MoviePass continues its downward spiral as New York Attorney General Barbara Underwood launches an investigation to see if their parent company misled investors. The too good to be true movie theater subscription service launched into popularity in the summer of 2017 when it slashed its monthly fee to $9.95 and let subscribers see as many movies as they wanted, limited to one per day. Movie theaters were not happy about the new business model, and the company soon became too popular to make a profit, bleeding out millions of dollars in the process. The service lost $127 million in the second quarter of 2018 alone.

Now, New York Attorney General Barbara Underwood is looking into MoviePass parent company Helios & Matheson to see if the company used illegal business practices to lure in potential investors. Underwood is using the Martin Act, which is a statute put in place to protect New York investors and the "integrity of the financial markets from fraud." According to sources, the investigation is in the very early stages at this time. Helios & Matheson released a statement in regard to the matter. The statement reads.

"We are aware of the New York Attorney General's inquiry and are fully cooperating. 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."

Even as the MoviePass ship is clearly sinking, the company has always maintained that everything is running smoothly, even as subscribers tear the company apart online. Even looking at the business model from an outsider's perspective, it doesn't look sustainable and seems like there were so many promises made that they could not keep. The only hope that the company really had was that more subscribers would sign up to offset the money that they were bleeding out on a daily basis.

After beginning to lose a bunch of money, MoviePass started taking out emergency loans, while beginning to add restrictions to their service. Subscribers were blocked from new releases and were later not able to see movies during peak hours of operation. Then, the service completely stopped working for some subscribers, while others found out that their subscriptions had been terminated by MoviePass. Users are now able to see three movies a month, which is a far cry from being able to go to theaters once a day.

Related: MoviePass Could Be Gone in Just Two Months

While nothing has been proven at this time in terms of misleading investors, it seems that it's only a matter of time before MoviePass closes up shop for good. Subscribers have been burned too many times and the attorney general launching an investigation is definitely not a good sign by any means. Since news of the investigation became public, MoviePass stock prices fell 3 percent, bringing the total stock price down to 2 cents per share. CNBC was the first to report the MoviePass legal woes.