Auditor: 'Substantial Doubt' About Sustainability Of MoviePass

The independent auditor of Helios & Matheson, the parent company of the subscription movie service MoviePass, has told the company it has “substantial doubt” about the viability of the service.

That is according to the company’s annual report, which was filed with the Securities and Exchange Commission on Tuesday.

“Our auditors’ doubts are based on our incurring significant net losses and our working capital position,” the report says. “Our ability to continue as a going concern will be determined by our ability to obtain additional funding in the short term to enable us to continue the development and integration of our MoviePass business.”

"For the foreseeable future, MoviePass expects to fund its operations from additional debt or equity offerings and increased revenue from MoviePass subscribers and ancillary revenue streams,” the report added.

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MoviePass lets its subscribers pay a low monthly fee (currently as low as $7.95 per month) and see as many movies as they want, at almost every theater. In cities like New York, seeing one movie per month is more than enough to offset the cost of the subscription.

The company has said it plans to leverage the data it has gathered about its users to generate revenue, including through advertising. So far, however, the company’s primary source of revenue remains subscription fees.

The annual report suggests that the company has the resources to operate for the next year, but will need to secure new financing or turn on the data spigot in order to continue beyond that time.

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