MoviePass has been forced to borrow $5m to remain in service after its users experienced technical difficulties due to the firm’s lack of money.
The owner of MoviePass, Helios and Matheson Analytics, said that it borrowed $5m in cash because the company was unable to make certain required payments, according to a Securities and Exchange Commission filing.
“The $5.0 million cash proceeds received from the Demand Note will be used by the Company to pay the Company’s merchant and fulfilment processors,” the filing said.
“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 MoviePass, Inc. (‘MoviePass’), which would cause a MoviePass service interruption. Such a service interruption occurred on July 26, 2018.”
According to the filing, Helios and Matheson borrowed a total of $6.2m from Hudson Bay Capital Management, “which includes $5.0 million in cash borrowed by the Company from the Holder and $1.2m of original issue discount,” it said.
After complaints of the app and cards not working, MoviePass said in a tweet that it is “working towards a fix on this technical issue. In the meantime, all e-ticketing remains fully functional.”
Last week it was reported that Helios and Matheson’s share price bombed after a rescue plan did little to assure investors.
Helios and Matheson first received notice that it could be delisted from the Nasdaq in June, after failing to maintain a share price above the minimum $1 despite MoviePass having more than three million members.