What to Know
- $5 million of the loan will be used to help MoviePass make payments to its "merchant and fulfillment processors"
- Service issues were the result of the company temporarily running out of cash
- MoviePass allows users to see one movie per day for a $9.95 monthly fee
The parent company of movie subscription service MoviePass received a loan worth more than $6 million after a “service interruption” Thursday prevented it from making required payments, according to a Securities and Exchange Commission filing.
According to the filing, $5 million of the loan received by Helios and Matheson will be used to help MoviePass make payments to its “merchant and fulfillment processors.”
If it fails to do so, the processors would stop processing payments. That appears to have been what happened on Thursday for the company's more than three million subscribers.
The filing notes: "Such a service interruption occurred on July 26, 2018."
Moviegoers at the time complained on social media that they were unable to check-in. MoviePass had said Thursday on Twitter it was "experiencing technical issues with our card-based check-in process" and "diligently working to resolve the issue."
A spokesperson for MoviePass gave NBC the following statement: "We apologize for the inconvenience caused by a temporary outage in our app over the past day. We have handled the issues on the back-end, and our app is now up-and-running with stability at 100%. We thank our members and our community for their patience and ongoing support, and we appreciate their commitment to our vision as we revolutionize the movie industry. We’ve also posted a letter to subscribers on our social media channels and in our app communicating adjustments to the service and our plans for the future."
“Such service interruptions could have a material adverse effect on MoviePass' ability to retain its subscribers,” the SEC filing says. “This would have an adverse effect on the Company’s financial position and results of operations.”
The loan comes after Helios said in a July 10 SEC filing that it could lose at least $45 million this month, NBC News reported. The company said then it had more than $13 million available in cash.
U.S. & World
MoviePass CEO Mitch Lowe told NBC News earlier this month that customers shouldn’t be concerned about the company’s future.
MoviePass allows users to see one movie per day for a $9.95 monthly fee.
In a statement last summer, AMC called the MoviePass business model “shaky and unsustainable.” In June AMC unveiled a rival subscription program.
