Helios & Matheson Analytics, the owner of beleaguered e-ticketing company MoviePass, is in hot water.

The firm is facing a fraud investigation by the New York Attorney General, over claims that it misled investors.

It comes as the firm struggles to deal with its money-losing business model.

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Helios & Matheson, the owner of beleaguered e-ticketing company MoviePass, is in hot water as it now faces a fraud investigation by NY's Attorney General alleging it misled investors

'We've launched a securities fraud investigation into @MoviePass' parent company,' New York Attorney General Barbara Underwood said in a tweet.

'My office is committed to protecting New York investors and the integrity of our financial markets.'

The probe was first reported by CNBC, which said Underwood is using the Martin Act, a powerful New York State statute that allows the attorney general to go after suspected instances of fraud.

As part of the statute, the attorney general can bring either criminal or civil chargies against defendants.

The investigation is still in the early stages, according to CNBC.

'We are aware of the New York Attorney General's inquiry and are fully cooperating,' Helios and Matheson said in a statement.

'We believe our public disclosures have been complete, timely and truthful and we have not misled investors.

'We look forward to the opportunity to demonstrate that to the New York Attorney General,' the firm added.

It comes as Helios & Matheson CEO Ted Farnsworth indicated that MoviePass had secured $65 million in new funding last month.

He also insisted Moviepass was not going bankrupt, according to the Wrap.

The company has not provided additional details on the new investment.

'We're still here, and we're not going anywhere,' Farnsworth told the Wrap.

'We're doing [mergers and acquisitions], we're looking at all kinds of acquisitions at any given time and we'll grow the company that way and I think you'll see over the next few weeks.'

Moviepass has experienced a tumultuous last few months, as the service was temporarily shut down in July after its owner ran out of cash.

The CEO of Moviepass parent Helios & Matheson, Ted Farnsworth (far right), claims the firm 'isn't going anywhere,' and is looking to mergers and acquisitions as a way to stay afloat

The firm was forced to take out a $5 million emergency loan to pay its payment processors after it missed payments, forcing the site to go offline for a brief period of time.

What's more, as Helios & Matheson has grappled with financial setbacks, it has also gotten hammered on Wall Street, with its stock tumbling over 99 percent in the last three months.

It made a last-ditch effort to save some cash by announcing changes to its monthly subscription plan.

In August, Moviepass attempted to raise its monthly subscription fee to $15 per month.

Users immediately criticized the move, prompting the firm to keep the rate at $10 a month.

However, the firm announced it would impose a cap of three movies per month, instead of one every day.

Moviepass rival AMC said its subscription service, 'Stubs A-list' had already amassed 400,000 subscribers. The service lets users watch three movies per week for $19.95 per month

WHAT IS MOVIEPASS? MoviePass is a discount movie ticket service that allows users to see multiple movies per month for a flat rate. It's grown to 3 million subscribers, from about 20,000, since it slashed monthly rates nearly a year ago to $10, from as high as $50. The firm changed its business model last summer to offer a Netflix-style subscription that lets you see a movie a day for a flat fee of $9.95 a month. But, 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, and its financial stability has come increasingly into question. In summer 2018, MoviePass revealed a plan to raise its monthly fee by 50% to $15, and allow subscribers to see one movie per day. Days later, it backtracked on the plan. It now says it will continue to charge just $10, but you can only see three movies per month. In recent months, MoviePass also stopped letting subscribers view the same movie multiple times and began requiring moviegoers to send photographs of ticket stubs as proof. Advertisement

So far, that move seems to be paying off for Moviepass, according to Farnsworth.

'People are going to less than one movie a month,' he told the wrap. 'So technically, subscription alone right now is doing just fine, now it's tacking on all the other things on top of it.'

Now, the firm is looking to diversify its business model by offering access to not just big ticket titles, but also indie movies, as well as ramping up its targeted marketing efforts, Farnsworth said.

However, skeptics have pointed out that Moviepass has been known to give numbers that don't exactly pan out, so many are taking the announcement of a fresh funding round with a grain of salt.

The move comes as one of Moviepass' foremost competitors appears to be taking off.

AMC's 'Stubs A-List' subscription service, which lets users see three movies per week for $19.95 per month, said it had amassed 400,000 subscribers after just 14 weeks.

The theater chain said it had hoped to have 500,000 subscribers by the end of the year and it seems well on its way to achieving that goal.