Enjoy your MoviePass subscriptions while you've got one. They may not work for much longer.
But recently filed regulatory documents — as well as the company's recent stock performance — indicate it may be in deeper trouble than is widely appreciated.
In the first quarter, it burned through cash at a faster rate than it previously reported. It's so low on cash that it says it's going to need to sell more equity in the company to the public this month to raise funds, which would mark the third time this year it's tapped the public markets. But because of its recent stock slump, that tap may run dry before the year is out.
"Without additional funding, the company will not have sufficient funds to meet its obligations within one year," Helios and Matheson said in its quarterly report, filed on Tuesday.
It continued: "Without raising additional capital, there is substantial doubt about the company's ability to continue as a going concern through May 15, 2019."
MoviePass is burning through cash at a faster-than-reported rate
Helios and Matheson's troubles stem from MoviePass, which has become the core of its business. As its fans know well, MoviePass offers a $10-a-month service that allows subscribers to see a movie-a-day in the theaters.
When subscribers go see a movie, the company generally pays the theater the retail price of the tickets on behalf of those subscribers. Because ticket prices in many places are more than $10 and because many subscribers see more than one movie a month, many customers are getting a great deal — and MoviePass is losing money hand over fist.
In the first quarter, for example, Helios and Matheson posted $49.4 million in sales — $47.2 million of which came from MoviePass subscriptions. But the company's direct costs associated with those sales were $136 million in the period, almost all of which was likely due to buying movie tickets for its customers. In other words, on average, MoviePass customers are getting about $28 in tickets each month for their $10 subscription.
Source : http://www.businessinsider.com/helios-and-matheson-is-burning-through-cash-going-back-to-the-markets-2018-5