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.


MoviePass Parent Board Member Quits, Citing Lack of Financial Disclosures

Helios and Matheson Analytics, parent of ticket subscription service MoviePass, Aug. 30 disclosed that a member of its board of directors has resigned under protest.

Carl Schramm, in an Aug. 25 letter to Ted Farnsworth, CEO of HMNY, said he was resigning as a director, including positions on the audit committee, compensation committee, nominating and corporate governance committee and the pricing committee, citing a failure to receive necessary financial information on the company and subsidiary MoviePass.

Schramm served on the board since Nov. 9, 2016.

“I have sought, often unsuccessfully, information about the company’s financial status and operations, and explanations of company strategy,” Schramm wrote. “I have objected to the manner in which a number of business decisions have been presented to the board by management, without sufficient time for the board to examine complex documents, to review significant transactions, or to discuss how the proposed actions fit into the company’s strategic plan.”

Indeed, HMNY and MoviePass have engaged in numerous strategic moves aimed at buttressing the latter’s business model enabling subscribers daily access to a theatrical screening for $9.95 monthly fee.

With the service losing millions of dollars more per month than it generates, HMNY’s stock valuation has plummeted to 2 cents per share – after a 1-for-250 shares reverse stock split. A subsequent price hike was scuttled, with subscriber restrictions put in place instead.

In response, HMNY said it was unaware of any unanswered requests for information by Schramm. It said the board and committees of which Schramm was a member have met at least 25 times thus far in 2018.

HMNY contends it has kept the board “fully informed” and has provided all information needed for members to exercise their responsibilities.

HMNY said that since acquiring 92% stake in MoviePass, it has experienced unprecedented and unanticipated growth – including issues that have placed significant demands on management and the board, as evidenced by the number of board and committee meetings.

“But the company firmly believes all board and committee meetings have been duly noticed and held, and no material information has been withheld from any board member,” Farnsworth wrote in a filing.

MoviePass Now Limiting Title, Showtime Options

Fiscally-challenged ticket subscription service MoviePass is changing its rules again in an attempt to remain solvent.

The service Aug. 16 informed subscribers in an email it is now limiting them to select titles and showtimes per day.

The new restrictions are part of an updated plan enabling subscribers access to three movies per month. Subs previously had access to one theatrical screening daily for a $9.95 monthly fee – a business plan that was burning through more cash than was being generated.

The MoviePass website listed seven movies subscribers could watch Aug. 16, which included Blackkklansman, The Meg, The Miseducation of Cameron Post, We the Animals, Skate Kitchen, Juliet, Naked and Summer of 84.

On Friday, Aug. 17, subs have access to Mile 22 and Christopher Robin, but not The Meg and Blackkklansman. The former titles are replaced by Alpha and Slenderman on Aug. 18.

Subscribers do not have access to Crazy Rich Asians until Sunday, Aug. 19 – and then only in select markets. The same applies to the aforementioned titles.

Investors continued to hammer corporate parent Helios and Matheson Analytics’ stock, which closed down 37.5% at 3 cents per share. Despite HMNY issuing millions of shares daily in an attempt to buttress the stock, the company ended Aug. 16 with a market cap of just $200,000.

Separately, two class action lawsuits have been filed against HMNY alleging its executives mislead investors on the fiscal health of MoviePass, among other charges.





MoviePass 1st Birthday: Who’s Celebrating?

The day after posting more than $100 million in quarterly losses and telling investors its ability to continue as “going concern” is in doubt without additional funding, Helios and Matheson Analytics essentially threw a birthday party – for itself.

In an era of fake news, why not a disingenuous press release touting 21 self-serving milestones?

It was a year ago (Aug. 15) that HMNY acquired controlling interest in MoviePass and immediately cut the $20 monthly subscription fee to $9.95. Consumer indifference quickly changed, and the service added hundreds of thousands of subs (then 3 million) eager to watch a daily theatrical screening for free.

And that’s the service’s Achilles heel: As subscribers flock to theaters, MoviePass pays face value to exhibitors for every ticket consumed. A flawed business model predicated on infrequent theatrical attendance and revenue-sharing with exhibitors – none of which has transpired.

Investors (except day-traders) have jumped ship, leaving HMNY’s shares worth about a nickel, and the corporate parent little choice but to issue boat loads of shares – a staggering 630 million since July 31!

The tally translates to more than 159 billion shares prior to the company’s 1-for-250 shares reverse stock split.

“Measured by number of movie tickets sold, we are the fourth largest theater chain in the country without any brick and mortar locations, or screens,” MoviePass CEO Mitch Lowe said incredulously.

Never mind that most brick and mortar theaters are still in business, while MoviePass is operating on borrowed time.

“It’s an amazing milestone considering we feel like we’ve just begun,” said Lowe.

Amazing denial indeed.

Helios Touts One-Year Anniversary of MoviePass Acquisition Despite Mounting Losses

MoviePass owner Helios and Matheson Analytics Aug. 15 touted the one-year anniversary of its acquisition of the movie subscription service despite ongoing financial troubles.

“With only eight employees at the time, MoviePass was considered a fringe player supporting 720 partnered screens and having 15,000 subscribers,” read the press release from Helios. “When MoviePass lowered its subscription price from $20 per month to $9.95 per month, it created a movement bringing movie enthusiasts back to movie theaters and became a boon to a declining industry which, one year later, is showing signs of a financial rebound.

“Within the first several days, MoviePass grew 1,000%, from 15,000 subscribers to 150,000. MoviePass continued the quick growth trajectory, acquiring 1 million subscribers in just four months. This growth enabled MoviePass to close deals with CostcoiHeart Radio, and major Hollywood studios.”

MoviePass has more than 2,000 partner screens while also available for use at 91% of movie theaters nationwide, according to the release. MoviePass recently launched a new subscription model which is projected to reduce its cash deficit by approximately 60% or more, while allowing its subscribers to enjoy three movies per month for $9.95 per month and additional movies at a discounted price, a “win-win” for its subscribers and the industry, the release stated.

“We far exceeded our 2017 expectation for Helios and MoviePass,” said Ted Farnsworth, Helios chairman and CEO, in a statement. “In our agreement to acquire MoviePass in August 2017, MoviePass had a performance milestone to achieve 100,000 subscribers in one year. We were all surprised to see the subscriber growth surpass that milestone in one week. It is rare to see surprises of this magnitude. We’ve reached an important point in our company where, after a year of research and analysis, we believe we have fine-tuned the MoviePass business model to fit our unique growth rate. Under the new plan, we believe we are creating a more sustainable path for MoviePass and its loyal subscribers.”

“Measured by number of movie tickets sold, we are the fourth largest theater chain in the country without any brick and mortar locations, or screens,” said MoviePass CEO Mitch Lowe in a statement. “It’s an amazing milestone considering we feel like we’ve just begun.”

Still, the losses mounted during the past year. Helios Aug. 14 reported a second-quarter (ended June 30) net loss of $83.6 million on revenue of $74.1 million. The loss compared to a net loss of $5.2 million on revenue of $1.1 million during the previous-year period (before it acquired a 92% stake in MoviePass). MoviePass generated $72.4 million in subscription revenue but spent $178.7 million reimbursing exhibitors for tickets consumed by subscribers.

Helios, in its Aug. 15 release, noted the following highlights of the past year:

  • Helios acquired MovieFone which will be integrated with MoviePass.
  • Helios launched MoviePass Ventures at Sundance Film Festival 2018.
  • Helios launched MoviePass Films with Emmett Furla Oasis Films and veteran Hollywood producers Randall Emmett and George Furla.
  • MoviePass Films signed Bruce Willis for its first production, 10 Minutes Gone.
  • MoviePass E-Ticketing partners have seen a 38% growth in just the last few weeks.
  • MoviePass now accounts for approximately 6% of all movie tickets sold in the U.S. in any given week.
  • MoviePass has purchased over $450 million worth of tickets in the last 12 months.
  • 49% of MoviePass subscribers are seeing movies they wouldn’t normally see in theaters.
  • MoviePass has partnered with two major studios and more than 10 independent distributors and was engaged to promote their films, showing efficacy in marketing and buying a greater percentage of their box office, showing it can persuade subscribers to see particular titles over others.
  • MoviePass parent Helios established MoviePass Ventures in January 2018, and co-acquired rights to two movie titles, American Animalsand Gotti, and brought its subscriber base a series of MoviePass subscriber-only events. It has begun to monetize the titles downstream, beyond the theatrical window.
  • MoviePass conducted a series of sweepstakes and offers, showing the responsiveness and receptiveness of its subscriber base, including a 1.5% conversion rate for a financial services company (compared to an average 0.025% conversion rate) and over 120,000 opt-ins in a 24-hour period for a movie-related sweepstakes.
  • MoviePass is one of the most widely read business stories of 2018.
  • 47% of MoviePass subscribers are recommending more movies to friends.
  • 70% of MoviePass subscribers state that they somewhat or strongly agree that they are still more likely to see a film despite a low Rotten Tomatoes score.
  • For Beast, a Roadside Attractions’/30West’s production, MoviePass-supported and e-ticketing screens grossed 54.7% higher than theaters that MoviePass does not support.
  • MoviePass ticket purchases represented 16.8% of Thursday night previews for Paramount’s Book Club.
  • During the July 4 holiday week, MoviePass accounted for more than 5% of Universal Pictures’ First Purge, a 3,000-plus screen, wide release.
  • For Sundance-lauded Hearts Beat Loud, MoviePass represented 40% of the film’s box office take in its first full week of theatrical release in New York and Los Angeles.
  • For Tag, which MoviePass promoted in-app, the service’s revenue represented 13% of the film’s opening weekend domestic box office.
  • For A Miseducation of Cameron Post: MoviePass represented 57% of the film’s opening weekend New York City release.
  • For Blindspotting, MoviePass contributed 22.7% of its opening weekend domestic box office, and 24.7% through the first Tuesday following its release (37.6% domestic box office contribution on Monday, 30.8% domestic box office contribution on Tuesday) that included advance member screenings.

MoviePass Parent Posts $109.7 Million Half-Year Loss; Seeks Additional Funds to Sustain Operations Over the Next 12 Months

Helios and Matheson Analytics – parent of fiscally-challenged ticket subscription service MoviePass – Aug. 14 reported a second-quarter (ended June 30) net loss of $83.6 million on revenue of $74.1 million. The loss compared to a net loss of $5.2 million on revenue of $1.1 million during the previous-year period (before HMNY acquired 92% stake in MoviePass).

As expected, the MoviePass business model enabling subscribers daily access to a theatrical screening for $9.95 monthly fee continues to negatively affect the bottom line. The service generated $72.4 million in subscription revenue but spent a whopping $178.7 million reimbursing exhibitors for tickets consumed by subscribers.

For the first six months of the year, the cost-to-revenue equation didn’t get any better. MoviePass generated $119.5 million in subscription revenue, spending nearly $315 million on exhibitors.

Net loss for the half-year topped $109.7 million on revenue of $123.6 million.

In the regulatory filing, HMNY said it has been given until Dec. 18 to bring its stock up to the Nasdaq minimum of $1 per share or company shares will be delisted.

Further, HMNY said that without additional funding, it would not have sufficient funds to meet its obligations within the next 12 months.

“While management will look to continue funding operations by raising additional capital from sources such as sales of the company’s debt or equity securities or loans in order to meet operating cash requirements, there is no assurance that management’s plans will be successful,” HMNY said in the filing.

The company ended the period with just $15.5 million in cash, down from $25 million at the end of 2017.


Online Trading App Halts MoviePass Parent Stock Purchases

With its stock worth about a nickel, Helios and Matheson Analytics – parent of fiscally-challenged ticket subscription service MoviePass – has been a draw to entry-level investors.

That worries Robinhood, an upstart online trading app with a business model that pledges to help first-time investors navigate Wall Street.

The firm operates on margin trading charging subscribers from $6 monthly to buy and sell stock. This week, Robinhood reportedly sent an email to subscribers announcing it had suspended new purchases of HMNY stock.

“In order to protect our customers from the risks associated with some low-priced stocks, we remove the buy option for stocks like HMNY that consistently trade under $0.10 [per share],” said the company, as reported by Business Insider.

HMNY stock, which underwent a 1-for-250 shares reverse stock split last month, has lost 99.99% of its value since the split. The stock is reportedly held by more than 74,000 Robinhood subscribers, who can still hold and sell the company’s shares.

Robinhood’s move is in stark contrast to Maxim Group and Canaccord Genuity, two Wall Street investment firms that have profited from marketing shrinking HMNY shares.

The firms worked with HMNY pushing the stock on investors since last August after the latter acquired controlling interest in MoviePass. In return, they reportedly made millions on commissions while holding a “buy” rating on HMNY stock.

“We see numerous ways to monetize a large user base and drive profitability, such as movie promotions, profit sharing, rebates, concessions, data sales and advertising,” Brian Kinstlinger, analyst at Maxim, wrote in an October note.

Kinstlinger set a price target of $20 per share for HMNY stock.

Of course, HMNY shares have only declined over the past 10 months as MoviePass hemorrhaged millions more than it generated. The service reportedly spent upwards of $45 million monthly in June and July reimbursing exhibitors for tickets redeemed by subscribers.

An investor buying $100,000 worth of HMNY stock last October, would now hold about $1.85 in value.

Indeed, axiom “buyer beware,” is a mainstay on Wall Street precisely because investment banks’ ratings on third-party stock are often undermined by their cozy relationship with the same clients.

“Human nature being what it is, no CEO is likely to throw business to a bank whose analyst is negative on the CEO’s company,” Erik Gordon, professor at the University of Michigan’s Ross School of Business, told Business Insider.

“There are examples of analysts reiterating ‘buy’ ratings 30 days before a company went under,” said Gordon.

Black Friday: MoviePass Parent Market Value Dips Below $100K

A company’s future as a publicly traded stock is undeniably bleak when Wall Street values it less than $100,000.

That’s the reality Helios and Matheson Analytics, parent of MoviePass, found itself Aug. 10 when shares fell to 5.5 cents per share in midday trading, leaving HMNY with a market valuation of just $96, 200.

By comparison, AMC Theatres and Cinemark Theatres, which each have competing ticket subscription services, have $2.2 billion and $4.3 billion market caps, respectively.

The book has pretty much been written on MoviePass, a populist business model that enables subscribers to see a theatrical screening daily (now three times monthly) for $9.95 fee.

Indeed, 3 million people signed up to the service essentially to watch movies for free, leaving MoviePass to pay the bill. The company thought its scale and self-proclaimed user data would convince exhibitors to become partners and split costs.

Exhibitors had different ideas. Such as enjoying the MoviePass fiscal windfall, high-margin concession revenue for themselves, and then building a more economically prudent subscription service.

That might sound unfair and exploitive. But that’s capitalism. A reality HMNY should have known.



MoviePass Parent Stock Closes at Record Low

Helios and Matheson Analytics, the fiscally-challenged corporate parent of MoviePass, saw its shares shrink to a record low 6 cents per share, before “rebounding” to close Aug. 8 at $0.0675 per share.

The stock, which reached a split-adjusted $21.25 on July 24 prior to a 1-for-250 reverse stock split, has lost 99.7% of its value in 14 days as investors and analysts turn their backs on an unsustainable business model that essentially enabled subscribers to see a free theatrical movie daily for a $9.95 monthly fee.

MoviePass paid exhibitors face value for every ticket used by subscribers, thereby driving monthly reimbursement costs upwards of $45 million.

HMNY, which has a market cap of just $113, 737 continues struggling to reduce operating costs. The service earlier this week aborted a planned price hike, and instead restricted subs to three movies per month.

While it remains to be seen how many of the service’s 3 million subs exit following the changes, the message is clear: management wants users to go less frequently to the movie theater.

Or maybe just to see its own content.

In a strange PR move, MoviePass Films, the film financing and production unit, announced it had signed Bruce Willis to star in its first feature film, drama 10 Minutes Gone through its indie studio Emmett Furla Oasis Films. Production is slated to begin in September.


Bruce Willis Signed for First MoviePass Films Original Movie

Helios and Matheson Analytics, parent of fiscally-challenged MoviePass, has a market cap of just $118,600 with shares worth 7 cents each. The stock traded more than 308 million times Aug. 7 as day-traders played ping-pong attempting to glean incremental gains on a penny stock.

That didn’t stop subsidiary MoviePass Films from announcing its first feature film production, 10 Minutes Gone, starring Bruce Willis.

The veteran actor plays a man who loses 10 minutes of his memory after being hit by a stray bullet in a bank heist gone wrong.

10 Minutes is the first original production since MoviePass Films acquired indie studio Emmett Furla Oasis Films last year. Previous MoviePass Films deals including acquiring distribution rights to heist drama American Animals and John Travolta’s Gotti biopic.

Filming is set to begin in September.