The headlines are starting to bleed together at Helios and Matheson Analytics (NASDAQ:HMNY), the troubled owner of the MoviePass all-you-can-eat movie-watching buffet. The stock is down 36%! No, it's down 40%!
And today, Helios is down another 47.2% as of 11:20 a.m. EDT -- for good reason.
This morning, Helios filed an 8-K note with the Securities and Exchange Commission sketching out its latest plan to save the company. Unlike previous plans, this one has nothing to do with reverse stock splits, new share issuances, or handing out warrants like Halloween candy. Today, the company announced a new IOU-based business plan, in which it issued a promissory note to Hudson Bay Master Fund Ltd.
In exchange for $6.2 million, cash, Helios promised to repay Hudson Bay $1.2 million immediately (a wise choice by Hudson Bay, getting at least its interest payment up front), then to use the remaining $5 million "to pay the Company's merchant and fulfillment processors" (i.e., to pay for all the free movie tickets MoviePass subscribers have been buying), then repay $3.1 million more by Aug. 1, 2018 (i.e., five days from now), and finally to pay off the balance of the IOU by Aug. 5, 2018.
Suffice it to say, Helios is looking rather strapped for cash if it's now forced to resort to the Wall Street equivalent of a payday lender to meet its expenses.
But it really had no choice. As the company explained, on July 26, it ran so short of cash that it suffered a service interruption, during which members were unable to see their movies because MoviePass lacked the cash to make good on their ticket purchases. Helios can't allow that to become a habit if it hopes to have any chance of MoviePass surviving as a business.
All of this is to say that today's a bad day to be a Helios and Matheson stock owner.