More bad news for subscription movie ticket service MoviePass, which acknowledged yesterday that there was an unidentified issue preventing people from using their MoviePass credit cards to get tickets.
A regulatory filing from parent company Helios & Matheson offers more insight about what happened. The filing (first spotted by Business Insider) announces a “demand note” of $6.2 million, including $5 million in cash that the company borrowed. It goes on to explain:
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. 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.
In other words, it looks like MoviePass wasn’t able to pay one of its service providers, which led to the outage. In order to make those payments, it borrowed $5 million.
This doesn’t exactly inspire confidence in MoviePass’ finances. A Helios & Matheson filing from earlier this month suggested that the company was looking to raise up to $1.2 billion in equity and debt financing to fund MoviePass’ operations and growth.
Meanwhile, although the service is best-known for offering access to unlimited movie tickets for $9.95 per month, the specifics of the pricing model have been changing pretty frequently.