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The Attorney General of New York State, Barbara Underwood, has opened an investigation into the parent company MoviePass, a popular movie ticket subscription service, aimed at allegedly misleading investors, according to CNBC.
The Attorney General's office is investigating whether Helios and Matheson (HMNY) "misled the investor community about the company's financial statements," CNBC reported, citing a "close source of the record." The investigation is in its "early stages", according to the report.
Neither the Attorney General's office nor the company immediately returned Business Insider's requests for comment.
Business Insider reported in August that Helios and Matheson had covered hundreds of millions of losses by selling millions of new shares to shareholders, and that the company's CEO, Ted Farnsworth, had made several promises. to investors at a shareholder meeting that took place shortly thereafter.
Business Insider also interviewed shareholders of Helios and Matheson in July, who expressed frustration with management. Many had seen their stake drop by more than 99% and some had lost more than $ 100,000. Several analysts have also been misled by Wall Street analysts, who have maintained the "buy-in" ratings of equities, while their banks have earned millions of commissions selling Helios and Matheson shares when they sell their shares. collapsed.
Helios and Matheson have a long and complicated history that Business Insider described in an article in July. The company was formerly the American subsidiary of an Indian company (Helios and Matheson Information Technology) accused of defrauding at least 5,000 creditors in India, including banks and elderly people.
HMIT began disengaging from US operations in 2016 when HMNY merged with the Farnsworth, Zone Technologies, cash-losing start-up. Since then, HMIT's share of ownership has decreased, even though the directors of the Indian company remain associated with the owner of MoviePass.
Helios and Matheson, New York, bought MoviePass in August of last year and drastically lowered the monthly price to $ 9.95, which allowed the company to lose money on some customers who did not only one movie a month. This move has resulted in an unprecedented user base and equal losses.
In recent months, MoviePass has attempted to control its cash consumption by introducing unpopular features to users, such as limiting schedules and limiting usage to three movies per month. But he continued to hedge the losses by selling new shares and diluting the old shareholders. This strategy has angered many investors.
Helios and Matheson announced Tuesday the postponement of a crucial shareholder meeting on November 1st. At this meeting, Helios and Matheson will seek the approval of an amendment to a single reverse division of up to 1 per 500 shares. . The 1-for-500 reverse division is Helios and Matheson's latest attempt to revive the stock, which, if it continued trading at less than $ 1, could be delisted from the Nasdaq rating. from here mid-December.
However, the last reverse conversions adopted in July by Helios and Matheson failed to stabilize the stock price as they began to collapse immediately after the inverted division of 1: 250.
The Helios and Matheson shares traded around $ 0.02 on Wednesday.
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