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MoviePass parent Helios and Matheson shares plummet after revealing service outage due to cash problems

Last updated: 08:55 28 Jul 2018 EDT, First published: 12:03 27 Jul 2018 EDT

bucket of popcorn
The company recently orchestrated a reverse stock split that gives investors 1 share for every 250 owned

Shares in MoviePass’s beleaguered parent group Helios and Matheson Analytics Inc (NASDAQ:HMNY) plunged today after revealing that its cash problems reached crisis levels and caused a temporary “service interruption” last night.

According to a regulatory filing with the Securities and Exchange Commission, an outage that hit MoviePass starting on Thursday came about after the company failed to make certain payments to its vendors. Indeed, the company has been forced to borrow US$5 million in cash in order to pay its “merchant and fulfillment processors.”

The news has sent Helios & Matheson’s shares reeling by more than 70% to close Friday at US$2, losing about 90% of their value since the reverse split. 

“If the company is unable to make required payments to its merchant and fulfillment processors, the merchant and fulfillment processors may cease processing payments for Movie Pass Inc., which would cause a MoviePass service interruption,” the company said.

Read: MoviePass parent's CEO shrugs off cash burn worries and the competition to write company's own script

The MoviePass service continued to be patchy today.

At the start of the week, in an attempt to push up its share price, the company orchestrated a reverse stock split, which gives investors 1 share for every 250 owned. The move set a temporary fire under Helios and Matheson’s shares, pushing them up over US$22 earlier in the week, but today’s news has sent the stock plunging.

Hudson Bay Capital Management has agreed to supply Helios and Matheson with US$6.2mln in funding “which includes US$5mln in cash .. and US$1.2mln of original issue discount,” according to the filing.

--Updates share price--

Contact Ellen Kelleher at Ellen@proactiveinvestors.com

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