Perfect Corp. signs $2-a-share cash merger deal
As of September 24, 2026, the proposed $2.00-per-share merger had not closed; active subscribers and operating cash flow were lower year over year.
Perfect Corp. reported revenue of $34.3 million for the six months ended June 30, 2026, up 5.9% from $32.4 million a year earlier, and net income of $3.6 million, up 45.3% from $2.5 million. Revenue from mobile app and web subscriptions was $23.4 million, compared with $20.3 million. Active subscribers were 820,000 as of June 30, 2026, down 14.6% from over 960,000 a year earlier; operating cash flow was $5.209 million, versus $7.987 million.
On July 10, 2026, Perfect Corp. entered into a merger agreement with ProjectNY, controlled by Chairwoman of the Board and Chief Executive Officer Ms. Alice H. Chang. ProjectNY will merge into Perfect Corp.; each ordinary share issued and outstanding immediately before the effective time, except Excluded, Continuing and Dissenting Shares, will be converted into a right to receive $2.00 in cash per share, without interest. Completion remains subject to customary conditions, including approval by at least two-thirds of votes cast at an extraordinary general meeting. The merger had not been completed when the financial statements were authorized on September 24, 2026.
Positive
- Revenue: 5.9% increase to $34.3 million in first-half 2026.
- Net income rose 45.3% to $3.6 million in first-half 2026.
Negative
- Operating cash flow fell to $5.209 million from $7.987 million year over year.
- Active subscribers decreased 14.6% to 820,000 as of June 30, 2026.
Filing Explained
Chang, her controlled entities and CIT, together holding about 81.2% of Perfect’s voting power, agreed to vote for the merger; this voting commitment does not itself establish completion, which remains subject to shareholder approval by at least two-thirds of votes cast.
Key Figures
Revenue: $34.3 million
Net income: $3.6 million
Operating cash flow: $5.209 million
+4 more
7 metrics
Revenue
$34.3 million
Six months ended June 30, 2026; up 5.9% from the same period in 2025
Net income
$3.6 million
Six months ended June 30, 2026; up 45.3% from the same period in 2025
Operating cash flow
$5.209 million
Six months ended June 30, 2026; compared with $7.987 million in the same period of 2025
Active subscribers
820,000 subscribers
As of June 30, 2026; decreased 14.6% from over 960,000 as of June 30, 2025
Mobile app and web subscription revenue
$23.4 million
Six months ended June 30, 2026; compared with $20.3 million in the same period of 2025
Merger consideration
$2.00 in cash per share
Merger agreement dated July 10, 2026
Voting power held by merger supporters
Approximately 81.2%
Perfect Corp. total voting power held collectively under voting and support agreements
Key Terms
contract liabilities, cashless basis, Level 3, anti-dilutive, +1 more
5 terms
contract liabilities financial
"contract liabilities mainly arose from sales contracts with receipts from customers in advance"
Contract liabilities are amounts a company has been paid in advance for goods or services it still owes to customers — think of them like gift cards or prepaid subscriptions the company must fulfill later. For investors, they show promised future work or deliveries that will turn into revenue over time, reveal cash already collected, and help assess whether a firm has a backlog of obligations that could affect future earnings and cash flow.
cashless basis financial
"holders will be able to exercise their warrants on a cashless basis prior to redemption"
An agreement executed on a cashless basis lets a holder convert or exercise a security (like options, warrants, or conversion rights) without paying money upfront; instead the holder receives a smaller number of shares equal in value to what the cash would have purchased. Think of trading a coupon for fewer slices of a cake rather than handing over cash for the full slice. For investors, it affects how much ownership and dilution occur and avoids immediate cash outlays.
Level 3 financial
"the Company transferred the fair value from Level 1 into Level 3"
Level 3 describes the lowest-confidence category in the accounting “fair value” hierarchy, covering assets or liabilities whose prices are not observable in the market and must be estimated using judgment and internal models. For investors, Level 3 items matter because they can introduce greater uncertainty and potential valuation swings—like valuing a unique antique versus checking a price tag on a supermarket shelf—so they signal higher model risk and lower liquidity.
anti-dilutive financial
"excluded from the calculation of diluted earnings per share as they are anti-dilutive"
A claim, security feature, or action described as anti-dilutive prevents or does not cause a reduction in existing shareholders’ per-share values when additional shares could be issued. For example, certain convertible securities or corporate actions are treated as anti-dilutive for earnings-per-share calculations if including them would raise EPS rather than lower it; investors watch this because it affects reported per-share metrics, ownership percentages, and valuation comparisons, like keeping pie slices the same size instead of making them smaller.
volume-weighted average price financial
"daily volume-weighted average price of the Perfect Class A Ordinary Shares"
Volume-weighted average price (VWAP) is the average price of a stock over a specific time period where each trade is weighted by the number of shares traded, so larger trades influence the average more than small ones. Investors and traders use VWAP as a reference point to judge whether trades are happening at relatively good or poor prices—like checking the average price paid for an item at a market where bulk purchases count more than single-item buys.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How did PERF's revenue, net income, and operating cash flow compare in first-half 2026?
Perfect Corp. reported revenue of $34.3 million and net income of $3.6 million for the six months ended June 30, 2026, compared with $32.4 million and $2.5 million in the same 2025 period. Operating cash flow was $5.209 million, versus $7.987 million.
What is the proposed merger consideration for PERF shares?
Under the July 10, 2026 merger agreement, each ordinary share issued and outstanding immediately before the merger’s effective time, other than Excluded Shares, Continuing Shares and Dissenting Shares, will be converted into the right to receive $2.00 in cash per share, without interest.
How much voting power do the PERF merger supporters hold?
Ms. Alice H. Chang and her controlled entities, together with CyberLink International Technology Corp., collectively hold approximately 81.2% of Perfect Corp.’s total voting power and entered into agreements to vote in favor of the merger. Completion requires approval by at least two-thirds of votes cast at an extraordinary general meeting.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of September, 2026
Commission File Number: 001-41540
14F, No. 98 Minquan Road
Xindian District
New Taipei City 231
Taiwan
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
INCORPORATION BY REFERENCE
Exhibits 99.1 and 99.2 to this report on Form 6-K shall be deemed to be incorporated by reference into (1) the registration statement on Form F-3 (File No. 333-274835) (including the prospectus forming a part of such registration statement) filed by Perfect Corp. (the “Company”); and (2) the Company’s registration statement on Form S-8 (File No. 333-268059) (including the prospectus forming a part of such registration statement) and, in each case, to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.
Exhibit | Description of Exhibit | |||||||
99.1 | Condensed Consolidated Interim Financial Statements as of and for the Six Months ended June 30, 2026. | |||||||
99.2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Period Ended June 30, 2026 | |||||||
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Form 6-K may be viewed as “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are based on the beliefs and assumptions of our management. Although we believe that our respective plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These forward-looking statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements may be preceded by, followed by or include the words “believe,” “estimate,” “expect,” “forecast,” “may,” “will,” “should,” “seek,” “plan,” “scheduled,” “anticipate” or “intend” or similar expressions. Forward-looking statements contained in this Form 6-K (including information incorporated by reference herein) include, but are not limited to, statements about:
•our ability to maintain the listing of our securities on the NYSE;
•changes adversely affecting the business in which we are engaged;
•management of growth;
•commencement of any war, armed hostilities or other international calamity, including any act of terrorism, on or after the date of this Form 6-K, in or involving the U.S. or Taiwan, or the material escalation of any such war, armed hostilities or other international calamity that had commenced before the date of this Form 6-K, in each case which is reasonably likely to have a material adverse effect on the Company;
•general economic conditions;
•our business strategy and plans;
•the result of future financing efforts;
•our future market position and growth prospects;
•expected operating results, such as revenue growth, and earnings;
•the effects of health epidemics; and
•the other matters described in this Form 6-K.
Such forward-looking statements, if any, with respect to our revenues, earnings, performance, strategies, prospects and other aspects of the businesses are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of the business, future plans and strategies, anticipated events and trends, the economy and other future conditions that are subject to risks and uncertainties. These forward-looking statements are not intended to serve as, and must not be relied on as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability regarding future performance, events or circumstances. Many of the factors affecting actual performance, events and circumstances are beyond our control. The risk factors and cautionary language discussed in this Form 6-K (including information incorporated by reference herein) provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by us in such forward-looking statements, including among other things:
•the ability to increase user download and engagement with our mobile apps and webs, including our ability to attract free users to purchase our subscription plans available on our mobile apps and webs to unlock premium features of our products;
•the ability to innovate, develop and provide market competitive product offerings or upgrade our existing product offerings in response to rapidly-evolving consumer preferences in a timely and cost-effective manner;
•the ability to grow and retain active subscribers’ subscriptions to the premium features of our mobile apps and web services;
•the intensity of competition in the mobile app and web services market, including the development of Generative AI technologies, which may introduce new emerging technologies and competitors for AI photo, AI video use cases;
•the rate of adoption of AI- and AR- virtual try-on technology by consumers, brands, and retailers, and any changes in consumer preferences or shopping habits;
•the ability to retain and expand sales to existing brands or attract new brands into our brand portfolio;
•the intensity of competition in the enterprise business market, including the emergence of new competitors, the development of competing technologies, and pricing pressures;
•changes in applicable laws or regulations, especially laws and regulations related to privacy and data protection;
•the need to retain, attract or maintain high-quality personnel;
•the ability to enforce, protect and maintain intellectual property rights;
•our ability to complete the Merger on the proposed terms and anticipated timeline or at all, including the satisfaction or waiver of the conditions to completion of the Merger and receipt of the required shareholder approval;
•the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement;
•the cash position of the Company and its subsidiaries at the effective time of the Merger, including the risk that such cash may be insufficient or unavailable to fund the merger consideration or that Merger Sub may fail to fund any resulting shortfall as required under the Merger Agreement, which may result in the Merger not being completed promptly or at all;
•the effects of the announcement or pendency of the Merger on our business, financial condition, results of operations, cash flows, prospects, relationships with customers, suppliers and employees, and the market price of our Class A ordinary shares, including potential adverse effects arising from restrictions on our conduct of business under the Merger Agreement, diversion of management’s attention from ongoing business operations and loss of senior management or other key personnel;
•the amount of the costs, fees, expenses and charges related to the Merger and the outcome of any legal, regulatory or enforcement proceedings that may be instituted against us or others relating to the Merger; and
•the other matters described in this Form 6-K.
Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those anticipated in these forward-looking statements. There may be additional risks currently considered to be immaterial or which are unknown. It is not possible to predict or identify all such risks.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us, as of the date of this Form 6-K, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that such party has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 6-K. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date.
All forward-looking statements included herein and in the documents incorporated by reference in this Form 6-K are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, we undertake no obligations to update these forward-looking statements to reflect events or circumstances after the date of this Form 6-K or to reflect the occurrence of unanticipated events. In the event that any forward-looking statement is updated, no inference should be made that we will make additional updates with respect to that statement, related matters, or any other forward-looking statements. Any corrections or revisions and other important assumptions and factors that could cause actual results to differ materially from forward-looking statements, including discussions of additional significant risk factors, may appear in our public filings with the SEC, which are or will be (as appropriate) accessible at www.sec.gov, and which you are advised to consult.
Capitalized terms used herein without definition shall have the meanings assigned to them in the Company’s latest Annual Report on Form 20-F, as filed with the Securities and Exchange Commission (the “Form 20-F”). Please also see the “Risk Factors” section of the Form 20-F.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Perfect Corp. | ||||||||||||||
Date: September 24, 2026 | /s/ Alice H. Chang | |||||||||||||
Name: Alice H. Chang | ||||||||||||||
Title: Chief Executive Officer | ||||||||||||||
Exhibit 99.1
INDEX TO FINANCIAL STATEMENTS
| Unaudited Interim Financial Statements: | Page(s) | ||||
Unaudited Condensed Interim Consolidated Balance Sheets as of December 31, 2025 And June 30, 2026 | F-2 | ||||
Unaudited Condensed Interim Consolidated Statements Of Comprehensive Income For The Six Months Ended June 30, 2025 And 2026 | F-4 | ||||
Unaudited Condensed Interim Consolidated Statements Of Changes In Equity For The Six Months Ended June 30, 2025 And 2026 | F-5 | ||||
Unaudited Condensed Interim Consolidated Statements Of Cash Flows For The Six Months Ended June 30, 2025 And 2026 | F-6 | ||||
Notes to the Unaudited Condensed Interim Consolidated Financial Statements | F-7 | ||||
F-1
Index to Financial Statements
PERFECT CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2025 AND JUNE 30, 2026
(Expressed in thousands of United States dollars)
| December 31, 2025 | June 30, 2026 | |||||||||||||||||||
| Assets | Notes | Amount | Amount | |||||||||||||||||
| Current assets | ||||||||||||||||||||
| Cash and cash equivalents | 6(1) | $ | $ | |||||||||||||||||
| Current financial assets at amortized cost | 6(3) | |||||||||||||||||||
| Current contract assets | 6(17) | |||||||||||||||||||
| Accounts receivable | 6(4) | |||||||||||||||||||
| Other receivables | ||||||||||||||||||||
| Current income tax assets | ||||||||||||||||||||
| Inventories | ||||||||||||||||||||
| Other current assets | 6(5) | |||||||||||||||||||
| Total current assets | ||||||||||||||||||||
| Non-current assets | ||||||||||||||||||||
| Non-current financial assets at amortized cost | 6(3) | |||||||||||||||||||
| Property, plant and equipment | 6(6) | |||||||||||||||||||
| Right-of-use assets | 6(7) and 7 | |||||||||||||||||||
| Intangible assets | 6(8) | |||||||||||||||||||
| Deferred income tax assets | ||||||||||||||||||||
| Guarantee deposits paid | ||||||||||||||||||||
| Total non-current assets | ||||||||||||||||||||
| Total assets | $ | $ | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-2
Index to Financial Statements
PERFECT CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (continued)
DECEMBER 31, 2025 AND JUNE 30, 2026
DECEMBER 31, 2025 AND JUNE 30, 2026
(Expressed in thousands of United States dollars)
| December 31, 2025 | June 30, 2026 | |||||||||||||||||||
| Liabilities and Equity | Notes | Amount | Amount | |||||||||||||||||
| Current liabilities | ||||||||||||||||||||
| Current contract liabilities | 6(17) | $ | $ | |||||||||||||||||
| Other payables | 6(10) | |||||||||||||||||||
| Other payables – related parties | 7 | |||||||||||||||||||
| Current tax liabilities | ||||||||||||||||||||
| Current provisions | 6(11) | |||||||||||||||||||
| Current lease liabilities | 6(7) and 7 | |||||||||||||||||||
| Other current liabilities | ||||||||||||||||||||
| Total current liabilities | ||||||||||||||||||||
| Non-current liabilities | ||||||||||||||||||||
| Non-current financial liabilities at fair value through profit or loss | 6(9) | |||||||||||||||||||
| Deferred income tax liabilities | 6(27) | |||||||||||||||||||
| Non-current lease liabilities | 6(7) and 7 | |||||||||||||||||||
| Net defined benefit liability, non-current | 6(12) | |||||||||||||||||||
| Total non-current liabilities | ||||||||||||||||||||
| Total liabilities | ||||||||||||||||||||
| Equity | ||||||||||||||||||||
| Capital stock | 6(14) | |||||||||||||||||||
Perfect Class A Ordinary Shares, $ | ||||||||||||||||||||
Perfect Class B Ordinary Shares, $ | ||||||||||||||||||||
| Capital surplus | 6(15) | |||||||||||||||||||
| Capital surplus | ||||||||||||||||||||
| Retained earnings | 6(16) | |||||||||||||||||||
| Accumulated deficit | ( | ( | ||||||||||||||||||
| Other equity interest | ||||||||||||||||||||
| Other equity interest | ( | ( | ||||||||||||||||||
| Total equity | ||||||||||||||||||||
| Total liabilities and equity | $ | $ | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Index to Financial Statements
PERFECT CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Expressed in thousands of United States dollars)
| Six months ended June 30 | ||||||||||||||||||||
| 2025 | 2026 | |||||||||||||||||||
| Items | Notes | Amount | Amount | |||||||||||||||||
| Revenue | 6(17) and 7 | $ | $ | |||||||||||||||||
| Cost of sales and services | 6(12)(22)(23) | ( | ( | |||||||||||||||||
| Gross profit | ||||||||||||||||||||
| Operating expenses | 6(4)(6)(7)(8)(12)(22)(23) and 7 | |||||||||||||||||||
| Sales and marketing expenses | ( | ( | ||||||||||||||||||
| General and administrative expenses | ( | ( | ||||||||||||||||||
| Research and development expenses | ( | ( | ||||||||||||||||||
| Expected credit gains (losses) | 12(2) | ( | ||||||||||||||||||
| Total operating expenses | ( | ( | ||||||||||||||||||
| Operating income (loss) | ( | |||||||||||||||||||
| Non-operating income and expenses | ||||||||||||||||||||
| Interest income | 6(18) | |||||||||||||||||||
| Other income | 6(19) | |||||||||||||||||||
| Other gains and losses | 6(9)(20) | |||||||||||||||||||
| Finance costs | 6(7)(21) and 7 | ( | ( | |||||||||||||||||
| Total non-operating income and expenses | ||||||||||||||||||||
| Income before income tax | ||||||||||||||||||||
| Income tax expense | 6(24) | ( | ( | |||||||||||||||||
| Net income | $ | $ | ||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||
| Components of other comprehensive income that will be reclassified to profit or loss | ||||||||||||||||||||
| Exchange differences arising on translation of foreign operations | $ | $ | ( | |||||||||||||||||
| Other comprehensive income, net | $ | $ | ( | |||||||||||||||||
| Total comprehensive income | $ | $ | ||||||||||||||||||
| Net income attributable to: | ||||||||||||||||||||
| Shareholders of the parent | $ | $ | ||||||||||||||||||
| Total comprehensive income attributable to: | ||||||||||||||||||||
| Shareholders of the parent | $ | $ | ||||||||||||||||||
| Earnings per share (in dollars) | 6(25) | |||||||||||||||||||
| Basic earnings per share of Class A and Class B Ordinary Shares | $ | $ | ||||||||||||||||||
| Diluted earnings per share of Class A and Class B Ordinary Shares | $ | $ | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Index to Financial Statements
PERFECT CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Expressed in thousands of United States dollars)
| Equity attributable on owners of the parent | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital surplus | Other equity interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes | Capital stock | Additional paid-in capital | Other | Accumulated deficit | Exchange differences arising on translation of foreign operations | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Year 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Net income for the period | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income for the period | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based payment transactions | 6(13) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Year 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Net income for the period | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income for the period | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based payment transactions | 6(13) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Index to Financial Statements
PERFECT CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Expressed in thousands of United States dollars)
| Six months ended June 30 | |||||||||||||||||
| Notes | 2025 | 2026 | |||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||
| Profit before tax | $ | $ | |||||||||||||||
| Adjustments to reconcile profit (loss) | |||||||||||||||||
| Depreciation expense | 6(6)(7)(22) | ||||||||||||||||
| Amortization expense | 6(8)(22) | ||||||||||||||||
| Expected credit losses (Reversal of expected credit losses) | 6(4)(22) and 12(2) | ( | |||||||||||||||
| Interest income | 6(18) | ( | ( | ||||||||||||||
| Interest expense | 6(7)(21) | ||||||||||||||||
| Net gains on financial assets at fair value through profit or loss | 6(2) | ( | ( | ||||||||||||||
| Net gains on financial liabilities at fair value through profit or loss | 6(9)(20) | ( | ( | ||||||||||||||
| Share-based payment transactions | 6(13) | ||||||||||||||||
| Changes in operating assets and liabilities | |||||||||||||||||
| Accounts receivable | ( | ||||||||||||||||
| Current contract assets | |||||||||||||||||
| Other receivables | ( | ||||||||||||||||
| Other current assets | |||||||||||||||||
| Current contract liabilities | ( | ||||||||||||||||
| Other payables | |||||||||||||||||
| Other payables – related parties | ( | ||||||||||||||||
| Current provisions | ( | ||||||||||||||||
| Other current liabilities | ( | ||||||||||||||||
| Cash inflow generated from operations | |||||||||||||||||
| Interest received | |||||||||||||||||
| Interest paid | ( | ( | |||||||||||||||
| Income tax paid | ( | ( | |||||||||||||||
| Net cash flows from operating activities | |||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||
| Acquisition of financial assets at fair value through profit or loss | 6(2) | ( | ( | ||||||||||||||
| Proceeds from disposal of financial assets at fair value through profit or loss | 6(2) | ||||||||||||||||
| Acquisition of financial assets at amortized cost | 6(3) | ( | ( | ||||||||||||||
| Proceeds from disposal of financial assets at amortized cost | 6(3) | ||||||||||||||||
| Acquisition of subsidiaries, net of cash acquired | 6(27) | ( | |||||||||||||||
| Acquisition of property, plant and equipment | 6(6) | ( | ( | ||||||||||||||
| Proceeds from disposal of property, plant and equipment | 6(6) | ||||||||||||||||
| (Increase) Decrease in guarantee deposits paid | ( | ||||||||||||||||
| Net cash flows used in investing activities | ( | ( | |||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||
| Repayment of principal portion of lease liabilities | 6(7)(26) | ( | ( | ||||||||||||||
| Net cash flows used in financing activities | ( | ( | |||||||||||||||
| Effects of exchange rates changes on cash and cash equivalents | ( | ||||||||||||||||
| Net decrease in cash and cash equivalents | ( | ( | |||||||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Index to Financial Statements
PERFECT CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2026
(Expressed in thousands of United States dollars, except as otherwise indicated)
(Expressed in thousands of United States dollars, except as otherwise indicated)
1. History and Organization
Perfect Corp. (the “Company” or “Perfect”), is a Cayman Islands exempted company with limited liability, which was incorporated on February 13, 2015 with registered address PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The Company and its subsidiaries (collectively referred to herein as the “Group”) are SaaS technology companies offering AR/AI solution dedicated to the beauty and fashion industry as well as mobile applications to consumers. The principal place of business is at 14F, No. 98 Minquan Road, Xindian District, New Taipei City 231, Taiwan.
On January 7, 2025, the Group completed the acquisition of Wannaby Inc. Wannaby (“2025 Business Combination”) for $6,473 . As a result of transaction, Wannaby, along with its wholly owned subsidiary, Wannaby UAB, became an indirect wholly owned subsidiary of Perfect.
2. The Date of Authorization for Issuance of the Financial Statements and Procedures for Authorization
These unaudited condensed interim consolidated financial statements were authorized for issuance by the Board of Directors on September 24, 2026.
3. Application of New Standards, Amendments and Interpretations
3(1) New and amended International Financial Reporting Standards (“IFRS Accounting Standards”) adopted by the Group
New standards, interpretations and amendments issued by International Accounting Standards Board (the “IASB”) and became effective from 2026 are as follows:
| New Standards, Interpretations and Amendments | Effective date by IASB | |||||||
| Specific provisions of Amendments to IFRS 9 and IFRS 7, ‘Amendments to the classification and measurement of financial Instruments’ | January 1, 2026 | |||||||
| Amendments to IFRS 9 and IFRS 7, ‘Contracts referencing nature-dependent electricity’ | January 1, 2026 | |||||||
| Annual Improvements to IFRS Accounting Standards - Volume 11 | January 1, 2026 | |||||||
The above standards and interpretations had no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.
F-7
Index to Financial Statements
3(2) New and revised IFRS Accounting Standards not yet adopted
New standards, interpretations and amendments which have been published by IASB but are not mandatory for the financial period ended June 30, 2026 are listed below:
| New Standards, Interpretations and Amendments | Effective date by IASB | |||||||
| Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ | To be determined by IASB | |||||||
| IFRS 18, ‘Presentation and disclosure in financial statements’ | January 1, 2027 | |||||||
| Amendments to IAS 21, ‘Translation to a Hyperinflationary Presentation Currency’ | January 1, 2027 | |||||||
| Amendments to IAS 28, ‘Amendments to the fair value option in IAS 28 investments in associates and joint ventures’ | January 1, 2027 | |||||||
| IFRS 19, ‘Subsidiaries without public accountability: disclosures’ | January 1, 2027 | |||||||
| IFRS 20, ‘Regulatory assets and regulatory liabilities’ | January 1, 2029 | |||||||
Except for the following, the above standards and interpretations are not expected to have significant impact to the Group’s financial position and financial performance based on the Group’s assessment.
IFRS 18, ‘Presentation and disclosure in financial statements’
IFRS 18, ‘Presentation and disclosure in financial statements’ replaces IAS 1. The standard introduces a defined structure of the statement of profit or loss, disclosure requirements related to management-defined performance measures, and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes.
4. Summary of Material Accounting Policies
The unaudited condensed interim consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair statement of the results of operations for the interim period. All such adjustments to the financial information are of a normal, recurring nature. Accordingly, these unaudited condensed interim consolidated financial statements are to be read in conjunction with the annual financial statements for the year ended December 31, 2025. The principal accounting policies applied in the preparation of these unaudited condensed interim consolidated financial statements are disclosed in financial statements for the year ended December 31, 2025 and have been consistently applied to all the periods presented, except for the adoption of new and amended standards as set out below and Note 3(1).
4(1) Compliance statement
These unaudited condensed interim consolidated financial statements of the Group have been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the IASB.
4(2) Basis of preparation
A.Except for the following items, the unaudited condensed interim consolidated financial statements have been prepared under the historical cost convention:
(a)Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
(b)Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
B.The preparation of the unaudited condensed interim consolidated financial statements in conformity with IAS 34 Interim Financial Reporting requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas
F-8
Index to Financial Statements
involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the unaudited condensed interim consolidated financial statements are disclosed in Note 5.
4(3) Basis of consolidation
A.Subsidiaries included in the unaudited condensed interim consolidated financial statements:
| Ownership (%) | ||||||||||||||||||||||||||
| Name of investor | Name of subsidiary | Main business activities | December 31, 2025 | June 30, 2026 | ||||||||||||||||||||||
| The Company | Perfect Mobile Corp. (Taiwan) | Design, development, marketing and sales of AR/AI SaaS solution and mobile applications. | ||||||||||||||||||||||||
| The Company | Perfect Corp. (USA) | Marketing and sales of AR/AI SaaS solution. | ||||||||||||||||||||||||
| The Company | Perfect Corp. (Japan) | Marketing and sales of AR/AI SaaS solution. | ||||||||||||||||||||||||
| The Company | Perfect Corp. (Shanghai) | Marketing and sales of AR/AI SaaS solution. | ||||||||||||||||||||||||
| The Company | Perfect Mobile Corp.(B.V.I.) | Investment activities. | ||||||||||||||||||||||||
| Perfect Mobile Corp. (Taiwan) | Perfect Corp. (France) | Marketing and service center for sales of AR/AI SaaS solution. | ||||||||||||||||||||||||
| Perfect Mobile Corp. (Taiwan) | Wannaby Inc. | Design, development, marketing and sales of AR/AI SaaS solution and mobile applications. | (Note) | |||||||||||||||||||||||
| Wannaby Inc. | Wannaby UAB | Design and development of AR/AI SaaS solution and mobile applications. | (Note) | |||||||||||||||||||||||
Note. As a result of 2025 Business Combination, Wannaby, along with its wholly owned subsidiary, Wannaby UAB, became an indirect wholly owned subsidiary of Perfect.
B.Subsidiaries not included in the unaudited condensed interim consolidated financial statements:
None.
C.Adjustments for subsidiaries with different balance sheet dates:
None.
D.Significant restrictions:
None.
E.Subsidiaries that have non-controlling interests that are material to the Group:
None.
4(4) Employee benefits
Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. Also, the related information is disclosed accordingly.
4(5) Income tax
F-9
Index to Financial Statements
The interim period income tax expense is recognised based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.
5. Critical Accounting Judgments, Estimates and Key Sources of Assumption Uncertainty
There have been no significant changes with regards to critical accounting judgments, estimates and key sources of assumption uncertainty since December 31, 2025. Please refer to Note 5 in the consolidated financial statements for the year ended December 31, 2025.
6. Details of Significant Accounts
6(1) Cash and cash equivalents
| December 31, 2025 | June 30, 2026 | ||||||||||
| Checking accounts | $ | $ | |||||||||
| Demand deposits | |||||||||||
| Time deposits | |||||||||||
| Others | |||||||||||
| $ | $ | ||||||||||
A.The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. As of June 30, 2026, the majority of our cash and cash equivalents, 92 %, are denominated in U.S. Dollars.
B.The Group has no cash and cash equivalents pledged to others.
6(2) Financial assets at fair value through profit or loss
| December 31, 2025 | June 30, 2026 | ||||||||||
| Current items: | |||||||||||
| Financial assets mandatorily measured at fair value through profit and loss | |||||||||||
| Money market funds | $ | $ | |||||||||
A.Amounts recognized in profit or loss in relation to financial assets at fair value through profit or loss are as follows:
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Financial assets mandatorily measured at fair value through profit and loss | |||||||||||
| Money market funds | $ | $ | |||||||||
B.The Group has no financial assets at fair value through profit or loss pledged to others.
C.Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).
F-10
Index to Financial Statements
6(3) Financial assets at amortized cost
| December 31, 2025 | June 30, 2026 | ||||||||||
| Current items: | |||||||||||
| Time deposits with maturities over three months | $ | $ | |||||||||
| Non-current items: | |||||||||||
| US Treasury | $ | $ | |||||||||
A.Amounts recognized in profit or loss in relation to financial assets at amortized cost are listed below:
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Interest income from financial assets at amortized cost | $ | $ | |||||||||
B.The counterparties of the Group's time deposits are financial institutions with high credit quality, so the Group expects that the probability of counterparty default is remote. As of June 30, 2026, 100 % of current financial assets at amortized cost are denominated in U.S. Dollars.
C.As at December 31, 2025 and June 30, 2026, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortized cost held by the Group was $46,473 and $51,522 , respectively.
D.The Group has no financial assets at amortized cost pledged to others.
E.Information relating to credit risk of financial assets at amortized cost is provided in Note 12(2).
6(4) Accounts receivable
| December 31, 2025 | June 30, 2026 | ||||||||||
| Accounts receivable | $ | $ | |||||||||
| Less: Allowance for expected credit losses (Note) | ( | ( | |||||||||
| $ | $ | ||||||||||
Note. For movements in the allowance for expected credit losses, please refer to Note 12(2) Credit risk for details.
A.The aging analysis of accounts receivable is as follows:
| December 31, 2025 | June 30, 2026 | ||||||||||
| Not past due | $ | $ | |||||||||
| Up to 30 days | |||||||||||
| 31 to 90 days | |||||||||||
| 91 to 180 days | |||||||||||
| Over 181 days | |||||||||||
| Less: Allowance for expected credit losses | ( | ( | |||||||||
| $ | $ | ||||||||||
The above aging analysis was based on days overdue.
B.As at December 31, 2025 and June 30, 2026, accounts receivable were all from contracts with customers. And as at January 1, 2025, the balance of receivables from contracts with customers amounted to $7,902 .
F-11
Index to Financial Statements
C.As at December 31, 2025 and June 30, 2026, without taking into account other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s accounts receivable was $7,567 and $5,955 , respectively.
D.The Group has no accounts receivable pledged to others.
E.Information relating to credit risk of accounts receivable is provided in Note 12(2).
6(5) Other current assets
| December 31, 2025 | June 30, 2026 | ||||||||||
| Prepaid expenses | $ | $ | |||||||||
| Others | |||||||||||
| $ | $ | ||||||||||
6(6) Property, plant and equipment
| Leasehold improvements | Machinery | Office equipment | Total | ||||||||||||||||||||
| At January 1, 2026 | |||||||||||||||||||||||
| Cost | $ | $ | $ | $ | |||||||||||||||||||
| Accumulated depreciation | ( | ( | ( | ( | |||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
| Opening net book amount | $ | $ | $ | $ | |||||||||||||||||||
| Additions | |||||||||||||||||||||||
| Cost of disposals | ( | ( | ( | ||||||||||||||||||||
| Accumulated depreciation on disposals | |||||||||||||||||||||||
| Depreciation expense | ( | ( | ( | ( | |||||||||||||||||||
| Closing net book amount | $ | $ | $ | $ | |||||||||||||||||||
| At June 30, 2026 | |||||||||||||||||||||||
| Cost | $ | $ | $ | $ | |||||||||||||||||||
| Accumulated depreciation | ( | ( | ( | ( | |||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
The Group has no property, plant and equipment pledged to others.
6(7) Leasing arrangements — lessee
A.The Group leases various assets including buildings and business vehicles. Rental contracts are typically made for periods of 2 to 3 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Leased assets cannot be used as collateral for borrowing purposes and are prohibited from being subleased, sold or lent to others or corporations under any circumstances.
B.Short-term leases with a lease term of 12 months or less include offices located in United States, Japan, China and France.
F-12
Index to Financial Statements
C.The movements of right-of-use assets of the Group are as follows:
| Buildings | Business vehicles | Total | |||||||||||||||
| At January 1, 2026 | |||||||||||||||||
| Cost | $ | $ | $ | ||||||||||||||
| Accumulated depreciation | ( | ( | ( | ||||||||||||||
| $ | $ | $ | |||||||||||||||
| Opening net book amount | $ | $ | $ | ||||||||||||||
| Additions | |||||||||||||||||
| Cost of derecognition | ( | ( | ( | ||||||||||||||
| Derecognized accumulated depreciation | |||||||||||||||||
| Depreciation expense | ( | ( | ( | ||||||||||||||
| Closing net book amount | $ | $ | $ | ||||||||||||||
| At June 30, 2026 | |||||||||||||||||
| Cost | $ | $ | $ | ||||||||||||||
| Accumulated depreciation | ( | ( | ( | ||||||||||||||
| $ | $ | $ | |||||||||||||||
D.Lease liabilities relating to lease contracts:
| December 31, 2025 | June 30, 2026 | ||||||||||
| Total lease liabilities | $ | $ | |||||||||
| Less: current portion (shown as ‘current lease liabilities’) | ( | ( | |||||||||
| $ | $ | ||||||||||
E.The information on profit and loss accounts relating to lease contracts is as follows:
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Items affecting profit or loss | |||||||||||
| Interest expense on lease liabilities | $ | $ | |||||||||
| Expense on short-term lease contracts | |||||||||||
| $ | $ | ||||||||||
F.For the six months ended June 30, 2025 and 2026, the Group’s total cash outflow for leases were $470 and $416 , respectively, including the interest expense on lease liabilities amounting to $6 and $9 , expense on short-term lease contracts amounting to $161 and $133 , and repayments of principal portion of lease liabilities amounting to $303 and $274 , respectively.
F-13
Index to Financial Statements
6(8) Intangible assets
| Goodwill | Unpatented technology | Software | Total | ||||||||||||||||||||
| At January 1, 2026 | |||||||||||||||||||||||
| Cost | $ | $ | $ | $ | |||||||||||||||||||
| Accumulated amortization and impairment | ( | ( | ( | ( | |||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
| Opening net book amount | $ | $ | $ | $ | |||||||||||||||||||
| Amortization charge | — | ( | ( | ( | |||||||||||||||||||
| Closing net book amount | $ | $ | $ | $ | |||||||||||||||||||
| At June 30, 2026 | |||||||||||||||||||||||
| Cost | $ | $ | $ | $ | |||||||||||||||||||
| Accumulated amortization and impairment | ( | ( | ( | ( | |||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
A.Details of amortization on intangible assets are as follows:
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Cost of sales and services | $ | $ | |||||||||
| Research and development expenses | |||||||||||
| $ | $ | ||||||||||
6(9) Financial liabilities at fair value through profit or loss
| December 31, 2025 | June 30, 2026 | ||||||||||
| Financial liabilities designated as at fair value through profit or loss | |||||||||||
| Non-current items: | |||||||||||
| Warrant liabilities | $ | $ | |||||||||
A. Amounts recognized in profit or loss in relation to financial liabilities at fair value through profit or loss are as follows:
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Net gains recognized in profit or loss | |||||||||||
| Warrant liabilities | $ | $ | |||||||||
The amounts presented above are recognized under “Gains (losses) on financial liabilities at fair value through profit or loss” and included within other gains and losses. See Note 6(20) for further details and reconciliation.
B. Warrant liabilities
(a)Each warrants entitles the holder to purchase one Class A Ordinary Share at a price of $11.50 (in dollars) per share.
(b)As of June 30, 2026, there were 20,850 thousand warrants outstanding, consisting of 20,850 thousand Public Warrants, each warrant is exercisable for one Perfect Class A Ordinary Share, in accordance with its terms.
F-14
Index to Financial Statements
(c)For the six months ended June 30, 2025 and 2026, no additional warrants were issued, exercised, forfeited or expired.
(d)Redemption of warrants when the price per Perfect Class A Ordinary Shares equal or exceed $18.00 (in dollars).
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
(i) in whole and not in part (ii) at a price of $0.01 (in dollars) per warrant (iii) upon not less than 30 20 trading days within a 30 -trading day period ending three business days before the Company sends the notice of redemption to the warrant holders (which the Company refers to as the “Reference Value”) equals or exceeds $18.00 (in dollars) per share.
(e)Redemption of warrants when the price per Perfect Class A Ordinary Share equals or exceeds $10.00 (in dollars).
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
(i) in whole and not in part (ii) at $0.10 (in dollars) per warrant upon a minimum of 30 days’ prior written notice of redemption (iii) provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the “fair market value” of Perfect Class A Ordinary Shares (iv) if, and only if, the Reference Value equals or exceeds $10.00 (in dollars) per share and (v) if the Reference Value is less than $18.00 (in dollars) per share.
6(10) Other payables
| December 31, 2025 | June 30, 2026 | ||||||||||
| Employee bonus | $ | $ | |||||||||
| Promotional fees | |||||||||||
| Payroll | |||||||||||
| Professional service fees | |||||||||||
| Platform fees | |||||||||||
| Remuneration to directors | |||||||||||
| Post and telecommunications expenses | |||||||||||
| Sales VAT payables | |||||||||||
| Others | |||||||||||
| $ | $ | ||||||||||
6(11) Provisions
| Warranty | |||||
| At January 1, 2026 | $ | ||||
| Additional provisions | |||||
| Net exchange differences | ( | ||||
| At June 30, 2026 | $ | ||||
Analysis of total provisions:
| December 31, 2025 | June 30, 2026 | ||||||||||
| Current | $ | $ | |||||||||
F-15
Index to Financial Statements
The Group enters into the contracts with customers with warranties on services provided. The warranties (loss indemnification) provide customers with assurance that the related services will function as mutually agreed. Provision for warranty is estimated based on historical warranty data, other known events and management’s judgment. The Group recognizes such expenses within ‘Cost of sales and services’ when related services are provided. Any changes in industry circumstances might affect the provisions. Provisions are settled when the payment is actually claimed.
6(12) Pensions
A.Defined benefit plan
(a)The Group’s subsidiary, Perfect Mobile Corp. (Taiwan), was incorporated in Taiwan, which has a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular foreign employees’ service years. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. Perfect Mobile Corp. (Taiwan) contributes to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, Perfect Mobile Corp. (Taiwan) would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, Perfect Mobile Corp. (Taiwan) will fund the deficit by the following March.
(b)For the aforementioned pension plan, the Group recognized pension costs of $1 and $2 for the six months ended June 30, 2025 and 2026, respectively.
(c)Expected contributions to the defined benefit pension plans of Perfect Mobile Corp. (Taiwan) for the year ending December 31, 2026 amount to $7 .
B.Defined contribution plans
(a)Perfect Mobile Corp. (Taiwan) has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, Perfect Mobile Corp. (Taiwan) contributes monthly an amount based on 6 % of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum when employees retire.
(b)The pension costs under defined contribution pension plan of Perfect Mobile Corp. (Taiwan) for the six months ended June 30, 2025 and 2026 were $313 and $381 , respectively.
(c)The pension costs under local government law of other foreign subsidiaries for the six months ended June 30, 2025 and 2026 were $131 and $119 , respectively.
6(13) Share-based payment
A.Share Incentive Plan
(a)For the six months ended June 30, 2025 and 2026, the Group’s Share Incentive Plan’s terms and condition are as follows:
| Plan | Type of arrangement | Settled by | Maximum terms of option granted | Vesting conditions | ||||||||||||||||||||||
| Share Incentive Plan | Employee stock options | Equity | ||||||||||||||||||||||||
F-16
Index to Financial Statements
(b)Movements of outstanding options under Share Incentive Plan are as follows:
| 2025 | 2026 | ||||||||||||||||||||||
| No. of options (units in thousands) | Weighted-average exercise price per share (in dollars) | No. of options (units in thousands) | Weighted-average exercise price per share (in dollars) | ||||||||||||||||||||
| Options outstanding at January 1 | $ | $ | |||||||||||||||||||||
| Options granted | |||||||||||||||||||||||
| Options forfeited | ( | ( | |||||||||||||||||||||
| Options outstanding at June 30 | |||||||||||||||||||||||
| Options exercisable at June 30 | |||||||||||||||||||||||
(c)As of December 31, 2025 and June 30, 2026, the range of exercise prices of stock options outstanding was $1.84 ~ $7.20 (in dollars) per share; the weighted-average remaining contractual period was 1.06 ~ 4.33 years and 0.56 ~ 3.84 years, respectively.
(d)The fair value of stock options granted on grant date is measured using the Black-Scholes option-pricing model. Relevant information is as follows:
| Plan | Grant date | Units granted (in thousands) | Stock price per share (in dollars) | Exercise price per share (in dollars) | Expected price volatility (Note ii) | Expected option life | Expected dividends | Risk-free interest rate | Fair value per unit (in dollars) | |||||||||||||||||||||||||||||||||||||||||||||||
| Share Incentive Plan | 2022.01.21 (Note i) | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023.01.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023.05.23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023.08.21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023.11.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024.05.27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024.12.23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025.05.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note i: Stock price, exercise price and fair value of stock option granted on January 21, 2022 were adjusted in connection with the recapitalization. All amounts in the table are presented on a consistent adjusted basis.
Note ii: Expected price volatility is estimated based on the daily historical stock price fluctuation data of the Company and guideline companies of the last five years before the grant date.
B.Expenses incurred on share-based payment transactions are shown below:
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Equity settled | $ | $ | |||||||||
C.In 2022, the Group has service agreements with its Board of Directors to grant them awards of the Company’s Ordinary Shares at a fixed monetary value. In the future, the Group may compensate directors either entirely in cash or partially in cash and partially in equity.
F-17
Index to Financial Statements
D.Shareholder Earnout
In connection with the merger transaction in 2022, the Company executed additional capitalization by way of the potential issuance of Earnout Shares for Perfect shareholders. In accordance with Shareholder Earnout terms and conditions contemplated by the business combination agreement, 3,000 thousand, 3,000 thousand and 4,000 thousand of the Shareholder Earnout Shares are issuable if over any 20 trading days within any 30 -trading-day period during the Earnout Period when the daily volume-weighted average price of the Perfect Class A Ordinary Shares is greater than or equal to $11.50 (in dollars), $13.00 (in dollars) and $14.50 (in dollars), respectively. None of these conditions had been met in the period up through June 30, 2026.
Shareholder Earnout Shares are considered a potential contingent payment agreement with Shareholders, based on a market condition without link to service. The expense related to these instruments was previously recorded in connection with the merger in 2022.
E.Sponsor Earnout
In connection with the business combination agreement, the Company entered into a Sponsor Letter Agreement pursuant to which it agreed to issue Earnout shares to the Sponsors. Subject to the terms and conditions contemplated by the Sponsor Letter Agreement, upon the occurrence of specific Sponsor Earnout Event (as defined below) from October 28, 2022 to October 28, 2027 (“Earnout Period”), Perfect will issue Perfect Class A Ordinary Shares of up to 1,175,624 Class A Ordinary Shares(the “Sponsor Earnout Promote Shares”) to Sponsor, with (a) 50 % of the Sponsor Earnout Promote Shares issuable if over any 20 trading days within any 30 -trading-day period during the Earnout Period the daily volume-weighted average price of the Perfect Class A Ordinary Shares is greater than or equal to $11.50 (in dollars), and (b) 50 % of the Sponsor Earnout Promote Shares issuable if over any twenty (20 ) trading days within any 30 -trading-day period during the Earnout Period the daily volume-weighted average price of the Perfect Class A Ordinary Shares is greater than or equal to $13.00 (in dollars). None of these conditions had been met in the period up through June 30, 2026.
6(14) Share capital
A.As of June 30, 2026, the Company’s authorized capital is $82,000 consisting of 700,000 thousand shares of Class A Ordinary Shares, 90,000 thousand shares of Class B Ordinary Shares, 30,000 thousand shares of classes reserved and may determine by Board of Directors. The paid-in capital was $10,185 , including 85,060 thousand Class A Ordinary Shares after the retirement of 16,388 thousand treasury shares and 27 thousand shares surrendered by a shareholder, and 16,789 thousand Class B Ordinary Shares. All proceeds from shares issued have been collected.
Perfect Class A Ordinary shares
Perfect Class A Ordinary shares have a par value of $0.1 (in dollars). Amounts received above the par value are recorded as share premium. Each holder of Perfect Class A Ordinary shares will be entitled to one vote per share. Class A Ordinary Shares are listed on NYSE under the trading symbol “PERF”.
Perfect Class B Ordinary shares
Perfect Class B Ordinary shares have a par value of $0.1 (in dollars). Perfect Class B Ordinary Shares have the same rights as Perfect Class A Ordinary Shares except for voting and conversion rights. Each Perfect Class B Ordinary Shares is entitled to 10 votes and is convertible into Perfect Class A Ordinary Shares at any time by the holder thereof. Each Class B Ordinary Share is convertible into one Class A Ordinary Share at any time at the option of the holder thereof. The right to convert shall be exercisable by the holder of the Class B Ordinary Share delivering a written notice to the Company that such holder elects to convert a specified number of Class B Ordinary Shares into Class A Ordinary Shares. Each Class B Ordinary Share shall, automatically and immediately, without any further action from the holder thereof, convert into one Class A Ordinary Share when it ceases being beneficially owned by any of the Principals. Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstances.
F-18
Index to Financial Statements
B.Movements for the Company’s share capital are as follows:
| Shares (in thousands) | |||||
| At January 1, 2026 | |||||
| At June 30, 2026 | |||||
6(15) Capital surplus
Except as required by the Company’s Articles of Incorporation or Cayman’s law, capital surplus shall not be used for any other purpose but covering accumulated deficit. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.
The following table illustrates the detail of capital surplus:
| December 31, 2025 | June 30, 2026 | ||||||||||
| Additional paid-in capital | $ | $ | |||||||||
| Other: | |||||||||||
| Employees’ stock option cost | |||||||||||
| Retirement of treasury shares | |||||||||||
| Subtotal | |||||||||||
| $ | $ | ||||||||||
6(16) Accumulated deficits
Under the Company’s Articles of Incorporation, distribution of earnings would be based on the Company’s operating and capital needs.
6(17) Revenue
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Revenue from contracts with customers | $ | $ | |||||||||
A.Disaggregation of revenue from contracts with customers
(a)The Group derives revenue from the transfer of goods and services over time and at a point in time in the following geographical regions:
| Six months ended June 30, 2025 | United States | Americas_ Others | Europe | Asia-Pacific | Others | Total | |||||||||||||||||||||||||||||
| Revenue from external customer contracts | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Timing of revenue recognition: | |||||||||||||||||||||||||||||||||||
| At a point in time | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Over time | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
F-19
Index to Financial Statements
| Six months ended June 30, 2026 | United States | Americas_ Others | Europe | Asia-Pacific | Others | Total | |||||||||||||||||||||||||||||
| Revenue from external customer contracts | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Timing of revenue recognition: | |||||||||||||||||||||||||||||||||||
| At a point in time | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Over time | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Note. “Americas_Others” includes North and South America, excluding the United States.
(b)Alternatively, the disaggregation of revenue could also be distinct as follows:
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| AR/AI cloud solutions and Subscription | $ | $ | |||||||||
| Licensing | |||||||||||
| Others | |||||||||||
| $ | $ | ||||||||||
(c)The revenue generated from AR/AI cloud solutions was $8,695 , and $7,001 for the six months ended June 30, 2025 and 2026, respectively.
B.Contract assets and liabilities
(a)The Group has recognized the following revenue-related contract assets mainly arose from unbilled receivables and contract liabilities mainly arose from sales contracts with receipts from customers in advance. Generally, the contract period is one year, the contract liabilities are reclassified as revenue within the following one year after the balance sheet date.
| January 1, 2025 | December 31, 2025 | June 30, 2026 | |||||||||||||||
| Contract assets: | |||||||||||||||||
| Unbilled revenue | $ | $ | $ | ||||||||||||||
| Contract liabilities: | |||||||||||||||||
| Advance sales receipts | $ | $ | $ | ||||||||||||||
(b)Revenue recognized that was included in the contract liability balance at the beginning of the period
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Revenue recognized that was included in the contract liability balance at the beginning of the period | |||||||||||
| Advance sales receipts | $ | $ | |||||||||
(c)Unsatisfied contracts
Aggregate amount of the transaction price allocated to contracts that are partially or fully unsatisfied as of December 31, 2025 and June 30, 2026, amounting to $ 29,926 and $ 26,059 , respectively. The Group expects that 94 % of the transaction price allocated to the unsatisfied contracts as of June 30, 2026, are expected to be recognized as revenue less than one year. The remaining 6 % is expected to be recognized as revenue from July 2027 to 2029.
F-20
Index to Financial Statements
6(18) Interest income
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Interest income from bank deposits | $ | $ | |||||||||
| Interest income from financial assets at amortized cost | |||||||||||
| Others | |||||||||||
| $ | $ | ||||||||||
The nature of interest income from financial assets at amortized cost was time deposits with maturities over three months.
6(19) Other income
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Subsidy from government | $ | $ | |||||||||
| Others | |||||||||||
| $ | $ | ||||||||||
6(20) Other gains and losses
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Foreign exchange gains (losses) | $ | $ | ( | ||||||||
| Gains on financial assets at fair value through profit or loss | |||||||||||
| Gains on financial liabilities at fair value through profit or loss | |||||||||||
| Others | |||||||||||
| $ | $ | ||||||||||
Please refer to Note 6(2) for details of gains on financial assets at fair value through profit or loss and Note 6(9) for details of gains on financial liabilities at fair value through profit or loss.
6(21) Finance costs
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Interest expense – lease liabilities | $ | $ | |||||||||
F-21
Index to Financial Statements
6(22) Costs and expenses by nature
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Employee benefit expenses | $ | $ | |||||||||
| Promotional fees | |||||||||||
| Platform fees | |||||||||||
| Professional service fees | |||||||||||
| Insurance expenses | |||||||||||
| Warranty cost | |||||||||||
| Depreciation of right-of-use assets | |||||||||||
| Depreciation of property, plant and equipment | |||||||||||
| Amortization of intangible assets | |||||||||||
| Expected credit losses | ( | ||||||||||
| Others | |||||||||||
| $ | $ | ||||||||||
6(23) Employee benefit expenses
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Wages and salaries | $ | $ | |||||||||
| Remuneration to directors | |||||||||||
| Employee insurance fees | |||||||||||
| Pension costs | |||||||||||
| Employee stock options | |||||||||||
| Other personnel expenses | |||||||||||
| $ | $ | ||||||||||
6(24) Income tax
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Current income tax: | |||||||||||
| Current tax expense recognized for the current period | $ | $ | |||||||||
| Tax on undistributed surplus earnings | |||||||||||
| Prior year income tax underestimation | |||||||||||
| Total current tax | |||||||||||
| Deferred income tax: | |||||||||||
| Origination and reversal of temporary differences | ( | ( | |||||||||
| Total deferred income tax | ( | ( | |||||||||
| Income tax expense | $ | $ | |||||||||
F-22
Index to Financial Statements
6(25) Earnings per share
| Six months ended June 30, 2025 | |||||||||||||||||
| Amount after tax | Weighted average number of ordinary shares outstanding (shares in thousands) | Earnings per share (in dollars) | |||||||||||||||
| Basic earnings per share | |||||||||||||||||
| Profit attributable to ordinary shareholders of the parent | $ | $ | |||||||||||||||
| Dilutive earnings per share | |||||||||||||||||
| Profit attributable to ordinary shareholders of the Group plus assumed conversion of all dilutive potential ordinary shares | $ | $ | |||||||||||||||
| Six months ended June 30, 2026 | |||||||||||||||||
| Amount after tax | Weighted average number of ordinary shares outstanding (shares in thousands) | Earnings per share (in dollars) | |||||||||||||||
| Basic earnings per share | |||||||||||||||||
| Profit attributable to ordinary shareholders of the parent | $ | $ | |||||||||||||||
| Dilutive earnings per share | |||||||||||||||||
| Profit attributable to ordinary shareholders of the Group plus assumed conversion of all dilutive potential ordinary shares | $ | $ | |||||||||||||||
Note. Warrant liabilities, Employee stock options, Shareholder Earnout and Sponsor Earnout were excluded from the calculation of diluted earnings per share as they are anti-dilutive, given that the fair value of the stocks is lower than the exercise price for the six months ended June 30, 2025 and 2026. As at December 31, 2025 and June 30, 2026, the potentially dilutive instruments are as follows:
| December 31, 2025 | June 30, 2026 | ||||||||||
| Potentially dilutive instruments (shares in thousands) | |||||||||||
| Warrant liabilities | |||||||||||
| Employee stock options | |||||||||||
| Shareholder Earnout | |||||||||||
| Sponsor Earnout | |||||||||||
6(26) Changes in liabilities from financing activities
| Non-current financial liabilities at fair value through profit or loss | Lease liabilities (including current portion) | Liabilities from financing activities-gross | |||||||||||||||
| At January 1, 2026 | $ | $ | $ | ||||||||||||||
| Changes in cash flow from financing activities | ( | ( | |||||||||||||||
| Change in fair value through profit and loss | ( | ( | |||||||||||||||
| Changes in other non-cash items – additions | |||||||||||||||||
| At June 30, 2026 | $ | $ | $ | ||||||||||||||
6(27) Business combinations
A.On January 7, 2025, the Group acquired 100 % of the share capital of Wannaby for $6,473 and obtained the control over Wannaby, a digital company known for its virtual try-on technology and digitalization
F-23
Index to Financial Statements
solutions for the fashion industry. This acquisition enables the Group to expand its offerings into new luxury market segments, including shoes, bags, and apparel.
B.The following table summarizes the consideration paid for Wannaby and the fair values of the assets acquired and liabilities assumes at the acquisition date:
| January 7, 2025 | |||||
| Purchase consideration | |||||
| Cash paid | $ | ||||
| Contingent consideration-Earnout liabilities (Note) | |||||
| Fair value of the identifiable assets acquired and liabilities assumed | |||||
| Cash | |||||
| Accounts receivable | |||||
| Other receivables | |||||
| Other current assets | |||||
| Property, plant and equipment | |||||
| Intangible assets | |||||
| Guarantee deposits paid | |||||
| Current contract liabilities | ( | ||||
| Other payables | ( | ||||
| Deferred income tax liabilities | ( | ||||
| Total identifiable net assets | |||||
| Goodwill | $ | ||||
Note. No later than April 30, 2026, the Group shall pay Farfetch US Holdings, Inc. (“Farfetch”) an earnout based on defined revenue for the year ended December 31, 2025, not exceeding $500 . As the defined revenue for the year ended December 31, 2025 was not achieved, the Group determined that no earnout would be payable and therefore reversed the related contingent consideration liability to zero during the year ended December 31, 2025.
| Six months ended June 30, 2025 | |||||
| Cash and cash equivalent balances acquired | $ | ||||
| Cash paid | ( | ||||
| Net cash outflow | $ | ( | |||
C.For the year ended December 31, 2025, the operating revenue contributed by Wannaby and included in the consolidated statement of comprehensive income since January 7, 2025, was $1,304 . Wannaby also incurred a loss before income tax of $1,488 over the same period. Had Wannaby been consolidated as of January 1, 2025, the consolidated statement of comprehensive income for the year ended December 31, 2025, would have reflected operating revenue of $69,154 and profit before income tax of $5,703 .
F-24
Index to Financial Statements
7. Related Party Transactions
7(1) Names of related parties and relationship
| Names of related parties | Relationship with the Group | |||||||
| CyberLink Corp. (CyberLink) | Other related party (Significant influence (Note) over the Company) | |||||||
| CyberLink Inc. (CyberLink-Japan) | Other related party (Subsidiary of CyberLink) | |||||||
| ClinJeff Corp. (ClinJeff) | Other related party (Major shareholder of CyberLink) | |||||||
As of June 30, 2026, Ms. Alice H. Chang, Chairwoman of the Board and Chief Executive Officer of the Company, is the ultimate controlling party.
Note. CyberLink owns more than 36 % of the Company’s issued and outstanding ordinary shares.
7(2) Significant related party transactions
A.Revenue
| Six months ended June 30, | |||||||||||||||||
| Description | 2025 | 2026 | |||||||||||||||
| CyberLink | Revenue-others (service revenue) | $ | $ | ||||||||||||||
Sales of services are negotiated with related parties based on agreed-upon agreement and the conditions and payment terms are same as those offered to third parties.
B.Other payables
| December 31, 2025 | June 30, 2026 | ||||||||||
| CyberLink | $ | $ | |||||||||
| CyberLink-Japan | |||||||||||
| $ | $ | ||||||||||
Other payables are mainly expenses from professional service, rental and payments on behalf of others.
C.Operating expenses
| Six months ended June 30, | |||||||||||||||||
| Description | 2025 | 2026 | |||||||||||||||
| CyberLink | Management service fee | $ | $ | ||||||||||||||
CyberLink provides support and assistance in legal services, network infrastructure and equipment maintenance services, marketing activity support and employee training programs. The service fees are calculated based on the agreed-upon hourly rate. The conditions and payment terms are same as those offered to third parties.
D.Lease transactions — lessee/rent expense
(a)The Group leases offices from CyberLink, ClinJeff and CyberLink-Japan. Rental contracts are typically made for periods of 1 2
F-25
Index to Financial Statements
(b)Rent expense
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| CyberLink-Japan | $ | $ | |||||||||
(c)Acquisition of right-of-use assets:
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| CyberLink | $ | $ | |||||||||
| ClinJeff | |||||||||||
| $ | $ | ||||||||||
(d)Lease liabilities
i.Outstanding balance:
| December 31, 2025 | June 30, 2026 | ||||||||||
| Total lease liabilities | $ | $ | |||||||||
| Less: Current portion (shown as ‘current lease liabilities’) | ( | ( | |||||||||
| $ | $ | ||||||||||
ii.Interest expense
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| CyberLink | $ | $ | |||||||||
| ClinJeff | |||||||||||
| $ | $ | ||||||||||
7(3) Key management compensation
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Salaries and other short-term employee benefits | $ | $ | |||||||||
| Share-based payment | |||||||||||
| Post-employment benefits | |||||||||||
| $ | $ | ||||||||||
The unpaid portion of the aforementioned information were $345 and $355 for June 30, 2025 and 2026.
8. Pledged Assets
None.
F-26
Index to Financial Statements
9. Significant Contingent Liabilities and Unrecognized Contract Commitments
9(1) Contingencies
None.
9(2) Commitments
Except for Notes 6(7), 6(9) and 7(2), there is no other significant commitments.
10. Significant Disaster Loss
None.
F-27
Index to Financial Statements
11. Significant Events After the Balance Sheet Date
Going Private Transaction
On March 18, 2026, the Company received a preliminary non-binding proposal letter from CyberLink International Technology Corp. (“CIT”) and Ms. Alice H. Chang, Chairwoman of the Board and Chief Executive Officer of the Company, together with her controlled entities, proposing a going-private transaction pursuant to which they would acquire all of the outstanding ordinary shares of the Company not already owned by them for cash consideration of $1.95 (dollar) per ordinary share, subject to the terms and conditions set forth in the proposal.
Following the evaluation of the proposal by the Company's independent special committee and subsequent negotiations, on July 10, 2026, the Company entered into an Agreement and Plan of Merger with ProjectNY, an exempted company with limited liability incorporated under the laws of the Cayman Islands and controlled by Ms. Alice H. Chang, pursuant to which ProjectNY will merge with and into the Company, with the Company continuing as the surviving company and becoming a privately held company.
Pursuant to the merger agreement, each ordinary share issued and outstanding immediately prior to the effective time of the merger, other than the Excluded Shares, the Continuing Shares, and the Dissenting Shares (each as defined in the merger agreement), will be cancelled and converted into the right to receive $2.00 (dollar) in cash per share, without interest. Concurrently with the execution of the merger agreement, Ms. Alice H. Chang and her controlled entities, together with CIT, who collectively hold approximately 81.2 % of the Company's total voting power, entered into voting and support agreements to vote in favor of the merger.
The completion of the merger remains subject to customary closing conditions, including approval by the affirmative vote of at least two-thirds of the votes cast by the Company's shareholders at an extraordinary general meeting. If completed, the Company's Class A ordinary shares will be delisted from the New York Stock Exchange (“NYSE”)and the Company will become a privately held company.
As of the date these consolidated financial statements were authorized for issuance, the merger has not been completed. Accordingly, this subsequent event has not resulted in any adjustment to the accompanying consolidated financial statements. There can be no assurance that the merger will be completed on the terms described above, or at all.
Subsequent to execution of the merger agreement, the Company filed a Schedule 13E-3 with the SEC on July 31, 2026 and filed an amended Schedule 13E-3 on August 26, 2026 in connection with the proposed merger transaction. The amendment did not change the key economic terms of the transaction. As of the date the financial statements were authorized for issuance, the merger has not been completed.
12. Others
12(1) Capital management
The Group’s objectives of capital management are to ensure the Group’s sustainable operation and to maintain an optimal capital structure to reduce the cost of capital and provide returns for shareholders. In order to maintain or adjust to optimal capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as total liabilities divided by total equity.
As of December 31, 2025 and June 30, 2026, the Group’s gearing ratios are as follows:
| December 31, 2025 | June 30, 2026 | ||||||||||
| Total liabilities | $ | $ | |||||||||
| Total equity | $ | $ | |||||||||
| Gearing ratio | |||||||||||
F-28
Index to Financial Statements
12(2) Financial instruments
A.Financial instruments by category
| December 31, 2025 | June 30, 2026 | ||||||||||
| Financial assets | |||||||||||
| Financial assets at amortized cost | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Current financial assets at amortized cost | |||||||||||
| Accounts receivable | |||||||||||
| Other receivables | |||||||||||
| Non-current financial assets at amortized cost | |||||||||||
| Guarantee deposits paid | |||||||||||
| $ | $ | ||||||||||
| December 31, 2025 | June 30, 2026 | ||||||||||
| Financial liabilities | |||||||||||
| Financial liabilities at fair value through profit or loss | |||||||||||
| Warrant liabilities | $ | $ | |||||||||
| Financial liabilities at amortized cost | |||||||||||
| Other payables (including related parties) | $ | $ | |||||||||
| Lease liabilities | $ | $ | |||||||||
B.Financial risk management policies
(a)The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance.
(b)Risk management is carried out by the Group’s finance department under policies approved by the management team. The Group’s finance department identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units.
C.Significant financial risks and degrees of financial risks
(a)Market risk
Foreign exchange risk
i.The Group operates internationally and is exposed to exchange rate risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD, JPY, RMB and EUR. Exchange rate risk arises from future commercial transactions and recognized assets and liabilities.
F-29
Index to Financial Statements
ii.The Group’s business involves some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: USD; other certain subsidiaries’ functional currency: JPY, RMB and EUR). The information of and sensitivity analysis for significant financial assets and liabilities denominated in foreign currencies illustrate as follows:
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Foreign currency amount (in thousands) | Exchange rate | Functional currency | Book value (USD) | Sensitivity analysis | |||||||||||||||||||||||||||||||
| Degree of variation | Effect on profit or loss | ||||||||||||||||||||||||||||||||||
| Financial assets | |||||||||||||||||||||||||||||||||||
| Monetary items | |||||||||||||||||||||||||||||||||||
| NTD:USD | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| EUR:USD | |||||||||||||||||||||||||||||||||||
| JPY:USD | |||||||||||||||||||||||||||||||||||
| USD:RMB | |||||||||||||||||||||||||||||||||||
| Financial liabilities | |||||||||||||||||||||||||||||||||||
| Monetary items | |||||||||||||||||||||||||||||||||||
| EUR:USD | |||||||||||||||||||||||||||||||||||
| USD:JPY | |||||||||||||||||||||||||||||||||||
| June 30, 2026 | |||||||||||||||||||||||||||||||||||
| Foreign currency amount (in thousands) | Exchange rate | Functional currency | Book value (USD) | Sensitivity analysis | |||||||||||||||||||||||||||||||
| Degree of variation | Effect on profit or loss | ||||||||||||||||||||||||||||||||||
| Financial assets | |||||||||||||||||||||||||||||||||||
| Monetary items | |||||||||||||||||||||||||||||||||||
| NTD:USD | $ | $ | $ | % | $ | ||||||||||||||||||||||||||||||
| EUR:USD | % | ||||||||||||||||||||||||||||||||||
| JPY:USD | % | ||||||||||||||||||||||||||||||||||
| USD:JPY | % | ||||||||||||||||||||||||||||||||||
| Financial liabilities | |||||||||||||||||||||||||||||||||||
| Monetary items | |||||||||||||||||||||||||||||||||||
| EUR:USD | % | ||||||||||||||||||||||||||||||||||
| USD:JPY | % | ||||||||||||||||||||||||||||||||||
iii.The total exchange gain (loss), including realized and unrealized, arising from significant foreign exchange variation on the monetary items held by the Group for the six months ended June 30, 2025 and 2026, amounted to $544 and $(114 ), respectively.
(b)Credit risk
i.Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms and the contract cash flow of financial assets at amortized cost and at fair value through profit or loss.
ii.The Group’s credit risk was mainly arising from bank deposits, trade receivables, other financial assets and deposits. The Company adopted a policy of only dealing with creditworthy counterparties and financial institutions to mitigate the risk of financial loss from defaults. The majority of cash and cash equivalents as well as current financial assets at amortized cost and at fair value through profit or loss are held with financial institutions with a rating of ‘A’.
F-30
Index to Financial Statements
iii.The default occurs when the contract payments are past due over 180 days.
iv.The Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:
If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
v.The following indicators are used to determine whether the credit impairment of debt instruments has occurred:
(i)It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;
(ii)The disappearance of an active market for that financial asset because of financial difficulties;
(iii)Default or delinquency in interest or principal repayments;
(iv)Adverse changes in national or regional economic conditions that are expected to cause a default.
vi.The following indicators are used to determine whether the credit impairment of accounts receivable has occurred:
(i)It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;
(ii)Default or delinquency in principal repayments.
vii.The Group classifies customers’ accounts receivable in accordance with geographic area and credit rating of customer. The Group applies the modified approach to estimate expected credit loss under the provision matrix basis.
viii.The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights.
ix.The Group used the territory economic forecasts to adjust historical and timely information to assess the default possibility of accounts receivable.
x.As of December 31, 2025 and June 30, 2026, the provision matrix is as follows:
| December 31, 2025 | Not past due | Up to 30 days past due | 31~90 days past due | 91~180 days past due | Over 181 days past due | Total | ||||||||||||||||||||||||||||||||
| rate | ||||||||||||||||||||||||||||||||||||||
| Total book value | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Loss allowance | ||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | Not past due | Up to 30 days past due | 31~90 days past due | 91~180 days past due | Over 181 days past due | Total | ||||||||||||||||||||||||||||||||
| rate | ||||||||||||||||||||||||||||||||||||||
| Total book value | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Loss allowance | ||||||||||||||||||||||||||||||||||||||
F-31
Index to Financial Statements
xi.Movements in relation to the Group applying the modified approach to provide loss allowance for accounts receivable is as follows:
| Accounts receivable | |||||
| At December 31, 2025 | $ | ||||
| Provision for impairment | |||||
| Write-offs | ( | ||||
| At June 30, 2026 | $ | ||||
xii.The loss amounts of accounts receivable allowance using simplified method were de minimis, thus, the loss was not recognized as at December 31, 2025 and June 30, 2026.
xiii.The Group used the territory economic forecasts to adjust historical and timely information to assess the default possibility of debt instruments. As of June 30, 2026, the Group assessed the expected credit losses of its debt instruments measured at amortized cost in accordance with IFRS 9. The assessment indicated that the credit risk of these instruments remained low and no significant increase in credit risk had occurred during the reporting periods.
(c)Liquidity risk
i.Cash flow forecasting is performed in the operating entities of the Group and aggregated by the Group’s finance department. The Group’s finance department monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.
ii.Surplus cash held by the operating entities over and above balance required for working capital management are managed by the Group’s finance department. The Group’s finance department invests surplus cash in interest bearing current accounts and time deposits, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts. As at December 31, 2025 and June 30, 2026, the Group held demand deposits, time deposits and money market position of $159,010 and $159,919 , respectively. The Group manages liquidity risk by ensuring that these balances are available to meet short-term cash needs. Time deposits withdrawn early receive a lower interest rate through the withdrawal date compared to the stated interest rate applicable on the nominal maturity date. However, there are no significant risk of change in value as a result of an early withdrawal for time deposits classified as cash equivalents.
iii.The table below analyses the Group’s non-derivative financial liabilities based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
| Non-derivative financial liabilities: December 31, 2025 | Less than 1 year | Between 1-5 years | Over 5 years | |||||||||||||||||
| Financial liabilities at fair value through profit or loss | $ | $ | $ | |||||||||||||||||
| Other payables (including related parties) | ||||||||||||||||||||
| Lease liabilities (Note) | ||||||||||||||||||||
| Non-derivative financial liabilities: June 30, 2026 | Less than 1 year | Between 1-5 years | Over 5 years | |||||||||||||||||
| Financial liabilities at fair value through profit or loss | $ | $ | $ | |||||||||||||||||
| Other payables (including related parties) | ||||||||||||||||||||
| Lease liabilities (Note) | ||||||||||||||||||||
Note. The amount included the interest of estimated future payments.
F-32
Index to Financial Statements
12(3) Fair value information
A.The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in money market funds is included in Level 1.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
B.Financial instruments not measured at fair value
(a)Except for those listed in the table below, the carrying amounts of the Group’s financial instruments not measured at fair value (including cash and cash equivalents, current financial assets at amortized cost, accounts receivable, other receivables (including related parties), guarantee deposits paid, other payables (including related parties) and lease liabilities) are approximate to their fair values.
| December 31, 2025 | ||||||||||||||||||||||||||
| Fair value | ||||||||||||||||||||||||||
| Financial assets: | Book value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Financial assets at amortized cost | ||||||||||||||||||||||||||
| US Treasury | $ | $ | $ | $ | ||||||||||||||||||||||
| June 30, 2026 | ||||||||||||||||||||||||||
| Fair value | ||||||||||||||||||||||||||
| Financial assets: | Book value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Financial assets at amortized cost | ||||||||||||||||||||||||||
| US Treasury | $ | $ | $ | $ | ||||||||||||||||||||||
(b)The methods and assumptions of fair value estimate are as follows:
i.US Treasury: They are measured at quoted price in active markets.
C.The related information of financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2025 and June 30, 2026 are as follows:
(a)The related information of natures of the assets and liabilities is as follows:
| December 31, 2025 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Recurring fair value measurements | ||||||||||||||||||||||||||
| Financial liabilities at fair value through profit or loss | ||||||||||||||||||||||||||
| Compound instrument: | ||||||||||||||||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
F-33
Index to Financial Statements
| June 30, 2026 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Recurring fair value measurements | ||||||||||||||||||||||||||
| Financial liabilities at fair value through profit or loss | ||||||||||||||||||||||||||
| Compound instrument: | ||||||||||||||||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
(b)The methods and assumptions the Group used to measure fair value are as follows:
i.Except those mentioned in point (ii) below, the carrying amounts of the Group’s financial instruments not measured at fair value (including cash and cash equivalents, current financial assets at amortized cost, accounts receivable, other receivables (including related parties), guarantee deposits paid, other payables (including related parties) and lease liabilities) are approximate to their fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(2).
ii.The fair value of the Perfect Public Warrants was determined using a Monte Carlo simulation model, which estimates the expected value of the warrants under both the deal closing and deal termination scenarios. Significant unobservable inputs include the probability of completion of the proposed going-private transaction and the expected volatility under each scenario.
D.For the year ended December 31, 2025 and six months ended June 30, 2026, there were no transfers between Level 1 and Level 2
E.For the year ended December 31, 2025, there was no
F.For the six months ended June 30, 2026, the Perfect Public Warrants (NYSE ticker: PERF WS) were suspended from trading by the NYSE on April 15, 2026. Subsequently, the NYSE filed a Form 25 with the SEC and stated that the warrants would be removed from listing and registration on May 12, 2026. Accordingly, May 12, 2026 is considered the effective NYSE delisting date for the warrants. Therefore, the Company transferred the fair value from Level 1 into Level 3.
G.The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:
| Fair value at June 30, 2026 | Valuation technique | unobservable input | Relationship of inputs to fair value | ||||||||||||||||||||
| Compound instrument: | |||||||||||||||||||||||
| Warrant liabilities | $ | Monte Carlo Simulation Model | Volatility | The higher the volatility, the higher the fair value | |||||||||||||||||||
| Probability of completion of the proposed going-private transaction | The higher the probability of completion, the lower the fair value | ||||||||||||||||||||||
H.The Group has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss from financial liabilities categorized within Level 3 if the inputs used to valuation models have changed:
F-34
Index to Financial Statements
| June 30, 2026 | |||||||||||||||||||||||
| Recognized in profit or loss | |||||||||||||||||||||||
| Input | Change | Favourable change | Unfavourable change | ||||||||||||||||||||
| Warrant liabilities | |||||||||||||||||||||||
| Volatility | ±1% | $ | $ | ( | |||||||||||||||||||
| Probability of completion of the proposed going-private transaction | ±1% | $ | $ | ( | |||||||||||||||||||
13. Segment Information
13(1) General information
Although the Group has multiple operating segments by geography, the management takes the aggregation criteria outlined in Paragraphs 11 to 14 of IFRS 8 into consideration to decide the reportable operating segments. In light of the qualitative and quantitative criteria, the Group concluded that it has only one reportable operating segment.
13(2) Geographical information
The Group derives revenue by geographical location for the six months ended June 30, 2025 and 2026 is as follows:
| Six months ended June 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Revenue | Revenue | ||||||||||
| United States | $ | $ | |||||||||
| Americas_Others (Note) | |||||||||||
| Europe | |||||||||||
| Asia-Pacific | |||||||||||
| Others | |||||||||||
| $ | $ | ||||||||||
Note : Americas_Others includes in North and South America, excluding the United States.
Geographical information on the revenue shows the location in which sales were generated.
The Group’s non-current assets, including property, plant and equipment, right-of-use assets and intangible assets, by geographical location as of December 31, 2025 and June 30, 2026 are as follows:
| December 31, 2025 | June 30, 2026 | ||||||||||
| Non-current assets | Non-current assets | ||||||||||
| United States | $ | $ | |||||||||
| Asia-Pacific | |||||||||||
| Europe | |||||||||||
| $ | $ | ||||||||||
F-35
Index to Financial Statements
Note : Non-current assets in the United States consist of goodwill and unpatented technology. Please refer to Note 6(8) for details.
13(3) Major customer information
There is no major customer of the Group (exceed 10% of revenue) for the six months ended June 30, 2025 and 2026.
F-36
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE PERIOD ENDED JUNE 30, 2026
The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our financial condition and results of operations for the six months ended June 30, 2026 and 2025 (this “MD&A”). This MD&A should be read together with Perfect Corp.’s unaudited condensed consolidated interim financial statements and accompanying notes for the six months ended June 30, 2026 and 2025, which are attached as Exhibit 99.1 to our Form 6-K furnished to the SEC on September 24, 2026 (the “Interim Financial Statements” or “our Interim Financial Statements”), and Perfect Corp.’s audited consolidated financial statements and management’s discussion and analysis for the year ended December 31, 2025, which are included in our annual report on Form 20-F for the year ended December 31, 2025 filed with the SEC on March 13, 2026 (the “Annual Report”). In addition to historical financial information, this MD&A contains forward-looking statements based upon current expectations that involve a number of known and unknown risks, uncertainties and assumptions and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements, including those set forth under the section entitled “Key Factors Affecting Our Results of Operations” and the section entitled “Item 3. Key Information - D. Risk Factors” in our Annual Report. You should also carefully read the section entitled “Cautionary Note Regarding Forward-Looking Statements.” Unless the context otherwise requires, references to “Perfect,” the “Company,” “we,” “us” and “our” shall mean Perfect Corp. and its consolidated subsidiaries. Capitalized terms not otherwise defined herein shall have the same meanings ascribed to them in the Annual Report.
Perfect’s annual consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). Our Interim Financial Statements are prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting”. All amounts are in U.S. dollars except as otherwise indicated herein. For more information about the basis of presentation of Perfect’s consolidated financial statements, see the section entitled “Basis of Presentation.”
Certain figures included in this MD&A have been rounded for ease of presentation. Percentage figures included in this MD&A have not in all cases been calculated on the basis of the rounded figures but on the basis of the amounts prior to rounding. For this reason, percentage amounts in this MD&A may vary slightly from those obtained by performing the same calculations using the figures in Perfect’s unaudited condensed consolidated interim financial statements or in the associated text. Certain other amounts that appear in this MD&A may similarly not sum due to rounding. Certain numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them due to rounding.
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Company Overview
Founded in 2015, we are a leading artificial intelligence (“AI”) technology company focused on delivering self-developed AI- and augmented reality (“AR”)- powered solutions to make your virtual world beautiful. Operating with a hybrid model that spans both B2C and B2B segments, we harness our cutting-edge expertise to transform how app and web users and brand customers interact with digital AI experiences.
Our B2C offerings revolve around advanced AI-driven technologies, delivering a seamless user experience for photo and video editing and creation. We offer seven mobile apps under the “YouCam” suite, YouCam Makeup, YouCam Perfect, YouCam Video, YouCam Enhance, YouCam AI Pro, YouCam Nails, and YouCam AI Chat, along with one web-based editing tool, YouCam Online Editor. Harnessing AI- and AR- technologies, our products enable real-time virtual try-ons, beauty camera or portrait retouching, photo or video enhancement, editing and creation, as well as state-of-the-art Generative AI capabilities such as image-to-image, image-to-video, text-to-video, text-to-photo, avatar creation, and intelligent editing. These innovative features empower users to transform selfie images and text prompts into striking personal content. Our B2C segment also functions as a dynamic platform for AI- and AR- functionalities, enabling us to fine-tune cutting-edge solutions that can later be integrated into our B2B offerings.
Capitalizing on our success in B2C business, we deliver hyper-realistic AI-driven virtual try-on solutions for enterprise clients, transforming both online and in-store shopping experiences from product discovery to personalized recommendations. Our subscription-based modules empower beauty, skincare clinics, med spas, jewelers, watchmakers, and fashion retailers to integrate virtual try-on technology across their mobile apps, websites, in-store kiosks, and third-party e-commerce platforms. Our current offerings cover makeup, nail art, hairstyling, eyewear, watch, jewelry try-ons, advanced skin diagnostics and simulation, and foundation shade matching, all powered by a robust recommendation engine for ultra-personalized results.
On March 18, 2026, we announced that we had received a preliminary non-binding proposal for a going-private transaction. On March 23, 2026, our Board of Directors announced the formation of a special committee to evaluate the proposal. On April 20, 2026, we announced that the special committee had appointed a financial advisor and legal counsel in connection with its evaluation of the proposed transaction. Subsequently, on July 10, 2026, we announced that we had entered into a definitive agreement with respect to the going-private transaction.
We have achieved significant scale and steady growth since inception in 2015. Our total revenue increased by 5.9% to $34.3 million for the six months ended June 30, 2026, from $32.4 million in the same period of 2025. The increase was primarily driven by continued revenue growth from YouCam mobile app and web subscriptions, supported by growing popularity among subscribers for Generative AI technologies
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and AI editing features for photos and videos, partially offset by a decrease in our online virtual product try-on solutions from brand customers and licensing revenue. We recorded net income of $3.6 million for the six months ended June 30, 2026, compared to $2.5 million in the same period of 2025, an increase of 45.3%, supported by our steady revenue growth and effective cost control.
Key Factors Affecting Our Results of Operations
Our results of operations are affected by the following factors:
Our ability to effectively monetize our premium features and expand our B2C business
Our results of operations are significantly driven by our ability to sustain a steady growth in our B2C business, which in turn, depends on our success in expanding and retaining subscriptions to the premium features offered through our YouCam suite of mobile applications and web-based services.
In managing our B2C business, we continuously monitor key performance indicators, such as the number of active subscribers. We also benchmark product ratings and functionalities against primary competitors to identify and prioritize features that serve as core drivers in converting free users to paying subscribers. As of June 30, 2026, we recorded 820,000 active subscribers, compared to over 960,000 as of June 30, 2025, a decrease of 14.6%. The decline was attributable to increased competition through the rapidly shifting landscape of AI-driven apps. Revenue from mobile app and web service subscriptions increased to $23.4 million for the six months ended June 30, 2026, compared to $20.3 million for the same period in 2025. We attribute this growth primarily to the continued recognition of revenue from annual subscription plans purchased in prior periods, as well as revenue generated from subscriptions during the current period.
As consumers increasingly rely on mobile technology for digital content creation and personal expression, we have observed growing demand for advanced, feature-rich mobile apps and web services. In response to this trend, we have introduced - and remain committed to continuously introducing - a range of innovative mobile apps and web services embedded with newly developed and enhanced premium features powered by cutting-edge Generative AI technologies. These innovative offerings elevate the user experience by supporting a broad spectrum of functionality, including skin and body retouching, hairstyle modifications, makeup simulations, and AI-assisted content creation, as well as improving the efficiency of content editing. The robust functionality fuels increased consumer engagement and sustained demand for paid offerings, seamlessly embedded into everyday use, ranging from casual touch-ups to professional-level production workflows. The increased consumer engagement supports our monetization efforts, driving conversion of free users to paying subscribers, leading to an increase in overall customer lifetime value and resulting in strong recurring revenue growth.
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We believe the continued integration of advanced Generative AI capabilities will unlock new possibilities in visual content creation. In line with this vision, we see ongoing opportunities to expand our footprint across mobile and web-based platforms by delivering updated apps and web services powered by next-generation Generative AI features. To support this strategy, we remain committed to advancing our AI- and AR- technologies with the goal of launching market-differentiating products and premium offerings that align with evolving consumer preferences.
Our ability to continuously introduce market competitive offerings that drive user interest
Our results of operations rely heavily on our ability to consistently develop and periodically launch new premium features and product offerings that resonate with our app and web service users and adapt to evolving market dynamics. Our continued investment in research and development underpins our ability to drive innovation and maintain product relevance. Expanding our total addressable market by identifying and engaging new target user groups also plays a significant role in maintaining our steady growth in B2C business and enhancing our market competitiveness. Technological shifts, changes in platform policies, and intensifying market competition may impact the adoption of our new product offerings. By proactively monitoring these factors and aligning our development strategies with user needs, we seek to preserve the quality and appeal of our products while effectively navigating an increasingly dynamic industry environment.
Overall adoption rate of AI- and AR-technologies in beauty and fashion industries
Our results of operations are partially affected by the overall growth and adoption of AI- and AR-technologies in the beauty and fashion industries, which are, in turn, dependent upon brand customers’ demand for these technologies and the pace at which brands undergo digital transformation. Any changes or innovations in the beauty and fashion industries and our ability to promptly adapt to such changes or innovations may impact our business performance and results of operations. While digital transformation has accelerated in recent years, the adoption of AI and AR technologies among beauty and fashion brands and retailers remains relatively limited. We view this as a strategic opportunity to drive further digitization and expand the adoption of AI- and AR-powered solutions across these sectors.
Our ability to expand into new verticals and grow our brand base
Leveraging our extensive industry and technology expertise, along with our broad customer network that we have established in the beauty AI- and AR- industry, we aim to further expand our product offerings into complementary segments and broaden our product portfolio beyond beauty and fashion industries to further grow our brand base. We have already made inroads into luxury and fashion industries, including clothes, hair styles, jewelry, eyewear, watches, and accessories, and now are exploring opportunities in new segments, such as solutions for hair salons, med-spa, skin clinics and aesthetic non-surgical beauty treatments.
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We are uniquely positioned to integrate our industry-leading facial and hand solutions into these new segments. For example, in the jewelry sector, we can provide a solution which enables consumers to virtually try on earrings, watches, rings and bracelets while simultaneously applying virtual makeup. This capability is challenging for a jewelry AI- and AR- vendor to replicate, given the complexity of combining virtual try-ons with virtual makeup features. Ultimately, our goal is to expand our product offerings, achieve widespread adoption, and provide a comprehensive suite of products that extends beyond the beauty and fashion industries.
Our ability to sustainably grow our B2B business
We offer a diverse range of AI- and AR- powered solutions, ranging from virtual try-ons for makeup, nail art, hairstyles, eyewear, watches and jewelry to advanced skin diagnostic technology, foundation shade finder, apparel virtual try-on, and aesthetic skin simulations. Our solutions can be deployed across various channels and platforms, including brand-owned channels such as brand-owned websites, in-store kiosks, retailer websites, and official mobile applications, as well as major China's third-party platforms such as Alibaba (Taobao and Tmall), and Tencent (WeChat).
Our ability to maintain sustainable growth for our B2B business depends in part on retaining our existing brand customers, expanding their use of our services and acquiring new brand customers into our brand portfolio. In managing our B2B business, our management vigilantly monitors revenue contribution from our Key Customers, as this metric provides reliable insights into the performance of our B2B business, for the reasons that (i) revenue from Key Customers accounted for approximately 30.6% and 22.2% of our total revenue for the six months ended June 30, 2025 and 2026, respectively; and (ii) revenue from Key Customers represented 87.7% and 81.4% of our total revenue from our total brand portfolio for the six months ended June 30, 2025 and 2026, respectively. In addition to the Key Customers, which are major brand customers, we also generate revenue from other long-tail brand customers which are part of the non-Key Customer brands. Total non-Key Customer brands revenue represented 12.3% and 18.6% of our total brand business for the six months ended June 30, 2025 and 2026, respectively.
The number of Key Customers decreased from 139 as of June 30, 2025 to 113 as of June 30, 2026. The net decline in the number of Key Customers was primarily due to customer downgrades in service subscription spending.
As we continue to strengthen long-term relationships with existing brand partners, our goal is to increase the average recurring fees per brand. We aim to achieve this through a combination of cross-selling across sister brands, geographic regions, and verticals within beauty and luxury groups, as well as upselling incremental SKUs, modules, and functionalities to beauty and fashion brands. We believe the high levels of customer engagement and the scalability of our platform position us well to maintain the sustainable growth in our B2B business.
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Our ability to manage and improve operating efficiency
Our results of operations partially depend on our ability to effectively manage our costs and expenses. We recognized operating expenses of $26.6 million for the six months ended June 30, 2026, compared to $26.4 million in the same period of 2025, an increase of 0.6%. Sales and marketing expenses remained relatively stable, while research and development and general and administrative expenses decreased 6.3% and 3.1%, respectively, during the period.
As we scale our business and advance our technology, we expect our customer acquisition efforts to benefit from our strong brand recognition and word-of-mouth referrals. Our continued investment in technology is also expected to drive operational efficiency, enabling the same number of employees to deliver higher productivity over time. In addition, we believe that we will continue to benefit from economies of scale as we continue to actively manage the level of our general and administrative expenses.
Our people and technology
We are committed to investing in our people and technology, as these are essential for delivering innovative solutions and services that meet the evolving needs of users and brands, expanding our active subscriber and brand customer base, and maintaining our market leadership in the consumer beauty and AI mobile apps as well as in the beauty and fashion AI- and AR- industry.
We have invested significant resources in our people, recruiting talent from renowned universities and academic institutions across various regions. We have developed a comprehensive talent development program that includes diverse training programs featuring lectures, senior experience sharing, study groups, and participation in conferences and external forums. We also foster a working environment that motivates employees to raise questions and adopts a problem-solving mindset. Our ultimate goal is to retain these talents in the long term and turn them into valuable assets for our business success.
We have also invested a substantial portion of our resources in technology development, recognizing it as the cornerstone of our business success. By collaborating with prestigious universities and research labs, we bring emerging talents and cutting-edge technologies from academic institutions to our Company, bridging the gap between academic research and commercial application. This collaboration offers us unique opportunities to access innovative ideas and the latest technology developments at an early stage, allowing us to plan proactively. Additionally, we are committed to continually improving and upgrading our technologies to ensure the highest quality for our users and brand customers. We believe these efforts are crucial to our business, as the success of our AI- and AR-powered solutions relies on technology that provides exceptional accuracy, scalability, and performance.
Basis of Presentation
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Our Interim Financial Statements have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting”. All intercompany accounts and transactions have been eliminated on consolidation. For the purposes of presenting the Interim Financial Statements, our assets and liabilities and our foreign operations (including subsidiaries in other countries that use currencies which are different from our functional currency) are translated into U.S. dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences, if any, are recognized in other comprehensive income and accumulated in equity.
Components of Results of Operations
Revenue
Our revenue sources include two major components: AI- and AR- cloud solutions and subscription and licensing. We would anticipate the revenue contribution from licensing becoming increasingly insignificant, as we progressively allocate fewer resources to this area and instead focus on strengthening our market leadership in the consumer beauty and AI mobile apps as well as in the beauty and fashion AI- and AR- industry.
(1)AI- and AR- cloud solutions and subscription
For AI- and AR- cloud solutions and subscription, we provide online cloud-based solutions to our customers, primarily including premium feature subscriptions for our app and web service users and virtual try-on solutions for our brand customers.
In terms of the premium features on our mobile apps and web services to which users subscribe through Apple App Store and Google Play and our website, we currently offer monthly and annual subscription plans, with varying subscription prices by countries and regions. We recognize revenue from such services based on the fulfilled contract obligations for each month.
Our typical contract terms with brand customers range from three months to multiple years, with a one-year term being the most common. Our contract consideration is fixed and determined by the following factors: (i) the functionality of the modules (e.g., makeup, skincare, shade finder, jewelry); (ii) the duration of the contract period; (iii) the geographical coverage, such as the number of countries or regions for module deployment or the number of website domains for integration into our modules; (iv) the maximum number of SKUs that a brand can utilize at the same time; and (v) any additional manpower hours required for customization, if any.
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Furthermore, depending on the nature of the products and services provided, the charges of brand customers can be further divided into one-time fees, recurring fees, or a combination of both. One-time fees are made up of service setup fee, customization fee, and console base fee, which allow brands to create a brand console account on our platform for uploading and managing SKUs. Recurring fees are related to granting brand customers access to the modules throughout the contract period. These fees are recurring as the service is time-limited and scope-limited, requiring renewal upon the expiration of the service term.
(2)Licensing
We collect licensing fees from (i) licensing self-developed technologies, which include offline SDK and AI- and AR- offline solutions to brand customers, and (ii) licensing customized mobile apps designed and created based on customers’ specifications that do not require continuous support from our backend cloud computing infrastructure. In this scenario, the mobile apps are operated by customers on their own infrastructure, with no additional supporting services required from us after delivery to customers.
Furthermore, depending on the type of licensing services provided, brand customers may elect to renew licensing agreements with us, as the right to use our intellectual property is only granted to them for a specific period. We collect recurring revenue from the renewal of licensing agreements by customers.
For further details on our revenue recognition, see Note [4] “[Summary of Significant Accounting Policies]” to our Interim Financial Statements.
Cost of Sales and Services
Our cost of sales and services primarily consists of kiosk hardware cost, certain research and development personnel-related expenses allocated to cost of sales and services which are directly related to revenue and services activities, warranty provision as well as third-party payment processing fees for distribution partners such as Google Play and Apple App Store. We expect that our cost of sales and services will increase in absolute dollars in tandem with the growth of our businesses in the foreseeable future, as we continue to invest and broaden our product offerings and scale up our business operations.
Sales and Marketing Expenses
Our sales and marketing expenses consist of personnel-related expenses for salaries, employee benefits, and stock-based compensation for employees engaged in sales and marketing, advertising and promotional fees, cloud-hosting fees as well as allocated facilities and information technology costs. We plan to continue to invest in sales and marketing to grow our user and brand customer base and increase our brand awareness. As such, we expect sales and marketing expenses to increase in absolute dollars. In the near term, we anticipate fluctuations in sales and marketing expenses as a percentage of revenue due to our investments in accelerating market adoption of our AI- and AR-technologies.
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General and Administrative Expenses
Our general and administrative expenses primarily consist of personnel-related expenses for employees involved in general corporate operations, including administration, legal, human resources, accounting and finance. Personnel-related expenses primarily include salaries, benefits, and share-based compensation. In addition, general and administrative expenses also include allocated facilities costs, such as rent, depreciation expenses, professional service fees and other general corporate expenses.
Furthermore, we have incurred and expect to continue incurring expenses as a result of becoming a public company since October 2022, including costs for complying with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations, and increased expenses for insurance, investor relations, and professional services. In the first half of 2026, our general and administrative expenses decreased slightly, demonstrating our effective cost control.
Research and Development Expenses
Our research and development expenses primarily consist of salaries and benefits, including share-based compensation, for our technology and product development personnel, and depreciation and other associated corporate costs.
We expect our research and development expenses to increase in the future as we expand our team of technology and product development professionals and continue to invest in technology infrastructure and innovative AI- and AR-solutions to enhance and broaden our product offerings.
Interest Income
Our interest income primarily consists of interest earned on bank deposits and financial assets at amortized cost.
Other Income
Our other income primarily consists of subsidies from local government and VAT adjustments. We do not expect material subsidies from local government in the foreseeable future.
Other Gains and Losses
Our other gains and losses primarily consist of losses on financial liabilities at fair value through profit or loss (“FVTPL”) and foreign exchange gains and losses. The FVTPL is primarily associated with our outstanding Warrants.
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Finance Costs
Our finance costs primarily consist of interest expenses on our lease liabilities.
Income Tax Expense
Our income tax expense primarily consists of current income tax expenses. As a global company, we are subject to income taxes in the jurisdictions where we do business. These foreign jurisdictions have different statutory tax rates. Accordingly, our effective tax rate will vary depending on the relative proportion of income derived in each jurisdiction, use of tax credits, changes in the valuation of our deferred tax assets and liabilities as well as changes in tax laws. Currently, the applicable tax rate in our headquarters in Taiwan is 20% while the tax rate for unappropriated earnings is 5%.
Results of Operations
Our results of operations for the six months ended June 30, 2025 and 2026 are presented below:
Six months ended June 30, | ||||||||||||||
($ in thousands) | 2025 | 2026 | ||||||||||||
Revenue | $ 32,361 | $ 34,275 | ||||||||||||
Cost of sales and services | (7,580) | (6,358) | ||||||||||||
Gross profit | 24,781 | 27,917 | ||||||||||||
Operating expenses | ||||||||||||||
Sales and marketing expenses | (15,170) | (15,476) | ||||||||||||
General and administrative expenses | (3,707) | (3,593) | ||||||||||||
Research and development expenses | (7,595) | (7,119) | ||||||||||||
Expected credit gains (losses) | 67 | (363) | ||||||||||||
Total operating expenses | (26,405) | (26,551) | ||||||||||||
Operating income (loss) | (1,624) | 1,366 | ||||||||||||
Non-operating income and expenses | ||||||||||||||
Interest income | 3,164 | 2,816 | ||||||||||||
Other income | 16 | 33 | ||||||||||||
Other gains and losses | 1,592 | 304 | ||||||||||||
Finance costs | (6) | (9) | ||||||||||||
Total non-operating income and expenses | 4,766 | 3,144 | ||||||||||||
Income before income tax | 3,142 | 4,510 | ||||||||||||
Income tax benefit (expense) | (642) | (877) | ||||||||||||
Net income | $ 2,500 | $ 3,633 | ||||||||||||
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Comparison of Six Months Ended June 30, 2025 to Six Months Ended June 30, 2026
Revenue
Total revenue increased by $1.9 million, or 5.9%, from $32.4 million for the six months ended June 30, 2025 to $34.3 million for the six months ended June 30, 2026. The increase was primarily driven by a 5.0% increase in revenue from our AI- and AR- cloud solutions and subscriptions, which increased from $29.0 million for the six months ended June 30, 2025 to $30.4 million for the same period in 2026. This growth was primarily driven by continued revenue growth from YouCam mobile app and web subscriptions, supported by growing popularity among subscribers for Generative AI technologies and AI editing features for photos and videos.
Licensing revenue decreased by 13.2% from $2.6 million for the six months ended June 30, 2025 to $2.2 million for the same period in 2026, primarily because we continue to prioritize enhancing our market leadership in the consumer beauty and AI mobile apps and web subscriptions, as well as AI- and AR-based SaaS subscription solutions for brand customers. We expect licensing revenue to become increasingly insignificant, as we continue to focus on strengthening our market leadership in the consumer beauty and AI mobile apps as well as in the beauty and fashion AI- and AR- industry.
With respect to geographical contribution, revenue from the Americas has increased by by 1.8% from $16.1 million for the six months ended June 30, 2025 to $16.4 million for the same period in 2026, revenue from Europe has increased by 1.3% from $9.4 million for the six months ended June 30, 2025 to $9.5 million for the same period in 2026, and revenue from Asia Pacific has increased 16.7% from $5.9 million for the six months ended June 30, 2025 to $6.9 million for the same period in 2026. Revenue outside of these three major regions has grown by 52.6% from $1.0 million for the six months ended June 30, 2025 to $1.5 million for the same period in 2026.
Cost of Sales and Services
Cost of sales and services decreased by $1.2 million, or 16.1%, from $7.6 million for the six months ended June 30, 2025 to $6.4 million for the same period in 2026. The decrease reflected increased operational efficiency from supplying standardized SaaS solutions with fewer brand-specific customization efforts.
Gross Profit
Gross profit increased by $3.1 million, or 12.7%, from $24.8 million for the six months ended June 30, 2025 to $27.9 million for the same period in 2026. Gross margin increased from 76.6% for the six months ended June 30, 2025 to 81.5% for the six months ended June 30, 2026. The increase in gross margin was
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primarily due to increased operational efficiency from supplying standardized SaaS solutions with fewer brand-specific customization efforts.
Total Operating Expenses
Total operating expenses increased by $0.1 million, or 0.6%, from $26.4 million for the six months ended June 30, 2025 to $26.6 million for the same period in 2026. Sales and marketing expenses remained relatively stable, while research and development expenses and general and administrative expenses decreased by 6.3% and 3.1%, respectively, during the period.
Sales and Marketing Expenses
Sales and marketing expenses increased by $0.3 million, or 2.0%, from $15.2 million for the six months ended June 30, 2025 to $15.5 million for the same period in 2026, remaining relatively stable.
General and Administrative Expenses
General and administrative expenses decreased by $0.1 million, or 3.1%, from $3.7 million for the six months ended June 30, 2025 to $3.6 million for the same period in 2026, demonstrating our effective cost control.
Research and Development Expenses
Research and development expenses decreased by $0.5 million, or 6.3%, from $7.6 million for the six months ended June 30, 2025 to $7.1 million for the same period in 2026.
Total non-operating income and expenses
Total non-operating income and expenses decreased by $1.6 million, or 34.0%, from $4.8 million for the six months ended June 30, 2025 to $3.1 million for the same period in 2026. The decrease was primarily attributable to lower other gains and losses and lower interest income.
Interest Income
Interest income decreased by $0.3 million, or 11.0%, from $3.2 million for the six months ended June 30, 2025 to $2.8 million for the same period in 2026.
Other Gains and Losses
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We recorded other gains of $0.3 million for the six months ended June 30, 2026, compared to other gains of $1.6 million for the same period in 2025. The decrease was primarily attributable to lower gains recognized on financial liabilities at fair value through profit or loss.
Net Income
As a result of the foregoing, our net income for the six months ended June 30, 2026 was $3.6 million, compared to $2.5 million for the same period in 2025, an increase of 45.3%. The increase was supported by our steady revenue growth and effective cost control.
Liquidity and Capital Resources
Since inception, we have financed our operations primarily through equity contributions from our shareholders and revenue generated from our business operations. As of June 30, 2026, we had cash and cash equivalents of $125.6 million, which primarily consisted of checking accounts, demand deposits and time deposits. Our cash and cash equivalents are primarily denominated in U.S. dollars, and we do not currently enter into any hedging arrangements. In addition, we had 6-month time deposits of $36.4 million classified as current financial assets at amortized cost according to IFRS and U.S. Treasuries of $15.1 million classified as non-current financial assets at amortized cost according to IFRS.
We do not have any loan and bank borrowings as of June 30, 2026. Our net income increased by $1.1 million, or 45.3%, from $2.5 million for the six months ended June 30, 2025 to $3.6 million for the six months ended June 30, 2026, primarily driven by continued revenue growth and effective cost control.
We believe that our cash and cash equivalents will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months from the date of this MD&A and sufficient to fund our operations. As of the date of this MD&A, there has been no material change to our liquidity position since June 30, 2026. To the extent that our current resources are insufficient to satisfy our cash requirements in the future, we may need to seek additional equity or debt financing. If the financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to decrease our level of investment in product development or we may delay, scale back or abandon all or part of our growth strategy, which could have an adverse impact on our business and financial prospects.
Our cash requirements for the six months ended June 30, 2026 and any subsequent interim period primarily include our capital expenditures, lease obligations, contractual obligations and other commitments. Our capital expenditures are primarily related to purchases of certain servers in our ordinary course of business and ERP system upgrades, which are immaterial from a dollar amount perspective. From January 1, 2026 through June 30, 2026, we incurred capital expenditures of less than $0.1 million. Our lease obligations consist of commitments under rental agreements for our office premises. Our contractual
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obligations primarily consist of minimum commitments for marketing activities. From a dollar amount perspective, both lease obligations and contractual obligations are immaterial. We expect our lease obligations, contractual obligations and the cash requirements associated with the Merger described below to comprise our principal short-term cash requirements, and we currently do not expect any material capital expenditures in the foreseeable future.
As of the date of this MD&A, 20,849,975 Class A Ordinary Shares were reserved for future issuance pursuant to outstanding Warrants. We would receive the proceeds from any exercise of any outstanding Warrants that are exercised for cash pursuant to their terms. Assuming the exercise in cash of all of the 20,849,975 Warrants, consisting of 11,499,975 Perfect Public Warrants, 6,600,000 Perfect Private Placement Warrants and 2,750,000 Perfect Forward Purchase Warrants, we would receive an aggregate of approximately $239.8 million, but would not receive any proceeds from the resale of Class A Ordinary Shares issuable upon such exercise. We will have broad discretion over the use of proceeds from the exercise of these Warrants. To the extent that any of these Warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of these Warrants will decrease. Any proceeds from the exercise of the Warrants would increase our liquidity, but our ability to fund our operations is not dependent upon receipt of cash proceeds from the exercise of the Warrants.
There is no assurance that our Warrants will be in the money prior to their expiration or the completion of the Merger, or that the holders of the Warrants will elect to exercise any or all of such Warrants. The likelihood that Warrant holders will exercise their Warrants, and therefore any cash proceeds that we may receive in relation to the exercise of the issued and outstanding Warrants, will be dependent on the trading price of our Class A Ordinary Shares. If the market price for our Class A Ordinary Shares is less than the exercise price of our Warrants, which is $11.50 per share, we believe Warrant holders will be unlikely to exercise their Warrants. Given that the $2.00 per share merger consideration is below the $11.50 per share exercise price of our Warrants, we believe holders of the Warrants are unlikely to exercise their Warrants for cash prior to completion of the Merger. Accordingly, we do not expect to rely on cash exercises of the Warrants to fund our operations prior to completion of the Merger.
On October 18, 2023, the SEC declared effective a registration statement on Form F-3, under which the selling security holders identified therein or their permitted transferees may offer and sell, from time to time, up to 38,542,254 Class A Ordinary Shares, 9,350,000 Warrants and 9,350,000 Class A Ordinary Shares underlying such Warrants. Given the substantial number of Class A Ordinary Shares registered for potential resale by the selling security holders, the sale of shares by the selling security holders, or the perception in the market that the selling security holders holding a large number of shares intend to sell their shares, could increase the volatility of the market price of our Class A Ordinary Shares or result in a significant decline in the public trading price of our Class A Ordinary Shares. These sales, or the possibility that these sales may occur, and any related volatility or decrease in market price of our Class A Ordinary
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Shares and Warrants, might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
On July 10, 2026, we entered into an Agreement and Plan of Merger with ProjectNY (the “Merger Agreement”), pursuant to which ProjectNY (the “Merger Sub”) will merge with and into us, with us continuing as the surviving company (the “Merger”). Upon completion of the Merger, each Class A Ordinary Share and Class B Ordinary Share outstanding immediately prior to the Merger, other than certain shares specified in the Merger Agreement, will be cancelled in exchange for $2.00 in cash per share, without interest and net of applicable withholding taxes. Upon completion of the Merger, we will become a privately held company and our Class A Ordinary Shares and outstanding warrants will cease to be listed or quoted on the applicable public markets. In connection with the Merger, on or prior to the effective time of the Merger, we are required under the Merger Agreement to use our best efforts to deposit with the paying agent available unrestricted cash of at least $96.0 million, subject to certain limitations, including that we are not required to make any deposit that would render us insolvent or deprive us of working capital reasonably determined in good faith to be required to conduct our business in the ordinary course.
Cash Flows Summary
Presented below is a summary of our operating, investing, and financing cash flows:
Six months ended June 30, | ||||||||||||||
($ in thousands) | 2025 | 2026 | ||||||||||||
Cash flows from (used in) operating activities | $ 7,987 | $ 5,209 | ||||||||||||
Cash flows from (used in) investing activities | (9,909) | (5,181) | ||||||||||||
Cash flows from (used in) financing activities | (303) | (274) | ||||||||||||
Effects of exchange rates changes on cash and cash equivalents | 441 | (109) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | $ (1,784) | $ (355) | ||||||||||||
Cash Flows Generated from (Used in) Operating Activities
Cash flows generated from or used in operating activities primarily relate to the collection of accounts receivable, payment of provisions and payables, net interest received and income tax paid. Our business primarily operates in a prepaid service subscription model, enabling us to collect cash in advance upon the subscription of product plans or signing of contract and then deliver services pursuant to terms and conditions of subscriptions or relevant contracts.
Net cash generated from operating activities decreased by $2.8 million, or 34.8%, from $8.0 million for the six months ended June 30, 2025 to $5.2 million for the six months ended June 30, 2026. The
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decrease was primarily driven by lower current contract liabilities and higher income tax paid, partially offset by higher profit before tax.
Cash Flows Generated from (Used in) Investing Activities
Cash flows generated from or used in investing activities primarily relates to acquisition of financial assets, proceeds from disposal of financial assets, acquisition of businesses, acquisition of property, plant and equipment, acquisition of intangible assets, and changes in guaranteed deposits paid.
Net cash used in investing activities was $5.2 million for the six months ended June 30, 2026, compared to $9.9 million for the six months ended June 30, 2025. The decrease in net cash used in investing activities was primarily attributable to the absence of cash outflows for an acquisition of a subsidiary in 2026, partially offset by higher net acquisitions of financial assets at amortized cost.
Cash Flows Generated from (Used in) Financing Activities
Net cash used in financing activities was $0.3 million for the six months ended June 30, 2026, consisting of $0.3 million in the repayment of the principal portion of lease liabilities.
Material Contractual Obligations and Commitments
During the periods presented, we did not have any material contractual obligations and commitments other than certain office leases entered into by Perfect Mobile Corp., a wholly-owned subsidiary of the Company. Perfect Mobile Corp. renewed two office leases with CyberLink Corp., a related party, in 2025.
Off-Balance Sheet Arrangements
During the periods presented, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which were established for the purpose of facilitating off-balance sheet arrangements.
Critical Accounting Estimates
Our Interim Financial Statements have been prepared in accordance with IFRS. The preparation of our Interim Financial Statements requires us to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue, expenses and related disclosures. See Note [5] “[Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty]” to our Interim Financial Statements for additional information on our critical accounting estimates.
Recent Accounting Pronouncements
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For a discussion of our new or recently adopted accounting pronouncements, see Note [3] “[Application of New Standards, Amendments and Interpretations]” to our Interim Financial Statements.
Emerging Growth Company Status
As defined in Section 102(b)(1) of the JOBS Act, we are an emerging growth company. As such, we are eligible for and intend to rely on certain exemptions and reduced reporting requirements provided by the JOBS Act, including (a) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act, (b) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements and (c) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
The Company will remain an emerging growth company under the JOBS Act until the earliest of:
(1)the last day of the fiscal year (a) following the fifth anniversary of the date on which Class A Ordinary Shares were offered in connection with the Transactions, (b) in which it has total annual gross revenues of at least $1.235 billion, or (c) in which it is deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of its ordinary shares that are held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; or
(2)the date on which it has issued more than $1 billion in non-convertible debt during the prior three-year period.
Foreign Private Issuer Status
We are an exempted company limited by shares incorporated in 2015 under the laws of the Cayman Islands. We are a foreign private issuer within the meaning of the rules under the Exchange Act. Under Rule 405 of the Securities Act, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and accordingly, the next determination will be made with respect to us on June 30, 2027. Even after we no longer qualify as an emerging growth company, for so long as we qualify as a foreign private issuer, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:
•the rules requiring domestic filers to issue financial statements prepared under U.S. GAAP;
•the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;
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•the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;
•the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and
•the selective disclosure rules by issuers of material nonpublic information under Regulation Fair Disclosure, or Regulation FD, which regulates selective disclosure of material non-public information by issuers.
We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, pursuant to the rules and regulations of the NYSE, we are required to furnish to the SEC on Form 6-K, no later than six months following the end of our second fiscal quarter, unaudited interim financial information that includes an interim balance sheet as of the end of our second fiscal quarter and a semi-annual income statement covering our first two fiscal quarters. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. Accordingly, our shareholders will receive less or different information about us than a shareholder of a U.S. domestic public company would receive.
We are a non-U.S. company with foreign private issuer status and are listed on the NYSE. NYSE rules permit a foreign private issuer such as us to follow the corporate governance practices of our home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from NYSE corporate governance listing standards. Among other things, we are not required to have:
•a majority of the Board consisting of independent directors;
•a compensation committee;
•a nominating committee; or
•regularly scheduled executive sessions with only independent directors each year.
We intend to rely on the exemptions listed above. As a result, you may not be provided with the benefits of certain corporate governance requirements of the NYSE applicable to U.S. domestic public companies. We would cease to be a foreign private issuer at such time as more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i) the majority of our executive officers or directors are U.S. citizens or residents, (ii) more than 50% of our assets are located in the United States, or (iii) our business is administered principally in the United States.
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Foreign private issuers, similar to emerging growth companies, are also exempt from certain more stringent executive compensation disclosure rules. Thus, even if we are no longer qualified as an emerging growth company but remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of public companies that are neither an emerging growth company nor a foreign private issuer.
If at any time we cease to be a foreign private issuer, we will take all action necessary to comply with the applicable rules of the SEC and the NYSE.
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various market risks, with foreign currency risk and interest rate risk being the most significant, followed by credit and liquidity risks. We do not currently maintain foreign exchange hedging contracts for all currencies in which we conduct business. Although we may enter into hedging arrangements from time to time to mitigate currency risk, changes in the fair value of these contracts may be offset by corresponding fluctuations in the value of the underlying transactions being hedged.
Foreign Currency Risk
We are exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, and receivables that are denominated in a currency other than the respective functional currencies of our entities. Our sales are substantially denominated in U.S. dollars, but the functional currencies of our entities also include NT Dollars, Euros, RMB and Japanese yen. Accordingly, changes in exchange rates are reflected in reported income and loss from our international businesses included in our consolidated statements of operations. The stronger U.S. dollar against NT Dollars as of June 30, 2026 decreases the reported expenses from our international businesses included in our consolidated statements of operations, as most of our engineers are located in Taiwan. However, we cannot assure you that this would continue to be the case in the future.
For the six months ended June 30, 2026, we had $0.1 million of other comprehensive loss generated from the exchange differences on translation of foreign operations, whereas for the same period in 2025, we had $0.2 million of other comprehensive income generated from the same.
A hypothetical 10% change in foreign currency exchange rates on our monetary assets and liabilities would not be material to our financial condition or results of operations.
Based on the above, we believe we are not exposed to significant transactional foreign currency risk. While we have not engaged in the hedging of our foreign currency transactions to date and do not enter into any hedging contracts for trading or speculative purposes, we may in the future, enter into derivatives or
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other financial instruments in an attempt to hedge our foreign currency exchange risk. It is difficult to predict the impact that hedging activities would have on our results of operations.
Interest Rate Risk
Given that we have no interest-bearing indebtedness as of the date of this MD&A, the risk arising from the fluctuation of interest rates should only be limited to interest income from interest-bearing assets such as cash and cash-equivalent assets and financial assets at amortized cost that bear variable interest rates.
Credit Risk
Credit risk refers to the risk of financial loss to us arising from default by the customers or counterparties of financial instruments on the contract obligations. Our primary exposure to credit risk arises from the possibility that counterparties may be unable to fully repay accounts receivable in accordance with agreed terms, as well as the contract cash flow from financial assets measured at amortized cost and at fair value through profit or loss.
We actively monitor and manage credit risk through regular credit checks and the enforcement of credit limits. For banks and financial institutions, we only engage with independently rated counterparties that hold a minimum credit rating of “A.” For our customers, credit risk is managed and assessed by our local entities, which evaluate each new customer prior to offering standard payment and delivery terms. Internal risk control teams assess customer credit quality by considering financial position, historical performance, and other relevant factors. Individual risk limits are established based on internal or external ratings, in alignment with thresholds approved by our Board.
Liquidity Risk
We manage liquidity risk by monitoring and maintaining a level of cash deemed adequate to finance our operations and mitigate the effects of fluctuations in cash flows. We currently have sufficient cash and liquidity to finance our operations.
Cautionary Note Regarding Forward-Looking Statements
This MD&A includes forward-looking statements regarding, among other things, our plans, strategies and prospects, both business and financial, and the Merger. These statements are based on the beliefs and assumptions of our management. Although we believe that our respective plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including
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statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These forward-looking statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements may be preceded by, followed by or include the words “may,” “will,” “should,” “could,” “would,” “predict,” “potential,” “continue,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” “forecast,” “seek,” “schedule,” or similar expressions.
Such forward-looking statements, if any, with respect to our revenues, earnings, performance, strategies, prospects and other aspects of the businesses are neither historical facts nor assurances of future performance. Instead, they are based solely on our current beliefs, expectations and assumptions regarding the future of the business, future plans and strategies, anticipated events and trends, the economy and other future conditions that are subject to risks and uncertainties. These forward-looking statements are not intended to serve as, and must not be relied on as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability regarding future performance, events or circumstances. Many of the factors affecting actual performance, events and circumstances are beyond our control. The risk factors and cautionary language discussed in this MD&A and the Annual Report provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by us in such forward-looking statements, including among other things:
•our ability to increase user download and engagement with our mobile apps and web services, including our ability to attract free users to purchase our subscription plans available on our mobile apps and web services to unlock premium features of our products;
•our ability to innovate, develop and provide market competitive product offerings or upgrade our existing product offerings in response to rapidly-evolving consumer preferences in a timely and cost-effective manner;
•our ability to grow and retain active subscribers’ subscriptions to the premium features of our mobile apps and web services;
•the intensity of competition in the mobile app and web services market, including the development of Generative AI technologies, which may introduce new emerging technologies and competitors for AI photo, AI video use cases;
•the rate of adoption of AI- and AR- virtual try-on technology by consumers, brands, and retailers, and any changes in consumer preferences or shopping habits;
•our ability to retain and expand sales to existing brands or attract new brands into our brand portfolio;
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•the intensity of competition in the enterprise business market, including the emergence of new competitors, the development of competing technologies, and pricing pressures;
•changes in applicable laws or regulations, especially laws and regulations related to privacy and data protection;
•our need to retain, attract or maintain high-quality personnel;
•our ability to enforce, protect and maintain intellectual property rights;
•our ability to complete the Merger on the proposed terms and anticipated timeline or at all, including the satisfaction or waiver of the conditions to completion of the Merger and receipt of the required shareholder approval;
•the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement;
•the cash position of the Company and its subsidiaries at the effective time of the Merger, including the risk that such cash may be insufficient or unavailable to fund the merger consideration or that Merger Sub may fail to fund any resulting shortfall as required under the Merger Agreement, which may result in the Merger not being completed promptly or at all;
•the effects of the announcement or pendency of the Merger on our business, financial condition, results of operations, cash flows, prospects, relationships with customers, suppliers and employees, and the market price of our Class A ordinary shares, including potential adverse effects arising from restrictions on our conduct of business under the Merger Agreement, diversion of management’s attention from ongoing business operations and loss of senior management or other key personnel;
•the amount of the costs, fees, expenses and charges related to the Merger and the outcome of any legal, regulatory or enforcement proceedings that may be instituted against us or others relating to the Merger; and
•the other matters described in “Item 3. Key Information — D. Risk Factors” in our Annual Report.
Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those anticipated in these forward-looking
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statements. There may be additional risks currently considered to be immaterial or which are unknown. It is not possible to predict or identify all such risks.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us, as of the date of this MD&A, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that such party has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this MD&A. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date.
All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this MD&A or to reflect the occurrence of unanticipated events. In the event that any forward-looking statement is updated, no inference should be made that we will make additional updates with respect to that statement, related matters, or any other forward-looking statements. Any corrections or revisions and other important assumptions and factors that could cause actual results to differ materially from forward-looking statements, including discussions of additional significant risk factors, may appear in our public filings with the SEC, which are or will be (as appropriate) accessible at www.sec.gov, and which you are advised to consult.
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Filing Exhibits & Attachments
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