July 27, 2018
Helios and Matheson Analytics, majority owner of MoviePass, July 27 disclosed an issue with its payment system to exhibitors that required an emergency loan of $6.2 million.
In a regulatory filing, HMNY said the $5 million in cash proceeds received from the loan would be used to pay MoviePass’ merchant and fulfillment processors.
It warned that if it was unable to make required payments to processors, they could cease making payments to theaters enabling MoviePass’ more than 3 million ($9.95 monthly) subscribers free daily access to a screening. The service said such an interruption occurred July 26.
“Such interruptions could have a material adverse effect on MoviePass’ ability to retain its subscribers,” said the filing. “This would have an adverse effect on the company’s financial position and results of operations.”
Ominous words as one of the summer’s biggest blockbusters – Paramount Pictures’ Mission: Impossible – Fallout– opens nationwide.
Simply put: MoviePass cannot afford to continue paying face-value for each ticket used by subscribers. And big chain exhibitors such as AMC and Regal have refused to split revenue or cut ticket prices for MoviePass.
The news further rattled investors, who continue to dump HMNY shares – down 57% in midday trading at around $2.94 per share.
Just 72 hours earlier, HMNY initiated a 1-for-250 shares reverse-stock split that briefly inflated shares to $21. The stock has been freefalling ever since.