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Item 1.01.
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Entry into a Material Definitive Agreement.
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On March 25, 2019, Helios
and Matheson Analytics Inc. (the “Company” or “us” or “we”) entered into Stock Purchase Agreements
(the “Purchase Agreements”) with certain institutional investors for the issuance and sale of securities in the aggregate
gross offering price of $6,000,000.00 (the “Offering”), consisting of (A) 60,000 shares of Series B Preferred Stock,
par value $0.01 per share (each, a “Preferred Share”), with each Preferred Share convertible into shares of the Company’s
common stock, par value $0.01 per share, (B) Series F-1 Preferred Stock Purchase Warrants (each, a “Series F-1 Warrant”)
to purchase an aggregate of 59,760 Preferred Shares and (C) Series F-2 Preferred Stock Purchase Warrants (each, a “Series
F-2 Warrant” and, together with Series F-1 Warrants, collectively, “Warrants”) to purchase an aggregate of 60,240
Preferred Shares. The Preferred Shares, the Series F-1 Warrants and the Series F-2 Warrants have been issued separately but could
only be purchased together in the Offering. The exercise price of the Warrants is $100.00 per Preferred Share. The Series F-1
Warrants will be exercisable at any time until the five-year anniversary of their issuance date. The Series F-2 Warrants will
be exercisable at any time on or after the date on which we obtain stockholder approval for a reverse stock split or to increase
our authorized common stock to allow for the reservation in full of all shares of common stock issuable upon conversion of the
Preferred Shares issuable upon exercise of the Series F-2 Warrants, and until the five-year anniversary of the initial exercise
date.
The closing of the
Offering occurred on March 25, 2019. The Company intends to use the net proceeds of the Offering for working capital purposes
for the Company and its subsidiaries; to redeem a portion of the Company’s outstanding non-convertible senior notes that
we issued on October 4, 2018 and December 18, 2018; and to pay certain fees due to our placement agent and financial advisor and
other transaction expenses. The Company estimates that the net proceeds from the Offering will be approximately $4.135 million,
after deducting such fees and expenses, assuming no exercise of the Warrants.
Each Preferred Share is convertible at any time at the option of the holder into 16,667 shares of our
common stock (the “Conversion Rate”), provided that the holder will be prohibited from converting Preferred Shares
into shares of our common stock if, as a result of such conversion, the holder, together with its affiliates, would beneficially
own more than 9.99% of the total number of shares of our common stock then issued and outstanding after giving effect to such conversion.
The rights and privileges of Series B Preferred Stock are described in the Certificate of Designation of Series B Preferred Stock
of the Company filed as Exhibit 3.1 to this Current Report and incorporated by reference herein.
Subject
to the applicable law and the rights of the holders of any outstanding series of our preferred stock, Preferred Shares will rank
pari passu on an as-converted to common stock basis with all of our common stock as to dividends, distributions of proceeds upon
certain asset sales, mergers or consolidations and distributions of assets upon our liquidation, dissolution or winding up. Preferred
Shares will be entitled to vote on an as-converted to common stock basis on all matters on which stockholders are generally entitled
to vote (provided that no holder of Preferred Shares will be entitled to such number of votes in excess of such holder’s
beneficial ownership limitation). Additionally, the vote or written consent of holders of a majority of the outstanding Preferred
Shares, voting separately as a single class, will be required for certain amendments to our certificate of incorporation.
The exercise price
and number of Preferred Shares underlying the Warrants are subject to proportionate adjustment upon the issuance by the Company
of stock dividends, stock splits, and similar proportionately applied changes affecting the Company’s outstanding Preferred
Shares. In addition, the exercise price of the Warrants will be adjusted as follows:
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until the date that the Company consummates more than $4 million of Dilutive Issuances (as described below), if we issue any shares of common stock, or securities convertible into, or exercisable or exchangeable for shares of common stock, at a price less than the then exercise price divided by the then Conversion Rate (the “Threshold Price”), which issuances we refer to as Dilutive Issuances, then the exercise price of the Warrants will automatically be reduced to an amount equal to the then exercise price multiplied by the quotient obtained by dividing the lower issuance price by the then Threshold Price, provided that the exercise price will not be lower than $0.01 in any event; and
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if we complete a reverse or forward stock split or reclassification of our common stock, and during the five trading days following such reverse or forward stock split or reclassification, the market price (as calculated pursuant to the terms of the Warrants) is less than the exercise price in effect immediately before the reverse or forward stock split or reclassification divided by the Conversion Rate, the exercise price will automatically be reduced to an amount equal to the then exercise price multiplied by the quotient obtained by dividing the market price (as calculated pursuant to the terms of the Warrants) by the then Threshold Price, provided that the exercise price will not be lower than $0.01 in any event.
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Holders of the Warrants will be entitled
to any purchase rights granted to the common stock holders that the holders could have acquired upon exercise of the Warrants and
conversion of the Preferred Shares underlying the Warrants. The Company shall not enter into any fundamental transaction unless
the successor entity assumes the obligations of the Company under the Warrants. Holders of the Warrants will be entitled to participate
in any dividends or other distribution of the Company’s assets declared or made to holders of the Company’s common
stock that the holders would have received upon exercise of the Warrants and conversion of the Preferred Shares underlying the
Warrants.
The securities sold in
the Offering were offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3, which
was filed with the Securities and Exchange Commission (the “SEC”) on July 2, 2018 and subsequently declared effective
on July 5, 2018 (File No. 333-226024). The Company has filed or will file a prospectus supplement with the SEC on March 26,
2019 in connection with the sale of the securities in the Offering.
Additionally,
pursuant to the Purchase Agreements, we entered into amendments with holders of our outstanding Series C Common Stock Purchase
Warrants and Series D Common Stock Purchase Warrants to purchase an aggregate of 666,666,668 shares of common stock, to reduce
the exercise price of each such warrant from $0.0163 to $0.01 per share of common stock.
In connection with the
Offering, the placement agent will receive (i) an aggregate fee equal to 8.0% of the gross proceeds received by the Company from
the sale of the securities in the Offering (except in the case of one of the purchasers with respect to which the fee will be equal
to 6.0% of the gross proceeds received from such purchaser), (ii) a management fee equal to 1.0% of the gross proceeds raised in
the Offering, (iii) $85,000 for certain expenses, (iv) $10,000 for clearing expenses and (v) warrants to purchase Preferred Shares
in an amount equal to 8.0% of the quotient obtained by dividing the gross proceeds raised in the Offering, or $6.0 million, by
the combined offering purchase price of $100.00 (the “Placement Agent Warrants”). The Placement Agent Warrants will
have substantially the same terms as the Series F-2 Warrants issued to the investors in the Offering, except that each Placement
Agent Warrant will have an exercise price equal to $125.00 per Preferred Share, or 125% of the combined offering purchase price
of $100.00, and will not contain any provisions for a downward adjustment to the exercise price in the event of a Dilutive Issuance
or under certain circumstances following a reverse or forward stock split. Palladium Capital Advisors, LLC served as our financial
advisor in connection with the Offering and will receive an advisory fee of $150,000.
The representations, warranties
and covenants contained in the Purchase Agreements were made solely for the benefit of the parties to such Purchase Agreements.
In addition, such representations, warranties and covenants (i) are intended as a way of allocating the risk between the parties
to the Purchase Agreements and not as statements of fact, and (ii) may apply standards of materiality in a way that is different
from what may be viewed as material by stockholders of, or other investors in, the Company. Moreover, information concerning the
subject matter of the representations and warranties may change after the date of the Purchase Agreements, which subsequent information
may or may not be fully reflected in public disclosures.
The foregoing descriptions
of the Purchase Agreements, the Warrants, and the Placement Agent Warrants are not complete and are qualified in their entirety
by references to the full text of such documents, forms of which are filed as Exhibits 10.1, 4.1 and 4.2, respectively, to this
Current Report and are incorporated by reference herein.
All
statements in this report that are not historical facts should be considered “Forward Looking Statements” within the
meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve
known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
Some of the forward-looking statements can be identified by the use of words such as “believe,” “expect,”
“may,” “will,” “should,” “seek,” “approximately,” “intend,”
“plan,” “estimate,” “project,” “continue” or “anticipates” or similar
expressions or words, or the negatives of those expressions or words. Except as otherwise required by applicable securities laws,
we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information,
future events, changed circumstances, or any other reason, after the date of this report.
The
legal opinion, including the related consent, of Greenberg Traurig, LLP is filed as Exhibit 5.1 and Exhibit 23.1 to this Current
Report.