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MoviePass owner seeks stake in Emmett Furla Oasis Films, launch film production company

Last updated: 10:36 30 May 2018 EDT, First published: 10:09 30 May 2018 EDT

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Is Helios and Matheson Analytics future in the stars?

Helios and Matheson Analytics Inc (NASDAQ:HMNY), the parent company of MoviePass, said Wednesday that it has been granted an exclusive option to take over Emmett Furla Oasis (EFO) Films, which produced “Heist” with Robert De Niro and “VIce” with Bruce Willis, among other titles.

If the deal gets done, Helios will buy the complete film library and production slate of EFO films. Helios then aims to use Emmett Furla Oasis’s film-making expertise to launch a film production company MoviePass Films LLC.

The announcement of Helios’s new acquisition comes at a time when its investors are particularly alarmed about the company’s future prospects and its cash-draining business model.

Currently, the company’s main line of work is selling MoviePass subscriptions, which allow moviegoers to pay a monthly fee of US$9.95 to see as many movies as they’d like in most US theatres, but just one movie per day. The profitability of this business has been called into question as Helios pays theaters' full price for the discounted tickets, which is burning up its cash pile.

READ: MoviePass owner's shares in a death spiral as stock falls below US$1

Helios shares have fallen below US$1 in the past month after the company outlined how its paltry cash holdings fail to match its monthly spending figures. Helios’s cash reserves came to US$25.5mln at the close of April, which is not enough to meet its monthly deficit of US$21.7mln.

This week, however, Helios did offer investors a dose of rosy news, with the revelation that Citadel Securities, a big hedge fund, now has a 5.4% stake in the company.

READ: Helios and Matheson shares surge after Citadel Securities reveals stake

Helios has been engaged in the business of providing content for some time and its move to buy Emmett Furla Oasis will allow it to throw itself into the movie business in a meaningful way. Next month, Helios will release two films. The first is “American Animals” and the second is “Gotti”, which stars John Travolta as John Gotti.

“Since we began disrupting the movie industry with our unprecedented low-cost movie theater subscription service, MoviePass, we have envisioned owning and developing our own studio content and using the power of our several million subscribers to bolster the success of the box office for our films,” said Mitch Lowe, MoviePass’ chief executive. “I believe MoviePass Films will accelerate those efforts and demonstrate the power of MoviePass to drive movie theater attendance.”

Under the terms of its tie-up with EFO Films, Helios will own 51% of MoviePass Films LLC while EFO Films will control 49% of the company. The company will create new movies for release in theatres as well as via streaming services. Randall Emmett and George Furla will serve as the production company’s co-chief executives and its chairman of the board will be Ted Farnsworth.

The deal’s terms remain undisclosed, but the payment came in the form of cash and stock.

Helios shares traded down about 5% to US$0.45 in morning trade.

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on 03/21/2019