April 18, 2018
Helios & Matheson Analytics, corporate parent of MoviePass, posted a loss of $150.8 million in 2017 – much of it associated with the investment group’s purchase of the theatrical ticket subscription service, according to an April 17 regulatory filing.
Revenue topped $10.4 million, up from $6.7 million in 2016. The company ended the year with $24.5 million in cash, and $27.5 million in accounts receivables.
More importantly, independent auditor Rosenberg Rich Baker Berman P.A. expressed “substantial doubt” about Helios & Matheson’s ability to continue as a “going concern,” in relation to its ownership of MoviePass.
The auditor cited recurring losses from operations and negative cash flows from operating activities.
“The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter,” wrote Rosenberg Rich Baker Berman, which has been Helios & Matheson’s auditor since 2015.
MoviePass has attempted to revolutionize the theatrical movie market offering daily access to a standard screening for $9.95 a month. The loss-leader pricing has generated more than 2 million subscribers – with the company projecting 5 million subs by the end of the year.
Yet, to make a profit, Helios & Matheson is banking that subscribers treat MoviePass like most members of a workout gym do – with infrequent use.
That hasn’t happened. To reduce fiscal risk, Helios & Matheson is trying to secure revenue sharing deals with exhibitors. The tactic has been met with stiff resistance from major chains AMC Theatres and Regal Cinemas; less so from independent chains. MoviePass pays exhibitors full face-value of every ticket used by subscribers.
Earlier this month, MoviePass announced a three-month $29.95 promotion that limits subs to four movies per month over the 90-day period.
“It’s clear that they are losing a lot,” said Wedbush Securities media analyst Michael Pachter.
Indeed, in the 10Q, CEO Ted Farnsworth and CFO Stuart Benson said continuing operating the company would be determined by “our ability to obtain additional funding in the short term” to enable the continued the development and integration of “our MoviePass business.”