A board member of subscription movie ticket service MoviePass’ parent company Helios and Matheson resigned on Thursday, alleging that the embattled company withheld key financial information from board members as it attempted to stay afloat while burning millions in cash.
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In a resignation letter to MoviePass CEO Theodore Farnsworth, the board member, Carl Schramm, said he was unable to obtain details related to the company’s “financial status and operations” as well as its business strategy. Schramm said the company’s management repeatedly made business decisions without giving board members sufficient time to parse the details and react.
“These concerns have increased substantially over the past eight weeks as management apparently has made a number of important corporate decisions and executed significant transactions either without Board knowledge or approval, or in Board meetings initiated with only a few hours of advance notice by email,” Schramm said in the letter, obtained by Deadline.
Schramm’s resignation occurred with MoviePass in the midst of a drastic restructuring to alleviate massive cash losses. The service, which originally allowed subscribers to see an unlimited number of movies for a monthly fee, recently limited customers to three movies per month.
Helios and Matheson shares have lost 99 percent of their value since June and were trading for less than a penny each on Thursday. The company reported an operating loss of $126.6 million in its most recent quarter, but said it had trimmed its cash deficit to about $12 million per month.
The MoviePass parent denied Schramm’s accusations in a 8-K filing on Thursday.
“The company is unaware of any unanswered requests for information by Mr. Schramm,” the filing said. “The board and committees of which Mr. Schramm was a member have met at least 25 times at duly convened meetings thus far in 2018, and the company firmly believes that it has kept the board fully informed and has provided all information needed for Board members to exercise their responsibilities.”
Helios and Matheson faces at least two pending shareholder lawsuits related to allegations that it withheld key financial information.