Perfect Moment Ltd. reported significant financial challenges in its latest 10-Q filing for the quarter ending September 30, 2024. The company experienced a notable decline in revenue, with total revenue for Q3 2024 at $3.8 million, down 35% from $5.9 million in Q3 2023. For the six months ended September 30, 2024, revenue decreased by 30% to $4.8 million from $6.9 million in the same period last year. This decline is primarily attributed to the conclusion of a collaboration with Hugo Boss, which accounted for a $2.0 million drop in revenue. Despite this, ecommerce revenue saw an increase of 8% due to enhanced brand awareness.

Gross profit also fell sharply, with Q3 2024 gross profit at $2.1 million, down 37% from $3.3 million in Q3 2023. For the six-month period, gross profit decreased by 35% to $2.4 million from $3.8 million. Gross margins declined to 54% in Q3 2024 from 56% in the prior year, reflecting lower sales and a higher proportion of ecommerce sales, which typically yield lower margins.

The company reported a net loss of $2.7 million for Q3 2024, an increase from a loss of $1.5 million in Q3 2023. For the six months, the net loss was $6.1 million, compared to $4.2 million in the same period last year. Operating expenses rose to $4.6 million in Q3 2024, up from $3.6 million in Q3 2023, driven by increased selling, general, and administrative expenses.

As of September 30, 2024, Perfect Moment's cash and cash equivalents had plummeted to $725,000 from $7.9 million at the end of March 2024. Total current liabilities surged to $10.6 million, up from $4.8 million, while total liabilities increased to $10.6 million from $4.8 million. The accumulated deficit grew to $55.1 million, compared to $49.0 million at the end of March 2024.

Strategically, the company is focusing on enhancing its direct-to-consumer model and reducing reliance on wholesale partners. It plans to open pop-up stores in New York and England to strengthen brand identity and customer loyalty. Additionally, Perfect Moment is exploring international expansion opportunities, particularly in China, where it anticipates initial losses before achieving profitability.

Management has expressed substantial doubt about the company's ability to continue as a going concern, citing insufficient cash flows from operations. To address this, the company is considering short-term loans and long-term funding sources while closely monitoring debt collection and implementing strategies to improve margins.