- MoviePass suffered a service outage late Thursday caused by it temporarily running out of cash.
- Its parent company — Helios & Matheson — said in May that it had enough cash to last over a year.
- The service was unavailable for many users late Thursday into early Friday.
- HMNY crashed more than 66% following the announcement of an emergency $5 million loan.
Helios & Matheson — the parent company of MoviePass —said Friday that its ongoing cash troubles had finally hit a breaking point, causing a temporary "service interruption," that sent its stock plummeting as much as 66%.
In a regulatory filing with the Securities and Exchange Commission, the company admitted the brief shutdown was because it was unable to make certain payments, and that it had borrowed $5 million cash in order to pay its "merchant and fulfillment processors."
"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 MoviePass, Inc. ("MoviePass"), which would cause a MoviePass service interruption," HMNY said. "Such a service interruption occurred on July 26, 2018."
The service appeared to still be down Friday morning when a Business Insider employee attempted to use the app.
"We are still experiencing technical issues with our card-based check-in process and we are diligently working to resolve the issue. In the interim e-ticketing is working," MoviePass tweeted late Thursday. "We apologize for the inconvenience and appreciate your patience while we resolve this issue."
Helios & Matheson had previously said in May that it had enough cash to sustain its operations for at least a year.
The company was not immediately available to comment to Business Insider. This post will be updated if comment is received.
Earlier this week, the company performed a massive reverse stock split, giving investors 1 share for every 250 they owned in a last-ditch effort to shore up its stock price to meet the Nasdaq stock exchange's $1 minimum. While the move didn't affect HMNY's rapidly declining market value, it did skyrocket shares to $22.50 apiece. Friday's slump, however, sent shares back down to $4.25 apiece.
It's market cap is still below the minimum $50 million.
Helios and Matheson borrowed the cash from Hudson Bay Capital Management, according to the filing. The total demand note was for $6,200,000, "which includes $5.0 million in cash borrowed by the Company from the Holder and $1.2 million of original issue discount."
How MoviePass got here:
- 'It is a full blown war going on': The CEO of MoviePass' parent company wants to use its subscribers as an army against traditional theaters
- MoviePass' parent company is doing a massive reverse stock split in order to stay listed on the Nasdaq
- MoviePass' parent company threw a Hail Mary to raise its stock price — but it already seems to be backfiring
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