What changed in this filing

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Item 1. Financial Statements

2025-11-13 compared with 2025-08-14 · 390 added, 253 removed, 302 unchanged (68% of the section changed)

3 unchanged sentences

in thousands, except share and per share data)

September 30, 2025

March 31, 2025

Current assets:

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Short-term borrowings, net

Operating lease liabilities, current

Note payable - related party, current, net

Operating lease obligations

Deferred revenue

1 unchanged sentence

Long term liabilities:

lease obligations, long-term portion

Note payable - related party, long-term, net

Total liabilities

Stockholders’ equity:

Series AA convertible preferred stock, $ 0.0001

par value, 1,800,000

shares authorized;

shares issued and outstanding as of June 30, 2025 and March 31, 2025, respectively

Shareholders’ equity:

Series AA convertible preferred stock, $ 0.0001 par value, 1,800,000 shares authorized;

924,921 shares issued and outstanding as of September 30, 2025 and March 31, 2025

Common stock;

$ 0.0001 par value;

100,000,000 shares authorized;

31,083,694 and 19,291,000

shares issued and outstanding as of June 30, 2025 and March 31, 2025, respectively

35,221,933 and 19,291,000 shares issued and outstanding as of September 30, 2025 and March 31, 2025, respectively

Additional paid-in capital

7 unchanged sentences

in thousands, except share and per share data)

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

Revenues, net:

Cost of sales

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Loss from operations

Other income (expense), net

Interest expense

Foreign currency transactions (loss) gain

Total other (expense) income, net

on Series AA Convertible Preferred Stock

loss attributable to common shareholders, basic and diluted

and diluted loss per share attributable to common stockholders

and diluted weighted-average number of shares outstanding

Foreign currency transaction gain

Total other expense, net

Dividends on Series AA Convertible Preferred Stock

Net loss attributable to common shareholders, basic and diluted

Basic and diluted loss per share attributable to common shareholders

Basic and diluted weighted-average number of shares outstanding

Other comprehensive losses:

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

the three months ended June 30, 2025 and 2024

in thousands, except share data)

Series AA Convertible Preferred Stock

the three months ended September 30, 2025 and 2024

Income (Loss)

Convertible Preferred Stock

Common Shares

Additional Paid-in

Accumulated Other Comprehensive

Total Shareholders’

Accumulated Other

Comprehensive

Shareholders’

Income (Loss)

Balance -March 31, 2024

Balance - June 30, 2024

Stock compensation expense for employee vested options

Stock compensation expense for employee vested RSUs

Fair value of shares issued for services

Foreign currency translation adjustment

Balance - September 30, 2024

Balance - June 30, 2025

Stock compensation expense for employee vested options

Stock compensation expense for employee vested RSUs

Cancellation of employee vested options

Fair value of RSUs issued to related party as a finance cost

Issuance of common stock from public offering

Issuance of common stock and warrants to related party under securities purchase agreement, net

Foreign currency translation adjustment

Dividends on Series AA Convertible Preferred Stock

Balance - September 30, 2025

the six months ended September 30, 2025 and 2024

Convertible Preferred Stock

Common Shares

Accumulated Other

Comprehensive

Shareholders’

Income (Loss)

Balance - March 31, 2024

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Fair value of shares issued for services

Foreign currency translation adjustment

Balance - September 30, 2024

Balance - March 31, 2025

Stock compensation expense for employee vested options

Stock compensation expense for employee vested RSUs

Cancellation of employee vested options

Fair value of shares issued for services

Fair value of RSUs issued to related party as a finance cost

Issuance of common stock upon extinguishment of Related Party Note

Sale of common stock from public offering

Issuance of common stock and warrants to related party under securities purchase agreement, net

Foreign currency translation adjustment

Dividends on Series AA Convertible Preferred Stock

Balance – June 30, 2025

Balance - September 30, 2025

accompanying notes are an integral part of these condensed consolidated financial statements

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in thousands)

Three months ended

June 30, 2025

June 30, 2024

Six months ended

September 30, 2025

September 30, 2024

Operating activities:

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Other non-current assets

Operating lease liability

Operating lease obligations

Trade payables

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Proceeds from public offering, net

Payment of dividend on Series AA Convertible Preferred Stock

Proceeds from securities purchase agreement, net from related party

Proceeds from short-term borrowings, net

Proceeds from Related Party Note

Repayment of short-term borrowings

Proceeds from trade finance facilities, net

Repayment of trade finance facility

Net cash used in financing activities

Proceeds from notes payable – related party

Payment of dividend on Series AA Convertible Preferred Stock

Net cash provided by financing activities

Effect of exchange rate changes on cash

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Cash and cash equivalents and restricted cash – beginning of the period

Cash and cash equivalents and restricted cash – end

of the period

Cash and cash equivalents and restricted cash – end of the period

Supplemental disclosures of cash flow information:

Interest paid on borrowings and bank loans

Reconciliation of cash, cash equivalents, and restricted cash reported in the condensed

consolidated balance sheets

Interest paid on borrowings

Reconciliation of cash, cash equivalents, and restricted cash reported in the condensed consolidated balance sheets

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents and restricted cash presented

in the condensed consolidated statements of cash flows

Total cash, cash equivalents and restricted cash presented in the condensed consolidated statements of cash flows

Supplemental disclosure of non-cash investing and financing activities:

Recognition of debt discount on short-term borrowings

Fair value of shares issued in exchange for services to be

Fair value of shares issued to extinguish Related Party Note

Recognition of operating lease right of use assets and lease

Fair value of shares issued to extinguish a note payable – related party

Fair value of RSUs issued as a finance cost on notes payable – related

Fair value of shares issued in exchange for services to be received

Cancellation of employee vested options

Recognition of operating lease right of use asset and lease obligation

accompanying notes are an integral part of these condensed consolidated financial statements

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to Condensed Consolidated Financial Statements

the three months ended June 30, 2025 and 2024

the three and six months ended September 30, 2025 and 2024

otherwise indicated, dollar amounts in thousands)

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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, 2025, results of operations for the three months

ended June 30, 2025 and 2024, consolidated statements of shareholders’ equity for the three months ended June 30, 2025 and 2024,

and cash flows for the three months ended June 30, 2025 and 2024.

The Company’s results for the three months ended June 30, 2025

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, 2025.

The terms “fiscal 2026” and “fiscal

2025” refer to the Company’s fiscal year ending March 31, 2026 and fiscal year ended March 31, 2025, respectively.

necessary for a fair presentation of the Company’s financial position at September 30, 2025, results of operations for the three

and six months ended September 30, 2025 and 2024, consolidated statements of shareholders’ equity for the three and six months

ended September 30, 2025 and 2024, and cash flows for the three and six months ended September 30, 2025 and 2024.

The Company’s

results for the three and six months ended September 30, 2025 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, 2025.

The terms “fiscal 2026” and “fiscal 2025” refer to the Company’s fiscal year ending March

31, 2026 and fiscal year ended March 31, 2025, respectively.

of consolidation

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Perfect Moment Asia Limited (“PMA”), Perfect Moment (UK) Limited (“PMUK”), Perfect Moment USA, Inc., (“PMUSA”)

and Perfect Moment TM Sarl.

and Perfect Moment International AG (“PMCH”).

These unaudited condensed consolidated financial statements have been prepared on the same basis as the annual

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

June 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 June 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 $ 3,819

for the three months ended June 30, 2025 and used cash in operations

during that period.

As of June 30, 2025, the Company had an

accumulated deficit of $ 68,735 .

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.

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.

Company’s future capital requirements will depend on many factors, including production costs and planned growth.

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a result of the above, in connection with the Company’s assessment of going concern considerations in accordance with FASB’s

Accounting Standards Update, Disclosures of Uncertainties about an Entity’s Ability to Continue as

a Going Concern, 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 consolidated financial statements are available to be

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, 2025, expressed substantial doubt about the Company’s ability to continue as a going concern.

consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification

Accounting Standards Update, Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern, 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 consolidated financial statements are available to be issued.

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, 2025, expressed substantial doubt about the Company’s ability to continue as a going concern.

These 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.

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customers concentrated in the northern hemisphere, and the lowest sales during its first fiscal quarter.

of June 30, 2025 and March 31, 2025, the Company did not have any contract assets and had $ 807

deferred revenue on the accompanying consolidated balance sheets.

the three months ended June 30, 2025 and 2024, revenue, net recognized from performance obligations related to prior periods was not

of September 30, 2025 and March 31, 2025, the Company did not have any contract assets and had $ 1,190 and $ 264 , respectively, of deferred

revenue on the accompanying consolidated balance sheets.

the three and six months ended September 30, 2025 and 2024, 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 was not material.

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OF REVENUE NET BY CHANNEL AND GEOGRAPHICAL LOCATION

Three months ended

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

Three Months Ended

June 30, 2025

June 30, 2024

Six Months Ended

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

Channel revenue, net

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Partnership revenues

Total revenue, net

Geographic location revenue, net

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Accounts receivable are carried net of allowances

for credit losses as of March 31, 2025 and 2024.

After all reasonable attempts to collect a receivable have failed, the amount of the

receivable is written off against the allowance.

As of June 30, 2025 and March 31, 2025, the Company had $ 624

respectively, in allowances for credit losses.

for credit losses as of September 30, 2025 and 2024.

After all reasonable attempts to collect a receivable have failed, the amount of

the receivable is written off against the allowance.

As of September 30, 2025 and March 31, 2025, the Company had $ 560 and $ 547 , respectively,

in allowances for credit losses.

Concentration

of credit risk

the three months ended June 30, 2025 and 2024, the largest fabric supplier supplied 56 %

respectively, of the fabric used to manufacture the Company’s products.

the three months ended June 30, 2025, we had one individual customer that accounted for approximately 11 % of total revenue, net.

customer individually did not comprise more than 10 %

of total accounts receivable as of June 30, 2025.

For the three months ended June 30, 2024, no single customer accounted for more than

of total revenue.

of June 30, 2025, no customers accounted for more than 10 %

of total accounts receivable.

As of March 31, 2025, two customers accounted for approximately 27 %

of total accounts receivable.

the three and six months ended September 30, 2025, the largest single supplier of manufactured goods produced 43 % of the Company’s

products and for the same periods in 2024, produced 45 % of the Company’s products.

the three and six months ended September 30, 2025, the largest single fabric supplier supplied Nil and 56 %, respectively, of

the fabric used to manufacture the Company’s products, and for the same periods in 2024, supplied 44 % and 46 %, respectively, of

the fabric used to manufacture the Company’s products.

the three months ended September 30, 2025, we had one major customer, which accounted for approximately 16 % of total revenue.

the six months ended September 30, 2025, we had one major customer, which accounted for approximately 12 % of total revenue.

the three months ended September 30, 2024, we had one major customer, which accounted for approximately 15 % of total revenue.

the six months ended September 30, 2024, we had two major customers, which accounted for approximately 23 % of total revenue.

of September 30, 2025, one customer accounted for approximately 19 % of total accounts receivable.

As of March 31, 2025, two customers

accounted for approximately 27 % of total accounts receivable.

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

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Period end exchange rate:

September 30, 2025

March 31, 2025

Period end exchange rate

Three months ended

1 unchanged sentence

Average exchange rate:

June 30, 2025

June 30, 2024

September 30, 2025

September 30, 2024

Six months ended

Average exchange rate:

September 30, 2025

September 30, 2024

Average exchange rate

per share of common stock

net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period.

Diluted net loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of shares

Diluted net loss per share is computed by dividing the net loss applicable to common shareholders by the weighted average number of shares

of common stock outstanding plus the number of additional shares of common stock that would have been outstanding if all dilutive potential

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exists, dilutive securities are not included in the calculation as the impact is anti-dilutive.

participating securities such as our preferred stock, basic and diluted net loss per share attributable to common stockholders is presented

participating securities such as our preferred stock, basic and diluted net loss per share attributable to common shareholders is presented

in conformity with the two-class method, an earnings allocation method that determines net income (loss) per share (when there are earnings)

for common stock and participating securities.

No income was allocated to the participating securities for three months ended June 30,

2025 and 2024 as results of operations were a loss and basic and diluted weighted-average shares are the same in the loss per share calculation

for both periods.

No income was allocated to the participating securities for the three and six months ended

September 30, 2025 and 2024 as results of operations were a loss and basic and diluted weighted-average shares are the same in the loss

per share calculation for both periods.

dilutive stock options and securities excluded from the computation of diluted net income (loss) per share, because the effect would

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OF ANTIDILUTIVE SECURITIES FOR BASIC AND DILUTED NET INCOME (LOSS) PER SHARE

September 30, 2025

September 30, 2024

Options to acquire common stock

2 unchanged sentences

Series AA convertible preferred stock

Antidilutive securities

issued accounting pronouncements

6 unchanged sentences

following table details the primary categories of inventories as of:

OF INVENTORIES

September 30, 2025

March 31, 2025

Finished goods

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Total inventories, net

PREPAID ASSETS AND OTHER CURRENT ASSETS

PREPAID AND OTHER CURRENT ASSETS

following table details the primary categories of prepaid and other currents assets as of:

OF PREPAID AND OTHER CURRENT ASSETS

September 30, 2025

March 31, 2025

Deposits and prepayments

Prepaid import duties

Marketing services

Unbilled accounts receivable

Other receivables

Unbilled accounts receivable

Total prepaid and other current assets

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OF ACCRUED EXPENSES

September 30, 2025

March 31, 2025

Accrued expenses

Accrued import duties

Indirect taxes

Accrued payroll and payroll taxes

Accrued Series AA Preferred Stock dividends

Returns provision

Accrued import duties

Merchant credit

Indirect taxes

the three months ended June 30, 2025, the Company entered into a business loan and security agreements (the “Q1 2026 Term Loan”)

with the same lender as the Term Loans entered into during fiscal year 2025 for a short-term loan that matures 30-weeks from the date

the amount is borrowed.

the six months ended September 30, 2025, the Company entered into business loan and security agreements (the “2026 Term Loans”)

with the same lender as the Term Loans entered into during fiscal year 2025 for short-term loans that mature 30-weeks from the date of

No amount of repaid borrowings may be reborrowed.

The Company borrowed a gross amount of $ 1,400 ,

net of fees of $ 70

which was recorded as a debt discount and is being amortized

over the term of the Q1 2026 Term Loan.

The Q1 2026 Term Loan and the outstanding balance owed on the fiscal year 2025 Term Loans at

March 31, 2025 are collectively referred to as the “Term Loans”.

the three months ended June 30, 2025, the Company made total repayments of $ 2,241

on the Term Loans and amortized $ 825

of the debt discount to interest expense.

As of June 30, 2025

and March 31, 2025, the Company had outstanding borrowings of $ 2,485

and $ 2,738 , respectively, and an unamortized debt discount

$ 887 , respectively, resulting in net balance of $ 1,694

and $ 1,851 , respectively.

May 2025, the Company entered into a promissory note (the “Related Party Note”) with an entity controlled by the Chairman

of the Company’s board of directors to borrow $ 500 .

The Related Party Note matures on December 31, 2025 and permits the Company to prepay the note in full without penalty at any time.

an Event of Default, as defined in the Related Party Note, occurs, the outstanding principal and accrued interest becomes due and payable

Concurrently, with the closing of an offering in June 2025 (see Note 7), the Related Party Note and accrued unpaid interest

of totaling $ 508

was extinguished through the issuance of 1,692,694

shares of the Company’s common stock at a per share price

The issuance of shares was approved and determined to be on terms and conditions at arm’s length as the share price was the same

price extended to third parties as part of a share offering that closed on the same day (see Note 7).

The Company borrowed a gross amount of $ 1,988 , net of fees of $ 658 which

was recorded as a debt discount and is being amortized over the term of the 2026 Term Loans.

The 2026 Term Loans and the outstanding

balance owed on the fiscal year 2025 Term Loans at March 31, 2025 are collectively referred to as the “Term Loans”.

the six months ended September 30, 2025 and 2024, the Company made total repayments on the Term Loans of $ 3,871 and $ 399 , respectively.

During the three and six months ended September 30, 2025, the Company amortized $ 538 and $ 1,293 , respectively, of the debt discount to

interest expense.

During the three and six months ended September 30, 2024, the Company amortized $ 181 of the debt discount to interest

As of September 30, 2025 and March 31, 2025, the Company had outstanding borrowings of $ 854 and $ 2,738 , respectively, and an

unamortized debt discount of $ 252 and $ 887 , respectively, resulting in a net balance of $ 602 and $ 1,851 , respectively.

May 2025, the Company entered into a promissory note (the “May 2025 Related Party Note”) with an entity controlled by the

Chairman of the Company’s board of directors to borrow $ 500 .

The May 2025 Related Party Note matures on December 31, 2025 and permits

the Company to prepay the note in full without penalty at any time.

If an Event of Default, as defined in the May 2025 Related Party

Note, occurs, the outstanding principal and accrued interest becomes due and payable immediately.

Concurrently, with the closing of an

offering in September 2025 (see Note 7), the May 2025 Related Party Note and accrued unpaid interest totaling $ 508 was extinguished through

the issuance of 1,692,694 shares of the Company’s common stock at a per share price of $ 0.30 .

The issuance of shares was approved

and determined to be on terms and conditions at arm’s length as the share price was the same price extended to third parties as

part of a share offering that closed on the same day (see Note 7).

August 2025, the Company received $ 3,390

from one of its principal shareholders (a related party) in exchange for an unsecured promissory note that matured on November

8, 2025 (the “First August 2025 Related Party Note”;

subsequently amended to March 2026 (see Note 13), and

from two of its principal shareholders (related parties) in exchange for an unsecured promissory note that matures on August

18, 2030 (the “Second August 2025 Related Party Note”, collectively with the First August 2025 Related Party

Note, the “August 2025 Related Party Notes”).

consideration for providing the August 2025 Related Party Notes, the Company issued the principal shareholder 652,253 restricted stock

units of the Company’s common stock, with 521,802 restricted stock units vesting immediately and 130,451 restricted stock units

vesting over the term of the August 2025 Related Party Notes.

The fair value of the restricted stock units was $ 305 , as determined by

the average closing price of the Company’s common stock for the five trading days immediately preceding the issuance of the August

2025 Related Party Notes, and was recorded as a debt discount and is being amortized over the terms of the August 2025 Related Party

August 2025 Related Party Notes permit the Company to prepay the note in full without penalty at any time.

If an Event of Default, as

defined in the August 2025 Related Party Notes, occurs, the outstanding principal and accrued interest becomes due and payable immediately.

If the Company prepays the notes, the unvested restricted stock units would vest proportionately with the amount of the prepayment.

the three and six months ended September 30, 2025, the Company amortized $ 98 of the debt discount to interest expense.

As of September

30, 2025, the Company has outstanding borrowings of $ 5,090 and an unamortized discount of $ 207 resulting in a net balance of $ 4,883 , of which $ 3,283 is current.

Finance Facility

Company repaid $ 2,495 on

the trade finance facility in June 2025.

During the three months ended June 30, 2025, there were letter of credits issued, and therefore,

no outstanding letters of credits as of the period then ended.

STOCKHOLDERS’ EQUITY

and Warrants Issued as Part of the Offering

June 30, 2025, the Company closed a public offering of 10,000,000

shares of its common stock at an offering price of $ 0.30

per share (the “Offering”), pursuant to its registration

statement on Form S-3 (File No.

333-285612) for aggregate net proceeds of approximately $ 2,538 ,

after deducting underwriting discounts and commissions and estimated offering expenses.

There were $ 149

of offering expenses that were accrued for as of June 30, 2025

and included as a component of accrued expenses on the accompanying unaudited condensed consolidated balance sheets.

Company repaid $ 2,495 on the trade finance facility in June 2025, and the facility was terminated in August 2025.

SHAREHOLDERS’ EQUITY

of Common Stock

On June 30, 2025, the Company closed a public offering of 10,000,000 shares of its common stock at an offering price

of $ 0.30 per share (the “Offering”), pursuant to its registration statement on Form S-3 (File No.

333-285612) for aggregate

net proceeds of approximately $ 2,538 , after deducting underwriting discounts and commissions and estimated offering expenses.

The underwriters

were also granted a 45-day option to purchase up to an additional 1,500,000

shares of common stock and/or pre-funded warrants to cover

were also granted a 45-day option to purchase up to an additional 1,500,000 shares of common stock and/or pre-funded warrants to cover

over-allotments, if any.

On July 21, 2025, the over-allotment option was partially exercised by the underwriters for an additional 313,128

shares of the Company’s common stock, generating net proceeds of approximately $ 83 , after deducting underwriting discounts and

commissions and estimated offering expenses.

connection with the Offering, the Company issued to the representative of the underwriters, warrants to purchase up to 500,000

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The June 2025

Warrant is exercisable beginning on the date of issuance and expires five years thereafter.

The holder of the June 2025 Warrants shall

not have the right to convert any portion of the June 2025 Warrant to the extent that after giving effect to such conversion the holder

of the June 2025 Warrant, together with any affiliates, would beneficially own in excess of 4.99 %

(which may be increased to 9.99 %

at the holder’s sole discretion) of the number of common shares outstanding immediately after giving effect to such conversion.

Warrant is exercisable beginning on the date of issuance and expires five

years thereafter.

June 2025 Warrant was determined to be an equity classified warrant and fair value was calculated as $ 5 using the Black-Scholes

option-pricing model with the following assumptions:

volatility of 60 %, risk-free rate of 4.2 %, annual dividend yield of

0.0 % and expected life of five years .

connection with the underwriter’s exercise of the over-allotment option, the Company issued the representative of the underwriters

from the Offering a warrant to purchase up to 15,656

shares of the Company common stock at an exercise price of

(the “July 2025 Warrant”).

The July 2025 Warrant

is exercisable beginning on the date of issuance and expires five

years thereafter.

July 2025 Warrant was determined to be an equity classified warrant and fair value was calculated as $ 74 using the Black-Scholes

option-pricing model with the following assumptions:

volatility of 113 %, risk-free rate of 4.2 %, annual dividend yield of 0.0 %

and expected life of five years .

holder of the June 2025 Warrants and July 2025 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 4.99% (which may be increased to 9.99% 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.

June 2025 Warrant was determined to be an equity classified warrant and fair value was calculated as $ 74 using the Black-Scholes option-pricing

model with the following assumptions:

Purchase Agreement:

On August 27, 2025, the Company entered into a securities purchase agreement (the “August SPA”)

to issue and sell 3,172,858 shares of its common stock at a per share price of $ 0.46822 , which represents the average closing price of

the Company’s common stock for the five trading days immediately preceding the sale, and a warrant to purchase up to 3,204,908

shares of its common stock at an exercise price of $ 0.46822 per share (the “August 2025 Warrant”) for aggregate net proceeds

of approximately $ 1,429 , after deducting direct offering expenses.

The August 2025 Warrant is exercisable beginning on the date of issuance

and expires three years thereafter.

The August 2025 Warrant can be exercised on a cashless basis if the shares underlying the August

2025 Warrant are not registered at the time it is exercised.

August 2025 Warrant was determined to be an equity classified warrant and fair value was calculated as $ 1,125 using the Black-Scholes

option-pricing model with the following assumptions:

volatility of 113 %, risk-free rate of 4.2 %, annual dividend yield of 0.0 %

and expected life of five

and expected life of three years .

holder of the August 2025 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.

in August 2026, the Company may, at its sole discretion, require the holder of the August 2025 Warrant to exercise the warrant in full

on a specified date (the “Mandatory Exercise Date”), provided that, prior to and as of the Mandatory Exercise Date (a) the

closing price of the Company’s common stock has exceeded the exercise price of the August 2025 Warrant during any consecutive five

trading days within a fifteen trading-day period at least once and (b) the Company has an effective registration statement registering

the resale of both the August 2025 Warrant and the shares issuable upon exercise of the August 2025 Warrant.

On the Mandatory Exercise

Date, the beneficial ownership limitation will be automatically increased to 19.99%.

If the holder of the August 2025 Warrant does not

pay the amount due in cash within thirty days of the Mandatory Exercise Date, then the Company may effect, in its discretion, either

(i) a cashless exercise of the August 2025 Warrants or (ii) a redemption and subsequent cancellation of the August 2025 Warrant, in exchange

Issued for Services

the three months ended June 30, 2025, the Company issued 100,000 shares

of common stock to a vendor for services to be rendered with a fair value of $ 62 ,

as determined by the closing price on the day of issuance.

During the three months ended June 30, 2025, the Company amortized $ 199 of

the value of the shares as the services were rendered and $ 441 of

the remaining fair value of the shares was included as a prepaid asset as of June 30, 2025.

As of March 31, 2025, $ 578 of the

remaining fair value of the shares issued during the year ended March 31, 2025 was included as a prepaid asset.

Company, from time to time, issues shares of its common stock for marketing and other services.

The fair value of the shares is

initially capitalized as a prepaid service cost and amortized over the service period.

As of March 31, 2025, the unamortized service

costs were $ 578 .

During the six months ended September 30, 2025, the Company issued 100,000 shares

of common stock to a vendor for services to be rendered with a fair value of $ 62 as

determined by the closing price on the day of issuance.

During the six months ended September 30, 2025 and 2024, the Company

amortized $ 339 and

respectively, of the value of the shares as the services were rendered.

As of September 30, 2025, the unamortized service cost was

$ 301 and was included as a component of prepaid and other current assets (see Note 4).

AA Preferred Stock Dividends

Dividends on the Series

AA Preferred Stock accrue daily and will be cumulative from the first day of the calendar month in which they are issued, and shall be

payable monthly in arrears on the 30th day of each calendar month, at the rate of 12.0 %

per annum of its original issue price, which is the equivalent to $ 0.6961 per annum per share.

the three months ended June 30, 2025, the Company recorded dividends on our Series AA Preferred Stock of approximately $ 159 .

As of June 30, 2025, we have unpaid dividends on our Series AA Preferred Stock of $ 61

recorded as a component of accrued expenses on the accompanying

condensed consolidated balance sheets (see Note 5).

on the Series AA Preferred Stock accrue daily and will be cumulative from the first day of the calendar month in which they are issued,

and shall be payable monthly in arrears on the 30th day of each calendar month, at the rate of 12.0 % per annum of its original issue

price, which is the equivalent to $ 0.6961 per annum per share.

the three and six months ended September 30, 2025, the Company recorded dividends on our Series AA Preferred Stock of approximately $ 161

and $ 320 , respectively.

As of September 30, 2025, we have unpaid dividends on our Series AA Preferred Stock of $ 54 recorded as a component

of accrued expenses on the accompanying condensed consolidated balance sheets (see Note 5).

STOCK-BASED COMPENSATION PLANS

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Vested/deemed vested

Non-vested at June 30, 2025

total stock compensation expense recognized related to vesting of time-based RSUs for the three months ended June 30, 2025 and 2024,

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, 2025, the total unrecognized stock-based compensation for time-based

RSUs totaled $ 494

and are expected to be recognized over a weighted average period

Non-vested at September 30, 2025

total stock compensation expense related to vesting of time-based RSUs for the three months ended September 30, 2025 and 2024, was $ 40

and $ 127 , respectively, and for the six months ended September 30, 2025 and 2024, was $ 76 and $ 204 , respectively, was recognized on the

accompanying condensed consolidated statements of operations and comprehensive loss as a component of selling, general and administrative

As of September 30, 2025, the total unrecognized stock-based compensation for time-based RSUs totaled $ 1,032 and was expected

to be recognized over a weighted average period of 3.6 years.

summary of option activity is presented below:

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Outstanding at March 31, 2025

Outstanding at June 30,

Vested and expected to vest

at June 30, 2025

Exercisable at June 30, 2025

total stock compensation expense recognized related to vesting of stock options for the three months ended June 30, 2025 and 2024 was

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, 2025 the total unrecognized stock-based compensation for stock options

and is expected to be recognized over a weighted average period

following table summarize the shares of the Company’s common stock issuable upon exercise of warrants outstanding at June 30, 2025:

Outstanding at September 30, 2025

Vested and expected to vest at September 30, 2025

Exercisable at September 30, 2025

During August 2025, the Company

re-purchased 208,400 stock options from certain directors and officers at fair value as determined by the closing price on the day of

re-purchase, for cash consideration of $ 60 .

The re-purchase provided for $ 37 in excess fair value of the cash consideration over the fair

value of the initial options, which was recognized as compensation expense and was included as a component of selling, general and administrative

expenses for the three and six months ended September 30, 2025.

total stock compensation expense recognized related to vesting of stock options for the three months ended September 30, 2025 and 2024

was $ 72 and $ 215 , respectively and for the six months ended September 30, 2025 and 2024 was $ 170 and $ 508 , respectively, and was recognized

on the accompanying condensed consolidated statements of operations and comprehensive loss as a component of selling, general and administrative

As of September 30, 2025 the total unrecognized stock-based compensation for stock options was $ 890 and is expected to be recognized

over a weighted average period of 2.6 years.

following table summarizes the shares of the Company’s common stock issuable upon exercise of warrants outstanding at September

OF COMMON STOCK ISSUABLE UPON EXERCISE OF WARRANTS OUTSTANDING

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Average Exercise

Underwriter Warrants

March 2025 Warrant

June 2025 Warrant

summary of warrant activity for the three months ended June 30, 2025 is presented below:

summary of warrant activity for the six months ended September 30, 2025 is presented below:

OF WARRANTS ACTIVITY

Outstanding at March 31, 2025

at June 30, 2025, all vested

of June 30, 2025, the intrinsic value of the outstanding warrants was $nil.

Outstanding at September 30, 2025, all vested

of September 30, 2025, the intrinsic value of the outstanding warrants was $ 34 .

COMMITMENTS AND CONTINGENCIES

from NYSE – On December 17, 2024 the Company received a notification from the NYSE American LLC (the “NYSE”)

stating that the Company is not in compliance with the minimum stockholders’ equity requirements of Sections 1003(a)(ii) of the

NYSE American Company Guide (the “Company Guide”) requiring stockholders’ equity of $ 4,000

or more if the Company has reported losses from continuing

operations and/or net losses in three of the four most recent fiscal years.

As of September 30, 2024, the Company had stockholders’

equity of approximately $ 2,700

and had losses in its three most recent fiscal years ended

March 31, 2024.

stating that the Company is not in compliance with the minimum shareholders’ equity requirements of Sections 1003(a)(ii) of the

NYSE American Company Guide (the “Company Guide”) requiring shareholders’ equity of $ 4,000 or more if the Company has

reported losses from continuing operations and/or net losses in three of the four most recent fiscal years.

As of September 30, 2025,

the Company had shareholders’ equity of approximately $ 981 and had losses in its three most recent fiscal years ended March 31,

Company is now subject to the procedures and requirements of Section 1009 of the Company Guide.

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Securities and Exchange Commission.

proceeding – The Company is, from time to time, involved in routine legal matters, and audits and inspections by

proceedings – 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.

5 unchanged sentences

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.

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.

has not yet been notified that the Former CEO has filed a legal claim with the UK Employment Tribunal.

commitments – The Company had $ 5,385

purchase obligations as of June 30, 2025, related to purchase

orders to factories for the manufacture of finished goods.

The complaint alleges breach of contract, and other claims and seeks specific damages of $ 600,000 and unspecified punitive damages.

believe the claims are entirely without merit and we continue to vigorously defend the matter.

October 6, 2025, the Company received notice that its former Chief Executive Officer of the Company, Mark Buckley,

filed Grounds of Complaint with the UK Employment Tribunal against the Company alleging, among other things, unfair dismissal from his

The Company filed its Grounds of Resistance to Mr.

Buckley’s claims on October 30, 2025.

The Company strongly believes

in its defense to Mr.

Buckley’s claims and also has strong counterclaims to bring against Mr.

Buckley because of his actions and

conduct while serving as the Company’s CEO.

The Company intends to continue vigorously defending the matter.

The Company’s

attempts to resolve the dispute will continue in parallel with the ongoing litigation.

commitments – The Company had $ 2,176 purchase obligations as of September 30, 2025, related to purchase orders to factories

for the manufacture of finished goods.

lien on inventory – Per the terms of one third-party service contract, a lien may be placed on the Company’s

1 unchanged sentence

of an outstanding payment.

As of June 30, 2025 and March 31, 2025, a lien has not been placed on the Company’s inventory in connection

with this contract.

– In April 2025, a two-year lease renewal agreement was

executed during April 2025 with fixed monthly payments of approximately $ 0.6 .

At inception, the Company recorded a right of use asset

and operating lease liability of approximately $ 18 .

As of September 30, 2025 and March 31, 2025, a lien has not been placed on the Company’s inventory in

connection with this contract.

– In April 2025, a two-year lease renewal agreement was executed during April 2025 with fixed monthly payments of

approximately $ 0.6 .

At inception, the Company recorded a right of use asset and operating lease liability of approximately $ 18 .

In October 2025, the Company notified its landlord of its intent to terminate this lease in January 2026.

RELATED PARTY TRANSACTIONS

director and one related party of the Company provided consulting and advisory services for the Company totaling $180 and $45 for

the three months ended June 30, 2025 and 2024, respectively, and are included in selling, general and administrative expenses on the

accompanying consolidated statement of operations and comprehensive loss.

As of June 30, 2025 and March 31, 2025 there were no

amounts owed to either director.

and Advisory Services

director and one related party of the Company provided consulting and advisory services for the Company totaling $ 191 and $ 47 for the

three months ended September 30, 2025 and 2024, respectively, and totaling $ 371 and $ 93 for the six months ended September 30, 2025 and

2024, respectively, and are included in selling, general and administrative expenses on the accompanying consolidated statement of operations

and comprehensive loss.

As of September 30, 2025 and March 31, 2025 there were no amounts owed to either the director or the related

SEGMENT REPORTING

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OF SEGMENT REVENUE, SIGNIFICANT SEGMENT EXPENSES AND SEGMENT MEASURE OF PROFITABILITY

months ended June 30, 2025

months ended June 30, 2024

segment expenses

Cost of Revenue

and administrative

and advertising

segment items (1)

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

Revenues, net

significant segment expenses:

Cost of sales

Selling expense

General and administrative

Marketing and advertising

Non-cash compensation

Other segment items (1)

interest expense and foreign currency transactions (loss) gain.

2 unchanged sentences

OF LONG-LIVED ASSETS, EXCLUDING OTHER NON-CURRENT ASSETS, BY GEOGRAPHY

United Kingdom

long-lived assets

5 unchanged sentences

consolidated financial statements.

July 21, 2025, the over-allotment option was partially exercised by the underwriters for an additional 313,128

shares of the Company’s common stock, generating net

proceeds of approximately $ 87 ,

after deducting underwriting discounts and commissions and estimated offering expenses.

July 21, 2025, in connection with the underwriter’s exercise of the over-allotment option, the Company issued the representative

of the underwriters from the Offering (see Note 7) a warrant to purchase up to 15,656

shares of the Company common stock at an exercise price of

(the “July 2025 Warrant”).

The July 2025 Warrant

is exercisable beginning on the date of issuance and expires five

years thereafter.

Company received $ 3,390,000 in funding from one of its principal stockholders (a related party) to support working capital needs.

Company is formalizing the related agreement, which is expected to include an interest rate of 12.0 % per annum and a maturity date of

November 8, 2025 .

Line of Credit (“ELOC”)

October 7, 2025, the Company entered into an equity purchase agreement (the “ELOC”), whereby the Company has the right, but

not the obligation, to direct an investor to purchase up to $ 25,000 of the Company’s common stock (the “Put Shares”),

where the Company directs the investor to purchase Put Shares in increments between $5 and the lesser of (a) $500 or (b) 20.0% of the

Average Daily Trading Value (as defined in the ELOC), on the terms and conditions set forth in the ELOC.

The purchase price of the Put

Shares will be the lesser of (i) 97.0% of the Market Price (as defined in the ELOC) or (ii) 102.0% of the Market Alternative Price (as

defined in the ELOC).

If the Company’s principal market is any tier of the OTC Markets on the date the investor receives the Company’s

directive, the purchase price of the Put Shares will be the lesser of (i) 85.0% of the Market Price or (ii) 85.0% of the Market Alternative

The number of Put Shares to be purchased by the investor is subject to a beneficial ownership limitation of 4.99% .

ELOC will not be effective until it is first approved by the Company’s shareholders and then approved by the Company’s board

of directors.

Once the ELOC is effective, the Company will issue the investor shares of the Company’s common stock (the “Commitment

Shares”) that is determined by dividing 187,000 by the lesser of (i) the closing price of the Company’s common stock on the

Trading Day (as defined in the ELOC) immediately preceding date the ELOC is approved by Company’s board of directors, or (ii) average

of the five (5) closing prices of the Company’s common stock during the five Trading Days immediately preceding the date the ELOC

is approved by Company’s board of directors.

As of the date these condensed consolidated financial statements were issued, the

approvals were not yet received.

connection with the ELOC, the Company entered into a registration rights agreement (the “ELOC RRA”) whereby the Company will

file a registration statement covering the maximum number of registerable securities (as defined in the ELOC RRA) within forty-five calendar

days from the date the ELOC is approved by the Company’s board of directors.

ELOC will end on the earlier of (i) the date the investor purchased $ 25,000 of Put Shares, (ii) October 7, 2027, (iii) the date of written

notice of termination by the Company to the investor (per the terms and conditions set forth in the ELOC), (iv) the ELOC RRA is no longer

effective after the initial effective date of the ELOC RRA, or (v) voluntary on involuntary bankruptcy proceedings commence.

August 2025 Related Party Note Amendment

October 2025, the Company amended the First August 2025 Related Party Note extending the maturity date from November 8, 2025 to March

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements