MoviePass Owner Helios and Matheson Analytics to Restate 3Q Financial Results

   By Aisha Al-Muslim 
 

MoviePass majority owner Helios and Matheson Analytics Inc. (HMNY) will restate financial results for the September-ended quarter after finding that it overstated revenue and understated its net loss.

The information technology services provider in a regulatory filing Tuesday said it will refile an amended report for the third quarter ended Sept. 30 "as soon as practicable." The company warned that the estimated impact is subject to change because the review hasn't been fully completed.

Helios' board and audit committee on Monday determined previously issued quarterly and year-to-date financial statements for Sept. 30 should no longer be relied upon, according to the filing. It found material weakness relating to subscription management as of Sept. 30 and through Dec. 31, and said that internal controls over financial reporting, disclosure controls and procedures weren't effective.

The company found that erroneous subscription recognitions resulted in the net loss being understated by about $6.6 million, the filing with the Securities and Exchange Commission said. The company also had an additional understatement of net loss of about $2.9 million due to a noncash error related to accounting for derivative securities.

The company also said it erroneously recognized up to about $5.9 million in revenue from MoviePass subscriptions that were suspended due to subscription service changes to which subscribers had not yet consented. It was also due to the erroneous recognition of up to about $700,000 in revenue from MoviePass subscriptions that had been terminated through refunds by Costco Wholesale Corp. (COST), according to the filing.

As of Jan. 1, the company implemented new software to help manage and account for subscriptions, including those that are terminated or suspended.

Helios said it should have posted a third-quarter net loss of $138.5 million, or 22 cents a share, instead of its initially reported $129.6 million, or 20 cents a share. Total revenue was $74.7 million, instead of the initially reported $81.3 million.

Helios has yet to release its fourth-quarter and full-year 2018 financial results.

In the third quarter, the company had said MoviePass, a movie-theater subscription service, experienced a significant decline in subscribers. Helios had flagged the drop in a securities filing in November, but didn't provide an exact figure.

MoviePass had 3.2 million subscribers as of Aug. 10, compared with 1 million in December 2017, according to an August filing.

Write to Aisha Al-Muslim at [e-mail]

(END) Dow Jones Newswires

March 12, 2019 11:23 ET (15:23 GMT)

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