Perfect Moment Ltd.

Previous wording

Perfect Moment is a luxury lifestyle brand offering high-performance skiwear and complementary apparel categories that merge technical functionality with fashion-led design. We develop collections for women, men, and children that reflect a combination of technical integrity, elevated aesthetics, and versatility across seasons and use cases.

Current wording

Perfect Moment is a luxury lifestyle brand offering high-performance skiwear, swimwear and complementary apparel categories that merge technical functionality with fashion-led design. We develop collections for women, men, and children that reflect a combination of technical integrity, elevated aesthetics, and versatility across seasons and use cases.

Previous wording

We are focused on generating long-term, brand-right growth and improving profitability. During the fiscal year ended March 31, 2025, we continued to scale our direct-to-consumer business, launched a new spring/summer capsule, and increased our annual style count from approximately 75 to over 200. We also implemented a tiered pricing architecture across key categories to support value perception and drive margin enhancement.

Current wording

We are focused on generating long-term, brand-right growth and improving profitability. During the fiscal year ended March 31, 2026, we continued to scale our direct-to-consumer business, launched a new spring/summer capsule. We also implemented a tiered pricing architecture across key categories to support value perception and drive margin enhancement.

Previous wording

Adjusted EBITDA is a non-GAAP financial measure that displays our net loss from continuing operations, adjusted to eliminate the effect of certain items as described below. We define Adjusted EBITDA as net loss excluding interest expense, income tax benefit (expense), depreciation and amortization and stock-based compensation expense. Adjusted EBITDA is a measure that is not defined in US GAAP. We believe that it is useful to exclude these expenses because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations.

Current wording

Adjusted EBITDA is a non-GAAP financial measure that displays our net loss from continuing operations, adjusted to eliminate the effect of certain items as described below. We define Adjusted EBITDA as net loss excluding interest expense, stock-based compensation expense, amortization of stock-based marketing services, depreciation and amortization, and income tax benefit (expense), if any. Adjusted EBITDA is a measure that is not defined in US GAAP. We believe that it is useful to exclude these expenses because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations.

Previous wording

Our gross profit for the year ended March 31, 2025 was $10,429 compared to $12,442 for the year ended March 31, 2024, a decrease of $2,013 or 16.2%.

Current wording

Our gross profit for the year ended March 31, 2026 was $15,959 compared to $10,429 for the year ended March 31, 2025, an increase of $5,530 or 53.0%. Our gross margins were 67.6% compared to 48.5% achieved in the prior year.

Previous wording

As of March 31, 2025, we had cash and cash equivalents of $7,509, including restricted cash of $1,350 and an accumulated deficit of $64,916. Historically, Perfect Moment has generated negative cash flows from operations and has primarily financed its operations through private sales of equity securities, debt and working capital finance.

Current wording

As of March 31, 2026, we had cash and cash equivalents of $1,151 and an accumulated deficit of $72,047. Historically, we have generated negative cash flows from operations and have primarily financed our operations through private sales of equity securities, debt and working capital finance facilities.

Previous wording

Our ability to fund inventory purchases, capital expenditures, and growth will depend on our ability to generate cash in the future. Our future ability to generate cash from operations is, to a certain extent, subject to general economic, financial, competitive, regulatory and other conditions. Based on our current level of operations, we believe our existing cash balances and expected cash flows from operations, alongside the continuance of our existing financing arrangements, will be sufficient to meet our operating requirements for at least the next 12 months, excluding financing to support production (i.e. timing of working capital). We may seek additional or alternative debt and equity financing to that set out above. If we raise equity financing, our shareholders may experience significant dilution of their ownership interests. If we conduct additional debt financing, the terms of such debt financing may be similar or more restrictive that the terms of our current financing arrangements and we would have additional debt service obligations. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition and results of operations could be harmed. See the sections below titled “Risk Factors – Risks Related to Ownership of Our Common Stock – Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our 2021 Equity Incentive Plan, could result in additional dilution of the percentage ownership of our stockholders” and “Risk Factors – Risks Related to Our Business, Our Brand, Our Products and Our Industry – We have a history of losses, expect to continue to incur losses in the near term and may not achieve or sustain profitability in the future, and as a result, our management has identified and our auditors reported that there is a substantial doubt about our ability to continue as a going concern.”

Current wording

Our ability to fund inventory purchases, capital expenditures, and growth will depend on our ability to generate cash in the future. Our future ability to generate cash from operations is, to a certain extent, subject to general economic, financial, competitive, regulatory and other conditions. Based on our current level of operations, we believe our existing cash balances and expected cash flows from operations, alongside the continuance of our existing financing arrangements, will be sufficient to meet our operating requirements for at least the next 12 months, excluding financing to support production (i.e. timing of working capital). We may seek additional or alternative debt and equity financing to that set out above. If we raise equity financing, our shareholders may experience significant dilution of their ownership interests. If we conduct additional debt financing, the terms of such debt financing may be similar or more restrictive than the terms of our current financing arrangements, and we would have additional debt service obligations. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition and results of operations could be harmed. See the sections below titled “Risk Factors – Risks Related to Ownership of Our Common Stock – Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our 2021 Equity Incentive Plan, could result in additional dilution of the percentage ownership of our stockholders” and “Risk Factors – Risks Related to Our Business, Our Brand, Our Products and Our Industry – We have a history of losses, expect to continue to incur losses in the near term and may not achieve or sustain profitability in the future, and as a result, our management has identified and our auditors reported that there is a substantial doubt about our ability to continue as a going concern.”

Previous wording

The changes in operating assets and liabilities during the year ended March 31, 2025 consisted primarily of a $1,536 increase in accrued expenses, a $903 increase in trade payables, $937 increase in inventories, $1,493 increases in prepaid expenses and other current assets and, offset by a $155 decrease in unearned revenue and a $160 decrease in accounts receivable.

Current wording

During the year ended March 31, 2025, operating activities used $9,861 in cash and cash equivalents and restricted cash, primarily resulting from a net loss of $15,939, offset by non-cash adjustments of $5,955 and a net cash inflow from changes in operating assets and liabilities of $123. Net cash used by changes in operating assets and liabilities was driven primarily by an increase in accrued expenses of $1,536, an increase in prepaid expenses and other current assets of $1,493, an increase in trade payables of $1,010, an increase in inventories of $937. These outflows were partially offset by a decrease in unearned revenue of $155 and a decrease in accounts receivable of $160.

Previous wording

Net cash obtained from financing activities during the year ended March 31, 2025 was $9,692, resulting from $5,148 in net proceeds from the issuance of preference shares, $2,000 in net proceeds from the issuance of a convertible note, $5,792 in net proceeds from short-term borrowing and $2,845 in net proceeds from trade finance facilities, offset by $5,742 in repayment of short-term borrowings and $351 in repayment of trade finance facilities.

Current wording

During the year ended March 31, 2025, financing activities provided $9,692 in cash and cash equivalents and restricted cash, primarily attributed to $5,792 of net proceeds from short term borrowings, $5,148 of net proceeds from issuance of preference shares and warrants, $2,845 of net proceeds from trade finance facilities, and $2,000 proceeds from a convertible note, offset by a $5,742 repayment of short term borrowings and $351 repayment of trade finance facilities.

Previous wording

As of March 31, 2025, we had cash and cash equivalents of $6,159 and restricted cash of $1,350, compared to $7,910 and $nil as of March 31, 2024.

Current wording

As of March 31, 2026, we had cash and cash equivalents of $1,151 compared to cash and cash equivalents of $6,159 and restricted cash of $1,350 as of March 31, 2025.

Previous wording

As of March 31, 2025, we had an available secured, committed revolving trade finance facility, which provides for borrowings up to $2,700. We were in compliance with all associated covenants and there was an outstanding balance of $2,495 under the facility as of March 31, 2025 which was due June 2025. Refer to Note 8 in Part II, Item 8 of this Form 10-K for further information regarding our trade finance facility.

Current wording

As of March 31, 2026, we has an available secured, committed revolving line of credit, which provides for borrowings up to $10,000. We were in compliance with all associated covenants and there was an outstanding balance of $5,140 under the revolved as of March 31, 2026 which was due on March 30, 2028. Refer to Note 9 in Part II, Item 8 of this Form 10-K for further information regarding our revolver.

Previous wording

Our expected short-term and long-term cash needs are primarily for working capital, including deposits with our suppliers. We expect to meet these short-term and long-term cash needs primarily with cash flows from operations and, if needed, borrowings from our existing credit facilities. As of March 31, 2025, we have $6,728 of minimum purchase obligations with our suppliers for our product lines that will be sold during the year ended March 31, 2026.

Current wording

Our expected short-term and long-term cash needs are primarily for working capital, including deposits with our suppliers. We expect to meet these short-term and long-term cash needs primarily with cash flows from operations and, if needed, borrowings from our existing revolver. As of March 31, 2026, we have $7,934 of minimum purchase obligations with our suppliers for our product lines that will be sold during the year ended March 31, 2027.

Previous wording

As of March 31, 2025, our sales-related reserves were $0.6 million compared to $0.3 million as of March 31, 2024. The most significant variable affecting these reserve balances is sales levels. As a percentage of Net sales, the sales reserves balances were 2.8% as of March 31, 2025 compared to 1.3% as of March 31, 2024. The reserve for returns from customers is the component of our sales-related reserves most susceptible to estimation uncertainty. These estimates are based on 1) historical rates of product returns and claims; and 2) events and circumstances that indicate changes to such historical rates are warranted, such as our customers’ inventory positions and their anticipated sell-through rates. However, actual returns and claims in any future period are inherently uncertain and thus may differ from our estimates. As a result, we adjust our estimates of revenue at the earlier of when the most likely amount of consideration we expect to receive changes or when the amount of consideration becomes fixed. If actual or expected future returns and claims are significantly different than the sales reserves established, we record an adjustment to Net sales in the period in which such determination was made.

Current wording

As of March 31, 2026, our sales-related reserves were $0.3 million compared to $0.6 million as of March 31, 2025. The most significant variable affecting these reserve balances is sales levels. As a percentage of Net sales, the sales reserves balances were 1.4% as of March 31, 2026 compared to 2.8% as of March 31, 2025. The reserve for returns from customers is the component of our sales-related reserves most susceptible to estimation uncertainty. These estimates are based on 1) historical rates of product returns and claims; and 2) events and circumstances that indicate changes to such historical rates are warranted, such as our customers’ inventory positions and their anticipated sell-through rates. However, actual returns and claims in any future period are inherently uncertain and thus may differ from our estimates. As a result, we adjust our estimates of revenue at the earlier of when the most likely amount of consideration we expect to receive changes or when the amount of consideration becomes fixed. If actual or expected future returns and claims are significantly different than the sales reserves established, we record an adjustment to Net sales in the period in which such determination was made.

Previous wording

We account for warrants as either equity- classified or liability classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480,Distinguishing liabilities from equity (“ASC 480”), and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of our control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance, modification, and as of each subsequent quarterly period end date while the warrants are outstanding.

Current wording

We account for warrants as either equity- classified or liability classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480,Distinguishing liabilities from equity (“ASC 480”), and ASC 815,Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of our control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance, modification, and as of each subsequent quarterly period end date while the warrants are outstanding.

Previous wording

For periods prior to the IPO, we issued stock option awards and restricted stock units to employees and non-employees under the 2021 Equity Incentive Plan (the “2021 Plan”). The fair value of each award is estimated on the date of the grant using the Black-Scholes option-pricing model in order to measure the compensation cost associated with the award. This model incorporates the following assumptions for inputs: the expected volatility in the market value of the underlying common stock, the expected term of the contractual option, the risk-free interest rate based upon quoted market yields for United State Treasury instruments with terms that were consistent with the expected term of the stock options and the expected dividend yield of the underlying common stock.

Current wording

For periods prior to the IPO, we issued stock option awards and restricted stock units to employees and non-employees under the 2021 Equity Incentive Plan (the “2021 Plan”).

Previous wording

The fair value of the stock awards issued to employees and nonemployees under the 2021 Plan prior to the IPO was estimated at each grant date using the Black-Scholes model which requires the input of the following subjective assumptions: (a) length of time grantees will retain their vested stock options before exercising them for employees and the contractual term of the option for nonemployees (“expected term”), (b) The volatility of our common stock price over the expected term, (c) expected dividends, (d) risk-free interest rate over the option’s expected term, and estimated forfeiture rate. A summary of our significant assumptions for the pre-IPO stock awards is as follows:

Current wording

The fair value of the stock awards issued to employees and nonemployees under the 2021 Plan are estimated at each grant date using the Black-Scholes model which requires the input of the following subjective assumptions: (a) length of time grantees will retain their vested stock options before exercising them for employees and the contractual term of the option for nonemployees (“expected term”), (b) The volatility of our common stock price over the expected term, (c) expected dividends, (d) risk-free interest rate over the option’s expected term, and estimated forfeiture rate. A summary of our significant assumptions for the pre-IPO stock awards is as follows:

Previous wording

The fair value of our cash equivalents, held primarily in cash deposits, have not been significantly impacted by increases or decreases in interest rates to date, due to the short-term nature of these instruments. The interest expense associated with our letter of credit trade finance facility and debt factoring facilities are composed of a fixed spread over HIBOR or SOFR. The fee associated with revenue financing is fixed and the interest rate on our convertible bridge loan is accrued at a fixed rate also. We are exposed to interest rate risk where the interest expense associated with our financing arrangements is depending upon HIBOR or SOFR, a floating reference rate, or in the event that the fixed interest rate associated with our financing arrangements is increased upon roll-over of the financing arrangement at its contractual maturity. Fluctuations in interest rates have not been significant to date. We do not expect that interest rates will have a material impact on our results of operations, owing to the size and short-term nature of the floating rate financing arrangements.

Current wording

The fair value of our cash equivalents, held primarily in cash deposits, have not been significantly impacted by increases or decreases in interest rates to date, due to the short-term nature of these instruments. The interest expense associated with our revolver is a fixed rate. We are exposed to interest rate risk where the interest expense associated with our financing arrangements in the event that the fixed interest rate associated with our financing arrangements is increased upon roll-over of the financing arrangement at its contractual maturity. Fluctuations in interest rates have not been significant to date. We do not expect that interest rates will have a material impact on our results of operations.