MoviePass Drama Persists as Member of Parent's Board Resigns
(Bloomberg) -- The owner of MoviePass Inc., the hard-pressed movie-theater ticket subscription service, is facing more upheaval as a board member resigned after alleging management wasn’t forthcoming with information about finances and operations.
Carl J. Schramm resigned from the board on Aug. 25 at parent company Helios & Matheson Analytics Inc., according to a filing.
Management made “a number of important corporate decisions” without board knowledge or approval, or with “only a few hours of advance notice by email,” Schramm alleged in his resignation letter. He also said he “sought, often unsuccessfully, information about the company’s financial status and operations, and explanations of company strategy."
The movie-subscription service was a hit with customers when it was launched late last year -- and that turned out to be a major problem for Helios & Matheson. The controversial plan that let customers attend a movie every day for $9.95 a month turned into a massive cash drain because MoviePass had to pay full price for every ticket.
Helios & Matheson said in the filing that it is unaware of any unanswered requests for information by Schramm.
“The company firmly believes that it has kept the board fully informed and has provided all information needed for board members to exercise their responsibilities,” it said.
The company’s financial troubles became apparent in July when it disclosed that its service was interrupted because it couldn’t keep up with merchant payments. Helios & Matheson had a first-quarter loss from operations of $107.7 million, compared to a loss of $4.4. million a year earlier.
MoviePass was forced to backtrack several times by changing its terms and making it harder for subscribers to see movies. It is now also facing two class-action lawsuits alleging investors took a bath because the company didn’t come clean about being unable to pay its bills.
Helios & Matheson’s shares, which started the year trading above $1,800, have now lost almost 100 percent of their value. The stock closed Wednesday at just under 2 cents a share.
Schramm was a member of the company’s audit committee, the compensation committee, the nominating and corporate governance committee and the pricing committee. An email to an outside press official for Helios & Matheson wasn’t immediately returned.
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