Helios & Matheson Analytics Inc. HMNY -3.28% plans to sell up to $150 million worth of stock and largely pump the money into MoviePass Inc., the fast-growing movie-theater subscription company it bought last year.
The news sent the stock of the cash-strapped company down 17% to $3.19 in after-hours trading.
New York-based Helios said it would use the proceeds from the stock sale to, among other things, increase its ownership stake in MoviePass, of which it already owns about 92%, support the operations of MoviePass and MoviePass Ventures, a subsidiary founded this year, or make acquisitions.
But Helios said in a securities filing that using “all or a portion” of the proceeds for acquisitions would require it to obtain “additional capital to support our operations during such period.”
Helios had about $42 million in cash as of March 31 and its average cash deficit from Sept. 30 through March 31 was about $20 million a month, according to a filing with the Securities and Exchange Commission.
As of Dec. 31, the end of its most recent year, Helios reported an accumulated deficit of $189 million.
In March, Helios disclosed plans to spin off Zone Technologies Inc., the firm behind safety and navigation app RedZone Map.
This month, it announced a deal for Verizon Communications Inc.’s Moviefone, one of the nation’s oldest cinema services, marking Helios’s first acquisition meant to complement MoviePass since it acquired control of the company in August.