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Drew Osumi

In an SEC filing today, MoviePass parent Helios & Matheson disclosed that it had only $15.5 million in available cash at the end of April, plus $27.9 million on deposit with merchants.

Even though the total funds available is $43.4 million, thats not much more than the companys monthly expenses of late, which are nearly $22 million.

The news has sent shares of Helios & Matheson plunging. In mid-day trading, they had fallen 29% to $1.50 a share.

Moviepass

“In 2018, we expect our cash deficit from month to month will vary significantly,” the filing says, “based on the amount of movie tickets MoviePass is required to purchase for its subscribers during the month, the amount we spend on acquiring financial interests in additional movies through MoviePass Ventures, the amount we may spend on any other types of acquisitions, and our ability to develop the MoviePass business model in the near term generally, including developing and growing sources of revenue other than subscription revenue. Because the length of time and costs associated with the development of the MoviePass and MoviePass Ventures business model is highly uncertain, we are unable to estimate the actual funds we will require.”

If adequate funding, either through an existing equity distribution agreement or other sources, fails to materialize, the filing adds, “we may be required to reduce the scope of our planned growth or otherwise alter our business model, objectives and operations, which could harm our business, financial condition and operating results.”

On the plus side, the filing pointed out, MoviePass implemented two new measures in April that have already trimmed the companys cash deficit in May by 35%. The measures are new technology designed to prevent subscribers from sharing their passes with non-subscribers, and a new restriction allowing members to see a movie only once. (Farewell, daily Avengers matinees, in other words.)

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Many stakeholders in the theatrical movie ecosystem, especially exhibitors, have long expressed skepticism about the viability of MoviePass given its $9.95 monthly subscription price. The company pays for tickets, which it then furnishes subscribers for a flat rate. Exhibitors have been wary because, even though the ticket sales are booked as ticket revenue, the subscription concept is seen as potentially damaging to their already uncertain long-term value in the media food chain. Studios, too, fear that the theatrical experience could be degraded if flat-rate pricing turns it into more of a commodity than an event experience.

Yesterday, during top exhibitor AMC Entertainments quarterly earnings call, CEO Adam Aron repeated his longstanding concerns about MoviePass. Aron said the company paid about $12 a ticket for hundreds of thousands of tickets in March and April, but subscribers had attended AMC theaters less than three times apiece each month.

At the current subscription price, Aron said, “There is not enough money to spread around MoviePass and Hollywood studios and theater operators so that Hollywood can make quality movies and theaters can operate quality theaters.”

MoviePass, which recently acquired MovieFone and emphasized digital data collection during its rise to more than 2 million subscribers, sees big potential in selling the data to brands and other third parties.

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