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MoviePass is on the brink.
The subscription-based movie ticket start-up temporarily ran out of cash late Thursday, cutting off service to its more than three million subscribers.
Helios & Matheson, the data firm that owns 92 percent of MoviePass, said in a regulatory filing that it was forced to borrow $5 million to pay its “merchant and fulfillment processors.”
“If the Company is unable to make required payments to its merchant and fulfillment processors, the merchant and fulfillment processors may cease processing payments for [the company], which would cause a MoviePass service interruption,” Helios said Friday in a filing with the Securities and Exchange Commission.
We are still experiencing technical issues with our card-based check-in process and we are diligently working to resolve the issue. In the interim e-ticketing is working. We apologize for the inconvenience and appreciate your patience while we resolve this issue.
MoviePass confirmed that something was awry, tweeting on Thursday night that it was “investigating an issue that is preventing users from checking in to movies.” It said in a subsequent tweet that the problem was “not with our card processor partners.”
The company, which allows subscribers to see a movie a day for $9.95 a month, has been roiled by financial troubles in recent months. In an SEC filing dated July 10, Helios said it could lose at least $45 million this month alone.
In the same filing, the company said it had $13.7 million in available cash and roughly $32.2 million on deposit as it burns through an average of $26.9 million a month.
The firm’s stock price has plummeted this year, losing nearly all of its value. Helios shares tanked on Friday morning on the heels of the service outage.
Ted Farnsworth, the CEO of Helios, did not immediately return a phone message requesting comment. The firm has owned MoviePass since last August.
The leaders of the company have previously brushed off worries about its financial health. In a phone interview earlier this month, MoviePass CEO Mitch Lowe said naysayers should hold off on writing the company’s obituary.
“I’d say they’re going to be very surprised. Of course, I think they’re wrong.”
But the service faces some stiff competition.
AMC Theatres recently launched a rival program that allows subscribers to see three movies a week — including in premium IMAX and 3D formats — for $19.95 a month.
Alamo Drafthouse, an independent chain with theaters in about 10 states, is also testing out a subscription service of its own.
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