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MoviePass’ parent company has boosted its share count by an unbelievable 80,000% since July — but it’s run out of room to issue new stock (HMNY)

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  • Helios & Matheson, which owns MoviePass, has more than doubled its share count in the last month.
  • The massive increase in shares helps to explain why its stock price has plunged — and why it’s seeking to reverse split its stock for a second time in three months.
  • The company’s share count has increased an amazing 80,368% just since its reverse split in July.
  • Thanks to that and its plunging share price, it’s basically run out of room to issue new shares.

The parent company of MoviePass revealed Wednesday that it continues to rely on one of the oldest tricks it’s used to stay in business — issuing new shares of stock.

Unfortunately for Helios & Matheson, that trick has now put it in a tight bind, one that’s forcing it to seek shareholder approval for a second reverse split of its stock just less than two months after going through with a 250-1 reverse swap. Thanks to all the shares it’s issued lately — and the ones it’s agreed to set aside for creditors who hold convertible notes it issued — the company has effectively run out of room to issue or sell new stock.

“We do not have enough authorized, unissued and unreserved shares to fulfill the current reserve requirements under the notes or to meet the company’s needs for future equity financing or acquisitions,” Helios & Matheson said in a document filed with the Securities and Exchange Commission on Wednesday.

Just in the last month, the company, which took a controlling stake in MoviePass last year, has more than doubled its share count. Its total outstanding shares stood at 1.36 billion on September 14, according to the regulatory document. That was up from 636.9 million on August 14.

The company didn’t explain how it managed to increase its share count by 719 million shares over that time period. But it had prior approval from shareholders to raise hundreds of millions of dollars by selling shares on the open market — something it’s done repeatedly over the last year.

Helios & Matheson has massively diluted shareholders

The share increase just over the last month mean that Helios & Matheson’s total share count has increased an unbelievable 80,368% just since its first reverse split in July. Adjusting for that split, the company’s number of outstanding shares has increased by more than 3,800,000% in the last year.

All that dilution has weighed heavily on the company’s shares. In May, Helios & Matheson’s stock fell below $1 a share, the minimum threshold to be listed on the Nasdaq market. After the Nasdaq sent the company a delisting warning, Helios & Matheson officials urged shareholders to approve its first reverse split in an effort to boost its stock price.

That worked, but only temporarily. Less than a week later the company’s stock was trading below $1 again, before plunging even more. In recent weeks, Helios & Matheson’s stock has hovered around 2 cents a share. That means it’s still in danger of being delisted by the Nasdaq, which requires a company’s stock to trade above a $1 a share for at least 10 consecutive trading days to avoid such a sanction.

The company’s stock price has fallen largely in tandem with its issuance of new shares. A month ago, when it had fewer than half as many shares outstanding, its stock was priced at 5 cents a share. Immediately after its reverse split — and before it issued hundreds of millions of new shares — it was trading at more than $20 a share.

The company has to set aside more shares than it’s authorized to issue

In addition to sinking Helios & Matheson’s stock, the issuance of all those new shares has had another consequence. The company has basically run out of room to issue new shares.

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Besides approving the reverse stock split in July, shareholders upped the number of shares that Helios & Matheson could issue to 5 billion shares. Although only 1.36 billion are now outstanding, it has to set aside some 5.3 billion shares for its creditors.

The company issued convertible notes in November, January, and June to fund its operations. Should its creditors decide to do so, they can exchange those notes for shares.

But the November and January notes have a provision in them in which the price at which they can be converted gets reduced to the lowest price at which the company has sold shares on the public market. At the same time, the number of shares that Helios & Matheson would have to issue at that price to the creditors goes up proportionately.

Both of those sets of notes can now be converted at a price of 2 cents a share, the company said in its filing, indicating that the company has sold stock on the open market recently at just that price. The result of the lowering of the conversion price is that Helios & Matheson now has to set aside more shares for those notes than it can issue in total.

Now the company is seeking approval to reverse split its stock again by as much as a 500-to-1 ratio. Such a move could potentially address both problems, by raising its share price above $1 a share and by giving it again extra headroom to cover conversion or issue new stock. The number of shares Helios & Matheson would have to issue to cover the convertible notes would be reduced by the same ratio by which it reduced its total share count.

Of course, if the company’s stock fell again after a second reverse split — due to the issuance of yet more shares or for some other reason — it could soon find itself in the same bind, under threat of delisting and running out of room to issue new shares for its creditors.



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Sordid tale of the bank ‘that would bribe God’

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Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Monitor water pumps remotely via your phone

Tracking and monitoring motor vehicles is not new to Kenyans. Competition to install affordable tracking devices is fierce but essential for fleet managers who receive reports online and track vehicles from the comfort of their desk.

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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –

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Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

Read: Ministry of Agriculture Apologizes After Sending Out Tweets Portraying the President in bad light

Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

Read Also: Galana Kulalu Irrigation Scheme To Undergo Viability Test Before Being Privatised

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“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

Read Also: DP Ruto Wants NCPB And Other Agricultural Bodies Merged For Efficiency

Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

Email your news TIPS to [email protected] or WhatsApp +254708677607. You can also find us on Telegram through www.t.me/kahawatungu

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William Ruto eyes Raila Odinga Nyanza backyard

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Deputy President William Ruto will next month take his ‘hustler nation’ campaigns to his main rival, ODM leader Raila Odinga’s Nyanza backyard, in an escalation of the 2022 General Election competition.

Acrimonious fall-out

Development agenda

Won’t bear fruit

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