Subscription service MoviePass hasn’t been having a great 2018. Constant changes to its terms of service have created a growing sense of uncertainty about what customers actually get with their MoviePass subscriptions. The company’s flagship tier was scuttled, then brought back without any real explanation. And in April, an independent auditor for MoviePass parent company Helios & Matheson Analytics raised alarm bells by expressing “substantial doubt” that the company could stay in business. Bloomberg reports that an SEC filing today largely confirms that assessment, with Helios & Matheson acknowledging it has just $15.5 million in the bank, even though it’s been blowing through more than $21 million per month on average over the past seven months.

The future doesn’t look promising for the company, and its stock price has responded accordingly, with shares dropping more than 31 percent by the close of trading. The general assumption has been that MoviePass could never maintain its current business strategy over the long term, but these latest financial revelations appear to indicate a real inflection point. Each new report is damaging the most essential part of the MoviePass brand: the assumption that the service will stay in operation in some form, and that new subscribers will be able to get their money’s worth.

The bare financials in the Form 8-K filing are stark. As of April 30th, Helios & Matheson has $15.5 million in cash, with $27.9 million “on deposit” with the company’s various merchant processors. Those latter funds represent money from annual and other long-term subscriptions that MoviePass customers have already paid, and that Helios & Matheson will receive over the course of the year. The problem is how much money is going out. According to the filing, the company has spent an average of $21.7 million per month for the stretch between October 2017 through April 2018. Even if Helios were to receive all of its payments from merchant processors back, it barely has enough cash to stay afloat for two months before the well runs dry.

Cost-cutting explains many recent changes, even if MoviePass wasn’t transparent at the time

That explains many of the changes MoviePass has made over the past few months, even if the company wasn’t completely transparent about them at the time. The biggest one was the change to how many times MoviePass customers can see a given movie. Historically, the service was a true all-you-can-eat buffet, allowing subscribers to buy one ticket per day to any 2D movie at a supported theater, without question. When the company changed those rules to limit subscribers so they could only see a given movie once, no matter how long it runs in theaters, a support ticket stated, “we hope this will encourage you to see new movies and enjoy something different!” It turns out that was a blatant effort to cut costs, with today’s filing explaining that the move “enabled us to reduce our cash deficit during the first week of May 2018 by more than 35 [percent].”

There are a lot of ways to read that percentage, and in MoviePass’ defense, the company has also said that the goal was to prevent people from using MoviePass to buy tickets for friends who aren’t subscribers. But either way, a savings of more than a third represents a radical shift. Couple that with the fact that the most popular movie the first week of May was Avengers: Infinity War, whose astounding box-office performance is driven by repeat visits, and the connection seems clearer — MoviePass is openly trying to save money by limiting features its customers actively use. It isn’t a “test” or an “experiment,” as the company has claimed in the past; it’s intentionally making the subscriptions people have already paid for less useful because its business model is unsustainable.

Helios & Matheson isn’t naive enough to think the situation is tenable, however. The filing acknowledges that the company will need new investment, or proceeds from stock sales, to stay afloat. It also points out that MoviePass has reinstated its $9.95 “unlimited” plan. As a result, the statement says, “we believe our subscriber acquisitions and subscription revenues will continue to increase for the foreseeable future.”

MoviePass only works if the notion of it being a great deal stays alive

That may be the biggest misread of them all because, for the first time, MoviePass is facing a real perception problem. When Helios & Matheson first took over and dropped the service’s price to $9.95 a month, MoviePass was hailed as a savior, a digital disruptor offering customers a movie-ticket value that seemed too good to be true. (The fact that it threatened to undermine the industry it was profiting off of didn’t make much difference to customers at the time, but that’s not a new phenomenon; just ask book retailers how they feel about Amazon.) Consumers love a deal, and how those deals come to pass is largely left forgotten.

But that only works if the optics game of a subscription service being a massive deal stays alive. MoviePass has tried too hard, and too fast. It blocked out theaters without notifying subscribers, it framed its numbers to make it look more essential than it actually was, it limited access to a popular movie going up against a less-popular film MoviePass itself was advertising, and it tried to play hardball with AMC Theatres, the biggest chain in the world. Some consumers may be eternally willing to give the service a free pass because they got on board early enough to take full advantage of what it was offering. But newer subscribers are essential to any of MoviePass’ planned profit models, and they may be hard to come by if the public doesn’t believe the service will still be around by the time their subscriptions expire.

One untapped business opportunity that goes unmentioned in the SEC filing is revenue-sharing. Part of the MoviePass plan has been to get theater chains to cut the service in on ticket sales and concessions revenue it generates, which would offer a fresh stream of income right when Helios & Matheson needs it most. But major theater chains largely haven’t been interested in those sort of deals, and AMC has flat-out refused to even discuss it — leading to some of the AMC theater blackout stunts MoviePass pulled earlier in 2018.

“We may be required to reduce the scope of our planned growth or otherwise alter our business model.”

As it turns out, AMC wasn’t hurt by MoviePass not playing nice. On May 7th, the company announced year-over-year revenue growth of 8 percent for the first quarter of 2018, and CEO Adam Aron even took time to throw some shade. “Our views about subscription have not changed one iota since the August press statement that we put out on the first day of MoviePass’, in my opinion, ridiculous price reduction,” he said. He also noted that the company has no issue with subscription services in and of themselves. “They can be quite positive, actually, if they’re done rationally and intelligibly. But they have to be done at a price that is sustainable.”

That notion of sustainability is looking to be more important than ever. For MoviePass, it may prove to be an existential issue. “If we are unable to obtain sufficient amounts of additional capital,” reads the Helios & Matheson filing, “we may be required to reduce the scope of our planned growth or otherwise alter our business model, objectives and operations.”