Hi, so here's a (lengthy) summary of my analysis. There's no other way to explain this...
1. Ted Farnsworth (as he proved in his latest interview) knew this was going to be a money-losing venture. That in itself isn't a bad thing for a startup company. What's bad is no venture capitalists trusts him and even fewer are willing to give him money. As a result, he has to resort to dilution. My calculations from weeks ago, proved accurate. I predicted over 200 million outstanding shares by now, and I believe we are there.
2. It's true there can only be a finite amount of dilution (limited by the 500 million total authorized shares they currently have. HMNY got close to that limit a few weeks ago, hence they had to get the note holders from November and January to agree to reduce the reserved share count from 200% to about 100%, in order for HMNY not to default. If HMNY defaults, bad things happen as note holders may want their money back immediately. HMNY has no such money...
3. After the agreement with note holders from point #2, they would have had to dilute another 60+ million shares since May 30th, in order to keep the lights on. This means they are very close, if not at the 500 million total shares. (200+ million outstanding + 270+ million reserved shares).
The only way they can continue to keep the lights on from here is:
a.) Find someone who will give the money. I seriously doubt that. They would need about $40+ million per month just to continue.
b.) Continue to dilute. The only way to do this is to get note holders to agree to reduce the 100% reserved shares down to 50%, or to authorize more shares above the 500 million limit, and then continue to dilute.
4. MoviePass, according to Ted Farnsworth, will be positive cash flow at 5 million subs. Note that this means they won't actually show a profit on the earnings report, but their revenue from subscriptions and whatever else MoviePass-related minus payment to movie theaters will be greater than zero (i.e. positive). However, they will still have General and Selling expenses, interest expenses, expenses for RedZone etc. In other words, they will still need to borrow money and dilute, even at 5 million subs!
5. I calculate they are close to 3 million, but slightly under it. BTW, I calculated in October they had about 600K subs when everyone and their mom on this board and other boards pumped 1-2 million subs. I was the closest human alive to calculate it as close as possible. I was off by only 25K. Read my post history :) So, they are NOWHERE near the 5 million mark. It's not projected until the end of the year. That's 4 more months away!
6. They will not be able to carry on like this for 4 more months. It's not financially possible.
Even the auditors have warned in their annual report. These auditors know math and the mumble jumble in those reports better than you or I, or possibly anyone on the boards anywhere.
So, my opinion? I wouldn't touch this until Ted Farnsworth has a real source of funding other than shareholders.
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