0001437749-13-005314.txt : 20130506 0001437749-13-005314.hdr.sgml : 20130506 20130506095321 ACCESSION NUMBER: 0001437749-13-005314 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20130331 FILED AS OF DATE: 20130506 DATE AS OF CHANGE: 20130506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Helios & Matheson Analytics Inc. CENTRAL INDEX KEY: 0001040792 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS BUSINESS SERVICES [7380] IRS NUMBER: 133169913 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22945 FILM NUMBER: 13814700 BUSINESS ADDRESS: STREET 1: 350 5TH AVENUE STREET 2: SUITE 7520 CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2129798228 MAIL ADDRESS: STREET 1: 350 5TH AVENUE STREET 2: SUITE 7520 CITY: NEW YORK STATE: NY ZIP: 10018 FORMER COMPANY: FORMER CONFORMED NAME: Helios &nd Matheson Analytics Inc. DATE OF NAME CHANGE: 20130506 FORMER COMPANY: FORMER CONFORMED NAME: Helios & Matheson Analytics Inc. DATE OF NAME CHANGE: 20130506 FORMER COMPANY: FORMER CONFORMED NAME: Helios & Matheson Information Technology Inc. DATE OF NAME CHANGE: 20110511 10-Q 1 hmny_10q-033113.htm FORM 10-Q hmny_10q-033113.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

   For the quarterly period ended: March 31, 2013


OR

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ___________

Commission file number:     0-22945       
 

HELIOS AND MATHESON ANALYTICS INC.
 (Exact Name of Registrant as Specified in Its Charter)

 
Delaware
(State or other jurisdiction of
incorporation or organization)
13-3169913
(I.R.S. Employer Identification No.)
   
Empire State Building, 350 5th Avenue,
New York, New York 10118
(Address of Principal Executive Offices)
(212) 979-8228
(Registrant’s Telephone Number,
Including Area Code)
   
HELIOS AND MATHESON INFORMATION TECHNOLOGY INC.
(Former name, former address and former fiscal year, if changed since last report)


 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x  No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes x   No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer   o Accelerated filer   o Non-accelerated filer   o Smaller reporting company   x
    (Do not check if a smaller reporting company)  
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes  o  No  x

As of April 18, 2013, there were 2,330,438 shares of common stock, with $.01 par value per share, outstanding.
 
 
 

 
 
HELIOS AND MATHESON ANALYTICS INC.

INDEX
 
 
PART I. FINANCIAL INFORMATION
3
   
ITEM 1. FINANCIAL STATEMENTS
3
Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012
3
Consolidated Statement of Income and Comprehensive Income for the three months ended March 31, 2013 and 2012
4
Consolidated Statement of Cash Flows for the three  months ended March 31, 2013 and 2012
5
Notes to Consolidated Financial Statements
6
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
10
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
14
ITEM 4.  CONTROLS AND PROCEDURES
14
   
PART II.  OTHER INFORMATION
14
   
ITEM 1.  LEGAL PROCEEDINGS
14
ITEM 1A.  RISK FACTORS
14
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
14
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
14
ITEM 4.  MINE SAFETY DISCLOSURE
14
ITEM 5.  OTHER INFORMATION
14
ITEM 6.  EXHIBITS
15
   
SIGNATURES
16

 
 
2

 

Part I. Financial Information
Item 1. Financial Statements
 
HELIOS AND MATHESON ANALYTICS INC.
CONSOLIDATED BALANCE SHEETS
 
   
March 31,
2013
   
December 31,
2012
 
ASSETS
 
(unaudited)
       
Current Assets:
           
Cash and cash equivalents   $ 2,044,386     $ 2,861,733  
Accounts receivable- less allowance for doubtful accounts of $38,420 at March 31, 2013, and $32,421 at December 31, 2012
    1,850,605       1,257,488  
Unbilled receivables     62,086       21,490  
Prepaid expenses and other current assets     144,602       130,571  
Total current assets     4,101,679       4,271,282  
Property and equipment, net
    52,699       52,717  
Security Deposit
    1,000,000       1,000,000  
Deposits and other assets
    100,032       100,032  
Total assets   $ 5,254,410     $ 5,424,031  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
Current Liabilities:
               
Accounts payable and accrued expenses   $ 1,110,496     $ 1,171,249  
Total current liabilities     1,110,496       1,171,249  
Shareholders' equity:
               
Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued and outstanding as of March 31, 2013, and December 31, 2012
    -       -  
Common stock, $.01 par value; 30,000,000 shares authorized; 2,330,438 issued and outstanding as of March 31, 2013 and December 31, 2012
    23,304       23,304  
Paid-in capital     37,855,740       37,855,740  
Accumulated other comprehensive loss - foreign currency translation     (46,879 )     (46,910 )
Accumulated deficit     (33,688,251 )     (33,579,352 )
Total shareholders' equity     4,143,914       4,252,782  
Total liabilities and shareholders' equity
  $ 5,254,410     $ 5,424,031  

See accompanying notes to consolidated financial statements.
 
 
3

 

HELIOS AND MATHESON ANALYTICS INC.
CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME

   
Three Months Ended
March 31,
 
   
2013
   
2012
 
   
(unaudited)
   
(unaudited)
 
             
Revenues
  $ 3,202,831     $ 2,679,131  
Cost of revenues
    2,528,410       2,038,635  
Gross profit
    674,421       640,496  
Operating expenses:
               
Selling, general & administrative
    568,838       533,910  
Depreciation & amortization
    2,472       5,018  
      571,310       538,928  
Income from operations
    103,111       101,568  
Other income(expense):
               
Early lease termination fee
    -       (82,548 )
Interest income-net
    730       923  
      730       (81,625 )
Income before income taxes
    103,841       19,943  
Provision for income taxes
    3,000       6,000  
Net Income
    100,841       13,943  
Other comprehensive Income - foreign currency adjustment
    31       1,735  
Comprehensive Income
  $ 100,872     $ 15,678  
                 
Net income per share
               
Basic & Diluted   $ 0.04     $ 0.01  
Dividend Per share
  $ 0.09     $ -  
 
See accompanying notes to consolidated financial statements.
 
 
4

 

HELIOS AND MATHESON ANALYTICS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
 
    Three Months Ended March 31,  
   
2013
   
2012
 
   
(unaudited)
   
(unaudited)
 
Cash flows from operating activities:
           
Net income
  $ 100,841     $ 13,943  
Adjustments to reconcile net income to net cash provided/(used) in operating activities, net of acquired assets:
               
Depreciation and amortization
    2,472       5,018  
Provision for doubtful accounts
    5,999       905  
Changes in operating assets and liabilities:
               
Accounts receivable
    (599,117 )     246,551  
Unbilled receivables
    (40,596 )     (70,483 )
Prepaid expenses and other assets
    (14,031 )     29,458  
Accounts payable and accrued expenses
    (60,753 )     (201,321 )
Net cash (used in)/provided by operating activities
    (605,185 )     24,071  
Cash flows from investing activities:
               
Purchase of Property and Equipment
    (2,454 )     (924 )
Deposits
    -       (75,550 )
Net cash used in investing activities
    (2,454 )     (76,474 )
Cash flows from financing activities:
               
Dividend Paid
    (209,739 )     -  
Net cash used in financing activities
    (209,739 )     -  
Effect of foreign currency exchange rate changes on cash and cash equivalents
    31       1,735  
Net decrease in cash and cash equivalents
    (817,347 )     (50,668 )
Cash and cash equivalents at beginning of period
    2,861,733       1,998,158  
Cash and cash equivalents at end of period
  $ 2,044,386     $ 1,947,490  
                 
Supplemental disclosure of cash flow information:
               
Cash paid during the period for income taxes - net of refunds
  $ 1,381     $ 2,572  
 
See accompanying notes to consolidated financial statements
 
 
5

 
 
HELIOS AND MATHESON ANALYTICS INC.
Notes to Consolidated Financial Statements
(Unaudited)

1)      GENERAL:
 
These financial statements should be read in conjunction with the financial statements contained in Helios and Matheson Analytics Inc.’s (“Helios and Matheson” or the “Company”) Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission (“SEC”) and the accompanying financial statements and related notes thereto. The accounting policies used in preparing these financial statements are the same as those described in the Company's Form 10-K for the year ended December 31, 2012. On May 3, 2013, the Company changed its name from Helios and Matheson Information Technology Inc. to Helios and Matheson Analytics Inc.

2)     CONTROLLED COMPANY:
 
The Board of Directors has determined that Helios and Matheson meets the definition of a “Controlled Company” as defined by Rule 5615(c) of the NASDAQ Listing Rules. A “Controlled Company” is defined in Rule 5615(c) as a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company. Certain NASDAQ requirements do not apply to a “Controlled Company”, including requirements that: (i) a majority of its Board of Directors must be comprised of “independent” directors as defined in NASDAQ’s rules; and (ii) the compensation of officers and the nomination of directors be determined in accordance with specific rules, generally requiring determinations by committees comprised solely of independent directors or in meetings at which only the independent directors are present.


3)      INTERIM FINANCIAL STATEMENTS:
 
In the opinion of management, the accompanying unaudited consolidated financial statements contain all the adjustments (consisting only of normal recurring accruals) necessary to present fairly the consolidated financial position as of March 31, 2013, the consolidated results of operations for the three month periods ended March 31, 2013 and 2012 and cash flows for the three month periods ended March 31, 2013 and 2012.

The consolidated balance sheet at December 31, 2012 has been derived from the audited financial statements at that date, but certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted from these financial statements pursuant to SEC’s rules and regulations.  For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Form 10-K filed by the Company for the year ended December 31, 2012.

For the three month period ended March 31, 2013, the Company reported net income of approximately $101,000 and for the three month period ended March 31, 2012, the Company reported net income of approximately $14,000.  The Company continues to focus on revenue growth by expanding its existing client market share and its client base and by providing a Flexible Delivery Model to clients, which allows for dynamically configurable “right shoring” of service delivery based on client needs.  The Company also keeps a tight rein on discretionary expenditures and SG&A to enhance its competitiveness.

In management's opinion, cash flows from operations combined with cash on hand will provide adequate flexibility for funding the Company's working capital obligations for the next twelve months.

4)      STOCK BASED COMPENSATION:
 
The Company has a stock based compensation plan, which is described as follows:

The Company’s Stock Option Plan (the “Plan”) provides for the grant of stock options that are either “incentive” or “non-qualified” for federal income tax purposes.  The Plan provides for the issuance of a maximum of 184,000 shares of common stock (subject to adjustment pursuant to customary anti-dilution provisions).  Stock options vest over a period of between one to four years.

The exercise price per share of a stock option is established by the Compensation Committee of the Board of Directors in its discretion but may not be less than the fair market value of a share of common stock as of the date of grant.  The aggregate fair market value of the shares of common stock with respect to which “incentive” stock options first become exercisable by an individual to whom an “incentive” stock option is granted during any calendar year may not exceed $100,000.
 
 
6

 

Stock options, subject to certain restrictions, may be exercisable any time after full vesting for a period not to exceed ten years from the date of grant.  Such period is established by the Company in its discretion on the date of grant.  Stock options terminate in connection with the termination of employment.

Information with respect to options granted under the Company’s Plan is as follows:

   
Number of
Shares
   
Weighted
Average
Exercise Price
 
Balance - December 31, 2012
    -       -  
Granted during 1st Qtr 2013     -       -  
Exercised during 1st Qtr 2013     -       -  
Forfeitures during 1st Qtr 2013     -       -  
Balance - March 31, 2013
    -     $ 0.00  


The following table summarizes the status of the stock options outstanding and exercisable at March 31, 2013:

 
Stock Options Outstanding
 
Exercise Price
Range
   
Weighted
Average
Exercise Price
   
Number of
Options
   
Weighted-
Remaining
Contractual Life (years)
   
Number of
Stock
Options
Exercisable
 
                           
$12.00 - $24.00     $ 0.00       0       0       0  
                    0               0  

 
At March 31, 2013 no stock options were exercisable.
 
5)      NET INCOME PER SHARE:
 
The following table sets forth the computation of basic and diluted net income per share for the three months ended March 31, 2013 and 2012:

   
Three Months Ended
March 31,
 
   
2013
   
2012
 
Numerator for basic net income per share
           
             
Net income available to common stockholders
  $ 100,841     $ 13,943  
                 
Numerator for diluted net income per share
               
Net income available to common stockholders & assumed conversion
  $ 100,841     $ 13,943  
                 
                 
Denominator:
               
Denominator for basic and diluted income per share - weighted-average shares
    2,330,438       2,330,438  
                 
Basic and diluted income per share:
               
Net income per share
  $ 0.04     $ 0.01  

 
7

 
 
6)      CONCENTRATION OF CREDIT RISK:

The revenues of the Company’s top three customers represented approximately 86.6% of the revenues for the three month period ended March 31, 2013.  The revenue of the Company’s top three customers represented approximately 83% of revenues for the same period in 2012.  No other customer represented greater than 10% of the Company’s revenues for such periods.  The Company continues its effort to broaden its customer base in order to mitigate this risk.

 
7)      CONTRACTUAL OBLIGATIONS AND COMMITMENTS:

The Company’s commitments at March 31, 2013, are comprised of the following:
 
   
Payments Due by Period
 
Contractual Obligations
 
Total
   
Less Than 1 Year
   
1 - 3 Years
   
3 - 5 Years
   
More Than 5 Years
 
Operating Lease Obligations
                             
Rent (1)
    628,160       157,040       314,080       157,040       -  
Total
  $ 628,160     $ 157,040     $ 314,080     $ 157,040     $ -  


(1) The Company has a New York facility with a lease term expiring March 31, 2017.
 

As of March 31, 2013, the Company does not have any “Off Balance Sheet Arrangements”.

 
8)    PROVISION FOR INCOME TAXES
 
The provision for income taxes as reflected in the consolidated statement of Income and Comprehensive Income varies from the expected statutory rate primarily due to a provision for minimum state taxes and the recording of adjustments to the valuation allowance against deferred tax assets.  Internal Revenue Code Section 382 (the “Code”) places a limitation on the utilization of Federal net operating loss and other credit carry-forwards when an ownership change, as defined by the tax law, occurs.  Generally, this occurs when a greater than 50 percent change in ownership occurs.  During 2006, Helios and Matheson Information Technology Ltd (“Helios and Matheson Parent”) acquired a greater than 50 percent ownership of the Company.  Accordingly, the actual utilization of the net operating loss carry-forwards for tax purposes are limited annually under the Code to a percentage (currently about four and a half percent) of the fair market value of the Company at the date of this ownership change.  The Company maintains a valuation allowance against additional deferred tax assets arising from net operating loss carry-forwards since, in the opinion of management; it is more likely than not that some portion or all of the deferred tax assets will not be realized.

9)    TRANSACTIONS WITH RELATED PERSONS
 
In September 2010, the Company entered into a Memorandum of Understanding with Helios and Matheson Parent (the “HMIT MOU”) pursuant to which Helios and Matheson Parent has agreed to make available to the Company facilities of dedicated Off-shore Development Centers (“ODCs”).  In connection with the ODCs, Helios and Matheson Parent also renders services by way of support in technology and client engagement, and by providing management and operational services at the ODCs. Helios and Matheson Parent has been providing recruitment services to Helios and Matheson Analytics Inc. and has not charged a fee for these services.  Helios and Matheson Parent also invests in deepening client relationships by providing knowledge transition free of cost to clients and volume/ business commitment-based discounts.  The investment made by Helios and Matheson Parent in this regard in Q1 2013 is $32,448.  The amount payable to Helios and Matheson Parent for services rendered under the HMIT MOU was $91,469 for the three months ended March 31, 2013 and is included as a component of cost of revenue. All payments to Helios and Matheson Parent under the MOU are made after collections are received from clients. The amount paid to Helios and Matheson Parent for services rendered under the HMIT MOU was $63,648 for the three months ended March 31, 2013.

 
8

 
 
10)       LEGAL PROCEEDINGS

On April 5, 2011, the Company filed a Complaint in the Superior Court of New Jersey, Union County against Toranco-Clark Associates LLC, its landlord of the former New Jersey office, for breach of its lease agreement in the amount of $22,000.  On June 17, 2011, Toranco-Clark Associates LLC filed a Counterclaim against the Company in the amount of $24,000 for alleged breach of the lease agreement. The ultimate outcome of this matter is uncertain at this time.

During 2011, Rosen and Associates, P.C. has asked for a payment of $23,680 for services it allegedly performed for the Company. No action has been filed by Rosen and Associates, P.C.

11) DIVIDEND PAID

On February 3, 2013 the Company’s Board of Directors declared a dividend of $0.09 per share on the Company's common stock, amounting to a total payout of $209,739. This amount represents approximately 50% of the net profits of the Company for the year ended December 31, 2012. The dividend was paid on March 5, 2013 to shareholders of record on February 18, 2013. However, there can be no assurance that we will pay dividends in the future.

12)    SUBSEQUENT EVENTS
 
           Management completed an analysis of all subsequent events occurring after March 31, 2013, the balance sheet date, through May 6, 2013, the date upon which the quarter-end consolidated financial statements were issued, and determined there were no disclosures necessary which have not been already disclosed elsewhere in these financial statements.
 
 
9

 

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of significant factors affecting the Company's operating results, liquidity and capital resources should be read in conjunction with the accompanying financial statements and related notes.

Statements included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this document that do not relate to present or historical conditions are “forward-looking statements” within the meaning of that term under Section 27A of the Securities Act of 1933, as amended, and under Section 21E of the Securities Exchange Act of 1934, as amended.  Additional oral or written forward-looking statements may be made by the Company from time to time, and such statements may be included in documents that are filed with the SEC.  Such forward-looking statements involve risks and uncertainties that could cause results or outcomes to differ materially from those expressed in such forward-looking statements. Words such as “believes,” “forecasts,” “intends,” “possible,” “expects,” “estimates,” “anticipates,” or “plans” and similar expressions are intended to identify forward-looking statements.  The Company cautions readers that results predicted by forward-looking statements, including, without limitation, those relating to the Company’s future business prospects, revenues, working capital, liquidity, capital needs, interest costs, and income are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements.  The important factors on which such statements are based, include but are not limited to, assumptions concerning the magnitude of the ongoing economic crisis, including its impact on the Company’s customers, demand trends in the information technology industry and the continuing needs of current and prospective customers for the Company’s services.

Overview
 
Since 1983, Helios and Matheson has provided high quality IT services and solutions to Fortune 1000 companies and other large organizations.  The Company is headquartered in New York City and has a second office in Bangalore, India.
 
The Company’s services include Application Value Management, Application Development, Integration, Independent Validation, Infrastructure and Information Management services. The Company believes that a philosophy of intense focus on client satisfaction, business aware solutions and guaranteed delivery provides tangible business value to its client base across banking, financial services, insurance, pharmaceutical and manufacturing/automotive verticals.

The Company is dedicated to providing a Flexible Delivery Model to its clients, which allows for dynamically configurable “right shoring” of service delivery based on client needs.
 
For the three months ended March 31, 2013, approximately 90% of the Company's consulting services revenues were generated from clients under time and materials engagements, as compared to approximately 88% for the three months ended March 31, 2012, with the remainder generated under fixed-price engagements and recruitment process outsourcing (RPO).  The Company has established standard-billing guidelines for consulting services based on the types of services offered.  Actual billing rates are established on a project-by-project basis and may vary from the standard guidelines. The Company typically bills its clients for time and materials services on a weekly and monthly basis.  Arrangements for fixed-price engagements are made on a case-by-case basis. Consulting services revenues generated under time and materials engagements are recognized as those services are provided.  Revenues from fixed fee contracts are recorded when work is performed on the basis of the proportionate performance method, which is based on costs incurred to date relative to total estimated costs.

The Company's most significant operating cost is its personnel cost, which is included in cost of revenues.  For the three months ended March 31, 2013 and 2012, gross margin was 21.1% and 23.9% respectively.

The Company actively manages its personnel utilization rates by monitoring project requirements and timetables.  The Company’s utilization rate for the three months ending March 31, 2013 was approximately 99% as compared to 89% for the three months ending March 31, 2012.  As projects are completed, consultants either are re-deployed to new projects at the current client site or to new projects at another client site or are encouraged to participate in the Company’s training programs in order to expand their technical skill sets.

Helios and Matheson, a premier global information technology firm is excited to introduce its predictive analytics practice - Helios and Matheson Analytics. Rooted in our heritage of exceptional client relationships we now leverage our technological prowess to garner analytic insights from data and make intelligent predictions to drive valuable decisions for our clients.  Our integrated service of Big Data technology, advanced analytics, extensive domain expertise in financial service and healthcare and engaging data visualization empowers our clients unlock the value of data to make better decisions. Our new name Helios and Matheson Analytics Inc. reflects the company's strategy to move beyond IT to offer its clients an enhanced suite of services of predictive analytics with technology at its foundation enriched by data science. This is an emergent client-led evolution of the firm's progression from technology to analytics to business value.
 
 
10

 
 
2012 ACHIEVEMENTS
 
2012 was a year of great significance for Helios and Matheson Analytics.
 
The year witnessed the Company’s achievement of financial targets and increased earnings per share.
 
Despite the macro-economic challenges and uncertainty in global spending, The Company doubled its net income as compared to last year. The Company generated cash from operations of $982K, resulting in a substantial increase in the cash balance from about $2 million at the end of 2011 to $2.9 million at the end of 2012.
 
The following is the list of the Company’s achievements as of December 31, 2012:
 
•           Continues to maintain stable and consistent operational and financial growth.
 
•           Has a strong balance sheet with current assets of $4.3 million and total assets of $5.4 million.
 
•           Continues to be a zero debt company with current ratio of 3.6:1.
 
•           Gained a higher gross margin by approximately $261K.
 
•           A controlled and stable SG&A at approximately $2.3 million, leading to a positive bottom line of approximately $422K - an increase of 108% over 2011.
 
•           Cash provided by operations was approximately $928K as compared to approximately $358K in 2011.
 
Keeping in view the sustained profitable performance over seven continuous quarters, the Board of Directors declared a dividend of $0.09 per share amounting to a payout of $209,739. This amount represents approximately 50% of the net Income of the Company for the year 2012.
 
Critical Accounting Policies
 
The methods, estimates and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results the Company reports in its consolidated financial statements.  The Company evaluates its estimates and judgments on an on-going basis.  Estimates are based on historical experience and on assumptions that the Company believes to be reasonable under the circumstances.  The Company’s experience and assumptions form the basis for its judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.  Actual results may vary from what is anticipated and different assumptions or estimates about the future could change reported results.  The Company believes the following accounting policies are the most critical to it, in that they are important to the portrayal of its financial statements and they require the most difficult, subjective or complex judgments in the preparation of the consolidated financial statements.
 
Revenue Recognition
 
Consulting revenues are recognized as services are provided.  The Company primarily provides consulting services under time and material contracts, whereby revenue is recognized as hours and costs are incurred.  Customers for consulting revenues are billed on a weekly, semi-monthly or monthly basis.  Revenues from fixed fee contracts are recorded when work is performed on the basis of the proportionate performance method, which is based on costs incurred to date relative to total estimated costs.  Any anticipated contract losses are estimated and accrued at the time they become known and estimable.  Revenues from RPO services are recorded when service is performed. Unbilled accounts receivables represent amounts recognized as revenue based on services performed in advance of customer billings.  Revenue from sales of software licenses is recognized upon delivery of the software to a customer because future obligations associated with such revenue are insignificant.
 
 
11

 
 
Allowance for Doubtful Accounts
 
The Company monitors its accounts receivable balances on a monthly basis to ensure that they are collectible.  On a quarterly basis, the Company uses its historical experience to accurately determine its accounts receivable reserve.  The Company’s allowance for doubtful accounts is an estimate based on specifically identified accounts as well as general reserves.  The Company evaluates specific accounts where it has information that the customer may have an inability to meet its financial obligations.  In these cases, management uses its judgment, based on the best available facts and circumstances, and records a specific reserve for that customer, against amounts due, to reduce the receivable to the amount that is expected to be collected.  These specific reserves are re-evaluated and adjusted as additional information is received that impacts the amount reserved.  The Company also establishes a general reserve for all customers based on a range of percentages applied to aging categories.  These percentages are based on historical collection and write-off experience.  If circumstances change, the Company’s estimate of the recoverability of amounts due the Company could be reduced or increased by a material amount.  Such a change in estimated recoverability would be accounted for in the period in which the facts that give rise to the change become known.
 
Valuation of Deferred Tax Assets
 
Deferred tax assets are reduced by a valuation allowance when, in the opinion of the Company, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The Company assesses the recoverability of deferred tax assets at least annually based upon the Company’s ability to generate sufficient future taxable income and the availability of effective tax planning strategies.
 
Stock Based Compensation
 
The Company uses the modified prospective application method as specified by the FASB whereby compensation cost is recognized over the remaining service period based on the grant-date fair value of those awards as calculated for pro forma disclosures as originally issued.
 
Results of Operations
 
The following table sets forth the percentage of revenues of certain items included in the Company’s Statements of Income:
 
   
Three Months Ended
March 31,
 
   
2013
   
2012
 
Revenues
    100.0 %     100.0 %
Cost of revenues
    78.9 %     76.1 %
Gross profit
    21.1 %     23.9 %
Operating expenses
    17.8 %     20.1 %
Income from operations
    3.3 %     3.8 %
Net Income
    3.2 %     0.5 %
 
Comparison of the Three Months Ended March 31, 2013 to the Three Months Ended March 31, 2012
 
Revenues. Revenues for the three months ended March 31, 2013 were $3.20 million compared to $2.68 million for the three months ended March 31, 2012. The increase was primarily attributable to an increase in consulting and RPO revenue.
 
Gross Profit. The resulting gross profit for the three months ended March 31, 2013 was $674,000 as compared to $640,000 for the three months ended March 31, 2012.  As a percentage of total revenues, gross margin for the three months ended March 31, 2013 was 21.1% compared to 23.9% for the three months ended March 31, 2012. The reduction to gross margin is due to a change in the revenue mix.
 
Operating Expenses. Operating expenses are comprised of selling, general and administrative (“SG&A”) expenses and depreciation and amortization.  Operating expenses for the three months ended March 31, 2013 were $571,000 as compared to the 2012 period of $539,000. The increase is primarily due to the hiring of additional personnel.
 
 
12

 
 
Taxes.   Tax provision for the three months ended March 31, 2013 was $3,000 compared to $6,000 for the three months ended March 31, 2012.
 
Net Income.  As a result of the above, the Company had net income of $101,000 or $0.04 per basic and diluted share for the three months ended March 31, 2013 as compared to a net income of $14,000 or $0.01 per basic and diluted share for the three months ended March 31, 2012.
 
Liquidity and Capital Resources
 
The Company believes that its business, operating results and financial condition continue to be impacted by the ongoing economic uncertainty. A significant portion of the Company’s major customers are in the financial services industry and came under considerable pressure as a result of the unprecedented economic conditions in the financial markets.  Spending on IT consulting services is largely discretionary, and the Company has experienced a pushback of new assignments and high margin projects from existing clients. Although revenues have improved quarter over quarter, the Company has reported relatively consistent income from operations.  The Company had income from operations of approximately $103,000 and net income of approximately $101,000 for the three months ended March 31, 2013.  During the three months ended March 31, 2012, the Company had income from operations of approximately $102,000 and net income of approximately $14,000. Net Income of the three months ended March 31, 2012 had non recurring expenses of about $83,000.
 
The Company's cash balances were approximately $2.04 million at March 31, 2013 and $2.9 million at December 31, 2012.  Net cash used by operating activities for the three months ended March 31, 2013 was approximately $605,000 compared to net cash provided by operating activities of approximately $24,000 for the three months ended March 31, 2012.
 
The Company's accounts receivable, less allowance for doubtful accounts, at March 31, 2013 and at December 31, 2012 were approximately $1.9 million and $1.3 million, respectively, representing 52 days and 34 days of sales outstanding (“DSO”) respectively. The increase in DSO was temporary and the overdue amounts have already been collected. The Company has provided an allowance for doubtful accounts at the end of each of the periods presented.  After giving effect to this allowance, the Company does not anticipate any difficulty in collecting amounts due.
 
For the three month period ended March 31, 2013 cash used by investing activities was ($2,500) as compared to ($76,000) of cash used by investing activities for the three months March 31, 2012. During the three months ended March 31, 2012, cash used in investing activities consisted of the amount paid as a security deposit for the new executive office in the Empire State Building.
 
For the three month period ended March 31, 2013, cash used by financing activities was ($210,000) as compared to $0 for the three months ended March 31, 2012.  On February 3, 2013 the Company’s Board of Directors declared a dividend of $0.09 per share on the Company's common stock, amounting to a payout of $209,739. Cash used in financing activities in 2013 consisted of the dividend paid to shareholders.
 
In management's opinion, cash flows from operations combined with cash on hand will provide adequate flexibility for funding the Company's working capital obligations for the next twelve months.
 
For the three months ended March 31, 2013 and 2012, there were no shares of common stock issued pursuant to the exercise of options granted under the Company’s stock option plan.
 
Off Balance Sheet Arrangements
 
As of March 31, 2013, the Company does not have any Off Balance Sheet Arrangements.
 
Contractual Obligations and Commitments
 
The Company’s commitments at March 31, 2013 are reflected and further detailed in the Contractual Obligation table located in Part I, Item 1, Note 7 of this Form 10-Q.

Inflation

The Company has not suffered material adverse affects from inflation in the past.  However, a substantial increase in the inflation rate in the future may adversely affect customers’ purchasing decisions, may increase the costs of borrowing or may have an adverse impact on the Company’s margins and overall cost structure.
 
 
13

 
 
Recent Accounting Pronouncements
 
None.
 
Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Not Required.

Item 4.  Controls and Procedures

Evaluation of disclosure controls and procedures.  As of March 31, 2013, we carried out an evaluation, under the supervision of and with the participation of our President and Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).  Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures.  Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of March 31, 2013, our disclosure controls and procedures were effective.
 
Changes in internal control.  During the quarter covered by this report, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.
 
Part II.  Other Information

Item 1.  Legal Proceedings

The Company’s legal proceedings at March 31, 2013 have been disclosed in Part I, Item 1, Note 10 of this Form 10-Q.
 
Item 1A.  Risk Factors

We incorporate herein by reference the risk factors included under Item 1A. of our Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on March 4, 2013.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosure

Not Applicable

Item 5.  Other Information

None.
 
 
14

 
 
Item 6.  Exhibits

(a)           Exhibits

 
3.1
 
Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 to the Form 10-K, as previously filed with the SEC on March 31, 2010.
     
3.2
 
Bylaws of Helios and Matheson Analytics Inc., incorporated by reference to Exhibit 3.2 to the Form 10-K, as previously filed with the SEC on March 31, 2010.
     
3.3
 
Certificate of amendment of Certificate of Incorporation of the Registrant incorporated by reference to Exhibit 3.3 to form 10-Q as previously filed with the SEC on March 13, 2011
     
31.1
 
Certification of Principal Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
     
31.2
 
Certification of Principal Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
     
32.1
 
Certification of the Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2
 
Certification of the Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101
 
The following financial statements from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 formatted in Extensive Business Reporting Language (XBRL):  (i) consolidated balance sheets; (ii) consolidated statements of Income and Comprehensive income; (iii) consolidated statements of cash flows; and (iv) the notes to the financial statements.
 
 
15

 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
HELIOS AND MATHESON ANALYTICS INC.
       
       
       
Date: May 6, 2013  
By:
/s/ Divya Ramachandran  
    Divya Ramachandran  
    Chief Executive Officer and President  
       
       
       
Date: May 6, 2013 By: /s/ Umesh Ahuja  
    Umesh Ahuja  
    Chief Financial Officer and Secretary  
 
 
 
16
 
EX-31.1 2 ex31-1.htm EXHIBIT 31.1 ex31-1.htm
 
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
 
I, Divya Ramachandran, the Principal Executive Officer of Helios and Matheson Analytics Inc., certify that:
 
1.
I have reviewed this quarterly report on Form 10-Q of Helios and Matheson Analytics Inc., the registrant;
 
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the registrant and have:
 
 
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
 
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
 
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 

 
Date:
May 6, 2013
 
/s/ Divya Ramachandran
 
     
Name: Divya Ramachandran
 
     
Title: President and Chief Executive Officer
 
     
(Principal Executive Officer)
 
 
EX-31.2 3 ex31-2.htm EXHIBIT 31.2 ex31-2.htm
Exhibit 31.2
 
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
 
I, Umesh Ahuja, the Principal Financial Officer of Helios and Matheson Analytics Inc., certify that:
 
1.
I have reviewed this quarterly report on Form 10-Q of Helios and Matheson Analytics Inc., the registrant;
 
2.
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the registrant and have:
 
 
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
 
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
 
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 

 
Date:
May 6, 2013
 
/s/ Umesh Ahuja
 
     
Name: Umesh Ahuja
 
     
Title: Chief Financial Officer
 
     
(Principal Financial Officer)
 
 
EX-32.1 4 ex32-1.htm EXHIBIT 32.1 ex32-1.htm

Exhibit 32.1


CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350


In connection with the accompanying Quarterly Report on Form 10-Q of Helios and Matheson Analytics Inc. for the three month period ending March 31, 2013, I, Divya Ramachandran, the Principal Executive Officer of Helios and Matheson Analytics Inc., hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 
(1)
such Quarterly Report on Form 10-Q for the three month period ending March 31, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 
(2)
the information contained in such Quarterly Report on Form 10-Q for the three month period ending March 31, 2013 fairly presents, in all material respects, the financial condition and results of operations of Helios and Matheson Analytics Inc., on a consolidated basis.



Date:
May 6, 2013
 
/s/ Divya Ramachandran
 
     
Name: Divya Ramachandran
 
     
Title: President and Chief Executive Officer
 
     
(Principal Executive Officer)
 




















A signed original of this written statement required by §906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document
 
EX-32.2 5 ex32-2.htm EXHIBIT 32.2 ex32-2.htm
Exhibit 32.2


CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350


In connection with the accompanying Quarterly Report on Form 10-Q of Helios and Matheson Analytics Inc. for the three month period ending March 31, 2013, I, Umesh Ahuja, the Principal Financial Officer of Helios and Matheson Analytics Inc., hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 
(1)
such Quarterly Report on Form 10-Q for the three month period ending March 31, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 
(2)
the information contained in such Quarterly Report on Form 10-Q for the three month period ending March 31, 2013 fairly presents, in all material respects, the financial condition and results of operations of Helios and Matheson Analytics Inc., on a consolidated basis.



Date:
May 6, 2013
 
/s/ Umesh Ahuja
 
     
Name: Umesh Ahuja
 
     
Title: Chief Financial Officer
 
     
(Principal Financial Officer)
 






















A signed original of this written statement required by §906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document
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The accounting policies used in preparing these financial statements are the same as those described in the Company's Form 10-K for the year ended December 31, 2012. On May 3, 2013, the Company changed its name from Helios and Matheson Information Technology Inc. to Helios and Matheson Analytics Inc.</font> </div><br/> <div style="LINE-HEIGHT: 1.25; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">2)&#160;&#160;&#160;&#160;&#160;CONTROLLED COMPANY:</font> </div><br/><div style="LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Board of Directors has determined that Helios and Matheson meets the definition of a &#8220;Controlled Company&#8221; as defined by Rule 5615(c) of the NASDAQ Listing Rules. A &#8220;Controlled Company&#8221; is defined in Rule 5615(c) as a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company. Certain NASDAQ requirements do not apply to a &#8220;Controlled Company&#8221;, including requirements that: (i)&#160;a majority of its Board of Directors must be comprised of &#8220;independent&#8221; directors as defined in NASDAQ&#8217;s rules; and (ii)&#160;the compensation of officers and the nomination of directors be determined in accordance with specific rules, generally requiring determinations by committees comprised solely of independent directors or in meetings at which only the independent directors are present.</font> </div><br/> <div style="LINE-HEIGHT: 1.25; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">3)&#160;&#160;&#160;&#160;&#160;&#160;INTERIM FINANCIAL STATEMENTS:</font> </div><br/><div style="LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In the opinion of management, the accompanying unaudited consolidated financial statements contain all the adjustments (consisting only of normal recurring accruals) necessary to present fairly the consolidated financial position as of March 31, 2013, the consolidated results of operations for the three month periods ended March 31, 2013 and 2012 and cash flows for the three month periods ended March 31, 2013 and 2012.</font> </div><br/><div style="LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The consolidated balance sheet at December 31, 2012 has been derived from the audited financial statements at that date, but certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted from these financial statements pursuant to SEC&#8217;s rules and regulations.&#160;&#160;For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Form 10-K filed by the Company for the year ended December 31, 2012.</font> </div><br/><div style="LINE-HEIGHT: 1.25; 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Helios and Matheson Parent has been providing recruitment services to Helios and Matheson Analytics Inc. and has not charged a fee for these services.&#160;&#160;Helios and Matheson Parent also invests in deepening client relationships by providing knowledge transition free of cost to clients and volume/ business commitment-based discounts. &#160;The investment made by Helios and Matheson Parent in this regard in Q1 2013 is $32,448. &#160;The amount payable to Helios and Matheson Parent for services rendered under the HMIT MOU was $91,469 for the three months ended March 31, 2013 and is included as a component of cost of revenue. All payments to Helios and Matheson Parent under the MOU are made after collections are received from clients. 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