Many MoviePass subscribers reported not being able to use their cards last night. On Twitter, the company referred to the problem as “technical” and said it would work throughout the evening to fix the problem. It advised customers to hold off on using the card unless they were planning on going to a member theater that offered e-ticketing.
This morning in regulatory filings with the SEC, MoviePass’ parent company Helios and Matheson Analytics told a very different story: They ran out of money to pay its bills. As part of this morning’s filling, MoviePass announced it is taking out an emergency loan of $5 million that would be used to pay “merchant and fulfillment processors,” which should allow the company return to operation.
Yet even once the spigot gets turned back on, the question remains for how long. The loan’s terms are onerous; MoviePass will pay $1.2 million in “original issue discount” to receive $5 million cash, and the note is due next week. According to the terms of the loan, lender Hudson Bay can demand repayment of of more than $3 million on August 1, and the rest by August 5.
The clock has been ticking on the cash-strapped company for months. Back in May, the company reported they were burning through more than $20 million a month, with only $15.5 million cash on hand. To stem the bleeding, the company instituted policies like surge pricing and eliminating customers from seeing the same film twice, while announcing it would again issue more shares of Helios and Matheson stock in an effort to raise capital.
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IndieWire reached out to MoviePass for comment, and to confirm when services will resume.
We’ve determined this issue is not with our card processor partners and will be continuing to work on a fix throughout this evening and night. If you have not headed to the theater yet, we recommend waiting for a resolution or utilizing e-ticketing which is not impacted.
— MoviePass (@MoviePass) July 27, 2018