- The former chairman of MoviePass is returning to the entertainment business with a new media and entertainment venture, Zash.
- Zash was cofounded by Ted Farnsworth, who ran MoviePass' parent company, and two investors who have ties to Triller and TikTok.
- MoviePass let subscribers see a movie per day in theaters for $10 per month and burned hundreds of millions of dollars before going bankrupt.
- The Zash announcement comes after Farnsworth and other execs settled in December a lawsuit with investors in MoviePass' parent company who alleged they'd been misled.
- Visit Business Insider's homepage for more stories.
The former chairman of MoviePass last week revealed his return to the entertainment business, roughly one month after he settled a securities lawsuit tied to the shuttered movie-ticket-subscription service, which burned hundreds of millions of dollars before going bankrupt.
Ted Farnsworth, the former CEO and chairman of MoviePass parent company Helios and Matheson Analytics, announced on Thursday a new holding company that he cofounded with two investors who have ties to short-form-video services Triller and TikTok.
The company, called Zash Global Media and Entertainment, announced a reverse merger with publicly traded company Vinco Ventures, which is listed on the Nasdaq. The combined company will invest in and acquire "media, entertainment, and content-focused technology companies," according to the announcement.
Like Vinco, Helios and Matheson was a publicly traded company listed on the Nasdaq. Farnsworth led Helios and Matheson as it acquired MoviePass in 2017 and flooded the market with new shares to cover MoviePass' massive losses. It wasn't enough to sustain the company and both Helios and Matheson and MoviePass filed for bankruptcy in early 2020. (Before declaring bankruptcy, Helios and Matheson was delisted from the Nasdaq in February 2019 after failing to meet listing standards by trading under $1 per share for months.)
Some investors participated in a class-action securities lawsuit against the parent company, Farnsworth, and two former MoviePass execs. In December, the court gave initial approval of an $8.25 million settlement with the individual defendants, including Farnsworth. The lawsuit stemmed from a 2018 complaint by an investor who alleged the company "misrepresented its prospects and operations" after acquiring MoviePass. MoviePass let subscribers see a movie per day in theaters for $10 per month, but paid full price to many movie theaters, which caused costs to balloon.
"The resolution speaks for itself and Mr. Farnsworth has nothing additional to add," a Zash spokesperson told Insider regarding the settlement.
Helios and Matheson was not Farnsworth's only experience in the realm of penny stocks. Farnsworth has registered more than 50 companies in the past three decades. Numerous companies that went public while Farnsworth was at the helm were valued at less than $1 a share within three years, Insider's Jason Guerrasio previously reported.
Read more: The definitive story of how a controversial Florida businessman blew up MoviePass and burned hundreds of millions
Farnsworth cofounded Zash with two entrepreneurs who boast connections to buzzy apps: Jaeson Ma, who said he was an early investor in Musical.ly (acquired by TikTok's parent company ByteDance in 2017) and Triller; and Vincent Butta, who was the operating chief at Triller's former owner, Carnegie Technologies.
Ma told Fox Business on Thursday that Zash has four main focus areas — short-form interactive content; premium TV and film; TV syndication; and augmented and virtual reality — though he did not detail the company's businesses in those areas.
Zash currently counts among its assets companies including American Syndicated Media, Fortress Media, and Faith X, according to filings.
Vinco said in a November filing, ahead of the Zash deal, that it might raise capital through the sale of $5 to $10 million in equity or take other measures to keep the business afloat as the pandemic presents new challenges. It also disclosed on January 25 a $12 million debt offering.
Shares of Vinco Ventures closed 196% higher at $4.56 on Thursday, when the Zash deal was announced. The stock closed at $4.16 on Monday.
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