What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-06-29 compared with 2025-06-30 · 262 added, 201 removed, 276 unchanged (63% of the section changed)

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that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions.

Our actual results could differ

materially from those discussed in the forward-looking statements below.

Factors that could cause or contribute to those differences

in our actual results include, but are not limited to, those discussed below and those discussed elsewhere within this Annual Report,

particularly in the section entitled “Cautionary Note Regarding Forward-Looking Statements” and the Item entitled “Risk

Factors.” Unless otherwise indicated, all dollar amounts are in thousands.

Moment is a luxury lifestyle brand offering high-performance skiwear and complementary apparel categories that merge technical functionality

Our actual results could differ materially

from those discussed in the forward-looking statements below.

Factors that could cause or contribute to those differences in our actual

results include, but are not limited to, those discussed below and those discussed elsewhere within this Annual Report, particularly

in the section entitled “Cautionary Note Regarding Forward-Looking Statements” and the Item entitled “Risk Factors.”

Unless otherwise indicated, all dollar amounts are in thousands.

Moment is a luxury lifestyle brand offering high-performance skiwear, swimwear and complementary apparel categories that merge technical functionality

with fashion-led design.

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During the fiscal year ended March 31, 2026, 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

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.

intend to grow our business over time by expanding our digital and retail footprint, diversifying our product portfolio, enhancing international

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to increase awareness, strengthen customer engagement, and support customer acquisition and retention.

May 2025 we entered two agreements with lenders in which we borrowed gross proceeds of $1,900, $500 of which were pursuant to a note

with an entity controlled by the Chairman of our board of directors.

Refer to Note 17 to our consolidated financial statements included

in Item 8 of this Form 10-K.

30, 2025, the Company closed a public offering of 10,000,000 shares of its common stock at an offering price of $0.30 per share (the “Offering”),

pursuant to its registration statement on Form S-3 (File No.

The Offering generated gross proceeds of $3.0 million.

underwriting discounts, non-accountable expenses, legal expense reimbursement, and other offering-related costs, the Company received

net proceeds of approximately $2,686,850.

In connection with the Offering,

the Company issued to ThinkEquity LLC, the representative of the underwriters, warrants to purchase up to 500,000 shares of common stock

at an exercise price of $0.38 per share.

These warrants are exercisable beginning on the date of issuance and expire five years thereafter.

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

warrants to cover over-allotments, if any.

As of the date of this filing, the over-allotment option has not been exercised.

Concurrently with the closing

off the Offering, the May 2025 Note was extinguished through the issuance of 1,692,694 shares of the Company’s common stock at

a per share price of $0.30.

Comparability

of Financial Information

historical operations and statements of assets and liabilities may not be comparable to our operations and statements of assets and liabilities

as a result of completing our IPO in February 2024 and becoming a public company.

On May 8, 2026,

the Company consummated the May 2026 Securities Purchase Agreement

with one of the lenders of the Loan under which it issued 6,060,606 shares of its common stock at a purchase price of $0.33 per share

and warrants to purchase up to 8,276,944 shares of its common stock at an exercise price of $0.40 per share and expiring on August 27,

2028 for gross proceeds of $2,000.

In connection with the May 2026 Securities

Purchase Agreement, the Company issued warrants to purchase up to 1,864,753 shares of its common stock at an exercise price of $0.46822

per share and expiring on August 27, 2028 to a related party.

12, 2026, we received a notice (the “Delisting Notice”) from NYSE Regulation informing the Company that NYSE Regulation had

determined to commence proceedings to delist the common stock of Perfect Moment Ltd.

(ticker symbol:

PMNT) from NYSE American.

NYSE Regulation

determined that we are no longer suitable for listing pursuant to Section 1009(a) of the NYSE American Company Guide (the “Company

Guide”), as we were unable to demonstrate that we had regained compliance with Sections 1003(a)(i) and 1003(a)(ii) of the Company

Guide by the end of the maximum 18-month compliance plan period, which expired on June 11, 2026.

Section 1003(a)(i) applies where a listed

company has stockholders’ equity of less than $2.0 million and has reported losses from continuing operations and/or net losses in two

of its three most recent fiscal years, and Section 1003(a)(ii) applies where a listed company has stockholders’ equity of less than $4.0

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

NYSE American

made a public announcement of this decision on June 12, 2026.

NYSE American applied to the U.S.

Securities and Exchange Commission

to delist our common stock upon completion of applicable procedures, including any appeal by us of NYSE Regulation’s decision.

Effective June

18, 2026 our common stock began trading on the OTCQB Venture Market (the “OTCQB”) under the symbol “PMNT.” The OTCQB

is a significantly more limited market than NYSE American, and trading on the OTCQB may result in a less liquid market for existing and

potential stockholders of our common stock and could adversely affect the trading price of our common stock.

of Operations

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March 31, 2025

Cost of goods sold

Cost of sales

Gross margin (1)

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Total other expense, net

Other comprehensive (losses) gains

Foreign currency translation (losses) gains

Other comprehensive (loss) gain

Foreign currency translation (loss) gain

Comprehensive loss

Gross margin is defined

as gross profit as a percentage of total net revenue.

margin is defined as gross profit as a percentage of revenue, net.

analyze operational and financial data to evaluate our business, allocate our resources, and assess our performance.

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that we use to evaluate our business.

We believe that these measures are useful for period-to-period comparisons of the Company’s performance.

We have included these non-GAAP financial measures in this Annual Report because they are key measures management uses to evaluate our

operational performance, produce future strategies for our operations, and make strategic decisions, including those relating to operating

expenses and the allocation of our resources.

Accordingly, we believe that these measures provide useful information to investors

and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

the Year Ended

We believe that these measures are useful for period-to-period comparisons of the Company’s

We have included these non-GAAP financial measures in this Annual Report because they are key measures management uses to

evaluate our operational performance, produce future strategies for our operations, and make strategic decisions, including those relating

to operating expenses and the allocation of our resources.

Accordingly, we believe that these measures provide useful information

to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

For the Year Ended

March 31, 2026

the Year Ended

For the Year Ended

March 31, 2025

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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.

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.

considers our core operating performance to be that which our managers can affect in any particular period through their management of

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and in making compensation decisions and in communications with our board of directors concerning our financial performance.

$5,375 decrease in Adjusted EBITDA for the year ended March 31, 2025 compared to the same period in 2024 was primarily driven by a $2,013

decline in gross profit, reflecting lower revenue and a reduction in gross margin from 50.9% to 48.5%.

Additionally, selling, general

and administrative expenses increased by $5,352, including higher stock-based compensation expense of $595, amortization of prepaid stock-based

marketing services of $910, legal fees of $1,510, and labor costs of $698 to support growth and public company readiness.

increases included retail store expenses of $497, travel of $192, audit fees of $189, information technology of $170, insurance of $170,

and postage of $121.

These impacts were partially offset by a $1,244 reduction in marketing and advertising expenses, primarily due to

lower agency fees and event-related costs.

$7,813 improvement in Adjusted EBITDA for the year ended March 31, 2026, compared to the same period in 2025, was primarily driven by

a $5,530 increase in gross profit, reflecting higher revenues and an increase in gross margin from 48.5% to 67.6%.

The improvement in

gross margin was attributable to several strategic operational initiatives executed throughout the year, including the opening of our

new European warehouse which improved supply chain efficiency and reduced fulfillment costs, enhanced sourcing and vendor management

practices that drove more favorable input costs through renegotiated supplier terms, disciplined pricing across channels, and a broader

supply chain reengineering effort that optimized cost structures across the full product lifecycle.

These gains were achieved against

a backdrop of an increasingly complex global duty and tariff environment, which required active management of cross-border cost exposures

and sourcing flexibility to protect margins.

growth was broad-based across channels, with wholesale revenues reaching $14,393 for the year ended March 31, 2026, compared to $10,111 in

the same period in 2025, an increase of $4,282 or 42.3%.

Partnership revenues also grew to $885 for the year ended March 31, 2026, from

$555 in the same period in 2025, an increase of $330 or 59.5%, alongside a more favorable channel and product mix overall.

general and administrative (“SG&A”) expenses decreased by $2,720 during the year ended March 31, 2026, compared to the

same period in 2025, reflecting continued cost discipline and a broad-based effort to eliminate non-essential expenditures and further

streamline operations across the business.

The decrease was driven in part by lower stock-based compensation expense following the restructuring

of our employee equity compensation program and the redundancy plan implemented in the fourth quarter of the prior fiscal year.

offsetting these savings were higher legal and professional fees associated with ongoing public company compliance and fundraising activities,

as well as costs to support operational expansion.

and advertising expenses decreased by $306 during the year ended March 31, 2026, compared to the same period in 2025.

While the Company

incurred higher activation and promotional costs to support the AW25 product launch, these increases were offset by lower spending in

other areas, resulting in a net decrease in marketing and advertising expenses compared to the same period in 2025.

improvement in adjusted EBITDA demonstrates operating leverage on higher revenue and margin despite ongoing investments in infrastructure

and brand development.

financial measures have limitations, should be considered as supplemental in nature and are not meant as a substitute for the related

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These limitations include the following:

stock awards and common stock purchase options expense has been, and will continue to be

for the foreseeable future, a significant recurring expense for the Company and an important

part of our compensation strategy;

assets being depreciated or amortized may have to be replaced in the future, and the non-GAAP

financial measures do not reflect cash capital expenditure requirements for such replacements

or for new capital expenditures or other capital commitments;

GAAP measures do not reflect future interest expense, or the cash requirements necessary

to service interest or principal payments, on our debts;

measures do not reflect our cash expenditures, or future requirements, for capital expenditures

or contractual commitments;

stock awards and common stock purchase options expense has been, and will continue to be for the foreseeable future, a significant

recurring expense for the Company and an important part of our compensation strategy;

assets being depreciated or amortized may have to be replaced in the future, and the non-GAAP financial measures do not reflect cash

capital expenditure requirements for such replacements or for new capital expenditures or other capital commitments;

GAAP measures do not reflect future interest expense, or the cash requirements necessary to service interest or principal payments,

on our debts;

measures do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

measures do not reflect changes in, or cash requirements for, our working capital needs;

companies, including companies in our industry, may calculate their non-GAAP financial measures

differently or not at all, which reduces their usefulness as comparative measures.

companies, including companies in our industry, may calculate their non-GAAP financial measures differently or not at all, which

reduces their usefulness as comparative measures.

of these limitations, you should consider the non-GAAP financial measures alongside other financial performance measures, including our

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should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

revenue for the year ended March 31, 2025, was $21,501 compared to $24,443 for the year ended March 31, 2024, a decrease of $2,942 or

The decrease is primarily attributed to the termination of a collaboration with Hugo Boss during the year ended March 31, 2024

totaling $3,169.

The remaining increase of $227 is attributed to retail revenue of $775 from our New York and London pop-up locations,

plus $555 in revenue from our collaborations entered into during the year ended March 31, 2025, offset by $780 lower wholesale revenue

and $323 lower ecommerce revenue.

of goods sold

of goods sold for the year ended March 31, 2025 was $11,072 compared to $12,001 for the year ended March 31, 2024, a decrease of $929

The change in cost of goods sold is primarily attributed to strategic changes in ecommerce driven by less discounting and improvements

in the supply chain.

revenue for the year ended March 31, 2026 was $23,603 compared to $21,501 for the year ended March 31, 2025, an increase of $2,102 or

revenues grew to $14,393 from $10,111 in the prior year, an increase of $4,282 or 42.3%, reflecting a stronger order book and improved

operational execution that enabled more efficient fulfillment and shipment timing.

This channel was the primary driver of overall revenue

growth during the year.

Ecommerce revenues were $8,256 compared to $10,060 in the prior year, a decrease of $1,804 or 17.9%.

reflects the Company’s strategic shift away from year-round promotional discounting, a decision designed to protect brand integrity

and improve revenue quality.

The Company also executed targeted off-price initiatives during the year to clear aged inventory and rationalize

its balance sheet, which further impacted ecommerce volumes.

While this transition weighed on near-term ecommerce revenues, it has laid

a healthier foundation for the channel going forward.

Partnership revenues increased to $885 from $555 in the prior year, an increase

of $330 or 59.5%, reflecting the continued development and contribution of this higher-margin channel.

Retail revenues were $69 compared

to $775 in the prior year, reflecting the Company’s rationalization of its direct retail footprint as part of its broader strategic

of sales for the year ended March 31, 2026 was $7,644 compared to $11,072 for the year ended March 31, 2025, a decrease of $3,428 or

The change in cost of sales is primarily driven by improved supply chain efficiency and disciplined cost management.

continue to focus on optimizing our supply chain and sourcing practices to support long-term margin expansion.

profit and gross margin

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

gross margins were 48.5% compared to 50.9% achieved in the prior year.

The decrease was primarily attributed to strategic changes in

ecommerce driven by less discounting and improvements in the supply chain, offset by a decrease in collaboration revenue.

general and administrative expenses (“SG&A”)

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

Our gross margins were 67.6% compared to 48.5% achieved in the prior year.

increase reflects the cumulative impact of several strategic operational improvements executed throughout the year.

First, the opening

of our new European warehouse meaningfully improved supply chain efficiency, reducing fulfillment costs and transit times across key

Second, enhanced sourcing and vendor management practices drove more favorable input costs through renegotiated supplier terms

and improved procurement processes.

Third, our continued focus on disciplined pricing ensured that margin was preserved across channels

without compromising competitive positioning.

Finally, a broader supply chain reengineering initiative allowed us to optimize cost structures

across the full product lifecycle.

The margin expansion demonstrates meaningful progress toward sustained profitability while continuing

to scale the business — particularly notable given the increasingly complex global duty and tariff environment, which required

active management of cross-border cost exposures and sourcing flexibility to protect margins.

expenses consist of personnel related expenses, stock compensation expense, legal and professional fees, depreciation and amortization

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sample costs.

expenses for the year ended March 31, 2025 were $20,685 compared to $15,333 for the year ended March 31, 2024, an increase of $5,352

The increase was primarily driven by higher stock-based compensation expense of $595, amortization of prepaid stock-based marketing

services of $910, legal fees of $1,510, and labor costs of $698 to support growth.

Additional increases included retail store expenses

of $497, travel of $192, audit fees of $189, information technology of $170, insurance of $170, and postage of $121.

expenses for the year ended March 31, 2026 were $17,965 compared to $20,685 for the year ended March 31, 2025, a decrease of $2,720

The decrease primarily reflects continued cost discipline and reduced discretionary spending, including lower stock-based

compensation following the restructuring of our employee equity program and redundancy plan implemented in the fourth quarter of the

prior fiscal year.

Beyond compensation, management undertook a broad review of the cost base, eliminating non-essential expenditures

and further streamlining operations across the business to generate additional savings and improve overall efficiency.

These savings

were partially offset by higher legal and professional fees related to public company compliance and fundraising activities, as well

as operational costs to support expansion initiatives.

The Company also incurred targeted increases across technology, compliance,

and insurance to strengthen its operating infrastructure and scalability.

SG&A expenses decreased as a percentage of revenue—improving to 76.1% from 96.2%—reflecting enhanced operating leverage,

improved cost efficiency, and the early benefits of management’s ongoing efforts to align the cost base with revenue growth.

and advertising expense

and advertising expense consist of agency, contractor and consulting expense, content production, promotional operating expense, a nd

and advertising expense consist of agency, contractor and consulting expense, content production, promotional operating expense, and

advertising costs.

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of $306 or 8.6%.

The decrease was primarily due to reductions in agency expenses of $920 and event costs of $400, partially offset

by investments of $200 in brand awareness initiatives aimed at driving eCommerce revenue and sell-through, including advertising, photoshoots,

and digital marketing.

The decrease primarily reflects the implementation of permanent cost-saving measures through optimized agency support,

improved event planning, and a greater focus on in-house capabilities, resulting in a more efficient allocation of marketing resources.

and Quarterly Trends

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and Capital Resources

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.

March 31, 2026, we have funded our operations with proceeds from the sale of common stock from equity financings, including the sale

of common stock and preferred stock, alongside existing trade, invoice and shareholder financing arrangements.

We have incurred

recurring losses, including a net loss of $7,131 for year ended March 31, 2026 and used cash in operations of $8,998 during that

As of March 31, 2026, the Company had an accumulated deficit of $72,047 and a stockholders’ deficit of $686.

These factors raise substantial doubt about our

ability to continue as a going concern for at least twelve months from the date these consolidated financial statements were

available to be issued.

Our ability to continue as a going concern is dependent upon management of its expenses and its ability to

obtain necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come

due, and upon profitable operations.

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.

expect operating losses and negative cash flows from operations to continue into the foreseeable future as we continue to invest in growing

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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.

than the terms of our current financing arrangements, and we would have additional debt service obligations.

In the event that additional

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Flows from Operating Activities

the year ended March 31, 2025, operating activities used $9,861 in cash and cash equivalents primarily resulting from a net loss of $15,939,

offset by non-cash charges of $6,062 and a net cash inflow from changes in operating assets and liabilities of $16.

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.

the year ended March 31, 2024, operating activities used $4,453 in cash and cash equivalents primarily resulting from a net loss of $8,722,

offset by non-cash charges of $2,442 and a net cash inflow from changes in operating assets and liabilities of $1,827.

changes in operating assets and liabilities during the year ended March 31, 2024 consisted primarily of a $2,029 increase in accrued

expenses, a $295 increase in trade payables, and a $240 increase in unearned revenue, offset by a $349 increase in inventory, a $238

increase in accounts receivable, a $219 increase in prepaid expense and other current assets, and a $106 decrease in operating leases.

During the year ended March 31, 2026, operating activities used $8,998

in cash and cash equivalents and restricted cash, primarily resulting from a net loss of $7,131, offset by non-cash adjustments totaling

$4,210 and a net cash outflow from changes in operating assets and liabilities of $6,077.

Net cash used in changes in operating assets

and liabilities was driven primarily by an increase in inventory of $2,812, an increase in accounts receivable of $1,821, an increase

in prepaid and other current assets of $670, and a decrease in accrued expenses of $1,469.

These outflows were partially offset by an

increase in trade payables of $860.

The increase in inventory reflects higher stock purchases to support the upcoming winter season and

expanded sales channels and also improved inventory planning and purchasing timing, designed to enhance availability and support stronger

sell-through performance in the second half of the fiscal year.

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

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

These outflows were partially offset by a decrease in unearned revenue of $155 and a decrease in accounts receivable of $160.

Flows from Investing Activities

used in investing activities was $302 in the year ended March 31, 2025 and $211 in the year ended March 31, 2024, an increase of $91.

The increase primarily reflects continued investment in our website infrastructure to enhance the customer experience and support our

digital growth initiatives.

the year ended March 31, 2026, investing activities used $359 in cash and cash equivalents and restricted cash, compared to $302 for

the same period in 2025, an increase of $57 or 18.9%.

The current period capital expenditures related to the opening of the new pop-up

stores in Verbier and other locations whereas the prior period capital expenditures related to an investment in our website infrastructure

to enhance customer experience and support our digital growth initiative.

These investments were consistent with the Company’s

strategy to enhance brand visibility and expand its retail presence in key markets while maintaining disciplined capital allocation.

Flows from Financing Activities

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.

cash obtained from financing activities during the year ended March 31, 2024 was $8,162, resulting from $6,009 in net proceeds from our

initial public offering, $2,179 in net proceeds from the issuance of common shares and $1,847 in net proceeds from trade finance facilities,

offset by $1,873 in repayment of trade finance facilities.

the year ended March 31, 2026, financing activities provided $3,294 in cash and cash equivalents and restricted cash, primarily attributed

to $4,050 of net proceeds from the sale of our common stock, $1,330 of net proceeds from short term borrowings, $5,590 of net proceeds

from the issuance of notes payable to related parties, and $5,140 of net proceeds from the issuance of notes payable, offset by a $4,725

repayment of short term borrowings, $2,495 repayment of trade finance facility, $5,090 repayment of notes payable to related parties,

and $506 payment of dividends on our Series AA Convertible Preferred Stock.

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.

and cash equivalents and restricted cash

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

finance facility

of March 31, 2025, we had an available secured, committed revolving trade finance facility, which provides for borrowings up to

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

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.

of March 31, 2026, we has an available secured, committed revolving line of credit, which provides for borrowings up to $10,000.

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.

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

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.

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.

Sheet Arrangements

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in Item 8 of Part II for additional information:

amount of consideration we receive and recognize as revenue, net across both wholesale and DTC channels varies with changes

in sales returns and other accommodations and incentives we offer to our customers.

When we give our customers the right to return products

or provide other accommodations such as chargebacks and markdowns, we estimate the expected sales returns and miscellaneous claims from

amount of consideration we receive and recognize as revenue, net across both wholesale and DTC channels varies with changes in sales

returns and other accommodations and incentives we offer to our customers.

When we give our customers the right to return products or

provide other accommodations such as chargebacks and markdowns, we estimate the expected sales returns and miscellaneous claims from

customers and record sales reserves to reduce revenue, net.

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 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.

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.

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

different than the sales reserves established, we record an adjustment to Net sales in the period in which such determination was made.

Receivable and Credit Losses

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charge to selling, general and administrative expenses in the period in which such a determination was made.

Company periodically reviews its inventory for potential excess, obsolescence, or slow-moving items and records reserves as

necessary to reflect inventory at the lower of cost or net realizable value.

This assessment is inherently judgmental and considers

multiple factors including current inventory levels, historical and projected sales trends, seasonality, planned markdowns, and

liquidation history.

Management places particular focus on unsold units from prior seasons and styles that have been carried

forward, taking into account their performance over time and expected sell-through.

Company periodically reviews its inventory for potential excess, obsolescence, or slow-moving items and records reserves as necessary

to reflect inventory at the lower of cost or net realizable value.

This assessment is inherently judgmental and considers multiple factors

including current inventory levels, historical and projected sales trends, seasonality, planned markdowns, and liquidation history.

places particular focus on unsold units from prior seasons and styles that have been carried forward, taking into account their performance

over time and expected sell-through.

is tracked at the SKU level, and the Company’s provision methodology involves a cross-functional process with the merchandising

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terms and applicable authoritative guidance in ASC 480, Distinguishing liabilities from equity (“ASC 480”), and ASC

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.

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.

issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component

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determine whether a change in classification between equity and liability is required.

account for share-based payments that involve the issuance of shares of our common stock to employees and non-employees and meet the criteria

for share-based awards as stock-based compensation expense based on the grant-date fair value of the award.

We estimate forfeitures and

apply that to the stock-based compensation expense to be recognized over the period an award vests.

account for share-based payments that involve the issuance of shares of our common stock to employees and non-employees and meet the

criteria for share-based awards as stock-based compensation expense based on the grant-date fair value of the award.

We estimate forfeitures

and apply that to the stock-based compensation expense to be recognized over the period an award vests.

We recognize compensation expense

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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

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.

fair value of the stock awards issued to employees and nonemployees under the 2021 Plan prior to the IPO was estimated at each grant

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:

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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:

For employees, the expected term is determined using the “simplified” method, as prescribed by the SEC’s

Staff Accounting Bulletin No.

107, Share-Based Payment, to estimate on a formula basis the expected term of the Company’s employee

stock options, which are considered to have “plain vanilla” characteristics.

For nonemployees, the expected term represents

the contractual term of the option.

The expected volatility was determined by examining the historical volatilities of a group of industry peers, as the

Company did not have any trading history for our common stock prior to the IPO.

dividend yield:

The expected dividend yield was based on our history and management’s current expectation regarding future

interest rate:

The risk-free interest rate was based upon quoted market yields for the United States Treasury instruments with terms

that were consistent with the expected term of the stock options.

forfeiture rate:

The expected forfeiture rate was based on our history and management’s expectation regarding future forfeitures.

A summary of our significant assumptions for the pre-IPO stock

awards is as follows:

Expected term:

For employees, the expected term is determined using the “simplified” method, as prescribed by the

SEC’s Staff Accounting Bulletin No.

107, Share-Based Payment, to estimate on a formula basis the expected term of the Company’s

employee stock options, which are considered to have “plain vanilla” characteristics.

For nonemployees, the expected term

represents the contractual term of the option.

Expected volatility:

The expected volatility was determined by examining the historical volatilities of a group of industry peers,

as the Company did not have any trading history for our common stock prior to the IPO.

Expected dividend yield:

The expected dividend yield was based on our history and management’s current expectation regarding

future dividends.

Risk-free interest rate:

The risk-free interest rate was based upon quoted market yields for the United States Treasury instruments

with terms that were consistent with the expected term of the stock options.

Estimated forfeiture rate:

The expected forfeiture rate was based on our history and management’s expectation regarding

future forfeitures.

factors change, and we utilize different assumptions, share-based compensation cost on future award grants may differ significantly from

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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.

The interest expense associated with our revolver is a fixed

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

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.

We do not expect that interest rates will have a material

impact on our results of operations.

are beginning to observe increases in our costs of goods sold, in particular, transportation costs.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis