MoviePass is (kind of) back online after a capital deficit at Helios and Matheson Analytics Inc HMNY forced a temporary shutdown.
What Happened
Management had trouble keeping the proverbial lights on this week. Many MoviePass users suffered a “service interruption” late Thursday through early Friday after management failed to pay its bills in time.
The firm took out an emergency cash loan of $5 million to pay its merchant and fulfillment processors and partially restore services, according to a filing with the Securities and Exchange Commission. The total demand note also included $1.2 million of original issue discount.
On Friday morning, the app alerted users that card-based check-in process remained down with “technical issues,” although e-ticketing was again functional.
Why It’s Important
Helios and Matheson provides services outside MoviePass, but its fate over the past year has been tethered to the floundering app.
Critics say MoviePass is squandering Helios and Matheson’s capital with an unsustainable business model, while at the same time it’s inspiring a continued sell-off in the parent stock. This week, HMNY executed a 250-to-1 reverse stock split to boost shares from 9 cents to about $23, and within two sessions, the value plunged to $3.17.
Helios and Matheson had said in May that it had enough cash to operate for a little over a year.
What’s Next
As of noon Friday, services hadn't yet been restored, and HMNY continued to fall. If the market cap drops below $50 million again, the stock may be at risk of a Nasdaq delisting.
Shares traded around $2.99, down 56 percent on the day at time of publication.
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