The retailer's future remains in the hands of founder Peter Simon, who committed £30m in loans to support the business following its company voluntary arrangement (CVA) restructuring deal.
Monsoon Accessorize said it believes it can continue using £12m of the owner's loans, but may need to call on Mr Simon for the extra £18m unsecured loan if trading conditions substantially worsen, the accounts said.
But the company's auditors said that management forecasts show targets are set to be missed, meaning access to a further £18m to keep the business afloat may not be available.
The report, signed by auditors at BDO, says covenants “are expected to be breached”.
If that happened, it would be up to Mr Simon to decide whether to hand the money over to the business to continue trading, renegotiate a new loan deal, or let the retailer collapse.
The auditors said the fact that Mr Simon could choose not to hand over the £18m facility if covenants are breached means “there can be no guarantee that funding sources will be available should they be needed”.
The company's ability to continue as a “going concern” therefore hangs on its ability to trade using just the £12m loan, or ensure it can access the extra funding, the accounts said.
However, Monsoon Accessorize said it has performed ahead of forecasts for the first month of the new financial year.
The company also delivered positive underlying profits, of £1.2m in the 2018 full-year, and has continued to post positive earnings for the 2019 full-year.
The group said that trading since 2018 has been “extremely difficult” as it battled “depressed consumer spending” in the UK.
Monsoon Accessorize suffered “slower growth in online sales” as like-for-like retail sales continued to decline in the most recent year, it said.
The stark warning comes less than a month after the retailer started to implement its CVA, after British Land dropped a legal challenge against it last month.
Without the CVA, which involves landlords agreeing to rent cuts, Monsoon Accessorize's owners claimed the chain would collapse.
However, British Land demanded Mr Simon stump up extra money in return for agreeing to the CVA.
Rent reductions will take place across 135 of Monsoon's 258 stores in the UK.
The retailer plummeted to a £22.5m pre-tax loss for the year to August 2018, from a £2.2m loss a year earlier, according to the recently filed accounts.
Turnover fell by 4.6 per cent to £296.4m for the year as its Monsoon Ladies and Monsoon Children brands both suffered like-for-like declines.
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