MoviePass shareholders sue as company reports $126 million loss

Angelo Anderson
August 16, 2018

"Without raising additional capital, there is substantial doubt about the company's ability to continue as a going concern through August 14, 2019", Helios said in its new 10-Q filing.

Helios and Matheson, the owner of the subscription movie service, posted a $126.6 million loss in the second quarter, dwarfing its $2.7 million loss in the year ago period. Most of that money, more than $150 million, has been spent in the last quarter.

To add more headaches, one shareholder has filed a class action lawsuit in the Southern District court of NY against Helios & Matheson, plus its CEO Ted Farnsworth and CFO Stuart Benson, for being misled about the company's business and prospects.

It's been a rough few weeks for MoviePass, and its parent company Helios and Matheson (HMNY), but it looks like things aren't going to be getting easier any time soon.


It's the latest move by the service to reduce its cash burn. The company said it intends to "vigorously defend" itself and believes the complaints are "without merit". Parent company Helios and Matheson, CEO Ted Farnsworth, and CFO Stuart Benson were named in the suit (which you can read here).

Earlier this month, MoviePass quoted Mark Twain in a release that declared, "talk of our demise is greatly exaggerated". If the new plan, which went into effect Wednesday, proves to be another failure, the company could quickly blow through its remaining $175.3 million of total assets left on hand, according to CNBC. It temporarily raised its prices and limited access to some blockbuster movies.

Wall Street has largely pulled the plug on the company, which in late July attempted to increase its price and avert being delisted from the Nasdaq with a reverse 250-to-1 stock split. The company had to take out an emergency loan last month just to keep the service up and running and it's clear that recent changes like limiting subscribers to three movies a month and blacking out some first-run flicks wasn't very popular. By Wednesday morning, it was trading at about 4 cents per share.

Other reports by Iphone Fresh

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