Perfect Moment Ltd.

ITEM 1. FINANCIAL STATEMENTS.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)

PERFECT MOMENT LTD AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

(Amounts in thousands, except share and per share data)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the three months ended June 30, 2026 and 2025

(Amounts in thousands, except share data)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

PERFECT MOMENT LTD AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the three months ended June 30, 2026 and 2025

(Unless otherwise indicated, dollar amounts in thousands)

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Nature of operations

Perfect Moment Ltd., a Delaware corporation (“Perfect Moment” or “PML” and, together with its subsidiaries unless the context otherwise requires, the “Company”), is an owner and operator of a luxury fashion brand that offers ski, surf, and activewear collections under the brand name Perfect Moment. The Company’s collections are sold directly to customers.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for complete consolidated financial statements. In the opinion of our management, these condensed consolidated financial statements contain all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position at June 30, 2026 and the results of operations and comprehensive loss, consolidated statements of shareholders’ equity (deficit), and cash flows for the three months ended June 30, 2026 and 2025. The Company’s results for the three months ended June 30, 2026 are not necessarily indicative of the results expected for the full year. You should read these statements in conjunction with our audited consolidated financial statements and management’s discussion and analysis and results of operations included in our Annual Report on Form 10-K (the “Form 10-K”) for the fiscal year ended March 31, 2026. The terms “fiscal 2027” and “fiscal 2026” refer to the Company’s fiscal year ended March 31, 2027 and fiscal year ended March 31, 2026, respectively.

Principles of consolidation

These unaudited condensed consolidated financial statements include the accounts of Perfect Moment Ltd. and its wholly owned subsidiaries; Perfect Moment Asia Limited (“PMA”), Perfect Moment (UK) Limited (“PMUK”), Perfect Moment USA, Inc., (“PMUSA”), Perfect Moment International AG (“PMCH”) and Perfect Moment Netherlands B.V. (“PMBV”). These unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments which are, in the opinion of management, necessary for the fair statement of the financial information for the interim periods presented. All significant intercompany balances and transactions have been eliminated in consolidation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going concern

Through June 30, 2026, the Company has funded its operations with proceeds from the sale of common stock, and other sales of common stock; the sale of preferred stock, alongside existing trade, invoice and other financing arrangements. The Company has incurred recurring losses, including a net loss of $3,533 for the three months ended June 30, 2026 and used cash in operations of $3,246 during that period. As of June 30, 2026, the Company had an accumulated deficit of $75,580 and a stockholders’ deficit of $1,994. On June 12, 2026, the Company’s common stock was delisted from the NYSE American and commenced trading on the OTCQB Venture Market (the “OTCQB”) on June 18, 2026. The OTCQB is a significantly more limited market than NYSE American, and trading on the OTCQB may result in a less liquid market for existing and potential stockholders of the Company’s common stock and could adversely affect the trading price of the Company’s common stock.

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.

The Company’s future capital requirements will depend on many factors, including production costs and planned growth. In order to finance these opportunities and associated costs, it is possible that the Company would need to raise additional financing if working capital is insufficient to support its business needs. While there can be no assurances, the Company intends to raise such capital through additional short-term loan issuances, debt factoring, and additional equity raises. If additional financing is required from outside sources, the Company may not be able to raise it on terms acceptable to it or at all. If the Company is unable to raise additional capital on acceptable terms when needed, its product development, results of operations and financial condition would be materially and adversely affected.

As a result of the above, in connection with the Company’s assessment of going concern considerations, management has determined that the Company’s liquidity condition raises substantial doubt about the Company’s ability to continue as a going concern through twelve months from the date these condensed consolidated financial statements are available to be issued.

In addition, the Company’s independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended March 31, 2026, expressed substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Use of estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments in applying the Company’s accounting policies that affect the reported amounts and disclosures made in the condensed consolidated financial statements and accompanying notes. Management continually evaluates the estimates and judgments it uses. These estimates and judgments have been applied in a manner consistent with prior periods and there are no known trends, commitments, events or uncertainties that management believes will materially affect the methodology or assumptions utilized in making these estimates and judgments in these condensed consolidated financial statements. Significant estimates inherent in the preparation of these condensed consolidated financial statements include reserves for uncollectible accounts receivables, realizability of inventory, sales reserves, useful lives and impairments of long-lived assets, realization of deferred tax assets and related uncertain tax positions, classification of convertible preferred stock, classification of warrants, and the valuation of stock-based compensation awards. Actual results may differ from these judgements and estimates under different assumptions or conditions and any such differences may be material.

Seasonality

The Company experiences certain effects of seasonality with respect to its business. The Company generally experiences greater sales during its last three fiscal quarters, primarily driven by ski and outerwear sales being higher during the winter months and the Company’s customers concentrated in the northern hemisphere, and the lowest sales during its first fiscal quarter.

Revenue recognition

As of June 30, 2026 and March 31, 2026, the Company did not have any contract assets and had $613 and $245, respectively, of deferred revenue on the accompanying consolidated balance sheets.

For the three months ended June 30, 2026 and 2025, revenue, net recognized from performance obligations related to prior periods was not material. Revenue, net expected to be recognized in any future period related to remaining performance obligations is not material.

Disaggregated revenue

The following table disaggregates the Company’s revenue, net by channel and geographic location:

Accounts receivable and allowance for credit losses

As of June 30, 2026 and March 31, 2026, the Company had $1,257 and $1,082, respectively, in allowances for credit losses.

Concentration of credit risk

Supplier

For the three months ended June 30, 2026 and 2025, the largest single supplier of the Company’s manufactured goods produced 100 % and 0%, respectively, of the Company’s products. For the three months ended June 30, 2026 and 2025, the largest fabric supplier supplied 0% and 56%, respectively, of the fabric used to manufacture the Company’s products.

Customer

For the three months ended June 30, 2026, we had one individual customer that accounted for approximately 29% of total revenue, net. This customer individually comprised 31% of total accounts receivable as of June 30, 2026. For the three months ended June 30, 2025, we had one individual customer that accounted for approximately 11% of total revenue, net. This customer individually did not comprise more than 10% of total accounts receivable as of June 30, 2025.

As of June 30, 2026, two customers accounted for 46% of total accounts receivable. As of March 31, 2026 one customer accounted for approximately 14% of total accounts receivable.

Warrants

We evaluate the appropriate balance sheet classification of warrants we issue as either equity or as a derivative liability. In accordance with ASC 815, we classify a warrant as equity if it is “indexed to the Company’s equity” and meets several specific conditions for equity classification. A warrant is not considered “indexed to the Company’s equity,” in general, when it contains certain types of exercise contingencies or potential adjustments to its exercise price. If a warrant is not indexed to the Company’s equity or it has net cash settlement provisions that result in the warrants being accounted for under ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) or ASC 815, it is classified as a derivative liability which is carried on the consolidated balance sheets at fair value with any changes in its fair value recognized in the statements of operations and comprehensive loss. At June 30, 2026 and March 31, 2026, all of the Company’s outstanding warrants were classified as equity.

Foreign currency

We used the exchange rates in the following table to translate amounts denominated in non-USD currencies as of and for the periods noted:

Net loss per share of common stock

Potentially dilutive stock options and securities as presented in the table below were excluded from the computation of diluted net loss per share because the effect would be anti-dilutive. As the Company incurred losses in the three months ended June 30, 2026 and 2025, basic and diluted weighted-average shares are the same in the loss per share calculation.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03,Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The standard is effective for the Company for annual periods beginning January 1, 2027 and interim periods beginning January 1, 2028, with early adoption permitted. The standard may be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the impact that this ASU will have on the presentation of its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11,Interim Reporting (Topic 270): Narrow-ScopeImprovements (the “Update”), an amendment to improve the guidance in Topic 270,Interim Reporting, by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The amendments add to Topic 270 a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in this Update clarify interim disclosure requirements and the applicability of Topic 270 apply to all entities that provide interim financial statements and notes in accordance with GAAP. In addition, the amendments in this Update result in a comprehensive list of interim disclosures that are required by GAAP with the objective to provide clarity about the current requirements. The Update is effective for the Company for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Update can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the impact that the Update will have on the presentation of its consolidated financial statements.

Other recent authoritative guidance issued by the FASB (including technical corrections to the ASCs), the American Institute of Certified Public Accountants, and the SEC did not, or is not expected to, have a material impact on the Company’s consolidated financial statements and related disclosures.

3. INVENTORIES, NET

The following table details the primary categories of inventories, net for the periods presented.

4. PREPAID AND OTHER CURRENT ASSETS

The following table details the primary categories of prepaid and other currents for the periods presented.

5. ACCRUED EXPENSES

The following table details the primary categories of accrued expenses for the periods presented.

6. DEBT

Line of Credit, related parties

On March 30, 2026, the Company entered into a loan agreement for up to $10,000 maturing on March 30, 2028 (the “Revolver”) with an investor, considered a related party at the time the Revolver was entered into, and an additional lender, that become a related party in May 2026 (see Note 11), (together, the “Lenders”).

The Lenders will be entitled to assign all or a portion of its exposure under the Revolver or to sell participations therein. The proceeds of the Revolver were restricted to the repayment of the August 2025 Related Party Notes and to fund the working capital needs of the Company’s operations.

The Revolver bears interest of 12.0% per annum and is calculated on the daily outstanding balance. The Revolver also incurs a fee of 1.5% per annum on the daily unused portion, payable monthly in arrears. The Revolver is secured by a first priority, perfected lien on and security interest in the existing and future assets of the Company.

During May 2026 and March 2026, the Company drew $860 and $5,140, respectively, under the Revolver.

During May 2026, the Company issued warrants to purchase up to 1,864,753 shares of the Company’s Common Stock at an exercise price of $0.46822 per share to one of the lenders of the Revolver in connection with the securities purchase agreement consummated in May 2026 (the “May 2026 Revolver Warrants”) (see Note 7). The warrants had a fair value of $266 which was recorded as a debt finance cost and is being amortized over the term of the Revolver.

The May 2026 Revolver Warrants are exercisable beginning on November 8, 2026 and expire August 27, 2028. The May 2026 Revolver Warrants can be exercised on a cashless basis if the shares underlying the May 2026 Revolver Warrants are not registered at the time it is exercised. The May 2026 Revolver Warrants was determined to be an equity classified warrant.

The holder of the May 2026 Revolver Warrants shall not have the right to convert any portion of the respective warrants to the extent that after giving effect to such conversion the holder of the respective warrants, together with any affiliates, would beneficially own in excess of 9.99% (which may be increased to 19.99% at the holder’s sole discretion) of the number of common shares outstanding immediately after giving effect to such conversion. Any increase to the beneficial ownership limitation will not be effective until the 61st day after notice is received by the Company.

As of June 30, 2026 and March 31, 2026, the Company had outstanding borrowings of $6,000 and $5,140, respectively, incurred interest of $178 and $nil, respectively, and an unamortized debt finance costs of $246 and $nil, respectively.

The Company also incurred and paid third-party legal fees in connection with the closing of the line of credit, which were recorded as debt issuance costs and included in other noncurrent assets, net in the accompanying balance sheet. As of March 31, 2026, the unamortized debt issuance costs were $311. During the three months ended June 30, 2026, the Company commenced amortization of these costs over the term of the line of credit and recognized $39 of amortization as interest expense. Accordingly, the unamortized debt issuance costs were $272 as of June 30, 2026.

During the three months ended June 30, 2026, total interest expense recognized on the Revolver was $237, which included amortization of the debt finance costs of $20, and the amortization of the debt issuance costs of $39.

The Revolver contains certain financial statement covenants that the Company is in compliance with as of June 30, 2026.

7. STOCKHOLDERS’ EQUITY

Securities Purchase Agreement:

On May 8, 2026, the Company consummated a securities purchase agreement with one of the lenders of the Revolver under which it issued 6,060,606 shares of its common stock at a purchase price of $0.33 per share and warrants to purchase up to 8,276,944 shares of its common stock at an exercise price of $0.40 per share and expiring on August 27, 2028 (the “May 2026 SPA Warrants”) for gross proceeds of $2,000 (the “May 2026 SPA”) less direct costs of $87. In connection with the May 2026 SPA, the Company issued the May 2026 Revolver Warrants to the other lender of the Revolver (see Note 6).

The May 2026 SPA Warrants are exercisable beginning on November 8, 2026 and expire August 27, 2028. The May 2026 SPA Warrants can be exercised on a cashless basis if the shares underlying the May 2026 SPA Warrants are not registered at the time it is exercised. The May 2026 SPA Warrants were determined to be equity classified warrants.

The holder of the May 2026 SPA Warrants shall not have the right to convert any portion of the respective warrants to the extent that after giving effect to such conversion the holder of the respective warrants, together with any affiliates, would beneficially own in excess of 9.99% (which may be increased to 19.99% at the holder’s sole discretion) of the number of common shares outstanding immediately after giving effect to such conversion. Any increase to the beneficial ownership limitation will not be effective until the 61st day after notice is received by the Company.

8. STOCK-BASED COMPENSATION PLANS

Time-based RSUs

A summary of time-based RSU activity is presented below:

The total stock compensation expense recognized related to vesting of time-based RSUs for the three months ended June 30, 2026 and 2025, was $62 and $36, respectively, and was recognized on the accompanying condensed consolidated statements of operations and comprehensive loss as a component of selling, general and administrative expenses. As of June 30, 2026, the total unrecognized stock-based compensation for time-based RSUs totaled $873 and are expected to be recognized over a weighted average period of 3.1 years.

Stock Options

A summary of option activity is presented below:

The total stock compensation expense recognized related to vesting of stock options for the three months ended June 30, 2026 and 2025 was $5 and $98, respectively, and was recognized on the accompanying condensed consolidated statements of operations and comprehensive loss as a component of selling, general and administrative expenses. As of June 30, 2026 the total unrecognized stock-based compensation for stock options was $170 and is expected to be recognized over a weighted average period of 1.8 years.

9. WARRANTS

The following table summarize the shares of the Company’s common stock issuable upon exercise of warrants outstanding at June 30, 2026:

Of the warrants outstanding, 6,105,521 shares remain subject to price reset as of June 30, 2026 based on future equity issuances with exercise prices lower than the stated exercise price.

A summary of warrant activity for the three months ended June 30, 2026 is presented below:

As of June 30, 2026, the intrinsic value of the outstanding warrants was $nil.

10. COMMITMENTS AND CONTINGENCIES

Legal proceeding* –*The Company is, from time to time, involved in routine legal matters, and audits and inspections by governmental agencies and other third parties which are incidental to the conduct of its business. This includes legal matters such as initiation and defense of proceedings to protect intellectual property rights, liability claims, employment claims, and similar matters. The Company believes the ultimate resolution of any such legal proceedings, audits, and inspections will not have a material adverse effect on its consolidated balance sheets, results of operations or cash flows.

On May 14, 2025, we were named as a defendant in a lawsuit filed in the Superior Court of the State of California in and for the County of Los Angeles Central Judicial District by Amanda Archer and Archer Bytes LLC, a former public relations consultant for the Company. The complaint alleges breach of contract, and other claims and seeks specific damages of $600,000 and unspecified punitive damages. We believe the claims are entirely without merit and intend to vigorously defend the matter.

On April 24, 2025, the Company’s former Chief Executive Officer (the “Former CEO”) commenced ACAS Early Conciliation proceedings (a mandatory step in the UK prior to filing a legal claim) alleging, among other things, unfair dismissal from his position. The Company has not yet been notified that the Former CEO has filed a legal claim with the UK Employment Tribunal.

Capital commitments – The Company had $6,202,782 purchase obligations as of June 30, 2026, related to purchase orders to factories for the manufacture of finished goods.

11. RELATED PARTY TRANSACTIONS

Consulting and Advisory Services

One director and one related party of the Company provided consulting and advisory services for the Company totaling $66 and $180 for the three months ended June 30, 2026 and 2025, respectively, and are included in selling, general and administrative expenses on the accompanying consolidated statement of operations and comprehensive loss. As of June 30, 2026 and March 31, 2026 there wereno amounts owed to either director.

Line of Credit, related party

Both lenders on the Revolver were investors of the Company that owned more than 5.0% of outstanding shares of the Company (see Note 6).

12. SEGMENT REPORTING

The following table includes additional information about reported segment revenue, significant segment expenses and segment measure of profitability:

Long-lived assets, excluding other non-current assets, were $1,467 and $1,357 as of June 30, 2026 and March 31, 2026, respectively and were located exclusively in the United Kingdom. See Note 2 for revenue by geographic location.

13. SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed consolidated financial statements were issued. Based upon this review, other than as described below or within these condensed consolidated financial statements, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.

During July 2026, the Company drew $1,000 on its Revolver.