The office of New York Attorney General has issued an investigation of Helios & Matheson, checking whether parent company of MoviePass misled sponsors, as per the media reports. Investigators are checking the firm’s financial disclosure employing the Martin Act, an anti-fraud state regulation that permits law enforcement organizations to investigate alleged securities fraud and bring criminal or civil charges.
MoviePass verified the investigation, claiming that it is helping the inquiry issued by New York Attorney General. “We think our public disclosures have been timely, complete, and truthful and we have not misled sponsors,” Helios & Matheson claimed to the media in an interview. “We look forward to the chance to show this to the Attorney General of New York,” it further added.
This development marks one more hold up for MoviePass, which clocked a staggering $124.6 Million working loss in its quarter of June and was hit by a lawsuit from a shareholder. The lawsuit was filed in August 2018 and alleged that investors underwent losses as they were misled about the firm’s business and its plans.
On a similar note, MoviePass earlier informed regulators that it wishes to sell the firm in debt and stock securities. MoviePass blew up in popularity due to its low cost. For only $10 per month, almost the price of a movie ticket in many areas, MoviePass users can see a movie each day.
But the firm loses cash when its users employ a pass, as the firm must pay for the tickets to the theaters. Earlier SEC filings unveiled that the firm was burning via a standard $21.7 Million loss each month running the service. In May 2018, it made a loss of almost $40 Million. Earlier, Helios & Matheson claimed in a different SEC paper that it had only made $18.5 Million in cash, in addition to the $30.3 Million in accounts receivable.