##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-22945
 HELIOS AND MATHESON NORTH AMERICA INC.
  Delaware
    
    13-3169913State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization200 Park Avenue South
    
    (212) 979-8228New York, New York 10003
    
    (Registrants Telephone Number,(Address of Principal Executive Offices)
    
    Including Area Code)
  Title of Class
    
    Name of Exchange on which RegisteredCommon Stock, par value $.01 per share
    
    NASDAQ Capital Market
 
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



PagePART I
    
    
    1Item 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    4Item 1B. Unresolved Staff Comments
    
    
    4Item 2. Properties
    
    
    4Item 3. Legal Proceedings
    
    
    4Item 4. Reserved
    
    
    4PART II
    
    
    5Item 5. Market for Registrants Common Equity, Related Shareholder Matters and Issuer
Purchases of Equity Securities
    
    
    5Item 6. Selected Financial Data
    
    
    5Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    5Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    10Item 8. Financial Statements and Supplementary Data
    
    
    10Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    10Item 9A. Controls and Procedures
    
    
    10Item 9B. Other Information
    
    
    11PART III
    
    
    11Item 10. Directors, Executive Officers and Corporate Governance
    
    
    11Item 11. Executive Compensation
    
    
    12Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Shareholder Matters
    
    
    12Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    12Item 14. Principal Accountant Fees and Services
    
    
    13PART IV
    
    
    13Item 15. Exhibits and Financial Statement Schedules
    
    
    13EX-23.2EX-31.1EX-31.2EX-31.3EX-32.1EX-32.2EX-32.3




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Forward-Looking Statements
  
    
    our lack of capital 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.




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##### Table of Contents



PART I
 
 ITEM 1.
    
    BUSINESS
 General
   Controlled Company
  Industry Background
  Strategy
   Expand Existing Client Market Share.
  1




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Expand Client Base.
 Global Delivery
 Operational Efficiency
 Helios and Matheson Operations
 Service Lines .
 Software.
 Clients
   Sales and Marketing
  Competition
   2




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Human Resources
  Long-Lived Assets
  Intellectual Property Rights
     3




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Seasonality
  
 ITEM 1A.
    
    RISK FACTORS
 Uncertain Economic Environment
  Volatility of Stock Price
  Rapid Industry Change
 .
 
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 2.
    
    PROPERTIES
  
 ITEM 3.
    
    LEGAL PROCEEDINGS
  
 ITEM 4.
    
    RESERVED
  4




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Price Range of Common Stock
   2009
    
    High
    
    
    LowFirst Quarter
    
    $
    0.68
    
    
    $
    0.20Second Quarter
    
    
    0.60
    
    
    
    0.15Third Quarter
    
    
    0.55
    
    
    
    0.25Fourth Quarter
    
    
    2.18
    
    
    
    0.25
 2010
    
    High
    
    
    LowFirst Quarter
    
    $
    4.05
    
    
    $
    0.57Second Quarter
    
    
    1.60
    
    
    
    0.73Third Quarter
    
    
    0.93
    
    
    
    0.65Fourth Quarter
    
    
    1.19
    
    
    
    0.55
 Dividends
  Holders
  Share Repurchases
  Equity Compensation Plan
  
 ITEM 6.
    
    SELECTED FINANCIAL DATA
  
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   5




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Overview
       Investments
   6




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Critical Accounting Policies
  Revenue Recognition
  Allowance for Doubtful Accounts
  Valuation of Deferred Tax Assets
  Stock Based Compensation
   7




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Results of Operations
  Year Ended December 31,2010
    
    
    2009Revenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of revenues
    
    
    79.3
    %
    
    
    75.2
    %Gross profit
    
    
    20.7
    %
    
    
    24.8
    %Operating expenses
    
    
    27.8
    %
    
    
    38.6
    %Loss from operations
    
    
    (7.1
    )%
    
    
    (13.8
    )%Net loss
    
    
    (7.1
    )%
    
    
    (13.9
    )%
 Comparison of Year Ended December 31, 2010 to Year Ended December 31, 2009
 Revenues.
 Gross Profit.
 Operating Expenses.
 Taxes.
 Net Loss.
 Liquidity and Capital Resources
   8




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Going Concern
  Off-Balance Sheet Arrangements
  Contractual Obligations
  Payments Due by PeriodMore Than 5Contractual Obligations
    
    Total
    
    
    Less Than 1 Year
    
    
    1 - 3 Years
    
    
    3 - 5 Years
    
    
    YearsOperating Lease ObligationsRent (1)
    
    
    450,037
    
    
    
    284,234
    
    
    
    165,803
    
    
    
    
    
    
    
    Total
    
    $
    450,037
    
    
    $
    284,234
    
    
    $
    165,803
    
    
    $
    
    
    
    $
    
 (1)
    
    The Company has a New York facility with a lease term expiring July 31, 2012.
  9




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Recent Accounting Pronouncements
  Inflation
  Nasdaq
  
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Managements Responsibility for Financial Statements
    10




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Management Report on Internal Control Over Financial Reporting
  (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 unauthorized
acquisition, use, or disposition of the Companys assets that could have a material effect
on the financial statements.
   Inherent Limitations on Effectiveness of Controls
  Changes in Internal Controls
  
 ITEM 9B.
    
    OTHER INFORMATION
  
 PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
   11




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Code of Ethics
   
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER
MATTERS
  Equity Compensation Plan Information
 ,
 Number of securitiesremaining available for futureissuance under equitycompensation plansNumber of securities to be
    
    
    Weighted-average exercise
    
    
    (Excluding securities to beissued upon exercise of
    
    
    price of outstanding
    
    
    issued upon exercise ofoutstanding options,
    
    
    options, warrants and
    
    
    outstanding options, warrantswarrants and rights as of
    
    
    rights as of December 31,
    
    
    and rights as of December 31,Plan Category
    
    December 31, 2010
    
    
    2010
    
    
    2010)Equity compensation plans
approved by
security holders
    
    
    34,250
    
    
    $
    4.74
    
    
    
    425,750Equity compensation
plans not
approved by
security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    34,250
    
    
    $
    4.74
    
    
    
    425,750
 
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
   12




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ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 Financial Statements
  Consolidated Financial Statement Schedules
  Exhibits
  ExhibitNumber
    

    Description of Exhibits3.1
    
    
    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, 2010.3.2
    
    
    Bylaws of Helios and Matheson North America Inc. , incorporated by reference to Exhibit
3.2 to the form 10-K, as previously filed with SEC on March 31, 2010.4.1
    
    
    Specimen common stock certificate, incorporated by reference to Exhibit 4.1 to the form
10-K, as previously filed with SEC on March 31, 2010.10.1
    
    
    Securities Purchase Agreement between the Company and Helios and Matheson Information
Technology Ltd. dated as of August 4, 2010, incorporated by reference to Exhibit 10.1 on
Form 8-K, as previously filed with the SEC on August 6, 2010.10.1.1
    
    
    Amended and Restated 1997 Stock Option and Reward Plan, incorporated by reference to Annex
J to the Companys Definitive Proxy Statement, as previously filed with the SEC on June 27,
2005. 10.1.2
    
    
    Amendment No. 1 to the Registrants Amended and Restated 1997 Stock Option and Award Plan,
incorporated by reference to Exhibit 10.2 on Form 8-K, as previously filed with the SEC on
June 9, 2006. 10.1.3
    
    
    Amendment No. 2 to the Registrants Amended and Restated 1997 Stock Option and Award Plan,
incorporated by reference to Exhibit 10.1.3 to the Form 10-K for the period ended December
31, 2006, as previously filed with the SEC on March 29, 2007. 10.1.4
    
    
    Form of Restricted Stock Award Grant and Notice Agreement between the Registrant and each
of its Non-Employee Directors, incorporated by reference to Exhibit 10.9 to the Form 10-Q for
the nine months ended September 30, 2005, as previously filed with the SEC on November 14,
2005. 10.1.5
    
    
    Form of Non-Qualified Stock Option Agreement between the Registrant and each of its
Non-Employee Directors incorporated by reference to Exhibit 10.10 to the Form 10-Q for the
nine months ended September 30, 2005, as previously filed with the SEC on November 14, 2005.

  13




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ExhibitNumber
    
    Description of Exhibits10.2
    
    
    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
    
    
    Professional Services Agreement by and between the Registrant and IonIdea, Inc., dated as
of August 1, 2010, incorporated by reference to Exhibit 10.1 to the Form 10-Q as previously
filed with the SEC on November 15, 2010.21
    
    
    Helios and Matheson North America, 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 2002.31.3
    
    
    Certification
of Chief Operating 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 2002.32.3
    
    
    Certification
of the Chief Operating Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
    
    Management contract or compensation plan.
  14




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SIGNATURES
  HELIOS AND MATHESON NORTH AMERICA INC.By:
    /s/ Divya RamachandranDivya RamachandranPresident and Chief Executive OfficerBy:
    /s/ Umesh AhujaUmesh AhujaChief Financial OfficerBy:
    /s/ Suparna NRSuparna NRChief Operating Officer  Signature
    
    Title
    
    Date/s/ Divya Ramachandran

Divya Ramachandran
    
    President, Chief Executive Officer and Director
(Principal Executive Officer)
    
    March 15, 2011/s/ Shri S. Jambunathan

Shri S. Jambunathan
    
    Chairman and Director
    
    March 15, 2011/s/ Daniel L. Thomas

Daniel L. Thomas
    
    Director
    
    March 15, 2011/s/ Kishan Grama Ananthram

Kishan Grama Ananthram
    
    Director
    
    March 15, 2011/s/ Suparna NR

Suparna NR
    
    Chief Operating Officer
    
    March 15, 2011/s/ Umesh Ahuja

Umesh Ahuja
    
    Chief Financial Officer (Principal Financial Officer)
    
    March 15, 2011
  15




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##### Table of Contents



ITEM 15 (a) (1) and (2)
 HELIOS AND MATHESON NORTH AMERICA INC.
  Report of Independent Registered Public Accounting Firm  Mercadien, P.C. Certified Public Accountants
    
    
    F-2Consolidated Balance Sheets
    
    
    F-3Consolidated Statements of Operations and Comprehensive Income
    
    
    F-4Consolidated Statements of Shareholders Equity
    
    
    F-5Consolidated Statements of Cash Flows
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7The following consolidated financial statement schedule of Helios and Matheson North America Inc. is included
in Item 15(c): Schedule II  Valuation and Qualifying Accounts
    
    
    S-1
   F-1




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      /s/ Mercadien, P.C., Certified Public Accountants
 
  F-2




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HELIOS AND MATHESON NORTH AMERICA INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    1,656,456
    
    
    $
    1,354,989Accounts receivable- less allowance for doubtful accounts of $212,624 at
December 31, 2010, and $220,879 at December 31, 2009
    
    
    2,223,452
    
    
    
    2,471,705Unbilled receivables
    
    
    
    
    
    
    184,229Prepaid expenses and other current assets
    
    
    1,069,646
    
    
    
    178,879Total current assets
    
    
    4,949,554
    
    
    
    4,189,802Property and equipment, net
    
    
    44,613
    
    
    
    79,952Deposits and other assets
    
    
    139,703
    
    
    
    154,703Total assets
    
    $
    5,133,870
    
    
    $
    4,424,457LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities:Accounts payable and accrued expenses
    
    $
    1,449,132
    
    
    $
    1,630,054Deferred revenue
    
    
    19,504
    
    
    
    184,904Total current liabilities
    
    
    1,468,636
    
    
    
    1,814,958Shareholders equity:Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued and
outstanding as of December 31, 2010, and December 31, 2009
    
    
    
    
    
    
    Common stock, $.01 par value; 30,000,000 shares authorized; 5,826,088 issued and outstanding as of December 31, 2010 and 3,086,362 issued and outstanding as
of December 31, 2009
    
    
    58,261
    
    
    
    30,864Paid-in capital
    
    
    37,820,783
    
    
    
    35,840,669Accumulated other comprehensive (loss)/income  foreign currency translation
    
    
    (9,862
    )
    
    
    2,084Accumulated deficit
    
    
    (34,203,948
    )
    
    
    (33,264,118
    )Total shareholders equity
    
    
    3,665,234
    
    
    
    2,609,499Total liabilities and shareholders equity
    
    $
    5,133,870
    
    
    $
    4,424,457
   F-3




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HELIOS AND MATHESON NORTH AMERICA INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Year Ended December 31,2010
    
    
    2009Revenues
    
    $
    13,279,555
    
    
    $
    14,890,970Cost of revenues
    
    
    10,532,901
    
    
    
    11,201,957Gross profit
    
    
    2,746,654
    
    
    
    3,689,013Operating expenses:Selling, general and administrative
    
    
    3,639,720
    
    
    
    5,623,108Depreciation and amortization
    
    
    48,318
    
    
    
    124,662Impairment of goodwill
    
    
    
    
    
    
    3,688,038
    
    
    
    5,747,770Loss from operations
    
    
    (941,384
    )
    
    
    (2,058,757
    )Interest income
    
    
    6,026
    
    
    
    5,011Loss before income taxes
    
    $
    (935,358
    )
    
    $
    (2,053,746
    )Provision for income taxes
    
    
    4,472
    
    
    
    21,931Net loss
    
    
    (939,830
    )
    
    
    (2,075,677
    )Other comprehensive (loss)/income  foreign currency adjustment
    
    
    (11,946
    )
    
    
    (4,779
    )Comprehensive loss
    
    $
    (951,776
    )
    
    $
    (2,080,456
    )Basic and diluted loss per share
    
    $
    (0.22
    )
    
    $
    (0.84
    )
   F-4




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HELIOS AND MATHESON NORTH AMERICA INC.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Additional
    
    
    AccumulatedPreferred Stock
    
    
    Common Stock
    
    
    Paid-In
    
    
    Other Comp
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Income
    
    
    Deficit
    
    
    TotalBalance, December 31, 2007
    
    
    
    
    
    $
    
    
    
    
    2,396,707
    
    
    $
    23,967
    
    
    $
    34,758,266
    
    
    $
    1,655
    
    
    $
    (28,264,093
    )
    
    $
    6,519,795Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,924,348
    )
    
    
    (2,924,348
    )Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,470
    
    
    
    
    
    
    
    
    
    
    
    64,470Foreign Exchange Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,208
    
    
    
    
    
    
    
    5,208Balance, December 31, 2008
    
    
    
    
    
    $
    
    
    
    
    2,396,707
    
    
    $
    23,967
    
    
    $
    34,822,736
    
    
    $
    6,863
    
    
    $
    (31,188,441
    )
    
    $
    3,665,125Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,075,677
    )
    
    
    (2,075,677
    )Sale of stock
    
    
    
    
    
    
    
    
    
    
    689,655
    
    
    
    6,897
    
    
    
    993,103
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,830
    
    
    
    
    
    
    
    
    
    
    
    24,830Foreign Exchange Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,779
    )
    
    
    
    
    
    
    (4,779
    )Balance, December 31, 2009
    
    
    
    
    
    $
    
    
    
    
    3,086,362
    
    
    $
    30,864
    
    
    $
    35,840,669
    
    
    $
    2,084
    
    
    $
    (33,264,118
    )
    
    $
    2,609,499Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (939,830
    )
    
    
    (939,830
    )Sale of stock
    
    
    
    
    
    
    
    
    
    
    2,739,726
    
    
    
    27,397
    
    
    
    1,972,603
    
    
    
    
    
    
    
    
    
    
    
    2,000,000Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,511
    
    
    
    
    
    
    
    
    
    
    
    7,511Foreign Exchange Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,946
    )
    
    
    
    
    
    
    (11,946
    )Balance, December 31, 2010
    
    
    
    
    
    $
    
    
    
    
    5,826,088
    
    
    $
    58,261
    
    
    $
    37,820,783
    
    
    $
    (9,862
    )
    
    $
    (34,203,948
    )
    
    $
    3,665,234
   F-5




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##### Table of Contents



HELIOS AND MATHESON NORTH AMERICA INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (939,830
    )
    
    $
    (2,075,677
    )Depreciation and amortization
    
    
    48,318
    
    
    
    124,662Impairment of goodwill
    
    
    
    
    
    
    Provision for doubtful accounts
    
    
    (36,320
    )
    
    
    60,000Stock based compensation
    
    
    7,511
    
    
    
    24,830Write down of investment
    
    
    
    
    
    
    Reduction of capital lease obligation
    
    
    
    
    
    
    Amortization of deferred financing cost
    
    
    
    
    
    
    8,883Changes in operating assets and liabilities:Accounts receivable
    
    
    284,573
    
    
    
    1,314,650Unbilled receivables
    
    
    184,229
    
    
    
    (150,021
    )Prepaid expenses and other current assets
    
    
    (890,767
    )
    
    
    148,113Deposits
    
    
    15,000
    
    
    
    1,750Accounts payable and accrued expenses
    
    
    (180,922
    )
    
    
    (17,668
    )Deferred revenue
    
    
    (165,401
    )
    
    
    25,118Net cash used in operating activities
    
    
    (1,673,609
    )
    
    
    (535,360
    )Cash flows from investing activities:(Purchase)/Sale of property and equipment
    
    
    (12,978
    )
    
    
    2,856Net cash provided by/(used in) investing activities
    
    
    (12,978
    )
    
    
    2,856Cash flows from financing activities:Proceeds from the sale of stock
    
    
    2,000,000
    
    
    
    1,000,000Payment of deferred financing cost
    
    
    
    
    
    
    (20,000
    )Net cash provided by financing activities
    
    
    2,000,000
    
    
    
    980,000Effect of foreign currency exchange rate changes on cash and cash equivalents
    
    
    (11,946
    )
    
    
    (4,779
    )Net increase/(decrease) in cash and cash equivalents
    
    
    301,467
    
    
    
    442,717Cash and cash equivalents at beginning of period
    
    
    1,354,989
    
    
    
    912,272Cash and cash equivalents at end of period
    
    $
    1,656,456
    
    
    $
    1,354,989Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    
    
    
    $
    Cash paid during the period for income taxes, net of refunds
    
    $
    446
    
    
    $
    (64,018
    )
   F-6




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##### Table of Contents



Description of Business and Basis of Presentation
  Principles of Consolidation
   Accounting Standards Codification
  Accounting for Income Taxes
   Comprehensive Income (Loss)
   F-7




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##### Table of Contents



Foreign Currency Translation
  Use of Estimates
  Going Concern
  Earnings Per Share
  Cash Equivalents
  Fair Value of Financial Instruments
  Property and Equipment
  Long-Lived Assets
   F-8




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##### Table of Contents



Revenue Recognition
  Accounts Receivable and Allowance for Doubtful Accounts
  Segment Information
  Stock-Based Compensation
       F-9




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##### Table of Contents



2010
    
    
    2009Expected life (years)
    
    
    4.00
    
    
    
    4.00Risk free interest rate
    
    
    1.45
    %
    
    
    1.62
    %Expected volatility
    
    
    1.18
    
    
    
    1.72Weighted 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, 2010 and
2009.
 2. NET INCOME (LOSS) PER SHARE
  Year Ended December 31,2010
    
    
    2009Numerator for basic net loss per shareNet loss
    
    $
    (939,830
    )
    
    $
    (2,075,677
    )Net loss available to
common stockholders
    
    $
    (939,830
    )
    
    $
    (2,075,677
    )Numerator for diluted net loss per shareNet loss available to common
stockholders & assumed conversion
    
    $
    (939,830
    )
    
    $
    (2,075,677
    )Denominator:Denominator for basic and diluted loss
per share  weighted-average shares
    
    
    4,212,277
    
    
    
    2,476,065Basic and diluted loss per share:Net loss per share
    
    $
    (0.22
    )
    
    $
    (0.84
    )
   F-10




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##### Table of Contents



3. PROPERTY AND EQUIPMENT
  December 31,2010
    
    
    2009Equipment and leaseholds
    
    $
    218,045
    
    
    $
    226,475Software
    
    
    166,705
    
    
    
    166,705Furniture and fixtures
    
    
    91,305
    
    
    
    111,984Automobiles
    
    
    21,889
    
    
    
    20,990497,944
    
    
    
    526,154Less accumulated depreciation and amortization
    
    
    453,332
    
    
    
    446,202$
    44,612
    
    
    $
    79,952
 4. CONTRACTUAL OBLIGATIONS AND COMMITMENTS
   Payments Due by PeriodMore Than 5Contractual Obligations
    
    Total
    
    
    Less Than 1 Year
    
    
    1 - 3 Years
    
    
    3 - 5 Years
    
    
    YearsOperating Lease ObligationsRent (1)
    
    
    450,037
    
    
    
    284,234
    
    
    
    165,803
    
    
    
    
    
    
    
    Total
    
    $
    450,037
    
    
    $
    284,234
    
    
    $
    165,803
    
    
    $
    
    
    
    $
    
 (1)
    
    The Company has a New York facility with a lease term expiring July 31, 2012. The
Company did not renew the lease for the Massachusetts facility and New Jersey facility.
 5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
  December 31,2010
    
    
    2009Accounts payable
    
    $
    770,935
    
    
    $
    424,010Payroll
    
    
    632,973
    
    
    
    808,366Other accrued expenses
    
    
    45,224
    
    
    
    397,678$
    1,449,132
    
    
    $
    1,630,054
 6. INCOME TAXES
    F-11




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##### Table of Contents



December 31,2010
    
    
    2009Licensing revenues
    
    $
    (25,000
    )
    
    $
    29,000Accounts receivable reserve
    
    
    107,000
    
    
    
    111,000Depreciation and amortization
    
    
    270,000
    
    
    
    274,000Investments
    
    
    928,000
    
    
    
    928,000Other
    
    
    210,000
    
    
    
    247,000Net operating losses
    
    
    5,351,000
    
    
    
    4,739,0006,841,000
    
    
    
    6,328,000Valuation allowance
    
    
    (6,841,000
    )
    
    
    (6,328,000
    )$
    
    
    
    $
    
    Year Ended December 31,2010
    
    
    2009Current:Federal
    
    $
    
    
    
    $
    State and local
    
    
    4,472
    
    
    
    21,931Total Current
    
    $
    4,472
    
    
    $
    21,931Deferred:Federal
    
    
    
    
    
    
    State and local
    
    
    
    
    
    
    Total Deferred
    
    
    
    
    
    
    Total
    
    $
    4,472
    
    
    $
    21,931
  F-12




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##### Table of Contents



2010
    
    
    2009Federal statutory rate
    
    
    (34.0
    )%
    
    
    (34.0
    )%State and local taxes net of federal tax benefit
    
    
    0.3
    
    
    
    0.7Non-deductible expenses
    
    
    (0.7
    )
    
    
    (0.1
    )Provision to return adjustments
    
    
    
    
    
    
    Change in valuation allowance
    
    
    34.88
    
    
    
    34.47Total
    
    
    0.48
    %
    
    
    1.07
    %
 7. RETIREMENT PLAN
  8. CONCENTRATION OF CREDIT RISK
  9. LEASES
  2011
    
    $
    2842342012
    
    
    165,803Total minimum future lease payments
    
    $
    165,803
    (1)
 (1)
    
    The Company has a New York facility with a lease term expiring July 31,
2012.
  10. STOCK OPTION PLAN
    F-13




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##### Table of Contents



WeightedNumber of
    
    
    AverageShares
    
    
    Exercise PriceBalance  December 31, 2007
    
    
    129,000
    
    
    $
    4.96Granted during 2008
    
    
    
    
    
    $
    0.00Exercised during 2008
    
    
    0
    
    
    $
    0.00Forfeitures during 2008
    
    
    (21,625
    )
    
    $
    6.13Balance  December 31, 2008
    
    
    107,375
    
    
    $
    4.17Granted during 2009
    
    
    
    
    
    $
    0.00Exercised during 2009
    
    
    
    
    
    $
    0.00Forfeitures during 2009
    
    
    (71,875
    )
    
    $
    3.95Balance  December 31, 2009
    
    
    35,500
    
    
    $
    4.62Granted during 2010
    
    
    
    
    
    $
    0.00Exercised during 2010
    
    
    
    
    
    $
    0.00Forfeitures during 2010
    
    
    (1,250
    )
    
    $
    1.20Balance  December 31, 2010
    
    
    34,250
    
    
    $
    4.74
   Stock Options OutstandingNumber ofWeighted
    
    
    
    
    
    
    Weighted-
    
    
    StockExercise Price
    
    Average
    
    
    Number of
    
    
    Remaining
    
    
    OptionsRange
    
    Exercise Price
    
    
    Options
    
    
    Contractual Life
    
    
    Exercisable$0.00 - $4.80
    
    $
    3.23
    
    
    
    14,250
    
    
    0.7 year
    
    
    14,250$4.80 - $9.60
    
    $
    5.82
    
    
    
    20,000
    
    
    5.6 years
    
    
    20,00034,250
    
    
    
    
    
    
    
    34,250
   F-14




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##### Table of Contents



11. QUARTERLY RESULTS (UNAUDITED)
  Quarter EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,(in thousands, except per share amounts)
    
    2010
    
    
    2010
    
    
    2010
    
    
    2010Revenues
    
    $
    3,445
    
    
    $
    2,961
    
    
    $
    3,453
    
    
    $
    3,421Gross profit
    
    
    801
    
    
    
    654
    
    
    
    672
    
    
    
    620(Loss)/income from operations
    
    
    (362
    )
    
    
    (423
    )
    
    
    2
    
    
    
    (158
    )Net (loss)/income
    
    
    (363
    )
    
    
    (427
    )
    
    
    11
    
    
    
    (161
    )Net (loss)/income per shareBasic and diluted (loss)/income per share
    
    $
    (0.12
    )
    
    $
    (0.14
    )
    
    $
    
    
    
    $
    (0.03
    )
 Quarter EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,(in thousands, except per share amounts)
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009Revenues
    
    $
    3,796
    
    
    $
    3,569
    
    
    $
    3,562
    
    
    $
    3,964Gross profit
    
    
    953
    
    
    
    912
    
    
    
    795
    
    
    
    1,029Loss from operations
    
    
    (737
    )
    
    
    (452
    )
    
    
    (536
    )
    
    
    (334
    )Net loss
    
    
    (743
    )
    
    
    (455
    )
    
    
    (540
    )
    
    
    (338
    )Net loss per shareBasic and diluted loss per share
    
    $
    (0.31
    )
    
    $
    (0.19
    )
    
    $
    (0.23
    )
    
    $
    (0.11
    )
  F-15




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##### Table of Contents



12. TRANSACTIONS WITH RELATED PARTY
   13. LEGAL PROCEEDINGS
    14. SUBSEQUENT EVENTS
    F-16




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##### Table of Contents



Schedule II  Valuation and Qualifying Accounts
 Col. A
    
    Col. B
    
    
    Col. C
    
    
    Col. D
    
    
    Col. EAdditions(1)
    
    
    (2)Balance at
    
    
    Charged to
    
    
    Charged toBeginning of
    
    
    Costs and
    
    
    Other Accounts
    
    
    Deductions -
    
    
    Balances atDescription
    
    Period
    
    
    Expenses
    
    
    Describe
    
    
    Describe
    
    
    End of PeriodReserves and allowances deducted from
asset accounts:For the year ended December 31, 2010
Allowance for doubtful accounts
    
    $
    220,879
    
    
    $
    (36,320
    )
    
    $
    61,471
    
    
    $
    (33,406
    )(a)
    
    $
    212,624For the year ended December 31, 2009
Allowance for doubtful accounts
    
    $
    209,771
    
    
    $
    60,000
    
    
    $
    
    
    
    $
    (48,892
    )(b)
    
    $
    220,879For the year ended December 31, 2008
Allowance for doubtful accounts
    
    $
    221,970
    
    
    $
    50,000
    
    
    $
    
    
    
    $
    (62,199
    )(c)
    
    $
    209,771
 (a)
    
    Uncollectible accounts written off during 2010.(b)
    
    Uncollectible accounts written off during 2009.(c)
    
    Uncollectible accounts written off during 2008.
  S-1




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Exhibits3.1
    
    
    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, 2010.3.2
    
    
    Bylaws of Helios and Matheson North America Inc. , incorporated by reference to Exhibit 3.2
to the form 10-K, as previously filed with SEC on March 31, 2010.4.1
    
    
    Specimen common stock certificate, incorporated by reference to Exhibit 4.1 to the form
10-K, as previously filed with SEC on March 31, 2010.10.1
    
    
    Securities Purchase Agreement between the Company and Helios and Matheson Information
Technology Ltd. dated as of August 4, 2010, incorporated by reference to Exhibit 10.1 on Form
8-K, as previously filed with the SEC on August 6, 2010.10.1.1
    
    
    Amended and Restated 1997 Stock Option and Reward Plan, incorporated by reference to Annex
J to the Companys Definitive Proxy Statement, as previously filed with the SEC on June 27,
2005. 10.1.2
    
    
    Amendment No. 1 to the Registrants Amended and Restated 1997 Stock Option and Award Plan,
incorporated by reference to Exhibit 10.2 on Form 8-K, as previously filed with the SEC on
June 9, 2006. 10.1.3
    
    
    Amendment No. 2 to the Registrants Amended and Restated 1997 Stock Option and Award Plan,
incorporated by reference to Exhibit 10.1.3 to the Form 10-K for the period ended December
31, 2006, as previously filed with the SEC on March 29, 2007. 10.1.4
    
    
    Form of Restricted Stock Award Grant and Notice Agreement between the Registrant and each
of its Non-Employee Directors, incorporated by reference to Exhibit 10.9 to the Form 10-Q for
the nine months ended September 30, 2005, as previously filed with the SEC on November 14,
2005. 10.1.5
    
    
    Form of Non-Qualified Stock Option Agreement between the Registrant and each of its
Non-Employee Directors incorporated by reference to Exhibit 10.10 to the Form 10-Q for the
nine months ended September 30, 2005, as previously filed with the SEC on November 14, 2005.
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
    
    
    Professional Services Agreement by and between the Registrant and IonIdea, Inc., dated as
of August 1, 2010, incorporated by reference to Exhibit 10.1 to the Form 10-Q as previously
filed with the SEC on November 15, 2010.21
    
    
    Helios and Matheson North America, 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, 201023.2
    
    
    Consent of Mercadien, P.C., Certified Public Accountants.31.1
    
    
    Certification
of Principal Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act
of 2002.31.2
    
    
    Certification of
Principal Financial Officer pursuant to Section 302 of Sarbanes-Oxley
Act of 2002.31.3
    
    
    Certification of
Principal Operating 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 2002.32.3
    
    
    Certification
of the Chief Operating Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
    
    Management contract or compensation plan.