MoviePass' parent company admits investors can't rely on some of its previous financial statements, and says it underestimated losses
- MoviePass' parent company, Helios and Matheson Analytics (HMNY), said in a filing with the Securities and Exchange Commission on Tuesday that its previously issued quarterly and year-to-date financial statements were not accurate.
- The company said the errors related primarily to the "overstatement of subscription revenues" in the third quarter of 2018 for MoviePass.
- The result was an underestimated net loss for HMNY of $6.6 million.
In a filing with the Security and Exchange Commission on Tuesday, MoviePass' parent company, Helios and Matheson Analytics, informed investors that they should no longer rely on the accuracy of some of the company's previous financial statements."The board of directors of Helios and Matheson Analytics Inc. and the audit committee, following discussions with management, determined that the company's previously issued quarterly and year-to-date unaudited consolidated financial statements for September 30, 2018, should no longer be relied upon," the filing to the SEC stated.
"Similarly, related press releases, earnings releases, and investor communications describing the Company's financial statements for these periods should no longer be relied upon," HMNY continued.
According to the filing, the errors related primarily to the "overstatement of subscription revenues" in the third quarter of 2018. That included the refunds of MoviePass subscriptions by Costco, back when the wholesale company was providing MoviePass subscription offers to its members, which came out to approximately $700,000 of revenue. And it also included the "erroneous recognition" of approximately $5.9 million of revenue from MoviePass subscriptions that were suspended due to subscription changes made by the company.
This resulted in an underestimated net loss for HMNY of approximately $6.6 million. That and other non-cash errors resulted in HMNY reporting its quarter losses as of September 2018 originally reported at over $137 million to now being over $146 million.
But those numbers could change as well.
"Because the Company has not yet fully completed its review, the estimated impact set forth above is preliminary and subject to change," HMNY said.Read more: MoviePass lays off its entire business development team as the company continues to tailspin
This continues a bad string of months for HMNY and MoviePass.
The Nasdaq delisted HMNY in February, and in early March MoviePass closed up its Los Angeles office after firing its business development team.
HMNY was not available for further comment to Business Insider.