When a good business closes 520 stores, 13% of its total, it's generally not a good sign. But for a cash-burning machine like Movie Gallery (NASDAQ: MOVI), it has to be seen as a good thing. The stock is up more than 17% in today's trading.

The movie rental industry's woes have been well-documented. With NetFlix (NASDAQ: NFLX) and Blockbuster (NYSE: BBI) engaged in an unprofitable price-war for the dollars of DVD by mail customers, a traditional brick and mortar player like Movie Gallery really lacks a compelling way to compete, or even a compelling raison d'etre.

The company currently boasts a market cap of under $20 million, a reflection of the company's new worth of negative $560 million, the result of a crushing debt load. While the stock will continue to have ups and downs as investors react to each new bit of news, there is tremendous risk here. The latest 10-Q should give most investors all the information they need to stay away from these shares:

As of July 1, 2007, we have a working capital deficiency of $1.1 billion. At July 1, 2007, we had $45.5 million of cash and cash equivalents and did not have any available borrowings under our March 2007 Credit Facility. These events raise substantial doubt as to our ability to continue as a going concern.