ITEM
1.01
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ENTRY
INTO A MATERIAL DEFINITIVE AGREEMENT
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Amendment
and Exchange Agreement
As discussed below,
on December 18, 2018, Helios and Matheson Analytics Inc. (the “Company,” “we,” “our” and “us”)
entered into a December 2018 Amendment and Exchange Agreement (the “Exchange Agreement”) with each of the holders of
its remaining outstanding Convertible Notes (as defined below). Pursuant to the terms of the Exchange Agreements, the Company has
eliminated all of its remaining outstanding Convertible Notes having an aggregate principal amount of $44.5 million and the related
Investor Notes (as defined below) and has issued New Non-Convertible Notes (as defined below) due May 29, 2020 having an aggregate
principal amount of approximately $11.3 million (subject to 50% reduction for a total of approximately $5.7 million if repaid
within nine months). Following consummation of the transactions contemplated by the Exchange Agreements, the Company no longer
has any outstanding convertible notes.
As previously disclosed
in the Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on November 6, 2017, pursuant to a securities
purchase agreement (the “November Securities Purchase Agreement”) entered into by the Company and certain institutional
investors party to the November Securities Purchase Agreement (collectively, the “November Buyers”), the Company agreed
to sell and issue to the November Buyers senior secured convertible notes in the aggregate principal amount of $100,000,000 (collectively,
the “November Convertible Notes”), for total consideration consisting of an aggregate cash payment to the Company of
$5,000,000 and secured promissory notes payable by the November Buyers to the Company (collectively, the “November Investor
Notes”) in an aggregate principal amount of $95,000,000.
As
previously disclosed in the Form 8-K filed with the SEC on January 11, 2018, pursuant to a securities purchase agreement (the
“January Securities Purchase Agreement”) entered into by the Company and an institutional investor party to the January
Securities Purchase Agreement (the “Buyer”), the Company agreed to sell and issue to the Buyer senior secured convertible
notes in the aggregate principal amount of $60,000,000 (collectively, the “January Convertible Notes,” and together
with the November Convertible Notes, the “Convertible Notes” ), for total consideration consisting of an aggregate
cash payment to the Company of $25,000,000 and a secured promissory note payable by the Buyer to the Company (the “January
Investor Note,” and together with the November Investor Notes, the “Investor Notes”) in an aggregate principal
amount of $35,000,000.
On December 18, 2018,
the Company entered into an Exchange Agreement with each of the holders of the November Convertible Notes in the aggregate outstanding
principal amount of approximately $18.8 million and the January Convertible Note in the aggregate outstanding principal amount
of approximately $25.7 million (the “Holders”) for the purpose of (i) netting the November Investor Notes and the
January Investor Notes issued by the Holders to the Company having an aggregate outstanding principal amount of approximately
$18.8 million and approximately $25.7 million, respectively, against the Holders’ November Convertible Notes and January
Convertible Notes, and (ii) following such netting transaction, exchanging the remaining outstanding amount payable to the Holders
under the Convertible Notes for new non-convertible Series B Senior Notes issued by the Company to the Holders (collectively,
the “New Non-Convertible Notes”) in an aggregate principal amount of approximately $11.3 million (subject to
50% reduction for a total of approximately $5.7 million if repaid within nine months). As a result, the Convertible Notes and
the Investor Notes were each cancelled and became null and void.
Following
the consummation of the transactions contemplated by the Exchange Agreement, all of the Convertible Notes have been cancelled.
New
Non-Convertible Notes
On December 18, 2018,
the Company issued the New Non-Convertible Notes in an aggregate principal amount of $11,345,950.32 (subject to 50% reduction for a total of approximately $5.7 million if repaid within nine months). The New Non-Convertible Notes
bear interest at a rate of 3% per annum, capitalized quarterly. The New Non-Convertible Notes are unsecured and not convertible
into equity securities of the Company. Unless earlier redeemed, the New Non-Convertible Notes will mature on May 29, 2020.
As
long as no Event of Default (as defined in the New Non-Convertible Notes) has occurred, the Company has the right to redeem each
New Non-Convertible Note at any time on or prior to the nine-month anniversary of the issuance of such New Non-Convertible Note
for 50% of the principal being redeemed and 100% of the accrued and unpaid interest and late charges, if any. After the nine-month
anniversary of the issuance of a New Non-Convertible Note, the Company has the right to redeem such New Non-Convertible Note at
any time for 100% of the principal being redeemed and 100% of the accrued and unpaid interest and late charges, if any. If the
Company does not redeem a New Non-Convertible Note within such nine-month period, such New Non-Convertible Note will amortize
monthly in cash for, from June 28, 2019, four monthly payments of $472,748 per month (plus accrued and unpaid interest, including
any capitalized interest) and, commencing on October 30, 2019, eight monthly payments of $1,181,870 (plus accrued and unpaid
interest, including any capitalized interest). Upon an Event of Default, the Company must redeem the New Non-Convertible Notes
in cash at a price equal to, if the Event of Default occurs on or prior to the nine-month anniversary of the issuance of the New
Non-Convertible Notes, and there is neither a Primary Covenant Event of Default nor a Bankruptcy Default (each as defined in the
New Non-Convertible Notes), 50% of the principal being redeemed and 100% of the accrued and unpaid interest and late charges,
if any, in each case, multiplied by a redemption premium. If the Event of Default occurs after the nine-month anniversary of the
issuance of the New Non-Convertible Notes, or there exists either a Primary Covenant Event of Default or a Bankruptcy Default,
then the Company must redeem the New Non-Convertible Notes in cash at a price equal to 100% of the principal being redeemed and
100% of the accrued and unpaid interest and late charges, if any, in each case, multiplied by a redemption premium.
If
the Holder participates in a subsequent offering by the Company, then 14.5% of the cash proceeds paid (or payable) by the Holder
in such applicable transaction will be used to pay down the New Non-Convertible Notes on a dollar-for-dollar basis. Each such
payment amount will reduce the scheduled amortization payments on a reverse basis (i.e. last amortization reduced first).