Perfect Moment Ltd.

Previous wording

We are focused on generating long-term, brand-right growth and improving profitability. During the six months ended September 30, 2025, we continued to scale our direct-to-consumer business, launched a new spring/summer capsule, opened a new European distribution hub in the Netherlands as part our global logistics transformation, and increased our annual style count from approximately 75 to over 200. We also implemented a tiered pricing architecture across key categories to support value perception and drive margin enhancement.

Current wording

We are focused on generating long-term, brand-right growth and improving profitability. During the nine months ended December 31, 2025, we continued to scale our direct-to-consumer business, launched a new spring/summer capsule, opened a new European distribution hub in the Netherlands as part our global logistics transformation, and increased our annual style count from approximately 75 to over 200. We also implemented a tiered pricing architecture across key categories to support value perception and drive margin enhancement.

Previous wording

We analyze operational and financial data to evaluate our business, allocate our resources, and assess our performance. In addition to total net sales, net loss, and other results under GAAP, the following information includes key operating metrics and non-GAAP financial measures that we use to evaluate our business. We believe that these measures are useful for period-to-period comparisons of the Company’s performance. We have included these non-GAAP financial measures in this Quarterly Report because they are key measures management uses to evaluate our operational performance, produce future strategies for our operations, and make strategic decisions, including those relating to operating expenses and the allocation of our resources. Accordingly, we believe that these measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

Current wording

We analyze operational and financial data to evaluate our business, allocate our resources, and assess our performance. In addition to total net sales, net income (loss), and other results under GAAP, the following information includes key operating metrics and non-GAAP financial measures that we use to evaluate our business. We believe that these measures are useful for period-to-period comparisons of the Company’s performance. We have included these non-GAAP financial measures in this Quarterly Report because they are key measures management uses to evaluate our operational performance, produce future strategies for our operations, and make strategic decisions, including those relating to operating expenses and the allocation of our resources. Accordingly, we believe that these measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

Previous wording

Adjusted EBITDA is a non-GAAP financial measure that displays our net loss from continuing operations, adjusted to eliminate the effect of certain items as described below. We define Adjusted EBITDA as net loss excluding interest expense, income tax benefit (expense), depreciation and amortization and stock-based compensation expense. Adjusted EBITDA is a measure that is not defined in US GAAP. We believe that it is useful to exclude these expenses because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations.

Current wording

Adjusted EBITDA is a non-GAAP financial measure that displays our net income (loss) from continuing operations, adjusted to eliminate the effect of certain items as described below. We define Adjusted EBITDA as net income (loss) excluding interest expense, income tax benefit (expense), depreciation and amortization and stock-based compensation expense. Adjusted EBITDA is a measure that is not defined in US GAAP. We believe that it is useful to exclude these expenses because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations.

Previous wording

Selling, general and administrative (SG&A) expenses decreased by $286 during the quarter compared to the prior-year period, reflecting continued cost discipline and reduced discretionary spending across most categories. The decrease was primarily driven by a reduction in stock-based compensation expense following the restructuring of the Company’s employee equity compensation program and the redundancy plan implemented in the fourth quarter of the prior fiscal year. Partially offsetting these savings were higher legal and professional fees associated with ongoing public company compliance and fundraising activities, as well as costs to support operational expansion. The Company also incurred incremental spending across key functional areas including information technology, insurance, travel, and retail operations, which were necessary to support its transition and long-term growth initiatives.

Current wording

Selling, general and administrative (SG&A) expenses decreased by $1,010 during the three months ended December 31, 2025, compared to the same period in 2024, reflecting continued cost discipline and reduced discretionary spending across most categories. The decrease was primarily driven by a reduction in stock-based compensation expense following the restructuring of our employee equity compensation program and the redundancy plan implemented in the fourth quarter of the prior fiscal year. Partially offsetting these savings were higher legal and professional fees associated with ongoing public company compliance and fundraising activities, as well as costs to support operational expansion. The Company also incurred incremental spending across key functional areas including information technology, insurance, travel, and retail operations, which were necessary to support its transition and long-term growth initiatives.

Previous wording

The $1,205 improvement in adjusted EBITDA for the three months ended September 30, 2025, compared to the same period in 2024, was primarily driven by a $791 increase in gross profit, reflecting higher revenue and an increase in gross margin from 54.0% to 60.1%. The margin expansion was largely attributable to the contribution from the partnership revenue stream, which was not in effect during the three months ended June 30, 2024, as well as a more favorable channel and product mix. In addition, continued improvements in the Company’s logistics and supply chain operations, including enhanced warehouse efficiency and optimized shipping routes, contributed to lower fulfillment costs and supported further gross margin improvement.

Current wording

The $3,089 improvement in Adjusted EBITDA for the nine months ended December 31, 2025, compared to the same period in 2024, was primarily driven by a $2,398 increase in gross profit, reflecting higher revenue and an increase in gross margin from 53.6% to 62.7%. The improvement in gross margin was mainly attributable to enhancements in the Company’s operating model and logistics execution, including more efficient supply chain and fulfillment processes and improved cost control. In addition, growth in partnership revenue contributed positively to gross margin, with partnership revenue increasing to $375 during the nine months ended December 31, 2025, from $91 in the prior-year period, alongside a more favorable channel and product mix.

Previous wording

Because of these limitations, you should consider the non-GAAP financial measures alongside other financial performance measures, including our net loss and our other financial results presented in accordance with GAAP. You are encouraged to evaluate the above adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Current wording

Because of these limitations, you should consider the non-GAAP financial measures alongside other financial performance measures, including our net income (loss) and our other financial results presented in accordance with GAAP. You are encouraged to evaluate the above adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Previous wording

Total revenue for the three months ended September 30, 2025 was $4,763, compared to $3,833 for the same period in 2024, an increase of $930, or 24% and for the six months ended September 30, 2025 was $6,235, compared to $4,808 for the same period in 2024, an increase of $1,427, or 30%. Growth for both periods was primarily driven by contributions from the new partnership channel, with additional improvement from the wholesale channel reflecting more favorable shipment timing compared to the same period in FY25.

Current wording

Total revenue for the three months ended December 31, 2025 was $11,656, compared to $11,658 for the same period in 2024, a decrease of $2, or 0.0% and for the nine months ended December 31, 2025 was $17,891, compared to $16,466 for the same period in 2024, an increase of $1,425, or 8.7%. Growth for both periods was primarily driven by contributions from the new partnership channel.

Previous wording

Cost of goods sold for the three months ended September 30, 2025 was $1,901, compared to $1,762 for the same period in 2024, an increase of $139, or 8% and for the six months ended September 30, 2025 was $2,484, compared to $2,378 for the same period in 2024, an increase of $106, or 4%. The increase was primarily driven by improved inventory efficiency and disciplined cost management.

Current wording

Cost of sales for the three months ended December 31, 2025 was $4,148, compared to $5,269 for the same period in 2024, a decrease of $1,121, or 21.3% and for the nine months ended December 31, 2025 was $6,674, compared to $7,647 for the same period in 2024, a decrease of $973, or 12.7%. The decrease was primarily driven by improved inventory efficiency and disciplined cost management.

Previous wording

Gross profit for the three months ended September 30, 2025 was $2,862, compared to $2,071 for the same period in 2024, an increase of $791, or 38%. Gross margin improved to 60.1%, up from 54.0% in the prior-year period. This increase reflects the favorable impact of channel mix, particularly growth in higher-margin revenue streams, and our ongoing focus on disciplined pricing and supply chain reengineering.

Current wording

Gross profit for the three months ended December 31, 2025 was $7,508, compared to $6,389 for the same period in 2024, an increase of $1,119, or 17.5%. Gross margin improved to 64.4%, up from 54.8% for the same period in 2024. This increase reflects the favorable impact of channel mix, particularly growth in higher-margin revenue streams, and our ongoing focus on disciplined pricing and supply chain reengineering.

Previous wording

Gross profit for the six months ended September 30, 2025 was $3,751, compared to $2,430 for the same period in 2024, an increase of $1,321, or 54%. Gross margin improved to 60.2%, up from 50.5% in the prior-year period. This increase reflects the favorable impact of channel mix, particularly growth in higher-margin revenue channels, and our ongoing focus on disciplined pricing and supply chain reengineering.

Current wording

Gross profit for the nine months ended December 31, 2025 was $11,217, compared to $8,819 for the same period in 2024, an increase of $2,398, or 27.2%. Gross margin improved to 62.7%, up from 53.6% for the same period in 2024. This increase reflects the favorable impact of channel mix, particularly growth in higher-margin revenue channels, and our ongoing focus on disciplined pricing and supply chain reengineering.

Previous wording

Selling, general and administrative (SG&A) expenses for the three months ended September 30, 2025 were $3,637, compared to $3,923 for the same period in 2024, a decrease of $286, or 7%. For the six months ended September 30, 2025, SG&A expenses were $7,052, compared to $7,223 in the prior-year period, a decrease of $171, or 2%.

Current wording

SG&A expenses for the three months ended December 31, 2025 were $5,639, compared to $6,649 for the same period in 2024, a decrease of $1,010, or 15.2%. For the nine months ended December 31, 2025, SG&A expenses were $12,649, compared to $13,871 for the same period in 2024, a decrease of $1,222, or 8.8%.

Previous wording

The decreases primarily reflect continued cost discipline and reduced discretionary spending, including lower stock-based compensation following the restructuring of the Company’s employee equity program and prior-year redundancy actions. These savings were partially offset by higher legal and professional fees related to public company compliance and fundraising activities, as well as increased payroll and operational costs to support expansion initiatives. The Company also incurred targeted increases across technology, compliance, and insurance to strengthen its operating infrastructure and scalability.

Current wording

The decreases primarily reflect continued cost discipline and reduced discretionary spending, including lower stock-based compensation following the restructuring of our employee equity program and redundancy plan implemented in the fourth quarter of the prior fiscal year. These savings were partially offset by higher legal and professional fees related to public company compliance and fundraising activities, as well as increased payroll and operational costs to support expansion initiatives. The Company also incurred targeted increases across technology, compliance, and insurance to strengthen its operating infrastructure and scalability.

Previous wording

Overall, SG&A expenses decreased as a percentage of revenue—improving to 76% from 102% for the three-month period and to 113% from 150% for the six-month period—reflecting enhanced operating leverage, improved cost efficiency, and the early benefits of management’s ongoing efforts to align the cost base with revenue growth.

Current wording

Overall, SG&A expenses decreased as a percentage of revenue—improving to 48.4% from 57.0% for the three-month period and to 70.7% from 84.2% for the nine-month period—reflecting enhanced operating leverage, improved cost efficiency, and the early benefits of management’s ongoing efforts to align the cost base with revenue growth.

Previous wording

Marketing and advertising expenses for the three months ended September 30, 2025 were $362, compared to $705 for the same period in 2024, a decrease of $343, or 49%. For the six months ended September 30, 2025, marketing and advertising expenses were $891, compared to $1,158 in the prior-year period, a decrease of $267, or 23%.

Current wording

Marketing and advertising expenses for the three months ended December 31, 2025 were $1,286, compared to $1,034 for the same period in 2024, an increase of $252, or 24.4 %. For the nine months ended December 31, 2025, marketing and advertising expenses were $2,177, compared to $2,192 for the same period in 2024, a decrease of $15, or 0.7%.

Previous wording

The decreases primarily reflect the timing of marketing initiatives as the Company continues to better align and phase its brand and promotional activities throughout the year, rather than concentrating spend in the first half. In addition, management implemented permanent cost-saving measures through optimized agency support, improved event planning, and a greater focus on in-house capabilities, resulting in a more efficient allocation of marketing resources.

Current wording

These fluctuations primarily reflect the timing of marketing initiatives as the Company continues to better align and phase its brand and promotional activities throughout the year, rather than concentrating spend during the first half. In addition, management implemented permanent cost-saving measures through optimized agency support, improved event planning, and a greater focus on in-house capabilities, resulting in a more efficient allocation of marketing resources.

Previous wording

The Company remains focused on maintaining marketing efficiency while continuing to strengthen global brand awareness and customer engagement through targeted and data-driven campaigns that support both direct-to-consumer and wholesale channels.

Current wording

We remain focused on maintaining marketing efficiency while continuing to strengthen global brand awareness and customer engagement through targeted and data-driven campaigns that support both direct-to-consumer and wholesale channels.

Previous wording

Through September 30, 2025, the Company has funded its operations with proceeds from the sale of common stock from the initial public offering, a public offering during September 2025, and other sales of common stock; the sale of preferred stock, alongside existing trade, invoice and shareholder financing arrangements. The Company has incurred recurring losses, including a net loss of $5,659 for the six months ended September 30, 2025 and used cash in operations of $11,138 during that period. As of September 30, 2025, the Company had an accumulated deficit of $70,575. These factors raise substantial doubt about the Company’s ability to continue as a going concern for at least twelve months from the date these condensed consolidated financial statements were available to be issued. The Company’s ability to continue as a going concern is dependent upon management of its expenses and its ability to obtain necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due, and upon profitable operations.

Current wording

Through December 31, 2025, we have funded our operations with proceeds from the sale of common stock from the initial public offering, a public offering during December 2025, and other sales of common stock; the sale of preferred stock, alongside existing trade, invoice and shareholder financing arrangements. We have incurred recurring losses, including a net loss of $5,566 for the nine months ended December 31, 2025 and used cash in operations of $8,882 during that period. As of December 31, 2025, the Company had an accumulated deficit of $70,482. These factors raise substantial doubt about our ability to continue as a going concern for at least twelve months from the date these condensed consolidated financial statements were available to be issued. Our ability to continue as a going concern is dependent upon management of its expenses and its ability to obtain necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due, and upon profitable operations.

Previous wording

As of September 30, 2025, we had cash and cash equivalents of $393, including an accumulated deficit of $70,575. Historically, we have generated negative cash flows from operations and have primarily financed our operations through sales of equity securities, issuance of debt instruments and working capital finance facilities.

Current wording

As of December 31, 2025, we had cash and cash equivalents of $1,567. Historically, we have generated negative cash flows from operations and have primarily financed our operations through sales of equity securities, issuance of debt instruments and working capital finance facilities.

Previous wording

Our ability to fund inventory purchases, capital expenditures, and growth will depend on our ability to generate cash in the future. Our future ability to generate cash from operations is, to a certain extent, subject to general economic, financial, competitive, regulatory and other conditions. Based on our current level of operations, we believe our existing cash balances and expected cash flows from operations, alongside the continuance of our existing financing arrangements, will be sufficient to meet our operating requirements for at least the next 12 months, excluding financing to support production (i.e. timing of working capital). We may seek additional or alternative debt and equity financing to that set out above. If we raise equity financing, our shareholders may experience significant dilution of their ownership interests. If we conduct additional debt financing, the terms of such debt financing may be similar or more restrictive that the terms of our current financing arrangements and we would have additional debt service obligations. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition and results of operations could be harmed. See the sections included in our annual report filed on Form 10-K titled “Risk Factors – Risks Related to Ownership of Our Common Stock – Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our 2021 Equity Incentive Plan, could result in additional dilution of the percentage ownership of our shareholders” and “Risk Factors – Risks Related to Our Business, Our Brand, Our Products and Our Industry – We have a history of losses, expect to continue to incur losses in the near term and may not achieve or sustain profitability in the future, and as a result, our management has identified and our auditors reported that there is a substantial doubt about our ability to continue as a going concern.”

Current wording

Our ability to fund inventory purchases, capital expenditures, and growth will depend on our ability to generate cash in the future. Our future ability to generate cash from operations is, to a certain extent, subject to general economic, financial, competitive, regulatory and other conditions. Based on our current level of operations, we believe our existing cash balances and expected cash flows from operations, alongside the continuance of our existing financing arrangements, will be sufficient to meet our operating requirements for at least the next 12 months, excluding financing to support production (i.e. timing of working capital). We may seek additional or alternative debt and equity financing to that set out above. If we raise equity financing, our shareholders may experience significant dilution of their ownership interests. If we conduct additional debt financing, the terms of such debt financing may be similar or more restrictive than the terms of our current financing arrangements and we would have additional debt service obligations. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition and results of operations could be harmed. See the sections included in our annual report filed on Form 10-K titled “Risk Factors – Risks Related to Ownership of Our Common Stock – Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our 2021 Equity Incentive Plan, could result in additional dilution of the percentage ownership of our shareholders” and “Risk Factors – Risks Related to Our Business, Our Brand, Our Products and Our Industry – We have a history of losses, expect to continue to incur losses in the near term and may not achieve or sustain profitability in the future, and as a result, our management has identified and our auditors reported that there is a substantial doubt about our ability to continue as a going concern.”

Previous wording

During the six months ended September 30, 2025, operating activities used $11,138 in cash and cash equivalents and restricted cash, primarily resulting from a net loss of $5,659, non-cash adjustments totaling $2,479, and a net cash outflow from changes in operating assets and liabilities of $7,958. Net cash used in changes in operating assets and liabilities was driven primarily by an increase in inventory of $5,339, reflecting higher stock purchases to support the upcoming winter season and expanded sales channels, as well as an increase in accounts receivable of $3,888 and a decrease in accrued expenses of $1,248. These outflows were partially offset by an increase in trade payables of $1,633 and an increase in deferred revenue of $912. The increase in inventory also reflects improved inventory planning and purchasing timing, designed to enhance availability and support stronger sell-through performance in the second half of the fiscal year.

Current wording

During the nine months ended December 31, 2025, operating activities used $8,882 in cash and cash equivalents and restricted cash, primarily resulting from a net loss of $5,566, non-cash adjustments totaling $3,323, and a net cash outflow from changes in operating assets and liabilities of $6,639. Net cash used in changes in operating assets and liabilities was driven primarily by an increase in inventory of $3,191, an increase in accounts receivable of $4,518, and an increase in other non-current assets of $83, and a decrease in accrued expenses of $477. These outflows were partially offset by an increase in trade payables of $1,060 and a decrease in prepaid and other current assets of $454. The increase in inventory reflects higher stock purchases to support the upcoming winter season and expanded sales channels and also improved inventory planning and purchasing timing, designed to enhance availability and support stronger sell-through performance in the second half of the fiscal year.

Previous wording

During the six months ended September 30, 2024, operating activities used $7,734 in cash and cash equivalents and restricted cash, primarily resulting from a net loss of $6,132, an adjustment to add back non-cash charges of $961 and a net cash outflow from changes in operating assets and liabilities of $2,563. Net cash used by changes in operating assets and liabilities during the six months ended September 30, 2024 consisted primarily of an inflow of cash from a $2,559 increase in trade payables, a $908 increase in unearned revenue, offset by a cash outflow as a result of a $2,811 increase in inventories, $1,435 increase in accounts receivable, $1,425 increase in prepaid and other current assets and a $359 decrease in accrued expenses.

Current wording

During the nine months ended December 31, 2024, operating activities used $8,780 in cash and cash equivalents and restricted cash, primarily resulting from a net loss of $8,614, non-cash adjustments totaling $2,798 and a net cash outflow from changes in operating assets and liabilities of $2,964. Net cash used by changes in operating assets and liabilities during the nine months ended December 31, 2024 consisted primarily of an increase in inventory of $2,039, reflecting higher stock purchases to support the upcoming winter season, as well as an increase in accounts receivable of $1,740, offset by an increase in accrued expenses of $750.

Previous wording

Investing activities for the six months ended September 30, 2025 were $169, compared to $102 for the same period in 2024, an increase of $67, or 65.7%. The increase primarily reflects capital expenditures related to the opening of the new pop-up store in Verbier and preparatory investments for additional pop-up locations planned for the third quarter. These investments are consistent with the Company’s strategy to enhance brand visibility and expand its retail presence in key markets while maintaining disciplined capital allocation.

Current wording

During the nine months ended December 31, 2025, investing activities used $204 in cash and cash equivalents and restricted cash, compared to $287 for the same period in 2024, a decrease of $83, or 28.9%. The current period capital expenditures related to the opening of the new pop-up store in Verbier and preparatory investments for additional pop-up locations planned for the third quarter. These investments are consistent with the Company’s strategy to enhance brand visibility and expand its retail presence in key markets while maintaining disciplined capital allocation.

Previous wording

During the six months ended September 30, 2025, financing activities provided $4,338 in cash and cash equivalents, primarily attributed to $4,050 of net proceeds from the sale of our common stock, $1,330 of net proceeds from short term borrowings, and $5,590 of proceeds related to the issuance of notes payable to related parties, offset by a $3,871 repayment of short term borrowings, $2,495 repayment of trade finance facility, and $266 payment of dividends on our Series AA Convertible Preferred Stock.

Current wording

During the nine months ended December 31, 2025, financing activities provided $3,275 in cash and cash equivalents, primarily attributed to $4,050 of net proceeds from the sale of our common stock, $1,330 of net proceeds from short term borrowings, and $5,590 of net proceeds from the issuance of notes payable to related parties, offset by a $4,725 repayment of short term borrowings, $2,495 repayment of trade finance facility, and $475 payment of dividends on our Series AA Convertible Preferred Stock.

Previous wording

During the six months ended September 30, 2024, financing activities provided $2,507 in cash and cash equivalents and restricted cash, primarily attributed to $2,000 net proceeds from short term borrowings and $906 in net proceeds from trade finance facilities, offset by $399 in repayment of short term borrowings.

Current wording

During the nine months ended December 31, 2024, financing activities provided $5,321 in cash and cash equivalents and restricted cash, primarily attributed to $4,604 of net proceeds from short term borrowings, $2,849 of net proceeds from trade finance facilities, and $2,000 proceeds from a convertible note, offset by a $3,846 repayment of short term borrowings, $139 payment of deferred offering costs and a $147 repayment of trade finance facilities.

Previous wording

As of September 30, 2025, our sales-related reserves were $0.1 million compared to $0.6 million as of March 31, 2025. The most significant variable affecting these reserve balances is sales levels. As a percentage of net revenue, the sales reserves balances were 1.1% as of September 30, 2025 compared to 2.8% as of March 31, 2025 . The reserve for returns from customers is the component of our sales-related reserves most susceptible to estimation uncertainty. These estimates are based on 1) historical rates of product returns and claims; and 2) events and circumstances that indicate changes to such historical rates are warranted, such as our customers’ inventory positions and their anticipated sell-through rates. However, actual returns and claims in any future period are inherently uncertain and thus may differ from our estimates. As a result, we adjust our estimates of revenue at the earlier of when the most likely amount of consideration we expect to receive changes or when the amount of consideration becomes fixed. If actual or expected future returns and claims are significantly different than the sales reserves established, we record an adjustment to Net sales in the period in which such determination was made.

Current wording

These estimates are based on 1) historical rates of product returns and claims; and 2) events and circumstances that indicate changes to such historical rates are warranted, such as our customers’ inventory positions and their anticipated sell-through rates. However, actual returns and claims in any future period are inherently uncertain and thus may differ from our estimates. As a result, we adjust our estimates of revenue at the earlier of when the most likely amount of consideration we expect to receive changes or when the amount of consideration becomes fixed. If actual or expected future returns and claims are significantly different than the sales reserves established, we record an adjustment to Net sales in the period in which such determination was made.

Previous wording

For recent accounting pronouncements, see Note 2 of our audited consolidated financial statements included in this Annual Report.

Current wording

For recent accounting pronouncements, see Note 2 of our audited consolidated financial statements included in this Quarterly Report and Note 2 of our unaudited condensed consolidated financial statements included in this Form 10-Q.