MoviePass Owner Cancels Reverse Stock Split as Nasdaq Delisting Looms

Helios & Matheson could be delisted as early as next month if it can’t get its stock back above $1

MoviePass Studio Movie Grill partnership

Helios & Matheson, the parent company of MoviePass, announced in a public filing on Tuesday that it is canceling a shareholder vote for a second stock split, warning that it faces delisting from Nasdaq if its stock value remains below one dollar.

In the filing, Helios said that the company “does not expect to have the requisite stockholder votes” to approve a reverse stock split, which would have been set at a range between 1-for-2 shares and 1-for-500 shares. Helios shareholders had previously approved a reverse split in July, briefly raising the stock’s value as high as $22.50 a share. But the stock price quickly dropped and is currently valued at two cents a share.

Helios also warned in its filing that it could be delisted from Nasdaq as early as Dec. 18 if its stock price does not rise above one dollar and requests for a deadline extension are denied.

Helios & Matheson purchased the subscription ticket service MoviePass in August 2017, announcing on the same day of the purchase that they would offer a movie ticket per day to subscribers for just $9.95 per month. Helios’ stock peaked in October 2017 at $5,100/share, but dropped below a dollar over the course of 2018 as MoviePass made multiple changes to its model, including removing major releases like “Mission: Impossible — Fallout” entirely from its ticket purchasing app.

Currently, MoviePass allows for three movie tickets a month but reserves the right to remove in-demand films from availability. Meanwhile, AMC Theaters, which has publicly and repeatedly criticized MoviePass’ model over the past year, released its own competitor called A-List, which allows for three tickets per week for $19.95/month at AMC locations, with premium formats like IMAX and 3D included. The service was launched in July and already has over 500,000 subscribers

And as the competition increases, Helios & Matheson faces an investigation by the New York Attorney General’s office, which is investigating claims that the company misled investors. Helios & Matheson was accused in August of defrauding shareholders with misleading information about the company’s financial standing according to a lawsuit filed by Jeffrey Braxton against CEO Ted Farnsworth and CFO Stuart Benson.

Later that same month, Helios & Matheson board member Carl J. Schramm resigned from his seat, saying that the ticketing company withheld important financial information and made influential decisions without the board’s input.

Despite this, Helios & Matheson has moved forward with its MoviePass plans, announcing its intention to split the service off as a separate company last month. That includes both the subscription service and its fledgling film production division, MoviePass Films — which was developed after the company bought an ownership stake in Emmett Furla Oasis Films — and its movie acquisition company, MoviePass Ventures.

“We believe this new vertically integrated entertainment ecosystem, if achieved, would provide a sharper market focus, and that the combination of these four business lines under the MoviePass Entertainment umbrella would produce substantial synergies that we believe will generate value for our shareholders, subscribers, and business partners,” Helios CEO Ted Farnsworth said in a statement announcing the planned spinoff.