After nearly four years of radio silence, Hollywood Media (OTCPK:HOLL) released news one minute after Tuesday's closing bell, the type of news that would normally make investor's giggle with glee. However, given the company's checkered past and lack of transparency that has earned them a "stop sign" on OTC Markets for failing to make information public, traders will just have to see what kind of market reaction comes Wednesday morning.
Trading at 70 cents per share as of Tuesday's close, the Boca Raton, Florida-based company says it is paying out 45 cents per share on March 30, 2018 to stockholders of record as of March 1, 2018. The special one-time cash distribution, which stems from the "recently completed sale of its interest in an online ticketing business," will be treated as a return of capital for tax purposes.
The company also said that its board of directors has approved a plan to buy back up to one million shares of the company's 16.13 million outstanding shares. During the past four years, the company says its repurchased about 6.3 million shares of its common stock.
Hollywood Media, of HMC for short, doesn't have a boilerplate to describe its business model, nor does its essentially barren website, but what appears to be its sole asset does sport the name of a famous author, Tom Clancy. According to the press release, Hollywood Media owns 50% of Netco Partners, a joint venture that owns Net Force, a popular fictional book series of Tom Clancy focused on the Internet, cryptocurrency crime and espionage.
Hollywood Media says licensing fees from the franchise, which included 10 books form 1999-2006, have generated about $11.3 million in revenue for the company. A re-boot of the series is in the works, with manuscripts for the first two of a planned five books already written.
The company, which has a market capitalization of $11.29 million based upon its reported outstanding share count, said that it has $12.0 million in cash on hand and another $1.5 million in "holdback" payments from the ticketing business sale. Management also emphasized about $165 million in Federal net operating loss carry-forwards that it hopes can be used as a tax shelter in the future where applicable, possibly reducing up to $34 million in tax obligations over many years. It must be duly noted that any value is merely an estimate and difficult to predict.
For a company that hadn't said a peep since April 7, 2014, Hollywood Media had plenty to say today, mostly highlighting (without directly saying) that it is undervalued based upon the fundamentals it wants people to see. The last news release in 2014 was unaudited reports from Q4 2013, when a loss from aggregate operations (discontinued and continuing) was $1.6 million (6 cents per share). Shares were trading around $1.25 at the time. Even then, the company was shuffling around accounting with income tax benefits offsetting income tax expenses. Getting financial and SEC reports current (and audited) would go a long way to impress shareholders, but in the meantime, risky momentum players may be taking a swing at the company Wednesday with the news release and a new IR firm in the mix.
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