by the stockholder receiving the subscription
rights in such offering. In connection with any offering of subscription rights, we may enter into a standby arrangement with one
or more underwriters or other purchasers pursuant to which the underwriters or other purchasers may be required to purchase any
securities remaining unsubscribed for after such offering.
The applicable
prospectus supplement will describe the specific terms of any offering of subscription rights for which this prospectus is being
delivered, including the following:
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the price, if any, for the subscription rights;
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the exercise price payable for each share of common stock, preferred stock, or other securities
upon the exercise of the subscription rights;
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the number of subscription rights issued to each stockholder;
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the number and terms of the shares of common stock, preferred stock, or other securities which
may be purchased per each subscription right;
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the extent to which the subscription rights are transferable;
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any other terms of the subscription rights, including the terms, procedures and limitations relating
to the exchange and exercise of the subscription rights;
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the date on which the right to exercise the subscription rights shall commence, and the date on
which the subscription rights shall expire;
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the extent to which the subscription rights may include an over-subscription privilege with respect
to unsubscribed securities; and
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if applicable, the material terms of any standby underwriting or purchase arrangement entered into
by us in connection with the offering of subscription rights.
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The description
in the applicable prospectus supplement of any subscription rights we offer will not necessarily be complete and will be qualified
in its entirety by reference to the applicable subscription rights certificate, which will be filed with the SEC if we offer subscription
rights. For more information on how you can obtain copies of any subscription rights certificate if we offer subscription rights,
see “Where You Can Find More Information”. We urge you to read the applicable subscription rights certificate and any
applicable prospectus supplement in their entirety.
Anti-Takeover Effects of Certain Provisions
of Delaware Law and Our Charter Documents
The following is a
summary of our certificate of incorporation and our bylaws. This summary does not purport to be complete and is qualified in its
entirety by reference to our certificate of incorporation and bylaws. Our certificate of incorporation states that we expressly
elect not to be governed by Section 203 of the General Corporation Law of the State of Delaware.
Our charter documents
include provisions that may have the effect of discouraging, delaying or preventing a change in control or an unsolicited acquisition
proposal that a stockholder might consider favorable, including a proposal that might result in the payment of a premium over the
market price for the shares held by our stockholders. These provisions are summarized in the following paragraphs.
Effects of authorized
but unissued common stock and blank check preferred stock.
One of the effects of the existence of authorized but unissued common
stock and undesignated preferred stock may be to enable our board of directors to make more difficult or to discourage an attempt
to obtain control of our company by means of a merger, tender offer, proxy contest or otherwise, and thereby to protect the continuity
of management. If, in the due exercise of its fiduciary obligations, the board of directors were to determine that a takeover proposal
was not in our best interest, such shares could be issued by the board of directors without stockholder approval in one or more
transactions that might prevent or render more difficult or costly the completion of the takeover transaction by diluting the voting
or other rights of the proposed acquirer or insurgent stockholder group, by putting a substantial voting block in institutional
or other hands that might undertake to support the position of the incumbent board of directors, by effecting an acquisition that
might complicate or preclude the takeover, or otherwise.
In addition, our certificate
of incorporation grants our board of directors broad power to establish the rights and preferences of authorized and unissued shares
of preferred stock. The issuance of shares of preferred stock could decrease the amount of earnings and assets available for distribution
to holders of shares of common stock. The issuance also may adversely affect the rights and powers, including voting rights, of
those holders and may have the effect of delaying, deterring or preventing a change in control of our company.
Cumulative Voting.
Our certificate of incorporation does not provide for cumulative voting in the election of directors which would allow holders
of less than a majority of the stock to elect some directors.
Vacancies.
Section 223 of the Delaware General Corporation Law and our bylaws provide that all vacancies, including newly created directorships,
may be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum.
Special Meeting
of Stockholders.
A special meeting of stockholders may be called by our board of directors or the Chairman of our board
of directors and at the request in writing of holders of record of a majority of our outstanding capital stock entitled to vote.
The requirement that a majority of our outstanding capital stock is required to call a special meeting means that small stockholders
will not have the power to call a special meeting to, for example, elect new directors.
PLAN OF DISTRIBUTION
We
may offer and sell the securities in any one or more of the following ways:
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to or through underwriters, brokers or dealers;
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directly to one or more other purchasers;
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through a block trade in which the broker or dealer engaged to handle the block trade will attempt to sell the securities as agent, but may position and resell a portion of the block as principal to facilitate the transaction;
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through agents on a best-efforts basis;
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in “at the market” offerings, as defined in Rule 415 under the Securities Act, at negotiated prices, at prices prevailing at the time of sale or at prices related to such prevailing market prices, including sales made directly on the Nasdaq Capital Market or sales made through a market maker other than on an exchange or other similar offerings through sales agents; or
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otherwise through any other method permitted by applicable law or a combination of any of the above methods of sale.
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In
addition, we may enter into option, share lending or other types of transactions that require us to deliver shares of common stock
to an underwriter, broker or dealer, who will then resell or transfer the shares of common stock under this prospectus. We may
also enter into hedging transactions with respect to our securities. For example, we may:
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enter into transactions involving short sales of the shares of common stock by underwriters, brokers or dealers;
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sell shares of common stock short and deliver the shares to close out short positions;
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enter into option or other types of transactions that require the delivery of shares of common stock to an underwriter, broker or dealer, who will then resell or transfer the shares of common stock under this prospectus; or
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loan or pledge the shares of common stock to an underwriter, broker or dealer, who may sell the loaned shares or, in the event of default, sell the pledged shares.
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We
may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in
privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the
third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale
transactions. If so, the third party may use securities pledged by or borrowed from us or others to settle those sales or to close
out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out
any related open borrowings of stock. The third party in such sale transactions will be an underwriter and, if not identified in
this prospectus, will be identified in the applicable prospectus supplement (or a post-effective amendment). In addition, we may
otherwise loan or pledge securities to a financial institution or other third party that in turn may sell the securities short
using this prospectus. Such financial institution or other third party may transfer its economic short position to investors in
our securities or in connection with a concurrent offering of other securities.
Each
time we sell securities, we will provide a prospectus supplement that will name any underwriter, dealer or agent involved in the
offer and sale of the securities. Any prospectus supplement will also set forth the terms of the offering, including:
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the purchase price of the securities and the proceeds we will receive from the sale of the securities;
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any underwriting discounts and other items constituting underwriters’ compensation;
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any public offering or purchase price and any discounts or commissions allowed or re-allowed or paid to dealers;
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any commissions allowed or paid to agents;
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any other offering expenses;
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any securities exchanges on which the securities may be listed;
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the method of distribution of the securities;
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the terms of any agreement, arrangement or understanding entered into with the underwriters, brokers or dealers; and
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any other information we think is important.
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If
underwriters or dealers are used in the sale, the securities will be acquired by the underwriters or dealers for their own account.
The securities may be sold from time to time by us in one or more transactions:
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at a fixed price or prices, which may be changed;
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at market prices prevailing at the time of sale;
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at prices related to such prevailing market prices;
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at varying prices determined at the time of sale; or
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Such
sales may be effected:
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in transactions on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;
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in transactions in the over-the-counter market;
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in block transactions in which the broker or dealer so engaged will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction, or in crosses, in which the same broker acts as an agent on both sides of the trade;
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through the writing of options; or
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through other types of transactions.
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The
securities may be offered to the public either through underwriting syndicates represented by one or more managing underwriters
or directly by one or more of such firms. Unless otherwise set forth in the prospectus supplement, the obligations of underwriters
or dealers to purchase the securities offered will be subject to certain conditions precedent and the underwriters or dealers will
be obligated to purchase all the offered securities if any are purchased. Any public offering price and any discount or concession
allowed or reallowed or paid by underwriters or dealers to other dealers may be changed from time to time.
The
securities may be sold directly by us or through agents designated by us from time to time. Any agent involved in the offer or
sale of the securities in respect of which this prospectus is delivered will be named, and any commissions payable to such agent
will be set forth in, the prospectus supplement. Unless otherwise indicated in the prospectus supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
Offers
to purchase the securities offered by this prospectus may be solicited, and sales of the securities may be made by us directly
to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act with respect
to any resale of the securities. The terms of any offer made in this manner will be included in the prospectus supplement relating
to the offer.
Some
of the underwriters, dealers or agents used by us in any offering of securities under this prospectus may be customers of, engage
in transactions with, and perform services for us or affiliates of ours in the ordinary course of business. Underwriters, dealers,
agents and other persons may be entitled to indemnification against and contribution toward certain civil liabilities, including
liabilities under the Securities Act, and to be reimbursed for certain expenses.
Subject
to any restrictions relating to debt securities in bearer form, any securities initially sold outside the United States may be
resold in the United States through underwriters, dealers or otherwise.
Any underwriters to
which offered securities are sold by us for public offering and sale may engage in transactions that stabilize, maintain or otherwise
affect the price of the common stock during and after this offering, but those underwriters will not be obligated to do so and
may discontinue any market making at any time. Specifically, the underwriters may over-allot or otherwise create a short position
in the common stock for their own accounts by selling more common stock than have been sold to them by us. The underwriters may
elect to cover any such short position by purchasing common stock in the open market or by exercising the over-allotment option
granted to the underwriters. In addition, the underwriters may stabilize or maintain the price of the common stock by bidding for
or purchasing common stock in the open market and may impose penalty bids. If penalty bids are imposed, selling concessions allowed
to syndicate members or other broker-dealers participating in the offering are reclaimed if common stock previously distributed
in the offering are repurchased, whether in connection with stabilization transactions or otherwise. The effect of these transactions
may be to stabilize or maintain the market price of the common stock at a level above that which might otherwise prevail in the
open market. The imposition of a penalty bid may also affect the price of the common stock to the extent that it discourages resales
of the common stock. The magnitude or effect of any stabilization or other transactions is uncertain. These transactions may be
effected on the Nasdaq Capital Market or otherwise and, if commenced, may be discontinued at any time.
In connection with
this offering, the underwriters and selling group members may also engage in passive market making transactions in our common stock.
Passive market making consists of displaying bids on the Nasdaq Capital Market limited by the prices of independent market makers
and effecting purchases limited by those prices in response to order flow. Rule 103 of Regulation M promulgated by the SEC limits
the amount of net purchases that each passive market maker may make and the displayed size of each bid. Passive market making may
stabilize the market price of the common stock at a level above that which might otherwise prevail in the open market and, if commenced,
may be discontinued at any time.
We are subject to the
applicable provisions of the Exchange Act and the rules and regulations under the Exchange Act, including Regulation M. This regulation
may limit the timing of purchases and sales of any of the shares of common stock offered in this prospectus by any person. The
anti-manipulation rules under the Exchange Act may apply to sales of shares in the market and to the activities of us.
The
anticipated date of delivery of the securities offered by this prospectus will be described in the applicable prospectus supplement
relating to the offering.
Any
broker-dealer participating in the distribution of the shares of common stock may be deemed to be an “underwriter”
within the meaning of the Securities Act with respect to any securities such entity sells pursuant to this prospectus.
To
comply with the securities laws of some states, if applicable, the securities may be sold in these jurisdictions only through registered
or licensed brokers or dealers. In addition, in some states the securities may not be sold unless they have been registered or
qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
LEGAL MATTERS
The validity of the
issuance of the securities offered hereby will be passed upon for us by Greenberg Traurig LLP, Los Angeles, California. Any underwriters
will also be advised about the validity of the securities and other legal matters by their own counsel, which will be named in
the prospectus supplement.
EXPERTS
Rosenberg
Rich Baker Berman & Company, independent registered public accounting firm, has audited our consolidated financial statements
included in our Annual Report on Form 10-K for the years ended December 31, 2016 and 2015, as set forth in their report, which
is incorporated by reference in this prospectus supplement and elsewhere in the registration statement in which this prospectus
supplement is included. Our consolidated financial statements for the years ended December 31, 2016 and 2015 are incorporated by
reference in reliance on Rosenberg Rich Baker Berman & Company’s report, given on their authority as experts in accounting
and auditing.
The balance
sheet of Zone Technologies, Inc. as of December 31, 2015, and the related statements of operations, stockholders’ deficit,
and cash flows for the period then ended, have been audited by EisnerAmper LLP, independent registered public accounting firm,
as stated in their report which is incorporated by reference from the Company’s Form 8-K/A, Amendment No. 1, filed with the
Securities and Exchange Commission on September 20, 2016, which report includes an explanatory paragraph about the existence of
substantial doubt concerning Zone Technologies, Inc.’s ability to continue as a going concern. Such financial statements
have been incorporated herein by reference in reliance on the report of such firm given upon their authority as experts in accounting
and auditing.
The balance sheets
of MoviePass Inc. as of December 31, 2016 and 2015, and the related statements of operations, stockholders’ equity, and cash
flows for each of the years then ended, have been audited by EisnerAmper LLP, independent registered public accounting firm, as
stated in their report which is incorporated by reference from the Company’s Form 8-K filed with the Securities and Exchange
Commission on November 30, 2017 which report includes an explanatory paragraph about the existence of substantial doubt concerning
MoviePass Inc.’s ability to continue as a going concern. Such financial statements have been incorporated herein by reference
in reliance on the report of such firm given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with
the SEC a registration statement on Form S-3 under the Securities Act, with respect to the securities covered by this prospectus.
This prospectus, which is a part of the registration statement, does not contain all of the information set forth in the registration
statement or the exhibits and schedules filed therewith. For further information with respect to us and the securities covered
by this prospectus, please see the registration statement and the exhibits filed with the registration statement. A copy of the
registration statement and the exhibits filed with the registration statement may be inspected without charge at the Public Reference
Room maintained by the SEC, located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
for more information about the operation of the Public Reference Room. The SEC also maintains an Internet website that contains
reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The
address of the website is http://www.sec.gov.
We are subject to the
information and periodic reporting requirements of the Exchange Act and, in accordance therewith, we file periodic reports, proxy
statements and other information with the SEC. Such periodic reports, proxy statements and other information are available for
inspection and copying at the Public Reference Room and website of the SEC referred to above. We maintain a website at http://www.hmny.com.
You may access our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
amendments to those reports filed pursuant to Sections 13(a) or 15(d) of the Exchange Act with the SEC free of charge at our
website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Our website
and the information contained on that site, or connected to that site, are not incorporated into and are not a part of this prospectus.
INFORMATION INCORPORATED BY REFERENCE
The SEC and applicable
law permits us to “incorporate by reference” into this prospectus information that we have or may in the future file
with or furnish to the SEC. This means that we can disclose important information by referring you to those documents. You should
read carefully the information incorporated herein by reference because it is an important part of this prospectus. We hereby incorporate
by reference the following documents into this prospectus:
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our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the SEC on April 14, 2017;
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our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017, as filed with the SEC on May 19, 2017, August 11, 2017 and November 14, 2017;
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our Current Reports on Form 8-K filed with the SEC on January
4, 2017, January 17, 2017, January 23, 2017 (other than the portions of the filing that were furnished rather than filed),
February 7, 2017, February 10, 2017, March 14, 2017, May 23, 2017 (other than the portions of the filing that were furnished
rather than filed), June 5, 2017 (other than the portions of the filing that were furnished rather than filed), July 13 2017,
August 15, 2017 (other than the portions of the filing that were furnished rather than filed), August 18, 2017, August 22,
2017, August 28, 2017, September 7, 2017, September 14, 2017, September 20, 2017, October 5, 2017, October 11, 2017 (other
than the portions of the filing that were furnished rather than filed), October 17, 2017, October 23, 2017, October 24, 2017;
October 31, 2017, November 6, 2017, November 13, 2017, November 17, 2017, November 20, 2017, November 22, 2017, November 24,
2017, November 30, 2017, December 1, 2017, December 11, 2017, December 12, 2017, December 13, 2017, January 9, 2018, January
11, 2018, and January
19, 2018;
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the financial statements of Zone Technologies, Inc. for the period ended December 31, 2015 and the interim period ended June 30, 2016 included in our Current Report on Form 8-K/A filed with the SEC on September 20, 2016; and
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the financial statements of MoviePass Inc. for the year ended December 31, 2016 and the interim period ended September 30, 2017 included in our Current Report on Form 8-K filed with the SEC on November 30, 2017.
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Additionally, all documents
filed by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than any portions of filings that
are furnished rather than filed pursuant to Items 2.02 and 7.01 of a Current Report on Form 8-K), after the date of this prospectus
and before the termination or completion of this offering (including all such documents filed with the SEC after the date of the
initial registration statement and prior to the effectiveness of the registration statement) shall be deemed to be incorporated
by reference into this prospectus from the respective dates of filing of such documents. Any information that we subsequently file
with the SEC that is incorporated by reference as described above will automatically update and supersede any previous information
that is part of this prospectus.
Upon written or oral
request, we will provide you without charge, a copy of any or all of the documents incorporated by reference, other than exhibits
to those documents unless the exhibits are specifically incorporated by reference in the documents. Please send requests to Helios
and Matheson Analytics Inc., Attn: Chief Executive Officer, The Empire State Building, 350 Fifth Avenue, New York, New York 10118,
telephone number is (212) 979-8228.
$150,000,000
Common
Stock
PROSPECTUS SUPPLEMENT
Canaccord
Genuity
April 18, 2018
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