Helios & Matheson Analytics Inc. - FORM 10-K

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EXCEL - IDEA: XBRL DOCUMENT - Helios & Matheson Analytics Inc.	Financial_Report.xls
EX-31.2 - EXHIBIT 31.2 - Helios & Matheson Analytics Inc.	ex31-2.htm
EX-23.2 - EXHIBIT 23.2 - Helios & Matheson Analytics Inc.	ex23-2.htm
EX-32.2 - EXHIBIT 32.2 - Helios & Matheson Analytics Inc.	ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - Helios & Matheson Analytics Inc.	ex32-1.htm
EX-31.1 - EXHIBIT 31.1 - Helios & Matheson Analytics Inc.	ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One):

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2014

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________ to ________

HELIOS AND MATHESON ANALYTICS INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction

of Incorporation)

0-22945

(Commission File Number)

13-3169913

(I.R.S. Employer Identification No.)

Empire State Building, 350 Fifth Avenue

New York, New York 10118

(Address of Principal Executive Offices)

(212) 979-8228

(Registrant’s Telephone Number,

Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Class

Name of Exchange on which Registered

Common Stock, par value $.01 per share

NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐ No ☒

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 preceding 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 ☒ No ☐

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☐(Do not check if a smaller reporting company) Smaller reporting company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant was approximately $2,331,970 based on the sale price of the registrant's common stock on the NASDAQ Capital Market on the last business day of the registrant’s most recently completed second fiscal quarter.

As of March 17, 2015, there were 2,330,438 shares of the registrant’s common stock, $.01 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement for the 2015 Annual Meeting of Shareholders are incorporated by reference into Part III of this Report. See Item 15 for a list of other exhibits incorporated by reference into this Report.

TABLE OF CONTENTS

Page

PART I	1
Item 1. Business	1
Item 1A. Risk Factors	4
Item 1B. Unresolved Staff Comments	5
Item 2. Properties	5
Item 3. Legal Proceedings	5
Item 4. Mine Safety Disclosure	5

PART II	6
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	6
Item 6. Selected Financial Data	6
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	6
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	11
Item 8. Financial Statements and Supplementary Data	11
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	11
Item 9A. Controls and Procedures	11
Item 9B. Other Information	12

PART III	12
Item 10. Directors, Executive Officers and Corporate Governance	12
Item 11. Executive Compensation	12
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	13
Item 13. Certain Relationships and Related Transactions, and Director Independence	13
Item 14. Principal Accountant Fees and Services	13

PART IV	14
Item 15. Exhibits and Financial Statement Schedules	14

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 throughout and in particular in the discussion at Item 7 titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. These are statements regarding financial and operating performance and results and other statements that are not historical facts. The words “expect,” “project,” “estimate,” “believe,” “anticipate,” “intend,” “plan,” “forecast,” and similar expressions are intended to identify forward-looking statements. Certain important risks, including those discussed in the risk factors set forth in Item 1A of this report, 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:

●

our capital requirements and whether or not we will be able to raise capital when we need it;

●

changes in local, state or federal regulations that will adversely affect our business;

●

our ability to market and distribute or sell our products;

●

whether we will continue to receive the services of certain officers and directors;

●

our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others; and

●

other uncertainties, all of which are difficult to predict and many of which are beyond our control.

We do not intend to update forward-looking statements. You should refer to and carefully review the information in future documents we file with the Securities and Exchange Commission.

PART I

Item 1. Business

General

Since 1983, Helios and Matheson Analytics Inc. (“Helios and Matheson” or the “Company”) has provided high quality IT services and solutions to Fortune 1000 companies and other large organizations. Effective as of May 3, 2013, the company changed its name from Helios and Matheson Information Technology Inc. to Helios and Matheson Analytics Inc. Management believes that the new name more accurately reflects its business and operations going forward, which have moved beyond IT. The Company now offers its clients an enhanced suite of services of predictive analytics with technology at its foundation enriched by data science. Through the Company’s association with Helios and Matheson Information Technology Ltd. (referred to herein as “Helios and Matheson Parent”), we are developing long term mutually beneficial opportunities, both in the United States and globally. Helios and Matheson Parent is an information technology services organization with corporate headquarters in Chennai, India and the owner of approximately 75% of the Company’s outstanding common stock. The Company is headquartered in New York City and has a second office in Bangalore, India. The Company's common stock is listed on The NASDAQ Capital Market (“NASDAQ”) under the symbol "HMNY". Our website address is www.hmny.com. Information on our website is not a part of this report.

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.

Industry Background

Rapid technological advances and the wide acceptance and use of the Internet as a driving force in commerce accelerated the growth of the IT industry. These advances, including more powerful and less expensive computer technology, fueled the transition from predominantly centralized mainframe computer systems to open and distributed computing environments and the advent of capabilities such as relational databases, imaging, software development productivity tools, and web-enabled software. These advances expand the benefits that users can derive from computer-based information systems and improve the price-to-performance ratios of such systems. As a result, an increasing number of companies are employing IT in new ways, often to gain competitive advantages in the marketplace, and IT services have become an essential component of many companies’ long-term growth strategies. The same advances that have enhanced the benefits of computer systems rendered the development and implementation of such systems increasingly complex, popularizing the partnering with IT service providers like the Company for application development, support and related services. Accordingly, organizations turn to external IT services organizations such as Helios and Matheson to develop, support and enhance their internal IT systems.

In the past 6 to 8 years, we have seen a significant change in the volume, velocity and variety of data due to emerging technologies in computing power and with the proliferation and use of smart phones. This has unleashed the potential of Big Data, a collection of data sets so large and complex that it becomes difficult to process using on-hand database management tools or traditional data processing applications. The amount of data in the world is growing fast. Traditional digital databases are challenged to capture, store, search, share, analyze, and visualize this data deluge. Companies are relentlessly innovating to satisfy the increasingly demanding 21st century customer who lives many lives at once – online, mobile, global, local, blurring the lines between work and play, spoilt for choice and hungry for meaning and connection. It is now essential for business and IT organizations to work hand-in-hand to truly leverage the potential of Big Data – deepen customer engagement, realize operational efficiencies and essentially institutionalize data driven decision making.

Strategy

Helios and Matheson endeavors to provide high-quality, value-based offerings in the areas of application value management, application development, integration, independent validation, infrastructure and information management and analytics services.

We believe that the Company’s integrated service of Big Data technology, advanced analytics, extensive domain expertise in the areas of financial services and healthcare, including engaging data visualization, empowers our clients to unlock the value of data to make better decisions.

Helios and Matheson is ISO 27001 certified, the global benchmark for data security. This internationally recognized certification reflects our commitment to information security best practices.

The Company believes that intense focus on client satisfaction, business aware solutions and guaranteed delivery provides tangible business value to its client base across banking, financial services, insurance and healthcare verticals.

The Company’s goal is to realize consistent growth and competitive advantage through the following strategic initiatives:

Expand Existing Client Market Share. The Company endeavors to expand its penetration and market share within its existing client base through client focused sales and marketing initiatives allowing the Company to offer existing clients a broad suite of technology and analytics services. The Company’s relationships with current clients provide opportunities to market additional services in current and new geographical markets.

Expand Client Base. The Company endeavors to expand its client base particularly in the financial services sector. The Company endeavors to broaden the geography of its client base by offering services to many of its existing clients in their offices outside New York and New Jersey and using such contacts as a gateway into new geographies.

Global Delivery. 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.

Operational Efficiency. The Company is keeping a tight rein on discretionary expenditures and SG&A to enhance its competitiveness.

Helios and Matheson Operations

Service Lines. The Company’s main services include application value management, application development, integration, independent validation, infrastructure, information management and analytics services. These services account for approximately 92% of the Company’s revenues.

Software. Helios and Matheson markets and distributes software products developed by independent software developers. During 2014, software revenue was approximately 1% of the Company’s total revenues.

Clients

The Company’s clients consist primarily of Fortune 1000 companies and other large organizations. The Company’s clients operate in a diverse range of industries with a concentration in the banking, financial services, insurance and healthcare industries. Two of Company’s top five clients measured by revenue for the year ended December 31, 2014 have been clients for over five years. The revenues of the Company’s top four clients represented approximately 88% of the revenues for the twelve month period ended December 31, 2014 and the top three clients represented approximately 88% of the revenue for the twelve month period ended December 31, 2013. No other client represented greater than 10% of the Company’s revenues for such periods. During 2015, the Company expects that a significant portion of its revenues will continue to come from these clients. As indicated above, the Company continues to work positively to expand its client base by offering services to many of its existing clients in their offices outside New York and New Jersey and using such contacts as a gateway into new geographies.

All of the Company’s revenues were derived from clients within the United States for each of the years ended December 31, 2014 and 2013.

Sales and Marketing

The Company’s marketing strategy is to develop long-term mutually beneficial relationships with existing and new clients that will lead the Company to become a preferred provider of IT and analytics services. The Company seeks to employ a "cross selling" approach where appropriate to expand the number of services utilized by a single client. Other sales and marketing methods include client referrals, networking, and attendance at conferences.

Competition

The market for IT consulting and analytics services is intensely competitive, affected by rapid technological advances and includes a large number of competitors. The Company's competitors include the current or former consulting divisions of the “Big Four” accounting firms, major offshore outsourcing companies, systems consulting and implementation firms, application software development firms, management consulting firms, divisions of large hardware and software companies, and niche providers of IT and analytics services. Many of these competitors have significantly greater financial, technical and marketing resources than the Company. Competition imposes significant pricing pressures on the Company. The Company does not represent a significant competitive presence in the industry.

The Company believes that the principal competitive factors in the IT services and analytics market include breadth of services offered, industry and technology knowledge, expertise, intellectual property, cost competitiveness, quality of service and responsiveness to client needs. A critical component of the Company’s ability to compete in the marketplace is its ability to attract, develop, motivate and retain skilled professionals.

Human Resources

At March 31, 2015, the Company had 32 employees, of whom 25 were technology consultants, 3 provided sales and marketing services, and 3 were executive, financial and administrative personnel. None of the Company’s employees are represented by a labor union, and the Company has never incurred a work stoppage. In addition to these employees, the Company was utilizing the services of 26 independent contractors at December 31, 2014. These independent contractors act as consultants and they are not employees of the Company.

Long-Lived Assets

Substantially all of the Company’s long-lived assets were located in the United States for the years ended December 31, 2014 and 2013, respectively.

Intellectual Property Rights

The Company relies upon a combination of nondisclosure and other contractual arrangements and trade secret, copyright and trademark laws to protect its proprietary rights and the proprietary rights of third parties from whom the Company licenses intellectual property, but there can be no assurance that the steps taken by the Company in this regard will be adequate to deter misappropriation of proprietary information or that the Company will be able to detect unauthorized use and take appropriate steps to enforce its intellectual property rights. In addition, the Company is subject to the risk of litigation alleging infringement of third-party intellectual property rights. Any such claims could require the Company to spend significant sums in litigation, pay damages, develop non-infringing intellectual property or acquire licenses to the intellectual property which is the subject of the asserted infringement.

Helios and Matheson Parent has granted the Company a non-exclusive right to use the name "Helios and Matheson" and related trademarks, service names and service marks. Helios and Matheson Parent has the right to terminate the Company’s right to use the name and related trademarks and service marks upon each of the following events: (i) the Company duly and properly effectuates a change of the Company's corporate name which change is not consented to or approved by Helios and Matheson Parent; (ii) the Company consummates a business combination or merger, pursuant to which the Company is not the surviving corporation, or the Company consummates a sale of all or substantially all of its assets without the consent or approval of Helios and Matheson Parent or (iii) the Company files, or becomes a debtor subject to, a bankruptcy proceeding which proceeding or filing was not commenced by Helios and Matheson Parent or consented to by Helios and Matheson Parent. The Company could be materially adversely affected if Helios and Matheson Parent terminated the Company’s rights to use the name and the related trademarks and service marks as the Company would be forced to change its name, commence marketing under a new name and would not be able to enjoy the benefits of the Company’s marketing efforts under the name Helios and Matheson. Additionally, the Company is reliant upon Helios and Matheson Parent to protect Helios and Matheson’s trademarks, trade names, service marks and service names.

All ownership rights to software developed by the Company in connection with a client engagement are typically assigned to the client. In limited situations, the Company may retain ownership or obtain a license from its client, which permits the Company or a third party to market the software for the joint benefit of the client and the Company or for the sole benefit of the Company.

Seasonality

The Company’s business has not been affected by seasonality.

Government Regulation

We are not currently subject to direct regulation by any governmental agency, other than regulations applicable to businesses generally.

Item 1A. RISK FACTORS

The continued uncertain economic environment may adversely affect our business.

Spending on IT consulting and analytics services is largely discretionary and will decline during economic downturns or periods of economic uncertainty when the Company’s clients are operating under reduced budgets, including during the current period. A significant portion of the Company’s revenues are derived from sales to clients in the financial services, banking and insurance industries. Many of the Company’s major clients in the financial services industry came under significant financial pressure as a result of the recent economic crisis. If the period of economic uncertainty continues or if the economic environment worsens it could further erode the Company’s ability to sell future projects.

We rely on a concentrated client base for much of our revenue.

We rely on a small number of clients for a significant portion of our revenue. During the years ended December 31, 2014 and December 31, 2013, our top three clients accounted for 78% and 88% respectively of our revenue. If we were to lose any of these clients, we cannot assure you that they could be replaced quickly or at all. Our loss of any of these clients could have a material adverse effect on our revenues and results of operations.

Our stock price is volatile.

The Company’s stock was traded on 219 days during 2014 and may be subject to wide fluctuations in price in response to variations in quarterly results of operations and other factors, including financings, technological innovations and general economic or market conditions. For example, the closing price of our common stock during 2014 was as low as $1.70 and as high as $7.30. Stock markets have experienced extreme price and volume trading volatility in the recent past. This volatility had a substantial effect on the market price of many technology companies that has often been unrelated to the operating performance of those companies. This volatility may adversely affect the market price of the Company’s common stock.

Our industry is subject to rapid change.

Our industry is characterized by rapidly changing technology, evolving industry standards, frequent new product and service introductions, evolving distribution channels and changing customer demands. We must adapt to rapidly changing technological and application needs by continually improving our products as well as introducing new products and services to address user demands. Our success will depend in part on our ability to develop information technology solutions to meet client expectations, and offer services and solutions that keep pace with continuing changes in information technology, evolving industry standards and changing client preferences. If we are unable to keep up with technological changes and changes in industry standards, our business, reputation and results of operations may be materially adversely affected.

Our industry is intensely competitive.

The market for IT consulting and analytic services is intensely competitive, affected by rapid technological advances and includes a large number of competitors. Our competitors include the current or former consulting divisions of the “Big Four” accounting firms, major offshore outsourcing companies, systems consulting and implementation firms, application software development firms, management consulting firms, divisions of large computer hardware and software companies, and niche providers of IT services. Many of these competitors have significantly greater financial, technical and marketing resources than we have. Competition imposes significant pricing pressures on us. If we are unable to compete successfully in our markets, our business and financial results will be materially adversely affected.

Our success depends on our ability to protect our intellectual property.

We rely upon a combination of nondisclosure and other contractual arrangements and trade secret, copyright and trademark laws to protect our proprietary rights and the proprietary rights of third parties from whom we license intellectual property, but there can be no assurance that the steps we take in this regard will be adequate to deter misappropriation of proprietary information or that we will be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights.

Infringement on the proprietary rights of others could put us at a competitive disadvantage and any related litigation could be time consuming and costly.

Third parties may claim that we violated their intellectual property rights. To the extent of a violation of a third party’s intellectual property rights, we may be prevented from operating our business as planned, and may be required to pay damages, to obtain a license, if available, or to use a non-infringing method if possible, to accomplish our objectives. Any of these claims, with or without merit, could result in costly litigation and divert the attention of key personnel from our day-to-day operations. If such claims are successful, they could result in costly judgments or settlements.

Item 1B. UNRESOLVED STAFF COMMENTS

Not Required.

Item 2. Properties

The Company’s executive office is located at the Empire State Building, 350 Fifth Avenue, Suite # 7520, New York, NY 10118. The Company’s executive office is located in a leased facility with a term expiring on April 30, 2017. In addition, the Company has an office in Bangalore, India and pays a facilities fee that is based on the utilization of such facility. The Company is currently using such facilities under a Statement of Work, which expires on July 31, 2015. The SOW will renew automatically thereafter annually unless terminated by either party in accordance with the provisions of original agreement. These facilities are suitable and adequate for our current operations.

Item 3. Legal Proceedings

See Note 13 “Legal Proceedings” included in the Company’s financial statements which are included at Item 15 (a) of Part IV of this report.

Item 4. MINE SAFETY DISCLOSURE

Not Applicable

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters AND ISSUER PURCHASES OF EQUITY SECURITIES

Price Range of Common Stock

The Company’s common stock is listed on The NASDAQ Capital Market under the symbol “HMNY.”

The following table sets forth the quarterly range of high and low sale prices of the Company’s common stock since January 1, 2013 as reported by NASDAQ:

2014	High		Low
First Quarter	$	7.30	$	4.90
Second Quarter		5.35		3.49
Third Quarter		4.91		2.26
Fourth Quarter		3.39		1.70


2013	High		Low
First Quarter	$	4.77	$	2.97
Second Quarter		5.24		2.99
Third Quarter		9.50		3.82
Fourth Quarter		7.86		5.00

Dividends

During 2013, the Board of Directors of the Company declared a cash dividend of $0.09 per share to its common stockholders. On February 2, 2014, the Board of Directors declared a cash dividend of $0.08 per share to its common stockholders of record on February 18, 2014. The payment of dividends is at the discretion of the Company’s Board of Directors, who review many factors, including but not limited to profitability expectations, liquidity and financing needs, before making a determination that dividends will be paid. There is no guarantee that the Company’s Board of Directors will declare dividends in the future.

Holders

There were approximately 12 registered holders of record of the Company’s common stock as of February 13, 2015.

Recent Sales of Unregistered Securities and Share Repurchases

None.

Equity Compensation Plan

For information about the Company’s equity compensation plan, please see Item 12 of this report.

Item 6. Selected Financial Data

Not Required.

Item 7. 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 and liquidity and capital resources should be read in conjunction with the accompanying Consolidated Financial Statements and related Notes.

Overview

Helios and Matheson provides a wide range of high quality information technology (“IT”) consulting solutions, custom application development and analytics services to Fortune 1000 companies and other large organizations. The Company is headquartered in New York City, New York and has a subsidiary in Bangalore, India.

For the three and twelve months ended December 31, 2014, approximately 93% and 92% of the Company's consulting services revenues were generated from clients under time and materials engagements, with the remainder generated under fixed-price engagements and recruitment process outsourcing (RPO) engagements as compared to 93% and 92% for the three and twelve months ended December 31, 2013, respectively. 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 twelve months ended December 31, 2014 and 2013, gross margin was 20.4% and 20.6% respectively.

The Company actively manages its personnel utilization rates by monitoring project requirements and timetables. Helios and Matheson’s utilization rate for the three and twelve months ending December 31, 2014, was approximately 94% and 95%, respectively as compared to 92% and 96% for the three and twelve months ending December 31, 2013, respectively. 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 Helios and Matheson's training programs in order to expand their technical skill sets.

Investments by Helios and Matheson Parent

On March 30, 2006, Helios and Matheson Parent, an IT services organization with its corporate headquarters in Chennai, India, purchased 409,879 shares of the Company’s common stock from Mr. Shmuel BenTov, the Company’s former Chairman, Chief Executive Officer and President and his family members, which represented approximately 43% of the Company’s outstanding common stock. In 2006, 2007, 2008, 2009 and 2010 Helios and Matheson Parent purchased additional shares of the Company’s common stock. Helios and Matheson Parent owns 1,743,040 shares of common stock, representing approximately 75% of the shares of the common stock currently outstanding. Helios and Matheson Parent is a publicly listed company on three stock exchanges in India, the National Stock Exchange (NSE), the Stock Exchange, Mumbai (BSE) and Madras Stock Exchange (MSE).

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 consolidated 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. Clients for consulting revenues are billed on a weekly 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 and placement of a candidate is accepted by the customer. Unbilled accounts receivables represent amounts recognized as revenue based on services performed in advance of customer billings, including RPO services where placement of a candidate is accepted by the customer and payment is assured. 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.

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 estimate 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 reevaluated and adjusted as additional information is received that impacts the amount reserved. The Company also establishes a general reserve for all clients 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

Results of Operations

The following table sets forth the percentage of revenues of certain items included in the Company’s Statement of Income:

	Year Ended December 31,
	2014			2013
Revenues		100.0	%		100.0	%
Cost of revenues		79.6	%		79.4	%
Gross profit		20.4	%		20.6	%
Operating expenses		22.1	%		17.7	%
(Loss)/Profit from operations		( 1.7	)%		2.8	%
Net (Loss)/Profit		( 1.7	)%		2.9	%

Comparison of Year Ended December 31, 2014 to Year Ended December 31, 2013

Revenues. Revenues of the Company decreased by $2.7 million or 19.9% from $13.3 million for the twelve months ended December 31, 2013 to $10.6 million for the twelve months ended December 31, 2014. The decrease was primarily attributable to a decrease in consulting and RPO revenue due to a decline in discretionary spending in IT services by the Company’s major clients in the financial and banking service industry. Our clients are facing significant financial pressure due to the ongoing tough economic environment resulting in a pushback in new assignments.

Gross Profit. The resulting gross profit for the twelve months ended December 31, 2014 was $2.1 million, a decrease of $559,000 or 20.5% from the 2013 comparable period amount of $2.7 million. As a percentage of total revenue, gross margin for the twelve months ended December 31, 2014 and 2013 was 22.5% and 20.6% respectively. The reduction to gross margin is due to a reduction in revenue and the increase in gross margin percentage is due to the increase in higher margin offshore consulting revenue.

Operating Expenses. Operating expenses are comprised of selling, general and administrative (“SG&A”) expenses and depreciation and amortization. For the twelve months ended December 31, 2014 and December 31, 2013 operating expenses were $2.4 million. The Company continues to focus on various cost reduction initiatives including, but not limited to, renegotiation with major vendors and process restructuring.

Taxes. For the twelve months ended December 31, 2014, the Company recorded a tax provision of $12,000 for minimum state taxes and provision to return adjustments of ($3,459) from the filing of state and federal tax returns, as compared to a tax provision of $12,000 for minimum state taxes and provision to return adjustments of ($13,446) for the twelve months ended December 31, 2013. In addition, deferred taxes were not impacted by the pre-tax net income since such amounts were fully reserved as of December 31, 2014 and 2013 respectively.

Net Income. As a result of the above, the Company had net loss of approximately ($178,000) or $(0.08) per basic and diluted share for the twelve months ended December 31, 2014, compared to net income of approximately $383,000 or $0.16 per basic and diluted share for the twelve months ended December 31, 2013.

Liquidity and Capital Resources

The Company believes that its business, operating results and financial condition have been affected by the economic crisis and ongoing economic uncertainty which continue to impact the IT and analytics spending of its clients. A significant portion of the Company’s major clients 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 and analytics services is largely discretionary, and the Company has experienced a pushback of new assignments and high margin projects from existing clients. During the twelve months ended December 31, 2014 the Company’s revenues declined by approximately 19.9% and the Company reported a net loss of ($178,000) as compared to net income of $383,000 during the same period in 2013. The net loss resulted primarily from a decline in high margin projects and RPO services revenue. During the year, the Company also made investments in furthering its analytics business.

The Company's cash balances were approximately $1.2 million at December 31, 2014 as compared to $ 0.7 million at December 31, 2013. Net cash provided by operating activities for the twelve months ended December 31, 2014 was approximately $0.8 million as compared to net cash used in operating activities of approximately $1.9 million for the twelve months ended December 31, 2013. During the year ended December 31, 2013 cash used in operating activities included an increase in the amount of $1 million to a security deposit transferred to Helios and Matheson Parent. The security deposit is used to cover any expenses, claims or damages that Helios and Matheson Parent may incur while discharging its obligations under a memorandum of understanding we entered into with Helios and Matheson Parent in September 2010 and also to cover the Company’s payable to Helios and Matheson Parent pursuant to the memorandum of understanding. See Note 12 “Transaction with Related Party” included in the Company’s financial statements which are included at Item 15 (a) of Part IV of this report.

The Company's accounts receivable, less allowance for doubtful accounts, at December 31, 2014 and December 31, 2013 were $1.1 million and $2.1 million, respectively, representing 38 days and 59 days of sales outstanding (“DSO”) respectively. The Company believes DSO of 38 days and 59 days in 2014 and 2013, respectively, is consistent with favorable resolutions of a limited number of dated client disputes. 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.

The Company’s accounts payable and accrued expenses at December 31, 2014 and at December 31, 2013 were approximately $0.6 million and $0.8 million, respectively.

For the twelve months ended December 31, 2014, revenues from the Company’s four largest clients represented 88% and during twelve months ended December 31, 2013, revenue from the Company’s largest three clients represented 88% of revenues. No other customer represented greater than 10% of the Company's revenues for such periods.

Net cash used in investing activities was $14,249 and $7,699 for the twelve months ended December 31, 2014 and 2013, respectively. During 2014, additions of property and equipment were offset by disposals totaling $1,248 as compared to $250 during 2013.

For the twelve months period ended December 31, 2014, cash used by financing activities was ($186,000) as compared to ($210,000) for the twelve months ended December 31, 2013. On February 2, 2014 the Company’s Board of Directors declared a dividend of $0.08 per share on the Company's common stock, amounting to a payout of $186,435.

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

For the twelve months ended December 31, 2014 and 2013, there were no shares of common stock issued pursuant to the exercise of options issued under the Company’s stock option plan.

Going Concern

See “Going Concern” in Note 1 of the Company’s financial statements which are included at Item 15 (a) (1) and (2) of Part IV of this report.

Off-Balance Sheet Arrangements

The Company did not have any “Off Balance Sheet Arrangements” during the twelve months ended December 31, 2014 and 2013.

Contractual Obligations

The Company has the following contractual obligations as of December 31, 2014:

Contractual Obligations	Payments Due by Period
	Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years
Operating Lease Obligations
Rent ⁽¹⁾		366,427		157,040		209,387		-		-
Total	$	366,427	$	157,040	$	209,387	$	-	$	-

(1)

The Company leases office space located in the Empire State Building in New York. The lease term expires on April 30, 2017.

Recent Accounting Pronouncements

On May 28, 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 provides a robust framework for addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. ASU 2014-09 is effective beginning with the calendar year ended December 31, 2017. The Company has not yet assessed the impact ASU 2014-09 will have upon adoption on its financial position, results of operations or cash flows.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires that an entity’s management evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. Certain disclosures are necessary in the footnotes to the financial statements in the event that conditions or events raise substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter and early application is permitted. The Company has not yet assessed the impact ASU 2014-15 will have upon adoption.

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 our clients’ purchasing decisions, and consequently may impact the Company’s margins and overall cost structure.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not Required.

Item 8. Financial Statements and Supplementary Data

See the Company’s financial statements which are included at Item 15 (a) (1) and (2) of Part IV of this report.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management under the supervision of and with the participation of our President and Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer), conducted an evaluation 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, or the “Exchange Act”) as of December 31, 2014. 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 President and Chief Executive Officer, and our Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on that evaluation, our President and Chief Executive Officer and our Chief Financial Officer have concluded that, as of December 31, 2014, our disclosure controls and procedures were effective.

Management Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:

(i)

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii)

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(iii)

Provide reasonable assurance regarding prevention or timely detection of the unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Management assessed the Company’s internal control over financial reporting as of December 31, 2014, the end of the Company’s fiscal year. Management based its assessment on criteria established in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on management’s assessment, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2014. Management has reviewed the results of the assessment of the Company’s internal controls over financial reporting with the Audit Committee of the Company’s Board of Directors.

Inherent Limitations on Effectiveness of Controls

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Controls

During the period covered by this report, there was no change in the Company’s 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.

Item 9B. OTHER INFORMATION

None

PART III

Item 10. Directors, Executive Officers and corporate governance

The information concerning the Company’s Code of Ethics is set forth below in this Item 10. All other information required by this item is incorporated by reference to the Company’s Proxy Statement for the 2015 Annual Meeting of Shareholders.

Code of Ethics

The Board of Directors has adopted a code of ethics designed, in part, to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with or submits to the Securities and Exchange Commission and in the Company’s other public communications, compliance with applicable governmental laws, rules and regulations, the prompt internal reporting of code violations to an appropriate person or persons, as identified in the code and accountability for adherence to the code. The code of ethics applies to all directors, executive officers and employees of the Company. The Company will provide a copy of the code to any person without charge, upon request to Ms. Jeannie Lovastik, Human Resources Manager, by calling 212-979-8228 or writing to Ms. Lovastik’s attention at Helios and Matheson Analytics Inc., 350 Fifth Avenue, Suite 7520, New York, New York, 10118.

The Company intends to disclose any amendments to or waivers of its code of ethics as it applies to directors or executive officers by filing them on Form 8-K.

Item 11. Executive Compensation

The information required by this item is incorporated by reference to the Company’s Proxy Statement for the 2015 Annual Meeting of Shareholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management AND RELATED SHAREHOLDER MATTERS

The information concerning the Company’s equity compensation plan is set forth below in this Item 12. All other information required by this item is incorporated by reference to the Company’s Proxy Statement for the 2015 Annual Meeting of Shareholders.

Equity Compensation Plan Information

The Equity Compensation Plan Information as of December 31, 2014 was as follows:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights as of December 31, 2014		Weighted-average exercise price of outstanding options, warrants and rights as of December 31, 2014		Number of securities remaining available for future issuance under equity compensation plans (Excluding securities to be issued upon exercise of outstanding options, warrants and rights as of December 31, 2014

Equity compensation plans approved by security holders		-	$	-		400,000
Equity compensation plans not approved by security holders		-		-		-
Total		-	$	-		400,000

Item 13. Certain Relationships and Related Transactions, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated by reference to the Company’s Proxy Statement for the 2015 Annual Meeting of Shareholders.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated by reference to the Company’s Proxy Statement for the 2015 Annual Meeting of Shareholders.

PART IV

Item 15. Exhibits AND Financial Statement Schedules

15(a) (1) Financial Statements

The Consolidated Financial Statements filed as part of this report are listed and indexed in the table of contents. Schedules other than those listed in the index have been omitted because they are not applicable or the required information has been included elsewhere in this report.

15(a) (2) Consolidated Financial Statement Schedules

Schedule II – Valuation and Qualifying Accounts are included in this report.

15 (a) (3) Exhibits

The exhibits filed as part of this Annual Report on Form 10-K is listed in the Exhibit Index immediately preceding the exhibits. The Company has identified in the Exhibit Index each management contract and compensation plan filed as an exhibit to this Annual Report on Form 10-K in response to Item 15(a) (3) of Form 10-K.

Exhibit

Number

Description of 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 SEC on March 31, 2010.

3.1.1

Certificate of Amendment to Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.3 to the Form 10-Q for the period ended March 31, 2011 as filed with the SEC on May 13, 2011.

3.1.2

Certificate of Amendment to Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.4 to the Form 10-Q for the period ended June 30, 2011 as filed with the SEC on August 15, 2011.

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 SEC on March 31, 2010.

10.1

Helios and Matheson Analytics Inc. 2014 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 on Form 8-K, as previously filed with the SEC on March 3, 2014. †

10.2

Memorandum of Understanding, dated as of September 22, 2010, between the Registrant and Helios and Matheson Information Technology Limited, incorporated by reference to Exhibit 10.2 to Form 10-Q for the nine months ended September 30, 2010, as previously filed with the SEC on November 15, 2010.

10.3

Form of Indemnification Agreement between the Registrant and certain of its Directors and its Chief Executive Officer, incorporated by reference to Exhibit 10.12 to the Form 10-Q for the period ended September 30, 2003 as previously filed with the SEC on November 14, 2003. †

10.4

Amendment dated August 30, 2013 to Memorandum of Understanding dated as of September 22, 2010 between the Registrant and Helios and Matheson Information Technology Limited, incorporated by reference to Exhibit 10.1 to the Form 8-K as previously filed with the SEC on September 5, 2013.

10.5

Form of Board of Directors Services Agreement, incorporated by reference to Exhibit 10.1 to the Form 10-Q for the period ended September 30, 2012 as previously filed with the SEC on November 5, 2012.

10.6

Lease Agreement dated as of January 10, 2012 between the Registrant and Empire State Building Company LLC, incorporated by reference to Exhibit 10.1 to the Form 10-Q for the period ended March 31, 2012 as previously filed with the SEC on May 15, 2012.

10.7

Statement of Work dated August 1, 2008 between the Registrant and IonIdea, Inc., incorporated by reference to Exhibit 10.1 to the Form 10-Q for the period ended September 30, 2010 as previously filed with the SEC on November 15, 2010.

10.8

Amendment to Statement of Work dated August 1, 2008 between the Registrant and IonIdea, inc., incorporated by reference to Exhibit 10.1 to the Form 10-Q for the period ended June 30, 2013 as previously filed with the SEC on August 2, 2013.

10.9

Amendment dated July 16, 2013 to Statement of Work dated August 1, 2008 between the Registrant and IonIdea, Inc., incorporated by reference to Exhibit 10.1 to the Form 10-Q for the period ended September 30, 2013 as previously filed with the SEC on November 12, 2013.

Helios and Matheson Analytics, Inc. (formerly Helios and Matheson Information Technology Inc.) List of Subsidiaries, incorporated by reference to Exhibit 21 to the Form 10-K for the period ended December 31, 2009, as previously filed with SEC on March 31, 2010.

23.2

Consent of Mercadien, P.C., Certified Public Accountants.

31.1

Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

32.1

Certification of the Chief 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 Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

XBRL Instance Document.

101.SCH

XBRL Taxonomy Extension Schema.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase.

101.LAB

XBRL Taxonomy Extension Label Linkbase.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase.

101.DEF

XBRL Taxonomy Extension Definition Linkbase.

__________

† Management contract or compensation plan.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Dated: March 27, 2015

	HELIOS AND MATHESON ANALYTICS INC.


	By:	/s/ Divya Ramachandran
		Divya Ramachandran
		President and Chief Executive Officer

	By:	/s/ Umesh Ahuja
		Umesh Ahuja
		Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date


/s/ Divya Ramachandran	President, Chief Executive Officer and Director	March 27, 2015
Divya Ramachandran	(Principal Executive Officer)


/s/ Shri S. Jambunathan	Chairman and Director	March 27, 2015
Shri S. Jambunathan


/s/ Viraj Patel	Director	March 27, 2015
Viraj Patel


/s/ Kishan Grama Ananthram	Director	March 27, 2015
Kishan Grama Ananthram


/s/ Umesh Ahuja	Chief Financial Officer (Principal Financial Officer)	March 27, 2015
Umesh Ahuja

ITEM 15 (a) (1) and (2)

HELIOS AND MATHESON ANALYTICS INC.

The following consolidated financial statements and financial statement schedule of Helios and Matheson Analytics Inc. are included in Item 8:

Report of Independent Registered Public Accounting Firm – Mercadien, P.C. Certified Public Accountants	F-2

Consolidated Balance Sheets	F-3

Consolidated Statement of Operations and Comprehensive (Loss)/Income	F-4

Consolidated Statement of Shareholders’ Equity	F-5

Consolidated Statement of Cash Flows	F-6

Notes to Consolidated Financial Statements	F-7

The following consolidated financial statement schedule of Helios and Matheson Analytics Inc. is included in Item 15(c): Schedule II – Valuation and Qualifying Accounts	S-1

All other schedules for which provision is made in the applicable accounting regulation of the SEC are not required under the related instructions or are inapplicable and therefore have been omitted.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Helios and Matheson Analytics Inc.

We have audited the accompanying consolidated balance sheet of Helios and Matheson Analytics, Inc. and Subsidiary, (the “Company”) as of December 31, 2014 and 2013, and the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Helios and Matheson Analytics Inc. and Subsidiary as of December 31, 2014 and 2013, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

We were not engaged to examine management’s assertion about the effectiveness of Helios and Matheson Analytics Inc.’s internal control over financial reporting as of December 31, 2014 included in Item 9A on the Form 10-K entitled Management Report on Internal Control Over Financial Reporting and, accordingly, we do not express an opinion thereon.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The Schedule II listed in the index of financial statements is presented for purposes of additional analysis and is not a required part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ Mercadien, P.C., Certified Public Accountants

Mercadien, P.C., Certified Public Accountants

Hamilton, New Jersey

March 27, 2015

F-2

HELIOS AND MATHESON ANALYTICS INC.

CONSOLIDATED BALANCE SHEETS

	Year Ended December 31,
	2014			2013
ASSETS
Current Assets:
Cash and cash equivalents	$	1,225,518		$	660,278
Accounts receivable-less allowance for doubtful accounts of $37,711 at December 31, 2014, and $28,213 at December 31, 2013		1,082,088			2,147,436
Unbilled receivables		81,311			143,126
Prepaid expenses and other current assets		133,045			147,448
Total current assets		2,521,962			3,098,288
Property and equipment, net		53,422			50,071
Security Deposit		2,000,000			2,000,000
Deposits and other assets		52,347			78,520
Total assets	$	4,627,731		$	5,226,879

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	618,181		$	830,948
Total current liabilities		618,181			830,948

Shareholders' equity:
Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued and outstanding as of December 31, 2014, and December 31, 2013		-			-
Common stock, $.01 par value; 30,000,000 shares authorized; 2,330,438 issued and outstanding as of December 31, 2014 and as of December 31, 2013		23,304			23,304
Paid-in capital		37,855,740			37,855,740
Accumulated other comprehensive loss - foreign currency translation		(99,265	)		(77,032	)
Accumulated deficit		(33,770,229	)		(33,406,081	)
Total shareholders' equity		4,009,550			4,395,931
Total liabilities and shareholders' equity	$	4,627,731		$	5,226,879

See accompanying notes to consolidated financial statements.

F-3

HELIOS AND MATHESON ANALYTICS INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS)/INCOME

	Year Ended December 31,
	2014			2013

Revenues	$	10,641,681		$	13,291,095
Cost of revenues		8,468,103			10,558,446
Gross profit		2,173,578			2,732,649
Operating expenses:
Selling, general and administrative		2,345,168			2,346,926
Depreciation and amortization		11,129			10,595
		2,356,297			2,357,521
(Loss)/Income from operations		(182,719	)		375,128
Other income(expense):
Interest income		13,548			6,437
		13,548			6,437
(Loss)/Income before income taxes		(169,171	)		381,565
Provision for income taxes		8,541			(1,446	)
Net (Loss)/Income		(177,712	)		383,011
Other comprehensive loss - foreign currency adjustment		(22,232	)		(30,123	)
Comprehensive (Loss)/Income	$	(199,944	)	$	352,888

Basic and diluted net (loss)/income per share	$	(0.08	)	$	0.16
Dividend Per share	$	0.08		$	0.09

See accompanying notes to consolidated financial statements.

F-4

HELIOS AND MATHESON ANALYTICS INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

									Additional		Accumulated
	Preferred Stock				Common Stock				Paid-In		Other Comp			Accumulated
	Shares		Amount		Shares		Amount		Capital		Income			Deficit			Total
Balance, December 31, 2012		-	$	-		2,330,438	$	23,304	$	37,855,740	$	(46,910	)	$	(33,579,352	)	$	4,252,782
Net Income		-		-		-		-		-		-			383,011			383,011
Dividend Paid		-		-		-		-		-		-			(209,740	)		(209,740	)
Foreign Exchange Translation		-		-		-		-		-		(30,122	)		-			(30,122	)
Balance, December 31, 2013		-		-		2,330,438		23,304		37,855,740		(77,032	)		(33,406,081	)		4,395,931
Net Loss		-		-		-		-		-		-			(177,713	)		(177,713	)
Dividend Paid		-		-		-		-		-		-			(186,435	)		(186,435	)
Foreign Exchange Translation		-		-		-		-		-		(22,233	)		-			(22,233	)
Balance, December 31, 2014		-	$	-	$	2,330,438	$	23,304	$	37,855,740	$	(99,265	)	$	(33,770,229	)	$	4,009,550

See accompanying notes to consolidated financial statements.

F-5

HELIOS AND MATHESON ANALYTICS INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

	Year Ended December 31,
	2014			2013

Cash flows from operating activities:
Net (loss)/income	$	(177,712	)	$	383,011
Adjustments to reconcile net (loss)/income to net cash provided/(used) in operating activities:
Depreciation and amortization		11,129			10,595
Provision for doubtful accounts		10,000			(4,208	)
Gain on sale of Fixed Asset		(231	)		(250	)
Changes in operating assets and liabilities:
Accounts receivable		1,055,348			(885,740	)
Unbilled receivables		61,815			(121,636	)
Prepaid expenses and other assets		14,403			(16,877	)
Accounts payable and accrued expenses		(212,768	)		(340,301	)
Security Deposits		-			(1,000,000	)
Deposits		26,173			21,512
Net cash provided/(used in) by operating activities		788,157			(1,953,894	)
Cash flows from investing activities:
Purchase of property and equipment, net		(14,249	)		(7,699	)
Net cash used in investing activities		(14,249	)		(7,699	)
Cash flows from financing activities:
Dividend Paid		(186,435	)		(209,739	)
Net cash used in financing activities		(186,435	)		(209,739	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(22,233	)		(30,123	)
Net increase/(decrease) in cash and cash equivalents		565,240			(2,201,455	)
Cash and cash equivalents at beginning of period		660,278			2,861,733
Cash and cash equivalents at end of period	$	1,225,518		$	660,278

Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes - net of refunds	$	9,869		$	5,701

See accompanying notes to consolidated financial statements.

F-6

HELIOS AND MATHESON ANALYTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Description of Business and Basis of Presentation

Helios and Matheson Analytics Inc. (“Helios and Matheson” or the “Company”) was incorporated in the state of New York in February of 1983 and became a public company in August of 1997. In October of 2009, Helios and Matheson changed its state of incorporation from New York to Delaware. The Company is headquartered in New York, New York and has offices in New York and Bangalore, India. The Company provides a wide range of information technology (“IT”) consulting, custom application development and solutions and analytics services to Fortune 1000 companies and other large organizations. The Company supports all major computer technology platforms and supports client IT projects by using a broad range of third-party software applications. Effective as of May 3, 2013, the company changed its name from Helios and Matheson Information Technology Inc. to Helios and Matheson Analytics Inc. Management believes that the new name more accurately reflects its business and operations going forward, which have moved beyond IT. The Company now offers its clients an enhanced suite of services of predictive analytics with technology at its foundation enriched by data science. The Company is also developing long term opportunities both in the United States and globally through its association with Helios and Matheson Information Technology Ltd. (referred to herein as “Helios and Matheson Parent”), , an information technology services organization with corporate headquarters in Chennai, India and the owner of approximately 75% of the Company’s outstanding common stock.

Principles of Consolidation

The consolidated financial statements include the accounts of Helios and Matheson Analytics Inc. and its 100% owned subsidiary Helios and Matheson Global Services Private Limited (“HMGS”) from its date of acquisition on September 30, 2005. All material inter-company accounts and transactions have been eliminated.

Certain amounts reported in previous years have been reclassified to conform to the fiscal 2014 presentation.

Accounting Standards Codification

The Financial Accounting Standards Board (“FASB”) issued a standard known as the FASB Accounting Standards Codification (“ASC”), which became the source of authoritative accounting and reporting standards in the United States, in addition to guidance issued by the Securities and Exchange Commission (“SEC”). The ASC restructuring of accounting and reporting standards is designed to simplify user access to all authoritative U.S. Generally Accepted Accounting Principles (“GAAP”) by modifying the GAAP hierarchy to include only two levels of GAAP: authoritative and non-authoritative. The Company has adopted the disclosure and hierarchy requirements of this standard.

Accounting for Income Taxes

The Company adopted a FASB provision relating to Uncertainty in Income Taxes. As a result of the implementation, there has been no material change to the Company’s tax position as the Company has not paid any corporate income taxes due to carry-forward of operating losses. All tax benefits will likely not be recognized due to the substantial net operating loss carry-forwards. With no tax due for the foreseeable future, the Company has determined that a policy to determine the accounting for interest or penalties related to the payment of tax is not necessary at this time.

Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits, which are not expected to be realized. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted.

F-7

HELIOS AND MATHESON ANALYTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comprehensive Income (Loss)

Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that are recorded as an element of shareholder’s equity but are excluded from net income (loss). The Company’s other comprehensive income (loss) is comprised of foreign currency translation adjustments.

Foreign Currency Translation

Assets and liabilities denominated in non-U.S. currencies are translated at the rate of exchange prevailing on the date of the consolidated balance sheet and revenues and expenses are translated at average rates of exchange for the period. Gains (losses) on translation of the consolidated financial statements are from the Company’s subsidiary where the functional currency is not the U.S. dollar. Translation gains (losses) are reflected as a component of accumulated other comprehensive income (loss). Gains (losses) on foreign currency transactions are included in the consolidated statements of Income.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Going Concern

The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At December 31, 2014, the Company had $1,225,518 of cash and cash equivalents on hand as compared to $660,278 of cash and cash equivalents at December 31, 2013. For the year ended December 31, 2014 the Company reported net loss of $177,712 as compared to net income of $383,011 for the year ended December 31, 2013. The ability of the Company to continue as a going concern is dependent on the Company achieving profitable operations in the future.

Earnings Per Share

The Company calculates earnings per share as specified by the FASB. Basic earnings per share are calculated by dividing net earnings available to common shares by weighted average common shares outstanding. Diluted earnings per share is calculated similarly, except that it includes the dilutive effect of the assumed exercise of securities except when it is anti-dilutive, including the effect of shares issuable under the Company’s incentive plans.

Cash Equivalents

The Company considers all highly liquid financial instruments with original maturities of three months or less when purchased to be cash equivalents.

Fair Value of Financial Instruments

The carrying value of financial instruments (principally consisting of cash, cash equivalents and accounts receivable) approximates fair value because of their short maturities.

Property and Equipment

Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets, which range from three to ten years.

F-8

HELIOS AND MATHESON ANALYTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-Lived Assets

When impairment indicators are present, the Company reviews the carrying value of its assets in determining the ultimate recoverability of their unamortized values using analyses of future undiscounted cash flows expected to be generated by the assets. If such assets are considered impaired, the impairment recognized is measured by the amount by which the carrying amount of the asset exceeded its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less cost to sell.

Revenue Recognition

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are stated at amounts due from clients, net of an 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 estimate 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 client 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 client against amounts due to reduce the receivable to the amount that is expected to be collected. These specific reserves are reevaluated and adjusted as additional information is received that impacts the amount reserved. The Company also establishes a general reserve for all clients 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.

Segment Information

The disclosure of segment information is not required as the Company operates in only one business segment.

Stock-Based Compensation

No non-employee equity instruments were granted in 2014 or 2013.

At December 31, 2014, the Company has a stock based compensation plan, which is described as follows:

The Company adopted the Helios and Matheson Analytics Inc. 2014 Equity Incentive Plan (the “Plan”) that provides for the grant of stock options that are either “incentive” or “non-qualified” for federal income tax purposes, as well as for awards of restricted stock, performance units and performance shares.. The Plan provides for the issuance of a maximum of 400,000 shares of common stock (subject to adjustment pursuant to customary anti-dilution provisions). Stock options will be issued from the Plan are expected to vest over a period between one to four years.

F-9

HELIOS AND MATHESON ANALYTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

The Company uses the fair value 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. For the three and twelve months ended December 31, 2014 and December 31, 2013 the Company recorded stock based compensation expense of $0.

The fair value of options at the date of grant was estimated using the Black-Scholes model with the following assumptions:

	2014			2013
Expected life (years)		4.00			4.00
Risk free interest rate		0.93	%		0.96	%
Expected volatility		0.70			0.84
Weighted average fair value per option	$	0.00	⁽¹⁾	$	0.00	⁽¹⁾

(1) There were no options granted by the Company for the 12 months ended Decmber 31, 2014 and 2013.

2. NET (LOSS)/INCOME PER SHARE

The following table sets forth the computation of basic and diluted net (loss)/income per share for the years ended December 31, 2014 and 2013

		Year Ended December 31,
		2014			2013
Numerator for basic net (loss)/income per share
	Net (loss)/income	$	(177,712	)	$	383,011
	Net (loss)/income available to common stockholders	$	(177,712	)	$	383,011

Numerator for diluted net (loss)/income per share
	Net (loss)/income available to common stockholders & assumed conversion	$	(177,712	)	$	383,011

Denominator:
	Denominator for basic and diluted (loss)/income per share - weighted-average shares		2,330,438			2,330,438

Basic and diluted income per share:
	Net (loss)/income per share	$	(0.08	)	$	0.16

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HELIOS AND MATHESON ANALYTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

All options and warrants outstanding during 2014 and 2013 were not included in the computation of net income per share because the options and warrants were not likely to be exercised based on current market conditions.

3. PROPERTY AND EQUIPMENT

Property and equipment, at cost, consists of the following:

	December 31,
	2014		2013
Equipment and leaseholds	$	88,029	$	120,192
Software		167,337		167,337
Furniture and fixtures		34,186		34,186
		289,552		321,715
Less accumulated depreciation and amortization		236,130		271,644
	$	53,422	$	50,071

4. CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The Company has the following commitment as of December 31, 2014: operating lease obligations. The Company has one operating lease for its corporate headquarters located in New York. As of December 31, 2014, the Company does not have any “Off Balance Sheet Arrangements”.

The Company’s contractual obligations at December 31, 2014, are comprised of the following:

Contractual Obligations	Payments Due by Period
	Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years
Operating Lease Obligations
Rent ⁽¹⁾		366,427		157,040		209,387		-		-
Total	$	366,427	$	157,040	$	209,387	$	-	$	-

(1)

The Company has a New York facility with a lease at Empire State Building with a term expiring April 30, 2017 and requiring annual payments of $157,040 during 2014.

5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

	December 31,
	2014		2013
Accounts payable and other accrued expenses	$	130,451	$	56,056
Payroll		487,730		774,892
	$	618,181	$	830,948

F-11

HELIOS AND MATHESON ANALYTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. INCOME TAXES

The Company accounts for income taxes using the liability method.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Deferred tax assets and (liabilities) consist of the following:

	December 31,
	2014			2013
Licensing revenues	$	(7,000	)	$	(14,000	)
Accounts receivable reserve		38,000			34,000
Depreciation and amortization		261,000			261,000
Investments		928,000			928,000
Other		200,000			201,000
Net operating losses		5,143,000			5,106,000
		6,563,000			6,516,000
Valuation allowance		(6,563,000	)		(6,516,000	)
	$	-		$	-

Internal Revenue Code Section 382 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 percentage point change in ownership occurs. On September 5, 2006, 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 Code Section 382 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.

At December 31, 2014, the Company has federal net operating loss carry-forwards of approximately $14.8 million, which will begin to expire in 2020. The New Jersey net operating loss carry-forwards of approximately $1.8 million will begin to expire in 2020. The full utilization of the deferred tax assets in the future is dependent upon the Company’s ability to generate taxable income; accordingly, a valuation allowance of an equal amount has been established. During the years ended December 31, 2014 and 2013, the valuation allowance increased and decreased by approximately $47,000 and ($652,000), respectively.

Significant components of the provision for income taxes are as follows:

			Year Ended December 31,
			2014		2013
Current:
	Federal		$	-	$	-
	State and local			8,541		(1,446	)
		Total Current	$	8,541	$	(1,446	)
Deferred:
	Federal		$	-	$	-
	State and local			-		-
		Total Deferred		-		-
Total			$	8,541	$	(1,446	)

F-12

HELIOS AND MATHESON ANALYTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation between the federal statutory rate and the effective income tax rate for the years ended December 31, 2014 and 2013 is as follows:

	2014			2013
Federal statutory rate		34.0	%		34.0	%
State and local taxes net of federal tax benefit		(3.3	)		(0.3	)
Non-deductible expenses		(11.2	)		(2.0	)
Change in valuation allowance		(24.5	)		(32.1	)
Total		(5.1	)%		(0.4	)%

7. RETIREMENT PLAN

The Company sponsors a defined contribution plan under Section 401(k) of the Internal Revenue Code for its employees. Participants can make elective contributions subject to certain limitations.

8. CONCENTRATION OF CREDIT RISK

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and accounts receivable. The Company maintains its cash balances on deposit with a limited number of financial institutions in amounts which may exceed federally insured limits. Historically, the Company has not experienced any related cash-in-bank losses. For the twelve months ended December 31, 2014 the Company had four clients which accounted for 88% of revenue and for the twelve months ended December 31, 2013 the Company had three clients which accounted for 88% of revenues. No other client represented greater than 10% of the Company’s revenues for such periods.

9. LEASES

The Company leases office space under a non-cancelable operating lease. The future minimum payments for all non-cancelable operating leases as of December 31, 2014 are as follows:

2015	$	157,040
2016		157,040
2017		52,347
Total minimum future lease payments	$	366,427	⁽¹⁾

⁽¹⁾ The Company leases office space in New York. The lease term expires on April 30, 2017.

The Company’s office lease is subject to escalations based on increases in real estate taxes and operating expenses, all of which are charged to rent expense. Rent expense for the years ended December 31, 2014 and 2013 was approximately $237,038 and $224,629, respectively.

10. STOCK OPTION PLAN

The Company adopted the Helios and Matheson Analytics Inc. 2014 Equity Incentive (the “Plan”) that provides for the grant of stock options that are either “incentive” or “non-qualified” for federal income tax purposes, as well as for awards of restricted stock, performance units and performance shares. The Plan provides for the issuance of a maximum of 400,000 shares of common stock (subject to adjustment pursuant to customary anti-dilution provisions). Stock options that will be issued from the Plan are expected to vest over a period between one to four years.

F-13

HELIOS AND MATHESON ANALYTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

				Weighted
		Number of		Average
		Shares		Exercise Price
Balance - December 31, 2012			-		-
	Granted during 2013		-		-
	Exercised during 2013		-		-
	Forfeitures during 2013		-		-
Balance - December 31, 2013			-		-
	Granted during 2014		-		-
	Exercised during 2014		-		-
	Forfeitures during 2014		-		-
Balance - December 31, 2014			-		-

No stock options were granted during the twelve months ended December 31, 2014. No stock options were exercisable at December 31, 2014 and at December 31, 2013.

The following table summarizes the status of the stock options outstanding and exercisable at December 31, 2014:

Stock Options Outstanding

Weighted-

Number of

Weighted

Remaining

Stock

Exercise Price

Average

Number of

Contractual Life

Options

Range

Exercise Price

Options

(in years)

Exercisable

$0.00 - $8.00

0.00

At December 31, 2014, the Company had 400,000 shares of common stock reserved in connection with the Plan.

F-14

HELIOS AND MATHESON ANALTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. QUARTERLY RESULTS (UNAUDITED)

The following is a summary of the quarterly results of operations for the years ended December 31, 2014 and 2013:

	Quarter Ended
(in thousands, except per share amounts)	March 31, 2014			June 30, 2014			September 30, 2014			December 31, 2014
Revenues	$	2,934		$	2,801		$	2,510		$	2,396
Gross profit		535			497			524			617
(Loss)/Income from operations		(85	)		(81	)		(26	)		9
Net (loss)/income		(85	)		(80	)		(26	)		13
Net (loss)/income per share
Basic and diluted (loss)/income per share	$	(0.04	)	$	(0.03	)	$	(0.01	)	$	0.01

	Quarter Ended
(in thousands, except per share amounts)	March 31, 2013		June 30, 2013		September 30, 2013		December 31, 2013
Revenues	$	3,203	$	3,440	$	3,416	$	3,232
Gross profit		674		788		669		601
Income from operations		103		110		94		68
Net income		101		108		105		70
Net income per share
Basic and diluted income per share	$	0.04	$	0.05	$	0.05	$	0.03

12. TRANSACTIONS WITH RELATED PARTY

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”) and also render services by way of support in technology, client engagement, management and operating the ODCs for the Company. The Company has furnished Helios and Matheson Parent a security deposit of $2 million, classified as a non-current asset on the balance sheet, to cover any expenses, claims or damages that Helios and Matheson Parent may incur while discharging its obligation under the HMIT MOU and also to cover the Company’s payable to Helios and Matheson Parent. Helios and Matheson Parent has been providing recruitment services to Helios and Matheson Analytics Inc. and has not charged a fee for these services. For the purpose of strengthening our client relationships, Helios and Matheson Parent also provides knowledge transition free of cost to clients and volume/business commitment based discounts. The investment made by Helios and Matheson Parent in this regard during the twelve months ended December 31, 2014 is approximately $105,483. The amount payable to Helios and Matheson Parent for services rendered under the HMIT MOU was $8,736 and $392,808 for the twelve months ended December 31, 2014 and 2013, respectively 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 $0 and $283,645 for the twelve months ended December 31, 2014 and 2013, respectively. As of December 31, 2014, the Company has a receivable from Helios and Matheson Parent in the amount of $182,626 which represents amounts paid on behalf of Helios and Matheson Parent. As of December 31, 2014, the amount paid on behalf of Helios and Matheson parent is reported as an offset of accounts payable to Helios and Matheson Parent.

In August 2014, the Company entered into a Professional Service Agreement with Helios and Matheson Parent (the “HMIT PSA”), which documented ongoing services provided by Helios and Matheson Parent from February 24, 2014. Pursuant to the HMIT PSA Helios and Matheson Parent hires employees in India and provides infrastructure services for those employees to facilitate the operations of those of the Company’s clients who need offshore support for their business. For the services the Company pays the cost incurred by Helios and Matheson Parent for the employee it hires to provide the services and a fixed fee for infrastructure support. Beginning October 2014, all employees were transferred to the payroll of the Company’s subsidiary, Helios and Matheson Global Services Pvt. Ltd., and Helios and Matheson Parent was paid only for the infrastructure support they are providing. For the twelve months ended December 31, 2014 and 2013, the Company’s revenue from services provided with offshore support was approximately $909,000 and $0 respectively. Amounts payable to Helios and Matheson Parent for services rendered under the HMIT PSA was $322,000 for the twelve months ended December 31, 2014 and is included as a component of cost of revenue. The amount paid to Helios and Matheson Parent for services rendered under the HMIT PSA for the twelve months ended December 31, 2014 was $321,000.

F-15

HELIOS AND MATHESON ANALYTICS INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. LEGAL PROCEEDINGS

During 2011, Rosen and Associates, P.C. asked for a payment of $22,868 for services it allegedly performed for the Company. The Company did not execute any agreement for the performance of services with Rosen and Associates, P.C. On August 26, 2013 Rosen and Associates, P.C. filed a claim seeking payment for the services it allegedly performed. The trial was held on October 27, 2014. Rosen and Associates, P.C. was unable to prove their claim at trial and the case was dismissed. Rosen and Associates, P.C. did not recover any damages from the Company and the case is closed.

14. SUBSEQUENT EVENTS

Management completed an analysis of all subsequent events occurring after December 31, 2014, the balance sheet date, through March 27, 2015, the date on which the year-end consolidated financial statements were issued, and determined there were no disclosures necessary which have not been already disclosed elsewhere in these financial statements.

F-16

HELIOS AND MATHESON ANALYTICS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Schedule II – Valuation and Qualifying Accounts

Col. A	Col. B		Col. C							Col. D		Col. E
			Additions
			(1)			(2)
	Balance at		Charged/(Credit)			Charged to
	Beginning of		to Costs and			Other Accounts				Deductions -		Balances at
Description	Period		Expenses			Describe				Describe		End of Period
Reserves and allowances deducted from asset accounts:
For the year ended December 31, 2014
Allowance for doubtful accounts	$	28,213	$	10,000		$	(502	)	(b)	$	-	$	37,711
For the year ended December 31, 2013
Allowance for doubtful accounts	$	32,421	$	(4,208	)	$	-			$	-	$	28,213
For the year ended December 31, 2012
Allowance for doubtful accounts	$	77,590	$	(21,761	)	$	(23,408	)	(a)	$	-	$	32,421

(a) Uncollectible accounts charged off against specific accruals during 2012

(b) Uncollectible accounts charged off against specific accruals during 2014

S-1

EXHIBIT INDEX

Exhibit

Number		Description of 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 SEC on March 31, 2010.

3.1.1

3.1.2

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 SEC on March 31, 2010.

10.1

Helios and Matheson Analytics Inc. 2014 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 on Form 8-K, as previously filed with the SEC on March 3, 2014. †

10.2

10.3

10.4

10.5

Form of Board of Directors Services Agreement, incorporated by reference to Exhibit 10.1 to the Form 10-Q for the period ended September 30, 2012 as previously filed with the SEC on November 5, 2012.

10.6

10.7

10.8

Amendment to Statement of Work dated August 1, 2008 between the Registrant and ionIdea, inc., incorporated by reference to Exhibit 10.1 to the Form 10-Q for the period ended June 30, 2013 as previously filed with the SEC on August 2, 2013.

10.9

23.2

Consent of Mercadien, P.C., Certified Public Accountants.

31.1

Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

32.1

Certification of the Chief 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 Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

XBRL Instance Document.

101.SCH

XBRL Taxonomy Extension Schema.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase.

101.LAB

XBRL Taxonomy Extension Label Linkbase.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase.

101.DEF

XBRL Taxonomy Extension Definition Linkbase.

___________

† Management contract or compensation plan.

Helios & Matheson Analytics Inc. - FORM 10-K - March 27, 2015

Attached files

Helios & Matheson Analytics Inc. Reports