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.

 

AMC Theatres A-List Subscription Ticket Service Partners with Fandango, Atom Tickets

AMC Theatres A-List, the theatrical chain’s ticket subscription service and loyalty program, Sept. 17 announced a marketing partnership with online ticket services Fandango and Atom Tickets.

Under terms of the deal, A-List members who may use Atom Tickets and Fandango for movie tickets can now enter their A-List membership number during checkout, securing a ticket reservation with their membership, which is applied as one of the subscriber’s three-movies-per-week allotment.

A-List, which was launched this summer by AMC for $19.95 monthly as competition to MoviePass ($9.95) and Cinemark’s Movie Club ($8.99) subscription platforms,

Because A-List members receive the benefits of AMC Stubs Premiere, the online ticketing fee is waived. A-List subs can also purchase additional tickets in the same transaction on both sites, allowing them to bring along friends and family members to the movie.

“The guest feedback and membership sign-up rate have far exceeded our expectations, but we’re constantly looking for ways to provide more opportunities … through A-List,” Stephen Colanero, chief marketing officer, AMC, said in a statement.

Adding Fandango and Atom Tickets, the latter co-owned by Lionsgate, ups the profile of online ticketing across all platforms – and helps drive more moviegoers into their theaters.

“Fandango and AMC Theatres have worked together for more than a decade to innovate the moviegoing experience for AMC’s guests across online, mobile and social media platforms,” said Kevin Shepela, chief commercial officer, Fandango.

“Recognizing A-List membership is … a natural extension of our support for exhibitor loyalty programs,” added Matthew Bakal, cofounder and chairman of Atom Tickets.

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 Inks Promo Deal with Postmates Courier Service

Looking to retain subscribers and diversify revenue streams, fiscally-challenged ticket subscription service MoviePass Aug. 30 announced a promotional deal with Postmates, the San Francisco-based online courier service.

Postmates gives consumers access — via courier delivery — to more than 250,000 local merchants that were previously inaccessible online in more than 385 cities. Postmates has helped create an alternative infrastructure for local businesses to better compete against retail goliaths such as Walmart, Amazon and Target.

The agreement affords MoviePass subs special discounts and credit toward both services through promotions within the MoviePass app.

MoviePass will promote Postmates within its app and on corporate parent Helios and Matheson Analytics’ Moviefone.com website and provide subs with access to Postmates delivery credits, a week-long free trial of subscription service, Postmates Unlimited, and a credit toward one month of MoviePass.

MoviePass CEO Mitch Lowe said the pact is part of a larger strategy to provide an array of deals to subs, tapping different companies and brands to develop “creative and innovative” consumer offerings.

Previous MoviePass brand partners include iHeartMedia, Fandor, Costco and others. Additionally, this relationship furthers MoviePass’ ongoing effort to develop non-subscription-based revenue channels.

“Knowing that the vast majority of our subscribers generally have at least one streaming subscription at home, it was a no-brainer to bring them real value not just at the movies but on the comfort of their couches through our relationship with our friends at Postmates,” Lowe said.

Diversifying revenue streams would appear to be a mandatory considering HMNY’s stock is trading at 2 cents per share as Wall Street and consumers turn their backs on the MoviePass business model – and ongoing changes to it.

The $9.95 monthly service a year ago generated millions of subs offering daily access to a theatrical screening. With MoviePass paying exhibitors face value for every ticket used by subs, the service has been hemorrhaging millions of dollars more than it generates. As a result, theatrical access has now been restricted to three screenings monthly, in addition to select movies and exhibition times.

At the same time, AMC Theatres launched a rival service enabling subs access to three screenings weekly for $19.95 per month. The service has more than 260,000 subs.

Survey: Half of MoviePass Subs Likely to Cancel

Fiscally challenged MoviePass got more bad news Aug. 28 after a survey found nearly 50% of MoviePass respondents will likely cancel their membership.

In the August survey of 1,558 moviegoers — including 424 MoviePass subscribers — conducted by National Research Group for The Hollywood Reporter, just 48% of MoviePass respondents said they were satisfied with the service — which was down from 83% approval in a previous survey this spring.

Central to the service’s problems — beyond financial — are the ever-changing rules of engagement, according to the survey. A short-lived price hike from $9.95 to $14.95 was scuttled, with subscribers limited to three screenings per month. That change was followed by more restrictions on what titles subscribers could see and when.

“MoviePass’ innovation was offering the freedom and flexibility to see any movie, at any time, at almost any theater, for a low price,” NRG CEO Jon Penn told THR. “By constantly changing the terms of service — limiting which films subscribers could see and when they could see them — MoviePass has eroded brand trust and undermined their leadership position.”

Survey respondents appear in favor of ticket subscription services, with 23% interested in AMC Theatres’ A-List Stub platform. Another 39% said they would favor any service that could be sustainable.

“There remains immense opportunity and moviegoer appetite for innovation in movie ticket buying,” said Penn. “Future services that offer value, flexibility and convenience — in an economically viable way — will help drive moviegoing to new heights.”

 

MoviePass Annual Subs Now Limited to Three Movies Monthly

With its stock hovering around two cents per share, Helios and Matheson Analytics — corporate parent of MoviePass — is now restricting annual subscribers to three theatrical screenings per month — down from a daily screening.

In an email to the service’s $89.95 annual subscribers, the company said the switch would help maintain lower overhead costs, while affording subs with greater access to content.

“After experimenting with different models and options, we believe that our current monthly plan captures the need of our community — keeping prices low while continually striving to offer a wider selection of films,” said MoviePass.

In effect, MoviePass is now subjecting annual subscribers to the same three-title screening restrictions it imposed upon month-to-month subs earlier this year. Subs are also restricted to select titles and screening titles.

The company is allowing annual subs to cancel their membership for a prorated refund if they choose.

Departing annual subs is the least of MoviePass’ issues, which have dogged the once-promising service after Wall Street grew leery of a business model that enables subs to essentially watch a theatrical screening daily for free.

After cutting the monthly subscription price to $9.95 a year ago, MoviePass took off among consumers, attracting three million subs. At the same time, the service was unable to leverage its sub base with exhibitors in exchange for lower ticket prices.

With MoviePass paying exhibitors face value for every ticket consumed by subscribers, fiscal losses have mushroomed – more than $200 million through June 30.

Despite a 1-for 250 shares reverse stock split and the company buying/selling hundreds of millions of shares to boost the stock price, HMNY’s stock continues to plummet – leaving initial investors with virtually nothing except a desire for revenge.

Numerous shareholder lawsuits have been filed against HMNY, and founder/CEO Ted Farnsworth, among others.

AMC Theatres Ticket Subscription Service Tops 260,000 Subs

AMC Stubs A-List, the theatrical chain’s response to MoviePass, has generated 260,000 subscribers since launching the $19.95 service seven weeks ago, according to AMC Theatres.

The nation’s largest movie exhibitor chain said AMC Stubs A-List already has been responsible for more than 1 million in attendance at its movie theatres – and account for more than 5% of AMC’s weekly attendance.

A-List enables subs to purchase full-price tickets by online reservation, which it said resulted in 40% of subs buying additional tickets to see a movie. A-List members now account for more than 4% of AMC’s domestic attendance. The service is projected to reach 500,000 subs by June 2019.

AMC said the service shows broad geographic and demographic appeal. Subs have utilized the service at each of AMC’s 640 locations throughout 44 states in the U.S. Membership levels are strong across all age and ethnicity groups. Indeed, 28% of enrolled members are under the age of 30.

“While one would think that the rate of signups will inevitably have to slow down at some point, enrollments now are continuing at quite a brisk pace, getting AMC to scale much sooner than we initially anticipated,” CEO Adam Aron said in a statement.

AMC subs are watching a wide variety of movies, including more than 150 different titles. Early program analysis indicates incremental movie-going frequency among subs is significant; 45% of A-List members were not previously signed up to its AMC Stubs loyalty programs.

The AMC A-List membership includes a 12-month price protection guarantee from the date of a member’s enrollment.

“We expect that AMC Stubs A-List will be a permanent part of our marketing activity going forward,” Aron said.

In an apparent dig at ongoing turmoil at rival MoviePass, Aron said the A-List program is designed with the same integrity as an airline frequent flyer program.

“We fervently believe that consumers have a basic right to expect to be able to rely on us to honor the commitments that we make, and that they not have to fear constant program changes that come without warning,” he said.

Indeed, Aron’s comments come the same day MoviePass announced it would begin restricting subscriber access to select movies and showtimes.

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.

 

 

 

 

Shareholder Lawsuits Filed Against MoviePass Owner

As expected, two shareholder class action lawsuits have been filed against Helios and Matheson Analytics, parent of ticket subscription service MoviePass, alleging officers in the company engaged in a “scheme to deceive the market and a course of conduct that artificially inflated the company’s stock price, and operated as a fraud or deceit on acquirers of the company’s common stock.”

HMNY is 92% owner of MoviePass which enables subscribers daily (now three times monthly) access to a theatrical screening for $9.95 monthly fee.

The cases include Chang v. Helios and Matheson Analytics Inc., 18-cv-06965, and Braxton v. Benson, 18-cv-07242 – both filed this month in U.S. District Court, Southern District of New York.

Defendants named include Ted Farnsworth, CEO of HMNY, and Stuart Benson, CFO.

In recent weeks as shareholders have jettisoned HMNY stock – now worth pennies despite a 1-for-250 shares reverse stock split – as financial disclosures reveal an untenable business model that borders on a pyramid scheme.

HMNY this week said its ability to continue as a “going concern” remains in doubt without additional funding.

During the same time law firms specializing in securities litigation have flooded the market soliciting potential plaintiffs against HMNY.

Plaintiff Jeffrey Chang claims the Farnsworth and Benson (Mitch Lowe, CEO of MoviePass, was not named in the suit) as officers of a publicly traded company had a responsibility to “disseminate prompt, accurate and truthful information” regarding the HMNY fiscal condition.

Instead, the complaint alleges Farnsworth, Benson (and Lowe) misrepresentations and omissions during the class period violated these specific requirements and obligations.

Specifically, the complaint alleges the executives are liable for making knowingly false statements through so-called “group-published” information. To buttress its case, the filing included every HMNY/MoviePass press release since it acquired majority control of the ticket service on Aug. 15, 2017.

Chang seeks a jury trial and unspecified compensatory damages and legal costs.

A HMNY representative was not immediately available for comment.

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.