MoviePass takes out loan to stay in business

Company’s cash, its customers’ patience are running low

The lights at MoviePass will stay on — for now.

In a filing with the Securities and Exchange Commission on Friday, the embattled movie theater subscription company said it has taken out an emergency loan of $6 million, $5 million of which will be used to pay its partners and iron out a week of service snags.

How long that money will last, however, remains to be seen.

“The $5 million cash proceeds received from the demand note will be used by the company to pay [its] merchant and fulfillment processors,” Helios and Matheson, MoviePass’ primary owner, said in the SEC filing. “If the company is unable to make required payments … the merchant and fulfillment processors may cease processing payments for MoviePass, which would cause a MoviePass service interruption.”

That’s the kind of interruption that happened to MoviePass on Thursday, the filing said.

Users had been complaining all week that the MoviePass app was not working properly and theater admissions were not being processed. On Friday, MoviePass steered customers toward its e-ticketing service.

MoviePass has enchanted moviegoers — and sent ripples of fear through the traditional theater business — since lowering its price to $10 for a wideranging monthly subscription last summer. More than 2 million people subscribe to the service.

But outside observers have questioned the company’s business model, which requires paying full price to theaters on the bet that subscribers will see few movies each month.

Wall Street has been skeptical of MoviePass’ viability, sending the company stock down as low as 8 cents per share this month after a 12 month high of nearly $32 in October.