Perfect Moment Ltd.
For the period ended Jun 30, 2026. Filed Aug 14, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 14, 2026
PMNT$0.11-10.7%Stored close · as of Jul 8, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-12-31; filed 2026-02-12.
0001493152-26-006292
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-14.
0001493152-26-038291
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 109 previous paragraphs and 84 current paragraphs.
56 unchanged; 15 reworded; 13 added; 35 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
On June 12, 2026, our common stock was delisted from the NYSE American and commenced trading on the OTCQB Venture Market on June 18, 2026.
Current report
During July 2026, we drew $1,000 on our Revolver.
Current report
The $564 decrease in Adjusted EBITDA for the three months ended June 30, 2026 compared to the same period in 2025 was primarily driven by a $262 decrease in gross profit, reflecting lower revenue and a decrease in gross margin from 60.3% to 54.5%, along with higher legal and professional fees, payroll and related costs, and other operating expenses. The margin contraction was largely attributed to a decrease in partnership revenue, which had been in effect during the three months ended June 30, 2025.
Current report
Selling, general and administrative (“SG&A”) expenses decreased $35 during the three months ended June 30, 2026 compared to the same period in 2025, with key drivers including decreased amortization of stock-based services and decreased share-based compensation, largely offset by increased legal and professional fees in connection with fundraising efforts, higher payroll and related costs to support operational expansion, and incremental spending across key areas such as IT, insurance, travel, and retail operations. While these investments contributed to higher operating costs, they were necessary to support the Company’s strategic objectives for growth.
Current report
The $564 decrease in Adjusted EBITDA for the three months ended June 30, 2026 compared to the same period in 2025 was primarily driven by margin contraction on lower revenue combined with ongoing investments in headcount and infrastructure to support the Company’s transition and growth strategy.
Current report
Total revenue for the three months ended June 30, 2026 was $1,150, compared to $1,472 for the same period in 2025, a decrease of $322, or 21.9%. The decrease was primarily driven by a partnership revenues of $304 that were realized during the three months ended June 30, 2025 that did not recur in the current period.
Current report
Cost of goods sold
Current report
Gross profit for the three months ended June 30, 2026 was $627, compared to $889 for the same period in 2025, a decrease of $262, or 29.5%. Gross margin decreased to 54.5% from 60.3% in the prior-year period. The decrease was primarily attributable to a change in revenue mix, as the prior-year period benefited from higher-margin partnership revenue that did not recur in the current period. This was partially offset by the Company’s continued focus on disciplined pricing, inventory management and sourcing initiatives.
Current report
Selling, general and administrative expenses
Current report
SG&A for the three months ended June 30, 2026 were $3,380, compared to $3,415 for the same period in 2025, a decrease of $35, or 1.0%. The decrease was primarily attributable to decreased amortization of stock-based services and decreased share-based compensation, largely offset by increased legal and professional fees in connection with fundraising efforts, higher payroll and related costs to support operational expansion, and incremental spending across key areas such as IT, insurance, travel, and retail operations.
Current report
Marketing and advertising expenses for the three months ended June 30, 2026 were $507, compared to $529 for the same period in 2025, a decrease of $22, or 4.2%. The decrease was primarily driven by reduced agency support and lower promotional and event-based activation spend. The Company remains focused on maintaining marketing efficiency while building global brand awareness and desire.
Current report
During the three months ended June 30, 2026, investing activities used $66 in cash and cash equivalents, primarily related to capital expenditures incurred in the ordinary course of business, including expenditures associated with the Company’s new office. There were no investing activities during the three months ended June 30, 2025.
Current report
During the three months ended June 30, 2026, financing activities provided $2,860 in cash and cash equivalents, primarily attributed to $2,000 of proceeds from the sale of our common stock and $860 of proceeds from our line of credit with related parties.
Removed paragraphs (35)
Previous report
During January 2026, the shareholders holding a majority of the voting power of the Company entitled to vote as of the record date of January 14, 2026 approved a number of corporate matters. These actions included authorizing certain issuances of common stock and warrants, amending the Certificate of Incorporation to increase authorized shares, approving the ELOC, and authorizing an additional reverse stock split of the common stock at a ratio to be determined by the Company’s board of directors
Previous report
During January 2026, we issued 11,458,306 shares of our common stock upon conversion of all outstanding shares of Series AA Preferred Stock at a reduced conversion price of $0.46822 per share, as approved by our shareholders.
Previous report
Comparability of Financial Information
Previous report
Our historical operations and statements of assets and liabilities may not be comparable to our operations and statements of assets and liabilities as a result of completing our IPO in February 2024 and becoming a public company.
Previous report
The $1,553 improvement in Adjusted EBITDA for the three months ended December 31, 2025, compared to the same period in 2024, was primarily driven by a $1,119 increase in gross profit. This increase was largely attributable to improvements in gross margin, which rose from 54.8% to 64.4%, reflecting enhancements in the Company’s operating model and logistics execution. During the period, the Company benefited from continued optimization of its supply chain and fulfillment processes, including improved warehouse efficiency, more effective shipping flows, and better cost control across distribution activities. In addition, growth in partnership revenue contributed to the overall margin improvement, with partnership revenue increasing to $239 for the three months ended December 31, 2025, from $91 in the prior-year period.
Previous report
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 report
Marketing and advertising expenses increased by $252 during the three months ended December 31, 2025, compared to the same period in 2024, primarily due to the timing of marketing spend. The Company increased activation and promotional activities in the quarter to support the AW25 launch relative to the prior-year period.
Previous report
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 report
Selling, general and administrative (SG&A) expenses decreased by $1,222 for the nine months ended December 31, 2025, compared to the same period in 2024, which was primarily driven by a reduction in stock-based compensation expense following the restructuring of our employee equity program and the redundancy plan implemented in the fourth quarter of the prior fiscal year. Partially offsetting these savings were higher legal, professional, and payroll costs associated with ongoing public company compliance and fundraising activities, as well as costs to support operational expansion.
Previous report
Marketing and advertising expenses decreased by $15 for the nine months ended December 31, 2025, compared to the same period in 2024, primarily due to the timing of marketing spend. While the Company incurred higher activation and promotional costs in the third quarter to support the AW25 product launch, these increases were offset by lower spending in other periods, resulting in a decrease in marketing and advertising expenses on a year-to-date basis.
Previous report
The improvement in adjusted EBITDA demonstrates operating leverage on higher revenue and margin despite ongoing investments in infrastructure and brand development.
Previous report
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 report
The year-over-year increase in revenue was primarily driven by a stronger wholesale order book and improved operational execution, which enabled more efficient fulfillment and shipment timing compared to the prior year. These enhancements reflect the Company’s ongoing focus on operational discipline and supply chain optimization, positioning it to capture additional sales opportunities over the remainder of the season.
Previous report
Cost of sales
Previous report
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 report
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 report
The margin expansion demonstrates progress toward achieving improved profitability while continuing to scale the business.
Previous report
Selling, general and administrative expenses (“SG&A”)
Previous report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
December 31, 2025 represents the period with the highest return reserves, reflecting the seasonality of our business and the concentration of sales in the winter period. A significant portion of revenue in December is generated through our eCommerce channel, which historically experiences higher return rates than other channels, resulting in elevated return reserves at quarter-end.
Previous report
For periods prior to the IPO, we issued stock option awards and restricted stock units to employees and non-employees under the 2021 Equity Incentive Plan (the “2021 Plan”). The fair value of each award is estimated on the date of the grant using the Black-Scholes option-pricing model in order to measure the compensation cost associated with the award. This model incorporates the following assumptions for inputs: the expected volatility in the market value of the underlying common stock, the expected term of the contractual option, the risk-free interest rate based upon quoted market yields for United State Treasury instruments with terms that were consistent with the expected term of the stock options and the expected dividend yield of the underlying common stock.
Previous report
The fair value of the stock awards issued to employees and nonemployees under the 2021 Plan prior to the IPO was estimated at each grant date using the Black-Scholes model which requires the input of the following subjective assumptions: (a) length of time grantees will retain their vested stock options before exercising them for employees and the contractual term of the option for nonemployees (“expected term”), (b) The volatility of our common stock price over the expected term, (c) expected dividends, (d) risk-free interest rate over the option’s expected term, and estimated forfeiture rate. A summary of our significant assumptions for the pre-IPO stock awards is as follows:
Previous report
●*Expected term:*For employees, the expected term is determined using the “simplified” method, as prescribed by the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, to estimate on a formula basis the expected term of the Company’s employee stock options, which are considered to have “plain vanilla” characteristics. For nonemployees, the expected term represents the contractual term of the option.
Previous report
●*Expected volatility:*The expected volatility was determined by examining the historical volatilities of a group of industry peers, as the Company did not have any trading history for our common stock prior to the IPO.
Previous report
●*Expected dividend yield:*The expected dividend yield was based on our history and management’s current expectation regarding future dividends.
Previous report
●*Risk-free interest rate:*The risk-free interest rate was based upon quoted market yields for the United States Treasury instruments with terms that were consistent with the expected term of the stock options.
Previous report
●Estimated forfeiture rate: The expected forfeiture rate was based on our history and management’s expectation regarding future forfeitures.
Reworded paragraphs (15)
Previous 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.
Current wording
We are focused on generating long-term, brand-right growth and improving profitability. During the three months ended June 30, 2026, we continued to scale our direct-to-consumer business, launched a new spring/summer capsule, 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
The following tables set forth our results of operations for the:
Current wording
The following table sets forth our results of operations for the:
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 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.
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 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 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.
Current 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.
Previous 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.
Current 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.
Previous 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.
Current wording
Cost of goods sold for the three months ended June 30, 2026 was $523, compared to $583 for the same period in 2025, a decrease of $60, or 10.3%. The decrease was primarily driven by improved inventory efficiency and disciplined cost management. The Company continues to focus on optimizing its supply chain and sourcing practices to support long-term margin expansion.
Previous 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.
Current wording
As of June 30, 2026, we had cash and cash equivalents of $707, including an accumulated deficit of $75,580. 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 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.”
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 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 stockholders” 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 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.
Current wording
During the three months ended June 30, 2026, operating activities used $3,246 in cash and cash equivalents, primarily resulting from a net loss of $3,533, an adjustment to add back non-cash charges of $455 and a net cash outflow from changes in operating assets and liabilities of $168. Net cash used by changes in operating assets and liabilities during the three months ended June 30, 2026 consisted primarily of an outflow of cash from a decrease in trade payables of $1,168 and a decrease in accrued expenses of $619, partially offset by an inflow of cash from a decrease in accounts receivable of $860, an increase in deferred revenue of $378, a decrease in inventory of $141, a decrease in prepaid and other current assets of $98, and a decrease in other non-current assets of $74.
Previous 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.
Current wording
During the three months ended June 30, 2025, operating activities used $3,892 in cash and cash equivalents and restricted cash, primarily resulting from a net loss of $3,819, an adjustment to add back non-cash charges of $1,249 and a net cash outflow from changes in operating assets and liabilities of $1,322. Net cash used by changes in operating assets and liabilities during the three months ended June 30, 2025 consisted primarily of an outflow of cash from a decrease in accrued expenses of $1,824, a decrease in trade payables of $272, and an increase in prepaid and other current assets of $260, partially offset by an inflow of cash from an increase in deferred revenue of $542 and a decrease in inventory of $228.
Previous wording
Cash Flows Provided by Financing Activities
Current wording
Cash Flows Provided by (Used in) Financing Activities
Previous 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.
Current wording
During the three months ended June 30, 2025, financing activities used $466 in cash and cash equivalents, primarily attributed to $2,538 of net proceeds from the sale of our common stock, $1,330 of net proceeds from short term borrowings, and $500 of net proceeds related to the issuance of a note payable to a related party, offset by a $2,241 repayment of short term borrowings, $2,495 repayment of trade finance facilities, and $98 payment of dividends on our Series AA Convertible Preferred Stock.
Previous 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.
Current wording
As of June 30, 2026, our sales-related reserves were $0.2 million compared to $0.3 million as of March 31, 2026. The most significant variable affecting these reserve balances is sales levels. As a percentage of Net sales, the sales reserves balances were 16.8% as of June 30, 2026 compared to 1.4% as of March 31, 2026. 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.
Previous 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.
Current wording
For recent accounting pronouncements, see Note 2 of our unaudited condensed consolidated financial statements included in this Form 10-Q.
Previous wording
The fair value of our cash equivalents, held primarily in cash deposits, have not been significantly impacted by increases or decreases in interest rates to date, due to the short-term nature of these instruments. The interest expense associated with our letter of credit trade finance facility is composed of a fixed spread over HIBOR or SOFR. The interest rate associated with our short-term borrowings is a fixed rate also. We are exposed to interest rate risk where the interest expense associated with our financing arrangements is depending upon HIBOR or SOFR, a floating reference rate, or in the event that the fixed interest rate associated with our financing arrangements is increased upon roll-over of the financing arrangement at its contractual maturity. Fluctuations in interest rates have not been significant to date. We do not expect that interest rates will have a material impact on our results of operations, owing to the size and short-term nature of the floating rate financing arrangements.
Current wording
The fair value of our cash equivalents, held primarily in cash deposits, have not been significantly impacted by increases or decreases in interest rates to date, due to the short-term nature of these instruments. The interest expense associated with our revolver is a fixed rate. We are exposed to interest rate risk where the interest expense associated with our financing arrangements in the event that the fixed interest rate associated with our financing arrangements is increased upon roll-over of the financing arrangement at its contractual maturity. Fluctuations in interest rates have not been significant to date. We do not expect that interest rates will have a material impact on our results of operations.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
We continue to focus on optimizing our supply chain and sourcing practices to support long-term margin expansion.
Previous report — wording carried elsewhere
As of December 31, 2025, our sales-related reserves were $0.9 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, sales-related reserves were 4.8% as of December 31, 2025, compared to 2.8% as of March 31, 2025. The reserve for customer returns is the component of our sales-related reserves most susceptible to estimation uncertainty.
Previous report — wording carried elsewhere
If factors change, and we utilize different assumptions, share-based compensation cost on future award grants may differ significantly from share-based compensation cost recognized on past award grants. Higher volatility and longer expected terms result in an increase to share-based compensation determined at the date of grant. Future share-based compensation cost will increase to the extent that we grant additional share-based awards to employees and non-employees. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate any remaining unearned share-based compensation cost or incur incremental cost. Share-based compensation cost affects our selling, general and administrative expenses.