Helios and Matheson Analytics (HMNY) 10-Q 2009 Q1 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: March 31, 2009

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 & MATHESON NORTH AMERICA INC.

(Exact Name of Registrant as Specified in Its Charter)

New York	13-3169913
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
200 Park Avenue South
New York, New York 10003	(212) 979-8228
(Address of Principal Executive Offices)	(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yeso Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filero	Accelerated filero	Non-accelerated filero	Smaller reporting companyþ
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yeso Noþ

As of May 13, 2009, there were 2,396,707 shares of common stock, with $.01 par value per share, outstanding.

HELIOS & MATHESON NORTH AMERICA INC.

INDEX

PART I. FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008	3
Consolidated Statement of Operations for the three months ended March 31, 2009 and 2008	4
Consolidated Statement of Cash Flows for the three months ended March 31, 2009 and 2008	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3. Quantitative and Qualitative Disclosures about Market Risk	15
Item 4T. Controls and Procedures	15
PART II. OTHER INFORMATION	16
Item 1. Legal Proceedings	16
Item 1A. Risk Factors	16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3. Defaults Upon Senior Securities	17
Item 4. Submission of Matters to a Vote of Security Holders	17
Item 5. Other Information	17
Item 6. Exhibits	18
SIGNATURES	19
Exhibit 10.1
Exhibit 31.1
Exhibit 32.1

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Part I. Financial Information

Item 1. Financial Statements

HELIOS & MATHESON NORTH AMERICA INC.

CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2009			2008
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	821,418		$	912,272
Accounts receivable- less allowance for doubtful accounts of $200,779 at March 31, 2009, and $209,771 at December 31, 2008		3,478,316			3,846,355
Unbilled receivables		41,149			34,208
Prepaid expenses and other current assets		216,302			326,992
Total current assets		4,557,185			5,119,827
Property and equipment, net		172,258			207,470
Deposits and other assets		141,645			145,336
Total assets	$	4,871,088		$	5,472,633
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	1,638,516		$	1,647,722
Deferred revenue		306,633			159,786
Total current liabilities		1,945,149			1,807,508
Shareholders’ equity:
Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued and outstanding as of March 31, 2009, and December 31, 2008		—			—
Common stock, $.01 par value; 30,000,000 shares authorized; 2,396,707 issued and outstanding as of March 31, 2009; 2,396,707 issued and outstanding as of December 31, 2008		23,967			23,967
Paid-in capital		34,828,858			34,822,736
Accumulated other comprehensive income — foreign currency translation		4,716			6,863
Accumulated deficit		(31,931,602	)		(31,188,441	)
Total shareholders’ equity		2,925,939			3,665,125
Total liabilities and shareholders’ equity	$	4,871,088		$	5,472,633

See accompanying notes to consolidated financial statements.

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HELIOS & MATHESON NORTH AMERICA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended
	March 31,
	2009			2008
	(unaudited)			(unaudited)
Revenues	$	3,796,497		$	4,772,029
Cost of revenues		2,843,467			3,787,484
Gross profit		953,030			984,545
Operating expenses:
Selling, general & administrative(a)		1,655,362			1,785,602
Depreciation & amortization		34,821			44,126
		1,690,183			1,829,728
Loss from operations		(737,153	)		(845,183	)
Other income(expense):
Interest income-net		1,416			19,462
		1,416			19,462
Loss before income taxes		(735,737	)		(825,721	)
Provision for income taxes		7,424			4,500
Net loss		(743,161	)		(830,221	)
Other comprehensive loss — foreign currency adjustment		(2,147	)		(856	)
Comprehensive loss	$	(745,308	)	$	(831,077	)
Net loss per share
Basic	$	(0.31	)	$	(0.35	)
Diluted	$	(0.31	)	$	(0.35	)

^(a) The three months ended March 31, 2009 include a charge of $167,000 for severance and tax expense relating to the termination of an employment agreement.

See accompanying notes to condensed consolidated financial statements.

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HELIOS & MATHESON NORTH AMERICA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	March 31,
	2009			2008
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net (loss)/income	$	(743,161	)	$	(830,221	)
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities, net of acquired assets:
Depreciation and amortization		34,821			44,126
Provision for doubtful accounts		15,000			15,000
Stock based compensation		6,122			21,090
Amortization of deferred financing cost		1,941			1,941
Changes in operating assets and liabilities:
Accounts receivable		353,039			(261,566	)
Unbilled receivables		(6,941	)		(179,620	)
Prepaid expenses and other current assets		110,690			19,582
Deposits		1,750			(1,750	)
Accounts payable and accrued expenses		(9,206	)		(71,177	)
Deferred revenue		146,847			(47,510	)
Net cash used in operating activities		(89,098	)		(1,290,105	)
Cash flows from investing activities:
Purchase of property and equipment		391			(19,849	)
Net cash provided by/(used in) investing activities		391			(19,849	)
Cash flows from financing activities:
Net cash provided by financing activities		—			—
Effect of foreign currency exchange rate changes on cash and cash equivalents		(2,147	)		(856	)
Net decrease in cash and cash equivalents		(90,854	)		(1,310,810	)
Cash and cash equivalents at beginning of period		912,272			3,077,655
Cash and cash equivalents at end of period	$	821,418		$	1,766,845
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	—		$	—
Cash paid during the period for income taxes — net of refunds	$	(58,435	)	$	4,932

See accompanying notes to consolidated financial statements

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HELIOS & MATHESON NORTH AMERICA INC.

Notes to Consolidated Financial Statements

(Unaudited)

1) GENERAL:

These financial statements should be read in conjunction with the financial statements contained in Helios & Matheson North America Inc.’s (“Helios & Matheson” or the “Company”) Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission (“SEC”) and the accompanying financial statements and related notes thereto. The accounting policies used in preparing these financial statements are the same as those described in the Company’s Form 10-K for the year ended December 31, 2008.

2) CONTROLLED COMPANY:

The Board of Directors has determined that Helios & Matheson is a “Controlled Company” for purposes of NASDAQ listing requirements. A “Controlled Company” is 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. The Board of Directors has determined that Helios & Matheson is a “Controlled Company” based on the fact that Helios & Matheson Information Technology, Ltd. (“Helios & Matheson Parent”) holds more than 50% of the voting power of the Company.

3) INTERIM FINANCIAL STATEMENTS:

In the opinion of management, the accompanying unaudited consolidated financial statements contain all the adjustments (consisting only of normal recurring accruals) necessary to present fairly the consolidated financial position as of March 31, 2009, the consolidated results of operations for the three month period ended March 31, 2009 and 2008 and cash flows for the three month period ended March 31, 2009 and 2008.

The consolidated balance sheet at December 31, 2008 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Form 10-K filed by the Company for the year ended December 31, 2008.

The consolidated results of operations for the three month period ended March 31, 2009 are not necessarily indicative of the results to be expected for any other interim period or for the full year.

For the twelve month period ended December 31, 2008 the Company reported an operating loss of approximately ($3.0) million and for the three month period ended March 31, 2009, the Company reported an operating loss of approximately ($737,000) which included a charge of $167,000 to record severance and tax expense associated with the termination of the employment agreement with Michael Prude, the Company’s former Chief Operating Officer. While the Company continues to focus on revenue growth and cost reductions, including but not limited to outsourcing and off-shoring solutions, in an attempt to improve its financial condition, there can be no assurance that the Company will be profitable in future periods.

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

4) STOCK BASED COMPENSATION:

The Company has a stock based compensation plan, which is described as follows:

The Company’s Stock Option Plan (the “Plan”) provides for the grant of stock options that are either “incentive” or “non-qualified” for federal income tax purposes. The Plan provides for the issuance of a maximum of 460,000 shares of common stock (subject to adjustment pursuant to customary anti-dilution provisions). Stock options vest over a period of between one to four years.

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

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

The Company uses the modified prospective application method as specified by Financial Accounting Standards Board Statement 123 (revised 2004), Share Based Payment (Statement 123 (R)), whereby compensation cost for the portion of awards for which the requisite service has not yet been rendered that are outstanding as of the adoption date of Statement 123 (R) will be recognized over the remaining service period. The compensation cost for that portion of awards is based on the grant-date fair value of those awards as calculated for pro forma disclosures under Statement 123, as originally issued. For the three month period ended March 31, 2009 and 2008, the Company recorded stock based compensation expense under the provisions of Statement 123 (R) of $6,122 and $21,090, respectively.

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

			Weighted
	Number of		Average
	Shares		Exercise Price
Balance — December 31, 2008		107,375	$	4.17
Granted during 1st Qtr 2009		—		—
Exercised during 1st Qtr 2009		—		—
Forfeitures during 1st Qtr 2009		39,500	$	3.36
Balance — March 31, 2009		67,875	$	4.26

The following table summarizes the status of the stock options outstanding and exercisable at March 31, 2009:

Stock Options Outstanding

						Number of
	Weighted				Weighted-	Stock
Exercise Price	Average		Number of		Remaining	Options
Range	Exercise Price		Options		Contractual Life	Exercisable
$0.00 – $4.80	$	2.24		29,875	2.8 years		28,000
$4.80 – $9.60	$	5.86		38,000	3.8 years		28,000
				67,875			56,000

At March 31, 2009, 56,000 stock options were exercisable with a weighted average exercise price of $3.99.

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5) NET LOSS PER SHARE:

The following table sets forth the computation of basic and diluted net loss per share for the three months ended March 31, 2009 and 2008.

	Three Months Ended
	March 31,
	2009			2008
Numerator for basic net loss per share
Net loss	$	(743,161	)	$	(830,221	)
Net loss available to common stockholders	$	(743,161	)	$	(830,221	)
Numerator for diluted net loss per share
Net loss available to common stockholders & assumed conversion	$	(743,161	)	$	(830,221	)
Denominator:
Denominator for basic and diluted loss per share — weighted-average shares		2,396,707			2,396,707
Basic and diluted loss per share:
Net loss per share	$	(0.31	)	$	(0.35	)

During the three month period ended March 31, 2009 and March 31, 2008, all options and warrants outstanding were excluded from the computation of net loss per share because the effect would have been anti-dilutive.

6) CONCENTRATION OF CREDIT RISK:

The revenues of two customers represented approximately 26% and 14% of the revenues for the three month period ended March 31, 2009. The revenues of four customers represented approximately 17%, 15%, 13% and 13% of revenues for the same period in 2008. No other customer represented greater than 10% of the Company’s revenues for such periods.

7) CREDIT ARRANGEMENT:

The Company has entered into a Restated and Amended Loan and Security Agreement (“the Loan Agreement”) with Keltic Financial Partners, LP, (“Keltic”) which is effective as of June 27, 2007. The Loan Agreement, which was set to expire June 27, 2009, has been extended through December 31, 2009 under the same terms and conditions. Under the Loan Agreement, the Company has a line of credit up to $1.0 million based on the Company’s eligible accounts receivable balances at an interest rate that varies based on the extent of usage in any given calendar year from a minimum of prime to a maximum of prime plus 0.75% assuming no event of default under the Loan Agreement. Net availability at March 31, 2009 was $1.0 million. The Loan Agreement has certain financial covenants that shall apply only if the Company has any outstanding obligations to Keltic including borrowing under the facility. The Company had no outstanding balance at March 31, 2009, or at December 31, 2008, under the Loan Agreement.

8) CONTRACTUAL OBLIGATIONS AND COMMITMENTS:

The Company has the following commitments as of March 31, 2009: long term obligations of certain employment contracts and operating lease obligations. The Company has three operating leases for its corporate headquarters located in New York and its branch offices in New Jersey and Massachusetts.

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The Company’s commitments at March 31, 2009, are comprised of the following:

	Payments Due by Period
									More Than 5
Contractual Obligations	Total		Less Than 1 Year		1 – 3 Years		3 – 5 Years		Years
Long Term Obligations
Employment Contracts(1)		227,500		227,500		—		—		—
Operating Lease Obligations
Rent(2)		1,152,944		434,497		623,703		94,745		—
Total	$	1,380,444	$	661,997	$	623,703	$	94,745	$	—

(1)	The Company has employment agreements with its two named Executive Officers (Salvatore M. Quadrino, the Company’s Interim Chief Executive Officer and Chief Financial Officer, and Michael Prude, the Company’s Chief Operating Officer). Under Mr. Quadrino’s employment agreement, Mr. Quadrino will serve in a dual capacity as Chief Financial Officer and Interim Chief Executive Officer. Under this agreement, prior to January 1, 2009, Mr. Quadrino received, on a month-to-month basis, an additional $5,000 per month stipend for his role as Interim Chief Executive Officer. Effective January 1, 2009, this $5,000 per month stipend was eliminated and Mr. Quadrino’s annual salary was adjusted from $200,000 to $220,000. This rate adjustment is reflected in the table above.
	The employment agreement with Mr. Prude, the Company’s COO is effective July 1, 2007 and has a term of two years. Effective January 1, 2009, Mr. Prude’s annual salary was reduced by $30,000 from $237,000 to $207,000. This rate adjustment is reflected in the table above. Effective February 23, 2009, the Board of Directors of the Company and Mr. Prude agreed that Mr. Prude would be terminating his employment with the Company and that his responsibilities would be redistributed to the remaining members of the Company’s senior management team. Under the terms of Mr. Prude’s employment agreement, his final day with the Company will be April 30, 2009. Mr. Prude is entitled to nine months of severance totaling $155,250 which will be paid out monthly beginning May 2009. This severance amount is reflected in the table above.
(2)	The Company has a New York facility with a lease term expiring July 31, 2012, a New Jersey facility with a lease term expiring August 31, 2010, and a Massachusetts facility with a lease term expiring January 31, 2010.

As of March 31, 2009, the Company does not have any “Off Balance Sheet Arrangements”.

9) TERMINATION OF EMPLOYMENT AGREEMENT

Effective February 23, 2009, the Board of Directors of the Company and Mr. Prude agreed that Mr. Prude would be terminating his employment with the Company and that his responsibilities would be redistributed to the remaining members of the Company’s senior management team. Under the terms of Mr. Prude’s employment agreement, his final day with the Company was April 30, 2009. Mr. Prude is entitled to nine months of severance totaling $155,250 which will be paid out monthly beginning May 2009.

For the three month period ended March 31, 2009, the Company recorded a charge of $167,000 for severance and tax expense associated with the termination of Mr. Prude’s employment agreement. This charge is reflected in Selling, General and Administrative expenses as of March 31, 2009. The liability is included in accounts payable and accrued expenses on the balance sheet as of March 31, 2009.

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10) PROVISION FOR INCOME TAXES

The provision for income taxes as reflected in the consolidated statements of operations varies from the expected statutory rate primarily due to a provision for minimum state taxes and the recording of additional valuation allowance against deferred tax assets. Internal Revenue Code Section 382 (the “Code”) places a limitation on the utilization of Federal net operating loss and other credit carry-forwards when an ownership change, as defined by the tax law, occurs. Generally, this occurs when a greater than 50 percent change in ownership occurs. On September 5, 2006, Helios & Matheson Parent acquired a greater than 50 percent ownership of the Company. Accordingly, the actual utilization of the net operating loss carry-forwards for tax purposes are limited annually under the Code to a percentage (currently about four and a half percent) of the fair market value of the Company at the date of this ownership change. The Company did not generate taxable income during the three months ended March 31, 2009. The Company maintains a valuation allowance against additional deferred tax assets arising from net operating loss carry-forwards since, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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

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

Statements included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this document that do not relate to present or historical conditions are “forward-looking statements” within the meaning of that term under Section 27A of the Securities Act of 1933, as amended, and under Section 21E of the Securities Exchange Act of 1934, as amended. Additional oral or written forward-looking statements may be made by the Company from time to time, and such statements may be included in documents that are filed with the SEC. Such forward-looking statements involve risk and uncertainties that could cause results or outcomes to differ materially from those expressed in such forward-looking statements. Forward-looking statements may include, without limitation, statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Words such as “believes,” “forecasts,” “intends,” “possible,” “expects,” “estimates,” “anticipates,” or “plans” and similar expressions are intended to identify forward-looking statements. The Company cautions readers that results predicted by forward-looking statements, including, without limitation, those relating to the Company’s future business prospects, revenues, working capital, liquidity, capital needs, interest costs, and income are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements. The important factors on which such statements are based, include but are not limited to, assumptions concerning the anticipated growth of the information technology industry, the continued needs of current and prospective customers for the Company’s services, the availability of qualified professional staff, and price and wage inflation.

Overview

Since 1983, Helios & Matheson has provided IT services and solutions to Fortune 1000 companies and other large organizations. In 1997, Helios & Matheson became a public company headquartered in New York, New York. In addition, the Company has offices in Clark, New Jersey, Chelmsford, Massachusetts and Bangalore, India. The Company’s common stock is currently listed on the NASDAQ Capital Market ^CMunder the symbol “HMNA”. Prior to January 30, 2007, the Company’s name was The A Consulting Team, Inc.

Helios & Matheson provides a wide range of high quality, software and consulting solutions, through an integrated suite of market driven Service Lines in the areas of Application Value Management, Application Development and Integration, Independent Validation, Infrastructure, Information Management and IT Advisory Services for Fortune 1000 companies and other large organizations. These services account for approximately 88% of the Company’s revenues. The Company’s solutions are based on an understanding of each client’s enterprise model. The Company’s accumulated knowledge may be applied to new projects such as planning, designing and implementing enterprise-wide information systems, database management services, performance optimization, migrations and conversions, strategic sourcing, outsourcing and systems integration.

Helios & Matheson delivers its IT solutions through Solution Teams composed of Client Partners, Solution Partners, Project Managers, and Technical Specialists. These professionals possess the industry experience, project management skills and technical expertise to identify and effectively address a particular client’s needs in relation to its business objectives. Helios & Matheson’s focus on providing highly qualified IT professionals allows the Company to identify additional areas of the client’s business which could benefit from the Company’s IT solutions, thereby facilitating the cross-marketing of multiple Company services. The Company keeps its Solution Teams at the forefront of emerging technologies and business trends through close interaction with Helios & Matheson research personnel who identify innovative IT trends, tools and technologies and market driven solutions. As a result, management believes that Helios & Matheson Solution Teams are prepared to anticipate client needs, develop appropriate strategies and deliver comprehensive IT services, thereby allowing the Company to deliver the highest quality IT services in a timely fashion.

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Helios & Matheson markets and distributes a number of software products developed by independent software developers. The Company believes its relationships with approximately 50 software clients throughout the country provide opportunities for the delivery of additional Company consulting and training services. The software products offered by Helios & Matheson are marketed primarily through trade shows, direct mail, telemarketing, client presentations and referrals. Revenue from the sale of software is ancillary to the Company’s total revenues, but in the future the Company hopes to use such sales as a means of introducing itself to potential clients. For the three month period ending March 31, 2009, revenue from the software service line accounted for 12% of the Company’s total revenues.

The Company is dedicated to providing cost efficient competitive services to its clients through its Flexible Delivery Model which allows for dynamically configurable Onsite, Onshore or Offshore service delivery based on the needs of the clients. This capability is made possible by the Company’s investment in Helios and Matheson Global Services Private Limited (“HMGS”), the Company’s subsidiary operating in Bangalore, India. The Company ability to blend more offshore work into its pricing should allow it to be more price competitive.

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 company’s 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 outsourcing of IT development and services to third party IT service providers like the Company. Many companies outsource such work because their internal personnel lack the qualifications for certain projects or they have an insufficient number of internal staff to address all of the projects being undertaken. Outsourcing also enables companies to realize cost efficiencies through reduced personnel costs. Accordingly, organizations turn to external IT services organizations such as Helios & Matheson to develop, support and enhance their internal IT systems.

The Company believes that its business, operating results and financial condition have been impacted by the ongoing economic crisis. A significant portion of the Company’s major customers are in the financial services, pharmaceutical and manufacturing/automotive industries and have come under considerable pressure as a result of the unprecedented economic conditions in the financial markets. Spending on IT consulting services is largely discretionary. While the Company has not lost any major clients, it has experienced a pushback of new assignments from existing clients and difficulty in replacing completed projects, both of which have impacted revenue growth through 2009 year to date.

Beginning in 2006 and continuing through the fourth quarter of 2008, the Company expanded its sales and recruiting resources in an effort to increase its revenues in both the short and long-term. This effort, however, was met with limited success through the first quarter of 2009. While the Company has experienced an increase in its staffing business, consulting revenue, as a whole, has declined.

For the twelve month period ended December 31, 2008 the Company reported an operating loss of approximately ($3.0) million and for the three month period ended March 31, 2009, the Company reported an operating loss of approximately ($737,000), which included a charge of $167,000 to record severance and tax expense associated with the termination of Mr. Prude’s employment agreement . While the Company continues to focus on revenue growth and cost reductions, including but not limited to outsourcing and off-shoring solutions, in an attempt to improve its financial condition, there can be no assurance that the Company will be profitable in future periods.

For the three months ended March 31, 2009, approximately 73% of the Company’s consulting services revenues were generated from the hourly billing of its consultants’ services to its clients under time and materials engagements, as compared to approximately 60% for the three months ended March 31, 2008, with the remainder generated under fixed-price engagements. The increase in time and material engagements is a result of the Company’s efforts to grow its staffing business. 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 semi-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 has also generated revenues by selling software licenses. In addition to initial software license fees, the Company also derives revenues from the annual renewal of software licenses. Because future obligations associated with such revenue are insignificant, revenues from the sale of software licenses are recognized upon delivery of the software to a customer. The Company views software sales as ancillary to its core consulting services business. Revenue generated from software sales will vary from period to period. For the three month period ending March 31, 2009, revenue from the software service line accounted for 12% of the Company’s total revenues.

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The Company’s most significant operating cost is its personnel cost, which is included in cost of revenues. As a result, the Company’s operating performance is primarily based upon billing margins (billable hourly rate less the consultant’s hourly cost) and consultant utilization rates (number of days worked by a consultant during a semi-monthly billing cycle divided by the number of billing days in that cycle). For the three month period ended March 31, 2009, gross margin was 25.1% as compared to 20.6% for the three month period ended March 31, 2008. Gross margin has increased primarily as a result of a decision by the Company to minimize the amount of non-billing time for project resources. Large portions of the Company’s engagements are on a time and materials basis. While most of the Company’s engagements allow for periodic price adjustments to address, among other things, increases in consultant costs, to date clients have been averse to accepting cost increases. In addition, an increasing number of the Company’s clients are outsourcing the management of their time and material engagements to external Vendor Management Organizations (“VMOs”) who are responsible for monitoring the costs of external service providers. The Company has been challenged with absorbing the costs associated with the VMOs.

Helios & Matheson actively manages its personnel utilization rates by monitoring project requirements and timetables. Helios & Matheson’s utilization rate for the three month period ended March 31, 2009 was approximately 78% as compared to approximately 71% for the three month period ended March 31, 2008. 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 & Matheson’s training programs in order to expand their technical skill sets. The Company carefully monitors consultants that are not utilized. While the Company has established guidelines for the amount of non-billing time that it allows before a consultant is terminated, actual terminations vary as circumstances warrant.

Effective January 1, 2009, the Board of Directors of the Company requested that all members of the senior management team agree to accept pay reductions. As a result, Mr. Quadrino’s $5,000 per month stipend was eliminated and his annual base salary was adjusted from $200,000 to $220,000 and Mr. Prude’s annual base salary was reduced by $30,000, from $237,000 to $207,000, resulting in a combined annual reduction of approximately $70,000. Effective February 1, 2009, pay reductions were extended to other employees of the Company, resulting in an additional annual reduction of approximately $130,000.

Effective February 23, 2009, the Board of Directors of the Company and Mr. Prude agreed that Mr. Prude would be terminating his employment with the Company and that his responsibilities would be redistributed to the remaining members of the Company’s senior management team. Under the terms of Mr. Prude’s employment agreement, his final day with the Company will be April 30, 2009. Mr. Prude is entitled to nine months of severance totaling $155,250 which will be paid out monthly beginning May 2009. As of May 1, 2009, the Company has only one named executive officer.

Critical Accounting Policies

The methods, estimates and judgments the Company uses in applying its most critical accounting polices have a significant impact on the results the Company reports in its consolidated financial statements. The Company evaluates its estimates and judgments on an on-going basis. Estimates are based on historical experience and on assumptions that the Company believes to be reasonable under the circumstances. The Company’s experience and assumptions form the basis for its judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may vary from what is anticipated and different assumptions or estimates about the future could change reported results. The Company believes the following accounting policies are the most critical to it, in that they are important to the portrayal of its financial statements and they require the most difficult, subjective or complex judgments in the preparation of the consolidated financial statements.

Revenue Recognition

Consulting revenues are recognized as services are provided. The Company primarily provides consulting services under time and material contracts, whereby revenue is recognized as hours and costs are incurred. Customers for consulting revenues are billed on a weekly, semi-monthly or monthly basis. Revenues from fixed fee contracts are recorded when work is performed on the basis of the proportionate performance method, which is based on costs incurred to date relative to total estimated costs. Any anticipated contract losses are estimated and accrued at the time they become known and estimable. Unbilled accounts receivables represent amounts recognized as revenue based on services performed in advance of customer billings. Revenue from sales of software licenses is recognized upon delivery of the software to a customer because future obligations associated with such revenue are insignificant.

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Allowance for Doubtful Accounts

The Company monitors its accounts receivable balances on a monthly basis to ensure that they are collectible. On a quarterly basis, the Company uses its historical experience to accurately determine its accounts receivable reserve. The Company’s allowance for doubtful accounts is an estimate based on specifically identified accounts as well as general reserves. The Company evaluates specific accounts where it has information that the customer may have an inability to meet its financial obligations. In these cases, management uses its judgment, based on the best available facts and circumstances, and records a specific reserve for that customer, against amounts due, to reduce the receivable to the amount that is expected to be collected. These specific reserves are reevaluated and adjusted as additional information is received that impacts the amount reserved. The Company also establishes a general reserve for all customers based on a range of percentages applied to aging categories. These percentages are based on historical collection and write-off experience. If circumstances change, the Company’s estimate of the recoverability of amounts due the Company could be reduced or increased by a material amount. Such a change in estimated recoverability would be accounted for in the period in which the facts that give rise to the change become known.

Valuation of Deferred Tax Assets

Deferred tax assets are reduced by a valuation allowance when, in the opinion of the Company, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company assesses the recoverability of deferred tax assets at least annually based upon the Company’s ability to generate sufficient future taxable income and the availability of effective tax planning strategies.

Stock Based Compensation

The Company uses the modified prospective application method as specified by Financial Accounting Standards Board Statement 123 (revised 2004), Share Based Payment (Statement 123 (R)), whereby compensation cost for the portion of awards for which the requisite service has not yet been rendered that are outstanding as of the adoption date of Statement 123 (R) will be recognized over the remaining service period. The compensation cost for that portion of awards is based on the grant-date fair value of those awards as calculated for pro forma disclosures under Statement 123, as originally issued.

Results of Operations

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

	Three Months Ended
	March 31,
	2009			2008
Revenues		100.0	%		100.0	%
Cost of revenues		74.9	%		79.4	%
Gross profit		25.1	%		20.6	%
Operating expenses		44.5	%		38.3	%
Loss from operations		(19.4	)%		(17.7	)%
Net loss		(19.6	)%		(17.4	)%

Comparison of The Three Months Ended March 31, 2009 to The Three Months Ended March 31, 2008

Revenues.Revenues for the three months ended March 31, 2009 were $3.8 million compared to $4.8 million for the three months ended March 31, 2008. The decrease is primarily attributable to a decline in consulting revenue due to difficulty in replacing completed projects and a pushback of new assignments from existing clients primarily as a result of the unprecedented crisis in the financial markets and the economy more broadly.

Gross Profit. The resulting gross profit for the three months ended March 31, 2009 was $953,000, a decrease of $32,000 or 3% from the 2008 comparable period amount of $985,000. As a percentage of total revenues, gross margin for the three months ended March 31, 2009 was 25.1% compared to 20.6% for the three months ended March 31, 2008. Gross margin has increased primarily as a result of a decision by the Company to minimize the amount of non-billing time for project resources.

Operating Expenses.Operating expenses are comprised of Selling, General and Administrative (“SG&A”) expenses, and depreciation and amortization. SG&A expenses for the three months ended March 31, 2009, which included a charge of $167,000 to record severance and tax expense associated with the termination of Mr. Prude’s employment agreement, were $1.7 million compared to the 2008 comparable period level of $1.8 million. Excluding the charge associated with the termination of Mr. Prude’s employment agreement, SG&A expenses were $1.5 million. The decrease in SG&A expenses is associated with various cost reduction initiatives including, but not limited to, a reduction in employee headcount and pay rates. Depreciation and amortization expenses decreased $9,000 from $44,000 for the three months ended March 31, 2008 to $35,000 for the three months ended March 31, 2009.

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Taxes.Taxes for the three months ended March 31, 2009 were $7,000 compared to $5,000 for the three months ended March 31, 2008. For the three months ended March 31, 2009, the Company recorded a tax provision of $5,000 for minimum state taxes and an additional tax provision of $2,000 for provision to return adjustments from the filing of state and federal tax returns compared to a tax provision of $5,000 for minimum state taxes for the three months ended March 31, 2008.

Net Loss.As a result of the above, particularly the improvement of gross margin and the reduction of operating expenses, the net loss of ($743,000) or ($0.31) per basic and diluted share for the three months ended March 31, 2009 (which included a charge of $167,000 to record severance and tax expense associated with the termination of Mr. Prude’s employment agreement) was an improvement over the net loss of ($830,000) or ($0.35) per basic and diluted share for the three months ended March 31, 2008.

Liquidity and Capital Resources

The Company had an operating loss of ($737,000) and a net loss of ($743,000) for the three months ended March 31, 2009, both of which included a charge of $167,000 to record severance and tax expense associated with the termination of Mr. Prude’s employment agreement. During the three months ended March 31, 2008, the Company had an operating loss of ($845,000) and a net loss of ($830,000). The Company believes that its business, operating results and financial condition have been harmed by the recent economic crisis. A significant portion of the Company’s major customers are in the financial services industry and have come under considerable pressure as a result of the unprecedented economic conditions in the financial markets. While the Company has not lost any major clients, it has experienced a pushback of assignments from existing clients. Spending on IT consulting services is largely discretionary, and the Company has experienced a pushback of new assignments from existing clients and difficulty in replacing completed projects, both of which have impacted revenue growth through the first quarter of 2009. While the Company continues to focus on revenue growth and cost reductions, including but not limited to outsourcing and off-shoring solutions, in an attempt to improve its financial condition, there can be no assurance that the Company will be profitable in future periods.

The Company’s cash balances were $821,000 at March 31, 2009 and $912,000 at December 31, 2008. Net cash used in operating activities for the three months ended March 31, 2009 was approximately $89,000 compared to net cash used in operating activities of $1.3 million for the three months ended March 31, 2008. The decrease in net cash used is primarily a result of a decrease in operating losses and an increase in working capital incurred for the three months ended March 31, 2009.

The Company’s accounts receivable, less allowance for doubtful accounts, at March 31, 2009 and at December 31, 2008 were $3.5 million and $3.9 million, respectively, representing 80 and 66 days of sales outstanding (“DSO”), respectively. The Company believes the increase in DSO from 66 days at December 31, 2008 to 80 days at March 31, 2009 is consistent with clients’ financial pressures created by the ongoing economic crisis, as well as a limited number of client disputes which the Company has begun to favorably resolve. Excluding these disputes, the DSO is approximately 72 days, comparable to the DSO of 74 days for the three month period ended March 31, 2008. The accounts receivable at March 31, 2009 and December 31, 2008 included $41,000 and $34,000 of unbilled revenue, respectively. 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.

There was no cash provided by or used in investing activities for the three month period ended March 31, 2009. For the three month period ended March 31, 2008, cash used in investing activities was approximately $20,000, comprised solely of additions to property and equipment.

For the three month period ended March 31, 2009 and 2008, respectively, there was no cash provided by or used in financing activities.

The Company has entered into a Restated and Amended Loan and Security Agreement (“the Loan Agreement”) with Keltic Financial Partners, LP, (“Keltic”) which is effective as of June 27, 2007. The Loan Agreement, which was set to expire June 27, 2009, has been extended through December 31, 2009 under the same terms and conditions. Under the Loan Agreement, the Company has a line of credit up to $1.0 million based on the Company’s eligible accounts receivable balances at an interest rate that varies based on the extent of usage in any given calendar year from a minimum of prime to a maximum of prime plus 0.75% assuming no event of default under the Loan Agreement. Net availability at March 31, 2009 was $1.0 million. The Loan Agreement has certain financial covenants that shall apply only if the Company has any outstanding obligations to Keltic including borrowing under the facility. The Company had no outstanding balance at March 31, 2009, or at December 31, 2008, under the Loan Agreement.

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Beyond December 31, 2009, there is no guarantee that the Company will be able to renew or replace such financing upon expiration on commercially reasonable terms or at all.

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

For the three months ended March 31, 2009, there were no shares of common stock issued pursuant to the exercise of options issued under the Company’s stock option plan.

Off Balance Sheet Arrangements

As of March 31, 2009, the Company does not have any “Off Balance Sheet Arrangements”.

Contractual Obligations and Commitments

The Company has the following commitments as of March 31, 2009: long term obligations of certain employment contracts and operating lease obligations. The Company has three operating leases for its corporate headquarters located in New York and its branch offices in New Jersey and Massachusetts. The Company’s commitments at March 31, 2009 are reflected and further detailed in the Contractual Obligation table located in Part I, Item 1, Note 8 of this Form 10-Q.

Recent Accounting Pronouncements

None.

Inflation

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company has not entered into market risk sensitive transactions required to be disclosed under this item.

Item 4T. Controls and Procedures

Evaluation of disclosure controls and procedures. Salvatore M. Quadrino, the Company’s Principal Executive Officer and Principal Financial Officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in the Securities and Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report, has concluded that its disclosure controls and procedures are effective and designed to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to it by others within these entities.

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 financial statement 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 unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

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Management assessed the Company’s internal control over financial reporting as of December 31, 2008, 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. Management’s assessment included evaluation of the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and the Company’s overall control environment. This assessment is supported by testing and monitoring performed by both an external independent third party serving as the Company’s internal audit organization and the Company’s internal finance department.

Based on the Company’s assessment, management has concluded that the Company’s internal control over financial reporting was effective as of the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. 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. In addition, on a quarterly basis the Company evaluates any changes to its internal control over financial reporting to determine if material changes occurred.

The Company’s 2008 Annual Report on Form 10-K did not include an attestation report of Mercadien P.C., Certified Public Accountants, the Company’s registered public accounting firm, regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in the Company’s Annual Report.

Management’s Report on Internal Controls Over Financial Reporting shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Changes in internal control. There were no significant changes in the Company’s internal control over financial reporting in connection with the evaluation that occurred during its first fiscal quarter of 2009 that has materially affected or is reasonably likely to materially affect its internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

The Company’s 2008 Annual Report on Form 10-K includes a detailed discussion of risk factors. Additional risks or uncertainties not currently known to the Company or that the Company deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results. The information presented below updates and should be read in conjunction with the risk factors and information disclosed in the Company’s Form 10-K for the year ended December 31, 2008.

Going Concern and Capital Requirements

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 March 31, 2009, the Company had approximately $821,000 of cash and cash equivalents on hand as compared to $1.8 million at March 31, 2008. The Company has a line of credit up to $1.0 million with Keltic Financial Partners, LP (“Keltic”) based on the Company’s eligible accounts receivable balances which is subject to certain financial covenants that shall apply only if the Company has any outstanding obligations to Keltic including borrowing under the facility. The Keltic line of credit, which was set to expire on June 27, 2009, has been extended through December 31, 2009 under the same terms and conditions. For the twelve month period ended December 31, 2008 the Company reported an operating loss of ($3.0) million, which included a goodwill impairment (non-cash) charge of $1.1 million. For the three month period ended March 31, 2009, the Company reported an operating loss of ($737,000), which included a charge of $167,000 to record severance and tax expense associated with the termination of Mr. Prude’s employment agreement. Additionally, the Company had an accumulated deficit of $31.9 million at March 31, 2009. Beyond December 31, 2009, there is no guarantee that the Company will be able to renew or replace its current financing upon expiration on commercially reasonable terms or at all. Based upon the Company’s reduced liquidity, net losses and accumulated deficit, the ability of the Company to continue as a going concern is dependent on the Company achieving profitable operations and or obtaining additional sources of financing.

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The Company may require additional financing in the future to continue to implement its product and services development, marketing and other corporate programs. If the Company is able to obtain additional debt financing, the terms of such financing could contain restrictive covenants that might negatively affect its shares of common stock, such as limitations on payments of dividends and could reduce earnings due to interest expenses. Any further issuance of equity securities could have a dilutive effect on the holders of the Company’s shares of common stock. The Company’s business, operating results and financial condition (including, potentially, its ability to continue as a going concern) may be materially harmed if the Company cannot obtain additional financing.

NASDAQ Listing

The NASDAQ Capital Market CM’s continued listing requirements include requirements both that a company maintain a minimum bid price of $1 and that the market value of its publicly held shares (the market value of its shares not held by officers, directors or beneficial owners of more than 10% of the company’s total shares outstanding) be at least $1,000,000. At the close of business on May 13, 2009, the bid price for a share of the Company’s stock was $0.45, and the Company believes the value of its publicly held shares was approximately $518,472 based upon the public filings of our officers, directors and beneficial owners.

While The NASDAQ Capital Market CM has temporarily suspended both these continued listing requirements thru July 19, 2009, due to the recent turmoil in the financial markets, if upon the expiration of the temporary suspension, the Company is unable to meet the continued listing requirements of The NASDAQ Capital Market CM, then the Company could face being delisted from The NASDAQ Capital Market CM.

If the Company’s common stock is delisted from The NASDAQ Capital Market CM, the market liquidity of the Company’s common stock will likely be significantly limited, which would reduce stockholders’ ability to sell the Company’s common stock. Additionally any such delisting could harm the Company’s ability to raise capital through alternative financing sources on acceptable terms, if at all, and may result in the loss of confidence in the Company’s financial stability by suppliers, customers and employees. In addition, a delisting would likely increase the price volatility of the Company’s shares of common stock and have a material adverse impact on the price of the Company’s shares of common stock.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

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Item 6. Exhibits

(a)Exhibits

3.1	Restated Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 to the Form 10-Q for the period ended June 30, 2001, as previously filed with the SEC on August 10, 2001.
3.2.1	Certificate of Amendment of the Certificate of Incorporation of the Registrant dated August 8, 2002 incorporated by reference to Exhibit 3.2 to the Form 10-Q for the period ended June 30, 2001, as previously filed with the SEC on August 14, 2002.
3.2.2	Certificate of Amendment of the Certificate of Incorporation of the Registrant dated November 12, 2002, incorporated by reference to Exhibit 3.2.2 to the Form 10-Q for the period ended September 30, 2002, as previously filed with the SEC on November 14, 2002.
3.2.3	Certificate of Amendment of the Certificate of Incorporation of the Registrant dated January 5, 2004, incorporated by reference to Exhibit 3.2.3 to the Form 8-K dated January 8, 2004, as previously filed with the SEC on January 8, 2004.
3.2.4	Certificate of Amendment of the Certificate of Incorporation of the Registrant dated January 30, 2007, incorporated by reference to Exhibit 3.2.4 to the Form 10-K for the period ended December 31, 2006, as previously filed with the SEC on March 29, 2007.
3.3	Second Amended and Restated By-Laws of the Registrant, dated June 20, 2007, incorporated by reference to Exhibit 3.3 on Form 8-K, as previously filed with the SEC on June 22, 2007.
10.1	Extension of Restated and Amended Loan and Security Agreement between the Registrant and Keltic Financial Partners, LP dated March 30, 2009.
31.1	Certification of Interim Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.1	Certification of the Interim Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	HELIOS & MATHESON NORTH AMERICA INC.
Date: May 14, 2009	By:	/s/ Salvatore M. Quadrino
		Salvatore M. Quadrino
		Interim Chief Executive Officer and Chief Financial Officer

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EXHIBIT INDEX

Exhibit
No.		Description
	10.1	Extension of Restated and Amended Loan and Security Agreement between the Registrant and Keltic Financial Partners, LP dated March 30, 2009.
	31.1	Certification of Interim Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
	32.1	Certification of the Interim Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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