"The $5.0 million cash proceeds received from the Demand Note will be used by the Company to pay the Company's merchant and fulfillment processors", the SEC filing explained. "Helios and Matheson missed a payment to one of its fulfillment processors, and that contractor temporarily refused to process payments for MoviePass".
Moviegoers dependent on their MoviePass subscriptions were in for a surprise Thursday night when the convenient online ticketing service failed to work. But in a tweet late Thursday, MoviePass said that it recommended that users wait for a resolution or use e-ticketing, which it said had not been affected. In turn, that data is valuable to a whole lot of advertisers and, in theory, MoviePass would be able to grow to the point where they dictate terms to movie theaters and even film studios based on control of that data.
Or at least that's what MoviePass said when announcing the feature.
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Helios and Matheson, MoviePass' parent company, borrowed the money to try to keep operating from Hudson Bay Capital Management, according to the filing.
MoviePass has also faced increasing competition from rival services like AMC Stubs and Sinemia, both of which offer exclusive perks to subscribers, like free concession vouchers and access to Imax and 3D showings, which MoviePass is yet to offer. Some users recognise that the service was too affordable to last forever, and are just enjoying it while they can. For us, it's an inconvenience.
HMNY has owned MoviePass since August 2017.
But outside observers have questioned the company's business model, which requires paying full price to theaters on the bet that subscribers will see few movies each month. Friday's slump, however, sent shares back down to $4.25 apiece. The stock ended the week down almost 71 percent Friday, closing at $2.05 a share.