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MoviePass operations under investigation by New York AG

Helios and Matheson has struggled financially and is

Helios and Matheson has struggled financially and is facing class-action lawsuits by investors claiming the company failed to disclose aspects of a business model that were unsustainable. Photo Credit: AP/Darron Cummings

The company that runs the beleaguered MoviePass discount service for movie tickets is being investigated by the New York attorney general on allegations that it misled investors.

Parent company Helios and Matheson of Manhattan said in a prepared statement it is aware of the investigation but it believes "our public disclosures have been complete, timely and truthful and we have not misled investors."

The investigation was reported earlier by CNBC.

Helios and Matheson has struggled financially and is facing class-action lawsuits filed on behalf of investors claiming the company failed to disclose aspects of a business model that were unsustainable.

MoviePass drew in millions of subscribers, luring them with a $10 monthly rate. But that proved costly. Because MoviePass typically pays theaters the full cost of tickets — $15 or more in big cities — a single movie can put the service in the red. At one point Helios and Matheson had to take out a $5 million emergency loan to pay its payment processors after missed payments resulted in service outages.

Over the summer MoviePass walked back a planned 50 percent price increase following a subscriber backlash. But the company imposed a cap of three movies per month, instead of one every day.

Shares of Helios and Matheson Analytics Inc., which are in danger of being delisted by Nasdaq because they had fallen to about a penny, fell another 14 percent Thursday to close at 0.0172 cents. A year ago the shares closed at $4.07.

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