MoviePass is getting probed by acting New York Attorney General Barbara Underwood, whose office is investigating whether or not the company misled investors about its financials, sources told The Post.
The AG’s office is specifically looking into Helios and Matheson, the corporate parent of the cash-strapped movie subscription service, a source said Wednesday.
A source familiar with the investigation told The Post that it has been filed under the Martin Act, a New York statute designed to combat fraud and protect investors. CNBC first reported the investigation.
A Helios and Matheson representative did not immediately respond to a request for comment.
Helios and Matheson took a controlling stake in MoviePass in August 2017 and introduced the now-infamous $9.95-per-month rate for unlimited films in theaters.
The dirt-cheap rate led to MoviePass going from 20,000 to 3 million subscribers in under a year, but it also resulted in unstoppable cash burn. In August, Helios reported a $127 million loss.
Over the past few months, MoviePass went offline several times due to Helios’s cash crunch, which also forced the company to take out a $5 million emergency loan. It has also changed MoviePass to a 3 movie-per-month service versus its original movie-a-day offering.
Shares of Helios and Matheson have tumbled nearly 100 percent since their all-time high in October 2017, and have been trading under $1 since late July.
Helios shares are currently worth 2 cents.
The company on Tuesday postponed a stockholder vote on a proposed 1-for-500 reverse stock split until Nov. 1. The reverse split was originally scheduled to take place on Thursday, but Helios said in a statement that it wants stockholders to “have more time to consider” the proposal.
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