MoviePass Parent Company Lost $137 Million in Q3 as Financial Future Looks Grim

Company says that as of Nov. 12 it had roughly $6.2 million in cash on hand

MoviePass’s parent company, data firm Helios and Matheson Analytics, reported on Thursday that it lost $137.2 million in the third quarter of 2018.

The company has been burning through cash and has struggled in recent months to continue to sufficiently raise capital.

“During this transitional period for Helios and MoviePass, we have been focused on reducing our burn rate and striving to improve our business model and we are very encouraged by our Q3 financial results,” Helios & Matheson CEO Ted Farnsworth said in a statement.

In its third-quarter filing with the Securities and Exchange Commission on Thursday, Helios said that revenue for the quarter came in at $81.3 million, which was much improved compared with the $1.2 million the company reported during the same period last year.

That revenue growth, however, has come at a steep cost. Since acquiring MoviePass in August 2017, Helios and Matheson has spent hundreds of millions of dollars.

In October, the company announced plans to spin-off MoviePass to create a new subsidiary that would become a separate publicly-traded company. Analysts and industry experts at the time told TheWrap that if the company were able to successfully spin MoviePass off, it wouldn’t bode well for the subscription movie-going service.

Helios and Matheson said in its filing that as of Nov. 12, the company has roughly $6.2 million in cash on hand and about $23.3 million on deposit with merchant processors for a total of approximately $29.5 million.

“Our cash and cash equivalents may not be sufficient to fund our operations for the near future and we may not be able to obtain additional financing,” the company said in the filing. “We will continue to require significant proceeds from sales of our debt or equity securities, However, we no longer have access to funds from the sale of shares of common stock in the ATM Offering and we will need to seek other sources of capital, of which there can be no assurance.”

To add to the company’s financial woes, Helios and Matheson is at risk of being delisted from the New York Stock Exchange. The company’s shares currently trade below 2 cents per share, and if the company is unable to boost its stock above $1 by Dec. 18, it could be delisted.

While there’s not a one-to-one cause for delisted companies going bankrupt, the SEC’s website stated that “In most instances, companies that file under Chapter 11 of the Bankruptcy Code are generally unable to meet the listing standards to continue to trade on Nasdaq or the New York Stock Exchange.”

Farnsworth, however, has said in the past that the company has never considered filing for bankruptcy.

Helios and Matheson canceled plans on Tuesday for what would have been its second reverse stock split in a matter of months in order to help boost shares back above $1.

The company is also under investigation for fraud by the New York State Attorney General’s office to determine if it misled investors about its finances.

Helios and Matheson was accused in August of defrauding shareholders with misleading information about the company’s financial standing in a lawsuit filed by Jeffrey Braxton against CEO Ted Farnsworth and CFO Stuart Benson.

Later that same month, Helios and 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.

The company’s stock has fallen more than 40 percent in the last three months and 100 percent in the year to date.