MoviePass Parent Sells Hundreds of Millions in Common Stock for Pennies

Fiscally-challenged Helios and Matheson Analytics, parent of theatrical ticket subscription service MoviePass, Jan. 16 announced it has entered into definitive agreements with certain institutional investors for the purchase of 333,333,334 common units for gross proceeds of about $5.4 million.

Each unit includes one share of common stock, one warrant to purchase one share of common stock at a price of 1.63 pennies per share, one warrant to purchase another share of common stock at the same price, and one warrant to purchase one share of common stock at $1 per share.

The potential gross proceeds from the warrants, if fully exercised on a cash basis, will be about $344.2 million.

HMNY said it would use the $5.4 million for working capital purposes; to redeem about $1.2 million of an outstanding debt offering; and to pay certain fees due to the placement agent and other transaction expenses.

Indeed, with its stock worth less than 2 cents per share, HMNY is in danger of being delisted by Nasdaq for failing to meet the minimum $1 per share threshold. The trading board has given HMNY until April to meet the minimum.

 

 

MoviePass Films Inks Bruce Willis for Three New Projects

While its parent company – Helios and Matheson Analytics – lost $137 million in the most-recent fiscal period, with the stock worth about 1.6 cents, that hasn’t stopped MoviePass Films from signing Bruce Willis to a three-film deal.

Willis, who recently finished filming drama 10 Minutes Gone for Emmett/Furla/Oasis Films, agreed to the new deal with the production company he has made 14 movies (such as 16 Blocks and Lay the Favorite) for over his career.

Helios and Matheson Analytics, which owns and operates fiscally-challenged subscription theatrical ticket service, MoviePass, acquired Emmett/Furla/Oasis Films earlier this year, renaming the unit MoviePass Films.

Willis’ first movie in the new deal is Trauma Center, which reportedly begins filming in Miami in February.

“After 15 years, I look forward to continuing to work with Randall [Emmett] and George [Furla] in the coming year,” Willis said in a statement.

 

MoviePass Looking to Raise Prices, Restore Consumer/Investor Trust

MoviePass, the beleaguered theatrical ticket subscription service, is set to roll out new monthly pricing plans it hopes will financially stabilize the service and restore investor confidence in corporate parent Helios and Matheson Analytics, among other goals.

In an interview with Variety, MoviePass CEO Mitch Lowe said the new tiered pricing plans – ranging from the existing $9.95 to $24.95 – would be dependent on where subscribers lived.

As a result, consumers living in rural areas would likely see no change to the $9.95 fee (dubbed “select”) affording access to three movies per month at select times, while moviegoers in major markets such as Los Angeles and New York would pay $14.95.

A $19.95 “red carpet” option – which mirrors the fee of a competing service from AMC Theatres – enables rural subscribers access to three screenings at any time in any format (Imax, 3D, 2D). The option costs $24.95 in major cities.

“We have a lot to prove to all our constituents,” said Lowe. “We don’t just have to prove ourselves to our members, we also have to prove ourselves to the investment community, our employees, and our partners.”

Indeed, the service’s well-chronicled missteps largely revolved around an unsustainable business model that paid exhibitors full price for every ticket consumed by subscribers paying less than $10 per month for daily access to a theatrical screening.

With MoviePass unable to convince exhibitors to share in the financial risk in return for enhanced foot traffic and sharing user data – the latter triggering data breach concerns – the service began to hemorrhage money and alienate consumers and investors.

In HMNY’s most-recent fiscal report, the company reported a loss of $137 million and just $6.2 million in cash available. The parent’s stock is worth pennies and in risk of being delisted by Nasdaq – despite a reverse-stock split last summer. A planned second reverse-stock split was abandoned after failing to generate enough shareholder approval.

“Expectations weren’t met,” said Rodes Ponzer, head of marketing. “The creative memes and the consumer vitriol, we understand it. We told customers [theatrical access] was un-limited and we didn’t meet their expectations. Now we’re going to set their expectations properly.”

 

 

 

 

MoviePass Promotes Itum to EVP

MoviePass, the movie theater subscription service and majority-owned subsidiary of Helios and Matheson Analytics, has appointed Khalid Itum to EVP.

Previously VP of business development, Itum will continue to report to CEO Mitch Lowe. Itum will manage day-to-day operations at MoviePass, working closely with both Lowe and HMNY CEO Ted Farnsworth to spearhead company development, and drive its exhibition and distribution strategies forward, according to a MoviePass press release. Itum will also be responsible for creating its strategic plan and ensuring its implementation.

“Khalid is a unique talent with an amazing vision, who has been an integral part of MoviePass since 2014,” said Lowe in a statement. “Before coming on in a full-time capacity in 2017 to lead our studio affairs and distributor partnerships, he played a significant role as an advisor. As we continue to spur innovation across the industry, he not only strengthens our sales and operations efforts across the organization, but he deepens our relationships within the industry ecosystem.”

As VP, Itum had been responsible for driving revenue through multiple studio and independent distributor partnerships and various brand and content deals. He played a crucial role in growing MoviePass’ Los Angeles office and led the strategic formation of MoviePass Ventures and its first acquisition of American Animals — alongside The Orchard — at the 2017 Sundance Film Festival, according to the release. He also spearheaded the acquisition of Moviefone from Oath earlier this year.

“Khalid has a proven track record and I believe he will serve our financial goals and increase our overall operating performance,” said Ted Farnsworth, CEO of Helios and Matheson, in a statement. “Khalid brings a remarkable enthusiasm and passion to the job each day and truly shares in the overall vision of MoviePass.”

“I’m eager to continue building MoviePass and am proud of how far we’ve come,” said Itum in a statement. “The road hasn’t been easy — and the hyper growth has been challenging. However, we’ve taken a hard look over the past few weeks and months at what needs to happen in order to not just preserve what we’ve built, but to use it as a foundation upon which to build. Because of this, I know we’ll emerge a better partner to the theaters (big and small), major studios and independent distributors with whom we have the privilege of working to collectively best serve the interests of the American consumer. You may notice we’ve been out of the news for some time, and that’s been by design. At MoviePass, we’ve recently prioritized building toward a vision that aligns our success with greater consumption of entertainment. You’ll soon be able to judge for yourselves, and I believe that the best marketing we can do, today and always, is to enhance our product and treat our subscriber as a member of something special: because that’s what MoviePass is to a great number of Americans already. It’s on us to regain their trust. I believe the future is bright for our company, and I couldn’t do it without my team which has been giving its 200% dedication and effort to transform the offering and platform into its full potential. I look forward to announcing some powerful additions to our management team to join with us in charging forward.”

MoviePass Parent Narrows Q3 Fiscal Loss; Touts Subscriber Usage Decline

MoviePass parent Helios and Matheson Analytics Nov. 15 disclosed that subscribers of its fiscally-challenged theatrical ticket service consumed 0.77 movies per month in the third quarter (ended Sept. 30) compared to 2.2 movies in April.

The 65% usage drop is noteworthy in that it underscores management’s efforts to reduce monthly overhead costs related to reimbursing exhibitors full ticket price every subscriber screening.

Key to MoviePass’ survival is reducing the number of subscribers screenings — not subscribers. HMNY didn’t disclose MoviePass subscriber numbers, which topped 3 million before the service began implementing significant restrictions to the $9.95 monthly service.

“During this transitional period for Helios and MoviePass, we have been focused on reducing our burn rate and striving to improve our business model and we are very encouraged by our Q3 financial results,” Ted Farnsworth, CEO of Helios, said in a statement.

HMNY, which just canceled a special shareholder meeting after failing to secure enough investor interest in a second reverse-stock split, is desperately trying to rewrite the narrative on a money-hemorrhaging ticket subscription service that posted a loss of $105 million through June 30.

Indeed, the company posted a loss of $28.5 million, which it attributed to a $75.5 million (70.6%) gross margin improvement. Revenue increased $7.2 million, or 9.8%, to $80.5 million compared to the prior-year quarter.

MoviePass Films Invests in Sports-Themed Documentary

MoviePass Films, the theatrical ticket subscription service’s content acquisition unit, Nov. 1 announced an agreement with Art of Sport, the newly-formed, sports-centric distribution entity behind upcoming feature-length documentary, In Search of Greatness.

MoviePass Films, which is owned by MoviePass parent Helios and Matheson Analytics, has come on as an investor and strategic marketing partner ahead of the film’s early-November theatrical release.

In Search Of Greatness, directed by documentarian Gabe Polsky, best known for Red Army, which debuted in Cannes in 2014, and his work on Nat Geo’s Emmy-award-winning TV show, “Genius,” examines the importance of creativity in determining athletic ability, in addition to analyzing the roles nature and nurture play in the development of young athletes.

The film, which includes interviews with hockey legend Wayne Gretzky, superstar wide receiver Jerry Rice, and soccer icon Pele, opens in 11 major U.S. markets on Nov. 2, and expands to theaters across North America by mid-month.

“We are pleased to be able to continue supporting independent creators and helping them bring their artistic visions to life on the big screen,” MoviePass Films chairman Ted Farnsworth and co-CEO Randall Emmett, said in a statement.

The investment follows a busy month of deal-making for the MoviePass Films. In September, it partnered with indie distributor Neon to co-release Reinaldo Marcus Green’s Sundance award-winner Monsters and Men (currently in theaters), and is preparing to co-release the second film in that partnership, Ali Abassi’s Cannes award-winner Border (which debuts in theaters this week).

MoviePass Films also recently wrapped production on its Bruce Willis-starrer 10 Minutes Gone and green-lit Neil Marshall’s The Reckoning, which starts production in Wales in January. The MoviePass Films team intends to produce 10-12 films annually, in addition to acquiring 8-10 films per year, starting in 2019.

MoviePass Films via MoviePass and Moviefone, will mount a marketing campaign to support the film’s success, while in theaters. In Search of Greatness will be made available to MoviePass subscribers as a “Bonus Movie,” which will not count toward their monthly in-theater movie ticket allotment. MoviePass™ subscribers will also have a chance to attend the films’ red-carpet premieres and receive other special perks throughout the duration of the partnership.

 

 

MoviePass Parent Spinning Off Ticket Subscription Service

Helios and Matheson Analytics, the fiscally-challenged parent of MoviePass, Oct. 23 announced that its board of directors has approved a plan to spin off the money-losing theatrical ticket subscription service.

To do this, HMNY is creating a new subsidiary named MoviePass Entertainment that would take ownership of MoviePass and other film related assets, including MoviePass Ventures, Moviefone and MoviePass Films.

“Since we acquired control of MoviePass in December 2017, HMNY largely has become synonymous with MoviePass in the public’s eye, leading us to believe that our shareholders and the market perception of HMNY might benefit from separating our movie-related assets from the rest of our company,” Ted Farnsworth, CEO of HMNY, said in a statement.

Indeed, with HMNY’s stock valued at 3 cents per share and facing delisting by Nasdaq, Farnsworth said the plan is to make MoviePass Entertainment a separate publicly-held company.

If permitted to do so under Delaware law, HMNY would distribute a minority of the outstanding shares of MoviePass Entertainment common stock as a dividend to stockholders of HMNY, with the company retaining control of MoviePass Entertainment.

HMNY debt holders would be entitled to participate in any distribution of MoviePass Entertainment shares to the extent required by the terms of such notes and warrants.

Following any distribution of shares of MoviePass Entertainment and/or MoviePass Entertainment becoming a separate public company, HMNY plans to continue focusing on data analytics and consumer centric technologies.

“We believe this new vertically integrated entertainment ecosystem, if achieved, would provide a sharper market focus, and that the combination of these four business lines under the MoviePass Entertainment umbrella would produce substantial synergies that we believe will generate value for our shareholders, subscribers, and business partners,” said Farnsworth.

CNBC: NY Attorney General Investigating MoviePass Parent

The New York Attorney General’s office reportedly has opened an investigation into fiscally-challenged Helios and Matheson Analytics, corporate parent of theatrical ticket subscription service MoviePass.

CNBC, citing a source familiar with the investigation, reported NY AG Barbara Underwood is investigating whether HMNY mislead investors about its fiscal health – a situation underscored by the company’s stock currently trading at 2 cents per share, despite a recent 1-for-250 shares reverse stock split.

“We are aware of the New York Attorney General’s inquiry and are fully cooperating,” Helios and Matheson said in a statement to CNBC. “We believe our public disclosures have been complete, timely and truthful and we have not misled investors. We look forward to the opportunity to demonstrate that to the New York Attorney General.”

Notably, HMNY has yet to mention the investigation on its website despite the fact it is seeking shareholder support for another reverse stock split, this one combining 500 shares into one.

A stock split is typically used by publicly traded companies seeking to lure investors (by reducing the cost of shares) or artificially buttressing a stock’s valuation – the latter employed by HMNY to push shares above Nasdaq’s minimum $1 valuation and avoid being delisted.

HMNY’s fiscal woes have been driven by MoviePass offering subscribers daily access to a theatrical screening for $9.95 monthly fee – a disrupting business model that is financially unsustainable. MoviePass now limits subscribers to three screenings monthly.

Regardless, HMNY has continually told investors its finances are sound and that steps have been taken to reduce costs. The company’s most-recent regulatory filing tells a different story.

HMNY reported a $109 million net loss in the fiscal period ended June 30, with just $15 million in cash available.

MoviePass Owner Names New Communications Director

Fiscally challenged theatrical ticket subscription service MoviePass needs a new message and corporate owner Helios and Matheson Analytics needs a financial miracle.

The two entities Oct. 17 announced the appointment of Maayan Nave as executive director and president of global communications. Nave will lead all marketing, strategic communications and public relations initiatives for HMNY, MoviePass, MoviePass Films and MoviePass Ventures with existing communications teams in New York and California.

Nave, owner of a marketing communications agency operating in Tel-Aviv and New York, previously spearheaded all global communications for the sparkling water brand SodaStream, where he reportedly oversaw more than 60 PR, social media and guerilla marketing agencies in 45 markets around the globe.

Nave’s marketing activities have been recognized by some of the world’s top marketing competitions awarding SodaStream with the Euro Effie 2017, Golden Drum 2016, Sabre Award 2017, PR Daily’s Campaign of the Year and others.

“Maayan is an inspirational strategic leader, his global experience and proven success are a major asset to HMNY’s and MoviePass’ disrupting mission,” Ted Farnsworth, CEO of HMNY, said in a statement.

“Maayan is an epic disrupter with vast experience in both financial and consumer worlds and the right person to lead our marketing and communications efforts,” added Mitch Lowe, CEO of MoviePass.

All skills will be required as MoviePass attempts to resurrect a $9.95 monthly subscription service that has downsized from one-movie-per-day access to three titles monthly. In the process, HMNY has seen its stock freefall to less than a handful of pennies per share – despite a reverse stock split. A second reverse stock split is now planned.

MoviePass Owner Seeks Second Reverse-Stock Split

Helios and Matheson Analytics, corporate parent of fiscally challenged theatrical ticket subscription service MoviePass, is looking to authorize a second reverse-stock split.

A proposal for 1-for-500 shares reverse-stock split will be presented to HMNY shareholders at an upcoming special meeting Oct. 18 in New York.

“We believe that a reverse stock split could increase the market price of our common stock sufficient to satisfy the minimum bid price requirement in the near term, though we cannot provide any assurance that a reverse stock split will have that effect,” HMNY said in the proxy statement.

Indeed, HMNY’s 1-for-250 shares reverse-stock split in July was done to raise the company’s stock price above the $1 per share Nasdaq minimum.

While the split briefly resulted in HMNY stock reaching $22.50 per share, in less than five days the stock had again fallen below the $1 minimum. It closed Sept. 17 at 1.7 cents per share.

“As a result, we continue to be out of compliance with the minimum bid price requirement,” HMNY said in the proxy statement.

The company said that failure to maintain its Nasdaq listing could further limit its access to capital, undermining the ability to continue operating MoviePass, become cash flow positive or profitable.

“Therefore, the board has concluded that the potential harm to the [HMNY] and its stockholders resulting from a Nasdaq delisting outweighs the potential harm to the company and its stockholders from another significant reverse stock split,” said HMNY.