What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-06-30 compared with 2024-07-01 · 373 added, 672 removed, 104 unchanged (91% of the section changed)

5 unchanged sentences

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

The following discussion contains

forward-looking statements that involve risks and uncertainties such as our plans, estimates, and beliefs.

Our actual results could differ

3 unchanged sentences

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

Moment is a high-performance, luxury skiwear and lifestyle brand that fuses technical excellence with fashion-led designs.

We create apparel and products that feature what we believe is an unmatched combination of fashion, form, function

and fun for women, men and children.

all revenue channels, Perfect Moment distributes to over 60 countries.

We design our products in-house and work with a variety of suppliers

to manufacture materials and finished goods.

Our collections are worn by an evolving list of celebrities and influencers whose perfect

moments are captured across a range of social media platforms.

revenue for the year ended March 31, 2024, was $24,443 compared to $23,438 for the year ended March 31, 2023, an increase of $1,005 or

The increase is primarily attributed to an increase in ecommerce revenue of $1,833 or 21.4% versus the prior year.

The increase in ecommerce is attributed to enhanced brand awareness and the Company’s focus on ecommerce.

The overall increase

is offset by a decrease in wholesale revenue of $828 or 5.6%.

The decrease is attributed to higher purchases from our

wholesale customers in fiscal year 2023 due to the post COVID-19 rebound.

Company has deployed strategies across the entire sales and marketing funnel as we focus on building a direct relationship with our customer,

which we believe is an important step of following our customer from the ski slopes, to après, to the chalet, and eventually home

expanding our product offering across all seasons.

remain one of the most followed luxury ski brands globally and increased our followers across all social media platforms (Instagram,

Facebook (Meta) and TikTok) by 19% from March 31, 2023 through March 31, 2024.

The number of unpaid celebrities and influencers

driving the top of our funnel is extraordinary for a company of our size.

The strength at the top of the funnel provides opportunities

to move our customers through the funnel that not only leads to sales but more importantly allows us to build a community and ultimately

customer loyalty.

the year ended March 31, 2024, our digital strategies have aligned our customers with the expectations of a luxury brand allowing

us to reach new milestones.

Our focus for fiscal year 2024 was to drive full price retail by reducing the number of products on discount

and shortening our discount windows.

The strategy was deployed throughout the year including Black Friday where we discounted a smaller

product range than in prior years while providing our customers with a balance between full price and promotional items.

The result was

our biggest Black Friday as we delivered $1,833 of gross sales, a 52% increase versus the prior year, while achieving higher margins.

Profit and Margin

gross profit for the year ended March 31, 2024 was $9,231 compared to $8,756 for the year ended March 31, 2023, an increase

of $475 or 5.4%.

Our gross margins were 37.8% and flat compared to the 37.4% achieved in the prior year.

The increase was primarily attributed to strategic changes in ecommerce driven by less discounting and improvements in the supply

chain with Global-E, offset by a decrease in wholesale margin as well as a shift in revenue to lower margin ecommerce revenue.

our gross margins in ecommerce was a focus in fiscal year 2024, with anticipated improvements to our gross margins in fiscal

Currently, all ecommerce orders are dispatched from a third-party distribution center in the United Kingdom and in most instances

the Company is paying duties to cross international borders.

Compounding the margin dilution is the fact we are paying duties at full

retail and not at a transfer price.

We plan on opening third party operated distribution centers in key markets to lower our duty costs.

The local distribution centers will improve our customer experience, lower our duty cost plus reduce outbound and return shipping cost.

Our first third party distribution center outside of the United Kingdom will be in the United States in FY24.

anticipate our ecommerce margins to surpass wholesale margins in FY26.

of Key Strategies to Improve Margin

towards direct-to-consumer revenue (such as ecommerce and physical retail) .

We expect that rebalancing our sales from

wholesale to direct to consumer, coupled with the other margin initiatives would result in a double-digit percentage point improvement

in our gross margin, due to channel mix, over time.

product range within skiwear .

We believe the current range offers too much choice, and yields poorer margins, resulting from

a lack of economies of scale and higher levels of markdown and discounts.

and modify supplier base .

We are expecting our supplier base to evolve as we source fabrics and trims more efficiently and introduce

new finished good suppliers with better commercial terms (such as lower labor costs or better duty rates due to factories being based

in the EU, UK, or Vietnam).

and revise price positioning .

We will continue reviewing our selling prices.

We are expecting to introduce better discipline

and processes to assess price positioning with a focus on margin by each product, country of manufacture and country of selling.

We expect to raise selling prices to improve the gross margin over time as part of the range development process and will

monitor price elasticity.

We believe prices are relatively in-elastic for our industry and our customer segment, and that pricing

increases are generally expected by customers annually for luxury goods.

on reducing costs relating to crossing borders .

Operating a global business requires crossing borders with products resulting

in high costs for freight, duty, couriers and other handling costs.

Perfect Moment has grown very quickly and as a result has not

been able to focus on crossing borders in a cost-effective way.

We are focused on reducing these costs and expect to see savings

over time in freight (for example by using less air freight and more sea freight), lowering duty costs (for example moving production

to countries with lower tariffs and opening third party logistic hubs) and reducing broker fees through better processes.

Business Strategy

Moment sits at the intersection of three large and growing markets (luxury ski apparel, premium outerwear and athleisure and lifestyle).

Based on the characteristics of these respective markets, we believe we have the right brand profile, geographic footprint, target demographic,

marketing tools and operational expansion plan to gain significant market share.

We believe we are also well-positioned to drive sustainable

growth and profitability by executing on the following strategies:

Brand Awareness and Attract New Customers

brand awareness among potential new customers and strengthening our connections with those who already know us will be a key driver of

While we believe our brand has achieved substantial traction globally and those who have experienced our products demonstrate

loyalty, our presence is relatively nascent in many of our markets.

We believe we have a significant opportunity to increase brand awareness

and attract new customers to Perfect Moment through word of mouth, brand marketing and performance marketing.

the past, Perfect Moment’s strong skiing heritage has been used to engage with a core ski audience for whom we believe the combination

of technical performance and retro inspired designs resonate strongly.

We believe the nature of skiing as a largely affluent, international

pursuit means there is a large opportunity in aspirational, lifestyle-led social media engagement.

We believe Perfect Moment has captured

this social media opportunity to great effect, combining the style and form of the brand with celebrities, influencers, top-tier editorial,

collaborations and luxury locations to create a distinct, fun and engaging aspirational lifestyle narrative.

Beyond social media, we

believe Perfect Moment has been able to deploy this same core brand proposition and narrative to direct digital marketing and traditional

media, elevating brand profile and driving high levels of engagement simultaneously.

Perfect Moment has also been able to build an effective

online marketing engine driving large volumes of direct, organic search and paid search traffic to our ecommerce website, www.perfectmoment.com.

Moment expects to continue its approach to social media, building its follower base through a similar and evolving mix of celebrities,

influencers, editorials and locations.

It also expects to continue to pursue and scale the effective search engine optimization and paid

search strategies which have contributed to online sales growth, as well as direct marketing and customer engagement via direct customer

communications.

Perfect Moment is developing plans to leverage a new Perfect Moment owned physical store network to deepen its brand

identity and profile, as well as drive higher levels of loyalty and engagement at the local level.

marketing and performance marketing also work together to drive millions of visits to our digital platforms.

Brand marketing includes

differentiated content, our network of ambassadors, and social media, all of which result in what we believe is outsized engagement with

our community.

Our performance marketing efforts are designed to drive customers from awareness to consideration to conversion.

efforts include retargeting, paid search and product listing advertisements, paid social media advertisements, search engine optimization

and personalized email.

We believe our highly productive, diversified strategy generates a significant return on brand equity, driving

sales and building a growing customer database.

approach this strategy as a funnel, with brand awareness at the top and customer conversion at the bottom, allocating resources across

the top, middle and bottom, and measuring returns on these respective investments.

Digital Growth

used the wholesale channel to establish our brand globally, we believe we will become less reliant on wholesale partners during the next

5 years by committing more resources to our direct-to-consumer strategy and accelerating our digital growth.

We believe technology and

partnerships are the key underpinning factors in any ecommerce business and as such we will continue to enhance customer experience,

focusing on mobile as the dominant growth channel and leveraging the emerging benefits of social and conversational commerce.

International Expansion and Enter New Markets

believe there is an opportunity to increase penetration across our existing markets and selectively enter new regions.

Although the Perfect

Moment brand is recognized globally, our past investments have been focused on North America, the United Kingdom and the EU and have

driven revenue growth in the United States during the past fiscal year.

we expect the majority of our near-term growth to continue to come from the United States, the United Kingdom and the EU, we believe

there is a tremendous opportunity over the long term throughout the rest of the world.

In the fiscal year ended March 31, 2024, we increased

our outreach in what we believe are the most promising countries in continental Europe.

As part of the plan to enter new markets, we

will start with China, as we seek to enhance our ability to serve our international customers and further establish Perfect Moment as

a global brand.

believe there is a significant opportunity beyond our existing markets, with China representing the next market opening for Perfect Moment.

China is projected to become the largest winter sports market, with people participating expected to reach 50 million by 2025 with 1,000

ski resorts to be open by 2030, according to reports by Daxue Consulting and Capital Mind.

We allocated a small amount of inventory to

test the Chinese market directly in November 2024 on Tmall, using local partners to operate, with a digital approach to selling.

originally forecasting to run losses with respect to such activities for two years, then become profitable from the third year of such

activities, with China representing less than 10% of our revenue by 2027.

The data we now have on this small test has led to exploring

partnership models such as a Joint Venture, where we could benefit for local distribution, market expertise and financial support for

inventory and marketing.

We still believe the most significant hurdle to overcome with respect to our plan to enter the Chinese market

is liquidity to fund the initial operating losses.

order to offer a more localized experience to customers internationally, we intend to offer market-specific languages, currency and content,

as well as strategic international shipping and distribution hubs.

We plan to leverage our social media strategy and expand our network

of social media ambassadors to grow our brand awareness globally.

Our Wholesale Network

in the next 5 years we will be mainly focused on accelerating digital growth and our direct-to-consumer channel, we still intend to continue

broadening customer access and strengthening our global foothold in new and existing markets by strategically expanding our wholesale

network and deepening current relationships.

In all of our markets, we have an opportunity to increase sales by adding new wholesale

partners and increasing volume in existing retailers.

Additionally, we are focused on strengthening relationships with our retail partners

through broader offerings, exclusive products and shop-in-shop formats, which are dedicated spaces within another company’s retail

store on a short-term rental basis.

We believe our retail partners have a strong incentive to showcase our brand as our products drive

customer traffic and consistent full-price sell-through in their stores.

Our Product Offering

to enhance and expand our product offering represents a meaningful growth driver for Perfect Moment.

We expect that broadening our product

line will allow us to strengthen brand loyalty with the existing Perfect Moment customer base, drive higher penetration in our existing

markets and expand our appeal across new geographies.

We intend to continue developing our offering through the following strategies.

Fall and Winter .

Perfect Moment will continue to focus on quality materials and distinctive designs to create luxury products which

aim to deliver technical performance and style impact.

However, believing that people want to bring the functionality of our ski apparel

into their everyday lives, Perfect Moment is broadening the product range beyond the core “on-slope” skiwear to encompass

less technical lifestyle products and a wide range of exceptional products for any occasion, including all year-round accessories.

Spring and Summer.

We intend to continue building our successful Spring and Summer collections in categories such as surfwear, activewear,

loungewear and swimwear.

We believe offering inspiring new and complementary product categories that are consistent with our values of

heritage, functionality and quality and can become part of our core business represents an opportunity to develop a closer relationship

with our customers and expand our addressable market.

In June 2024, we launched an Ibiza-inspired Summer Capsule Collection across

our global eCommerce channels.

The collection was highlighted in a photoshoot published in British Vogue featuring photographer, Grace

Burns, and models Stella Jones and Paloma Baygual wearing items from the collection.

believe this strategy will deliver several benefits:

We expect that cross-over into adjacent product markets will increase sales by allowing us to sell outerwear, lifestyle

products, activewear and swimwear to non-skiers and cross-sell lifestyle and “off-slope” products to existing skiwear

customers in a winter setting.

Seasonality .

We expect that sales of new lifestyle products as well as activewear and swimwear products will be less concentrated

in the winter months and increase revenue from new and existing customers as we grow brand awareness.

We believe that our margins will be improved by this strategy as modest price increases across the existing range increase

margins dollar for dollar.

A greater use of high-margin luxury materials such as cashmere will support price and margin increases,

while a move towards more less technically-complex lifestyle pieces will also drive margin improvement.

Full price sales with limited

promotional activity will further improve margins.

the fiscal year ended March 31, 2024, we restructured and invested in our design, product development, merchandizing and production teams

to create a pathway to execute this underpinning strategy.

We launched our first spring / summer capsule encapsulating our

new strategy at the end of Q1 FY25.

We plan to then gradually increase our product offering as we evaluate demand, supply and profitability.

Perfect Moment Owned Physical Retail

Moment has grown to date without a Perfect Moment owned physical stand-alone store presence.

Sales growth has been driven by our wholesale

network and online offering.

As part of our growth strategy, we believe opening directly operated stores in strategically selected major

cities and pop-up stores in strategic ski resorts and high-traffic city locations would provide an excellent opportunity to generate

sales in key locations, providing a luxury in-store experience, reflecting the character of the brand and providing an experiential contact

point for customers.

our product range expands, we see the potential to further grow our community with a physical presence by opening directly operated stores.

We already have a physical presence in department stores, operated under wholesale arrangements.

Operating Perfect Moment owned stores

would provide our community a home for the brand and act as a beacon for new or potential customers, but they also add extra complexity

In order to test our retail model, we plan to first establish pop-up locations.

We evaluate each potential store location based

on lease availability and projected viability, and plan to open popups in the fiscal year ending March 31, 2025 and year-round stores

beginning the fiscal year ending March 31, 2027.

Company applies ASC Topic 280, Segment Reporting, in determining reportable segments for its financial statement disclosure.

Operating Decision Maker has been identified as the Chief Executive Officer.

The Company reports segments based on the financial information

it uses in assessing performance and deciding how to allocate resources.

Management has determined that the Company operates in one business

segment, product sales.

Key financial measures including but not limited to gross profit, Adjusted EBITDA and net loss are not reported

at a disaggregated level for wholesale and ecommerce and resource allocation decisions to the business strategy are not made based solely

on our key financial measures.

Concentration

we are organized fundamentally as one business segment, our revenue is primarily split between three geographic areas:

the United States,

Europe and the United Kingdom.

Customers in these regions are served by our leadership and operations teams in the United Kingdom and

our production team in Hong Kong.

table below reflects total net revenues attributed to Europe (excluding the United Kingdom), United States, United Kingdom, and the rest

of the world:

(excluding United Kingdom)

concentration

the years ended March 31, 2024 and 2023, the largest single supplier of manufactured goods, Everich Garments Group Ltd., produced 75%

and 72%, respectively, of the Company’s products.

In the years ended March 31, 2024 and 2023, the largest fabric supplier, Toray

International Inc., supplied 79% and 70%, respectively, of the fabric used to manufacture the Company’s products.

Company has contracted with additional suppliers to lower our concentration risk, improve margins, and establish better payment

concentration

the twelve months ended March 31, 2024, we had one customer that accounted for approximately 13% or $3,168 of total revenues individually

and in aggregate.

There was no accounts receivable balance for this customer as of March 31, 2024.

The Company has ended its

wholesale relationship with this customer as part of a broader strategy to enhance our relationships with our entire customer base.

the twelve months ended March 31, 2023, we had one customer that accounted for approximately 12% or $2,786 of total revenues individually

and in aggregate.

The related accounts receivable balance for this customer was approximately $41 as of March 31, 2023.

Financial Measures

use the following US GAAP and non-US GAAP financial measures to assess the progress of our business, make decisions on where to allocate

time and investment and assess then near-term and longer-term performance of our business:

(Amounts in thousands, except percentages)

Key Financial Measures

Total net revenue

Gross margin (1)

Loss from operations

Adjusted EBITDA (2)

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

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.

For further information about

how we calculate Adjusted EBITDA, the limitations of its use and a reconciliations to the most comparable US GAAP measure.

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

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.

design all products in-house and rely on a network of manufacturing partners across Europe and Asia, including China.

Our merchandise

is sold in over 60 countries through a combination of direct-to-consumer ecommerce, wholesale partnerships with premium retailers, select

concession formats, and licensed international wholesalers.

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

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

reach, and pursuing selective collaborations.

Our marketing efforts—both brand-building and performance-driven—are designed

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.

of Operations

following table sets forth our results of operations for the years ended March 31, 2025 and 2024.

(Amounts in thousands)

Statements of operations data:

Total Revenue

March 31, 2025

March 31, 2024

Cost of goods sold

Gross margin (1)

Operating expenses

3 unchanged sentences

Loss from operations

Interest expense

Foreign currency transactions gains

Loss before income taxes

Income tax benefit

Total other expense, net

Other comprehensive (losses) gains

1 unchanged sentence

Comprehensive loss

revenue for the year ended March 31, 2024, was $24,443 compared to $23,438 for the year ended March 31, 2023, an increase of $1,005 or

The increase is primarily attributed to an increase in ecommerce revenue of $1,833 or 21.4% versus the prior year.

in ecommerce is attributed to our continued focus of enhancing brand awareness to drive ecommerce sales.

The overall increase is offset

by a decrease in wholesale revenue of $828 or 5.6%.

The decrease is attributed to higher purchases from our wholesale customers

in fiscal year 2023 due to the post Covid rebound.

of goods sold

of goods sold for the year ended March 31, 2024 was $15,212 compared to $14,682 for the year ended March 31, 2023, an increase

of $530 or 3.6%.

The change in cost of goods sold is primarily attributed to an increase in revenues.

profit and gross margin

gross profit for the year ended March 31, 2024 was $9,231 compared to $8,756 for the year ended March 31, 2023, an increase

of $475 or 5.4%.

Our gross margins were 37.8%

and flat compared to the 37.4% achieved in the prior year.

The increase was primarily attributed to strategic changes in ecommerce driven by less discounting and improvements

in the supply chain with Global-E, offset by a decrease in wholesale margin as well as a shift in revenue to lower margin ecommerce revenue.

anticipate our ecommerce margins to surpass wholesale margins in FY26.

general and administrative expenses (“SG&A”)

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

and other selling, general and administrative expenses, including information technology, property related expenses, travel and product

sample costs.

expenses for the year ended March 31, 2024 were $12,122 compared to $12,369 for the year ended March 31, 2023, a decrease

of $247 or 2.0%.

The decrease is primarily attributed to a decrease in stock compensation expense of $3,297 offset by

an increase in labor of $965 to support growth and the listing on NYSE American, plus increases in legal $354, travel $269, audit fees

$214, commissions $179, customer bankruptcies $178, postage $166, design samples $161, information technology $128, and insurance costs

and advertising expense

and advertising expenses for the year ended March 31, 2024 were $4,784 compared to $5,012 for the year ended March 31, 2023, a

decrease of $228 or 4.6%.

The decrease is primarily attributed to a decrease in stock based expenses of $1,483 offset by

investments in brand awareness totaling $1,255 to drive ecommerce revenues and sell-through, which included a collaboration with

Soho House that included participating in the grand opening of their Portland Soho House, Verbier advertising and events,

photoshoots, and digital marketing.

| April 1, 2023 – March 3, 2024 Key Metrics

Global unique visitors per month (“UVPM”) (Digital):

8,005,510,160

Global Circulation (Print):

PR Value of Print & Digital Coverage (Not Social):

$30,979,755.00

and Brand Highlights – Ski Season Q3 & Q4

The total social audience reached by content posted

by global key opinion leaders (KOLs) 1 about Perfect Moment was more than 296.6 million during the period.

This represents

the total combined followers of the celebrities, influencers, models, media publications, and fashion industry notables who organically

posted about the brand during the quarter globally.

total UVPM reached more than 7.5 billion during the period.

This is the combined sum of UVPM reached by all global

digital media coverage achieved during the quarter.

several brand events across the U.S.

and Europe that included top fashion models and social media influencers with collective reach

of more than 71 million followers.

broad media coverage during the quarter, including features in both US and British Vogue, Esquire, ELLE, Harper’s BAZAAR, Forbes,

WWD, Travel & Leisure, WhoWhatWear and accolades from Condé Nast Traveler, Town & Country, NY Magazine, Glamour, Evening

Standard, GQ, Rolling Stone, and Haute Living Magazine (LA and Miami).

Stance & Perfect Moment collaborated to create a 4-piece buildable and adaptable capsule collection comprising of two jacket

styles and two accessories.

The exclusive collection was gifted globally and received recognition in three separate stories by British

Vogue reaching more than 3 million digital readers per month.

on the front cover of Modern Luxury Aspen’s Holiday 2023/Winter 2024 issue, featuring model Kate Love wearing exclusively Perfect

Included an eight-page fashion feature with Kate Love styled in Perfect Moment’s autumn/winter 2023 (AW23) collection,

and a two-page profile feature with Jane Gottschalk our Chief Creative Officer.

As the top luxury fashion publication in Aspen, Modern

Luxury Aspen has 50,000 print subscribers and more than 1.1 million digital readers per month.

The company defines a key opinion leader (KOL) as a person who is considered an expert on a certain topic and whose opinions are

respected by the public due to their trajectory and the reputation they have built.

They are typically identified by their reach, social

media following and stature.

KOL may include but is not limited to celebrities, social media influencers, fashion models, contributors

to media publications, and noted members of the fashion industry.

There is no official listing or accreditation of KOLs, so the term

is subjective, and therefore the list and definition may vary from company to company.

The source of the KOLs, social media and audience

reach statistics provided in this release are reports by the company’s public relations firm.

No reliance should be made upon their

accuracy or timeliness.

currency transactions gains

currency transactions gains increased by $225, from $39 for the year ended March 31, 2023, to $264 for the year ended March 31, 2024,

mainly driven by fluctuations in the U.S.

dollar to the U.K.

pound sterling exchange rate.

currency translation gains (losses)

currency translation gains (losses) result from the process of translating the financial statements of our foreign entities’ functional

currency into USD.

Foreign currency translation losses decreased unfavorably by $591, a gain of $303 during the year ended March 31,

2023 to a loss of $288 during the year ended March 31, 2024, mainly driven by fluctuations in the US dollar to the UK pound sterling

exchange rate.

of Non-GAAP Measures - Adjusted EBITDA

addition to our results under generally accepted accounted principles (“GAAP”), we present Adjusted EBITDA as a supplemental

measure of our performance.

However, Adjusted EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative

to net income, income from operations or any other performance measure derived in accordance with GAAP or as an alternative to cash flow

from operating activities as a measure of liquidity.

We define Adjusted EBITDA as net income (loss), plus interest expense, depreciation

and amortization and stock-based compensation.

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

the resources that affect our underlying revenue and profit generating operations in that period.

Non-GAAP adjustments to our results

prepared in accordance with GAAP are itemized below.

You are encouraged to evaluate these adjustments and the reasons we consider them

appropriate for supplemental analysis.

In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that

are the same as or similar to some of the adjustments in this presentation.

Our presentation of Adjusted EBITDA should not be construed

as an inference that our future results will be unaffected by unusual or non-recurring items.

For the Years ended

Gross margin is defined

as gross profit as a percentage of total net revenue.

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

In addition to total

net sales, net loss, and other results under GAAP, the following information includes key operating metrics and non-GAAP financial measures

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

March 31, 2025

the Year Ended

March 31, 2024

Net income / (loss), as reported

Net loss, as reported

Interest expense

2 unchanged sentences

Depreciation and amortization

Income tax benefit

Total EBITDA adjustments

Adjusted EBITDA

$3,412 decrease in Adjusted EBITDA for the year ended March 31, 2024 compared to the same period in 2023, was primarily driven

by an increase in investments in brand awareness totaling $1,255 to drive ecommerce revenues and wholesale sell-through, which included

a collaboration with Soho House, Verbier advertising and events, an increase in labor of $965 to support growth and

listing on NYSE American, plus increases in legal $354, travel $269, audit fees $214, commissions $179, customer bankruptcies $178, postage

$166, design samples $161, information technology $128, and insurance costs $116, offset by an increase in gross profit of

present adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on

a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

In addition, we use Adjusted

EBITDA in developing our internal budgets, forecasts, and strategic plan;

in analyzing the effectiveness of our business strategies in

evaluating potential acquisitions;

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

our financial performance.

Adjusted EBITDA has limitations as an analytical tool, which includes, among others, the following:

EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

EBITDA does not reflect future interest expense, or the cash requirements necessary to service interest or principal payments, on

depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in

the future, and the Adjusted EBITDA does not reflect any cash requirements for such replacements.

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.

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

the resources that affect our underlying revenue and profit generating operations in that period.

We present adjusted EBITDA because

we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding

items that we do not believe are indicative of our core operating performance.

In addition, we use Adjusted EBITDA in developing our

internal budgets, forecasts, and strategic plan;

in analyzing the effectiveness of our business strategies in evaluating potential acquisitions;

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.

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

financial information prepared in accordance with GAAP.

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;

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.

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

net loss and our other financial results presented in accordance with GAAP.

You are encouraged to evaluate the above adjustments and

the reasons we consider them appropriate for supplemental analysis.

In evaluating Adjusted EBITDA, you should be aware that in the future

we may incur expenses that are the same as or similar to some of the adjustments in this presentation.

Our presentation of Adjusted EBITDA

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.

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”)

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

and other selling, general and administrative expenses, including information technology, property related expenses, travel and product

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.

and advertising expense

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

advertising costs.

Marketing is an important driver of growth and we intend to continue to make significant investments in our marketing

organization.

and advertising expenses for the year ended March 31, 2025 were $3,540 compared to $4,784 for the year ended March 31, 2024, a decrease

of $1,244 or 26.0%.

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.

and Quarterly Trends

business is seasonal with revenue concentrated in northern hemisphere countries.

Revenue is elevated in the quarters ending

September 30, December 31 and March 31 driven by sales of ski and outerwear through the fall and winter months.

quarter ending June 30 sales are driven by swimwear and activewear.

Our growth rate fluctuates quarter-on-quarter as a result of the

seasonality of our business.

Revenue is elevated in the quarters ending September

30, December 31 and March 31 driven by sales of ski and outerwear through the fall and winter months.

In the quarter ending June 30 sales

are driven by swimwear and activewear.

Our growth rate fluctuates quarter-on-quarter as a result of the seasonality of our business.

We expect this fluctuation to continue.

In addition to seasonality, quarter-on-quarter results are

expected to be impacted by the timing of goods production and delivery, promotional activities and the addition of new

products and geographies as the business grows.

The business is also subject to the impact of economic cycles that influence retail

apparel trends.

In addition to seasonality, quarter-on-quarter results are expected to be impacted by the timing

of goods production and delivery, promotional activities and the addition of new products and geographies as the business grows.

business is also subject to the impact of economic cycles that influence retail apparel trends.

and Capital Resources

of March 31, 2024, we had cash and cash equivalents of $7,910 and an accumulated deficit of $48,977.

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

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and working capital finance.

Overall, cash and cash equivalents and restricted cash, in aggregate, increased by $3,198 million, from

$4,712 million as of March 31, 2023 to $7,910 million as of March 31, 2024.

This increase is primarily due to net proceeds from financing

activities totaling $8,162 from the sale of our common stock offset by net cash used in operating activities totaling $4,453.

May 2023 to August 2023, the Company issued and sold 409,050 shares of common stock to accredited investors in an equity financing at

a purchase price of $6.00 per share for an aggregate consideration of $2,179, net of broker fees and expenses of approximately $275.

February 7, 2024, the company entered into an underwriting agreement with ThinkEquity LLC, as representative (the “Representative”)

of the several underwriters identified therein, relating to the Company’s initial public offering (the “IPO”) of 1,334,000

shares of the Company’s common stock, par value $0.0001 per share.

The Company previously filed the form of underwriting agreement

as an exhibit to the Company’s registration statement on Form S-1, as amended from time to time (File No.

333-274913), which was

declared effective by the Securities and Exchange Commission on February 7, 2024.

The price per share to the public was $6.00 generating

gross proceeds of $8,004.

The Company also granted the Underwriters a 45-day option to purchase up to 200,100 additional shares of Common

Stock on the same terms and conditions for the purpose of covering any over-allotments in connection with the IPO.

number of shares of common stock outstanding after this offering was 15,578,449 as of February 7, 2024, that included the previously

issued and outstanding of 5,233,402, the 1,334,000 shares issued as part of this offering plus (i) the automatic conversion of all outstanding

shares of our Series A convertible preferred stock into 5,323,782 shares of common stock, (ii) the automatic conversion of all outstanding

shares of our Series B convertible preferred stock into 1,189,998 shares of common stock and (iii) the automatic conversion, in connection

with the closing of this offering (closing on February 12, 2024), of $10,002 in principal amount plus accrued interest in the amount

of $1,985 under our 8% senior subordinated secured convertible promissory notes (the “2021 Notes”) and our 8% senior subordinated

secured convertible promissory notes (the “2022 Notes” and, together with the 2021 Notes, the “Notes”), at 80%

of the initial public offering price into an aggregate of 2,497,267 shares of common stock.

February 12, 2024, the Company consummated the IPO and issued 1,334,000 shares of Common Stock for aggregate net proceeds of approximately

$6,009, after deducting underwriting discounts and commissions and estimated offering expenses.

The Company intends to use the

proceeds for general corporate purposes, including working capital, sales and marketing activities and general and administrative matters.

Concurrently with the closing of the IPO, the Company also issued warrants to purchase up to 66,700 shares of Common Stock to the Representative

and its designees, at an exercise price of $7.50 per share (the “Underwriter Warrants”).

The Underwriter Warrants are exercisable

beginning on August 5, 2024, and expire on February 7, 2029.

March 15, 2021, the Company entered into a securities purchase agreement with accredited investors pursuant to which it issued 8% Secured

Convertible Promissory Notes (also referred to herein as the “2021 Notes”) with an aggregate principal amount of $6.0 million

(such financing, the “2021 Debt Financing”).

During April to July 2022, further 8% Secured Convertible Promissory Notes (also

referred to herein as the “2022 Notes” and, together with the 2021 Notes, the “Notes”), that rank pari passu

to the original convertible debt financing, were issued to accredited investors with an aggregate principal amount of $4.00 million (such

financing, the “2022 Debt Financing”).

The maturity date for the Notes issued in the 2021 Debt Financing and the 2022 Debt

Financing is February 15, 2024.

The outstanding balance of the Notes will convert automatically upon the closing of a firm commitment

underwritten public offering of our common stock with aggregate gross proceeds of at least $8.0 million and simultaneous listing on a

national stock exchange (such transaction, a “Qualified IPO”), at a conversion price equal to 80% of the offering price to

the public in such Qualified IPO.

February 12, 2024, $10,002 in principal amount plus accrued interest in the amount of $1,985 automatically converted into Company common

stock, at 80% of the initial public offering price into an aggregate of 2,497,267 shares of common stock (see Note 13 of the financial

Company, through PMA, has a trade finance facility extended on goods for which letters of credit are issued to the Company’s suppliers

As of March 31, 2024 and March 31, 2023, the outstanding balance under the trade finance facility was $0 and $26, respectively,

and the Company had an available trade finance facility of $5.00 million.

As of March 31, 2024, there were no outstanding pledged letters

of credit by HSBC.

The trade finance facility does not become the Company’s responsibility until the Company receives the manufactured

clothing goods from suppliers.

Once drawn, the company has 120 days credit on the loan before repayment is due.

For drawings in Hong

Kong dollars, the interest rate equals HIBOR plus 3.0%, and for drawings in U.S.

dollars, the interest rate equals SOFR plus 3.3%.

trade finance facility was originally secured by a standby documentary credit for $1.0 million from UBS Switzerland AG and a personal

guarantee to the value of $4.0 million from the Chairman of our board of directors, Max Gottschalk, and a 3,150 corporate guarantee

from Perfect Moment (UK) Limited.

The UBS standby documentary credit expired on April 30, 2023 and the facility was then secured

by charge over cash deposits equal to the amount of the facility used at any given moment in time in addition to the aforementioned personal

and corporate guarantees.

On May 31, 2023, the UBS standby documentary credit was reinstated for $1.0 million, which standby

documentary credit was secured by a guarantee from Joachim Gottschalk & Associates, Ltd.

The UBS standby

documentary credit was extended on November 26, 2023 through January 26, 2024 at a 10% interest rate.

The JGA guarantee is in addition

to the $4.0 million personal guarantee of the trade finance facility by Mr.

The UBS standby documentary credit was not

extended and the 3,150 corporate guarantee from Perfect Moment (UK) Limited was replaced with a 2,000 corporate guaranteed from Perfect

Moment, Limited.

JGA guarantee accrued interest between 8% and 10% per annum, payable by the Company.

The interest charged for the twelve months

ended March 31, 2024 was $56.

During the year ended March 31, 2024, the Company utilized $1,847 of borrowings under the facility, all

of which was repaid by March 31, 2024.

The trade finance facility is also secured by a guarantee by Perfect Moment Ltd.

in the amount

of $2.0 million.

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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and our growth.

of March 31, 2024, our cash and cash equivalents and restricted cash are mainly held in U.S.

pound sterling, Hong Kong dollar,

and euro cash accounts with high credit quality financial institutions.

As a result of the seasonality of our business, we typically

draw down on our trade finance facilities during summer, fall and early winter to meet a large proportion of the cost of goods associated

with the manufacture of our fall/winter collection.

Trade finance and debt factoring facilities support our working capital cycle through

to the late fall/winter season when wholesale receivables are paid and ecommerce revenues increase.

ability to fund inventory, 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.

a result of the seasonality of our business, we typically draw down on our trade finance facilities during summer, fall and early winter

to meet a large proportion of the cost of goods associated with the manufacture of our fall/winter collection.

Trade finance and debt

factoring facilities support our working capital cycle through to the late fall/winter season when wholesale receivables are paid and

ecommerce revenues increase.

ability to fund inventory purchases, capital expenditures, and growth will depend on our ability to generate cash in the future.

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.”

report of our independent registered public accounting firm that accompanies our audited consolidated financial statements contains for

the fiscal years ended March 31, 2024 and March 31, 2023, includes a going concern explanatory paragraph in which such firm expressed

that there is substantial doubt about our ability to continue as a going concern.

Our consolidated financial statements contained in

this Annual Report do not include any adjustments that might result if we are unable to continue as a going concern.

If we are unable

to continue as a going concern, holders of our securities might lose their entire investment.

As discussed above, although we plan to

attempt to raise additional capital through one or more private placements or public offerings, the doubts raised relating to our ability

to continue as a going concern may make our shares an unattractive investment for potential investors.

These factors, among others, may

make it difficult to raise any additional capital and may cause us to be unable to continue to operate our business.

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.”

Flow Activities

following table shows summary consolidated cash flow information for the periods presented:

(Amounts in thousands)

March 31, 2025

March 31, 2024

Consolidated statement of cash flow data:

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changes in operating assets and liabilities during the year ended March 31, 2025 consisted primarily of a $1,536 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.

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,

$10,305, offset by non-cash charges of $8,555 and a net cash outflow from changes in operating assets and liabilities of $1,760.

changes in operating assets and liabilities during the year ended March 31, 2023 consisted primarily of a $812 increase in inventories,

$759 decrease in accounts payables, a $519 increase in trade receivables, and a $515 decrease in unearned revenue, offset

by a $514 increase in accrued expenses, and a $321 decrease in prepaid and other current assets.

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.

Flows from Investing Activities

used in investing activities was $211 in the year ended March 31, 2024 and $249 in the year ended March 31, 2023, a decrease of $38,

primarily due to a reduction of software and website development capital expenditures.

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.

Flows from Financing Activities

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.

cash obtained from financing activities during the year ended March 31, 2023 was $6,930, primarily attributed to net proceeds from the

issuance of Series B preferred stock totaling $5,200, net proceeds from debt financing totaling $2,555, offset by the repayment of shareholder

loans of $565 and repayment of trade finance facilities of $239.

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.

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

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.

Sheet Arrangements

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Accounting Policies and Estimates

management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial

statements, which have been prepared in accordance with U.S.

The preparation of those consolidated financial statements requires

our management to make judgments and estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent

assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue generated, and expenses

incurred during the reporting periods.

Our estimates are based on our historical experience and on various other factors that we believe

are reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of asset and

liabilities that are not readily apparent from other sources.

Significant estimates inherent in the preparation of the consolidated financial

statements include reserves for uncollectible accounts receivables;

realizability of inventory;

customer returns;

useful lives and impairments

of long-lived tangible and intangible assets;

accounting for income taxes and related uncertain tax positions;

and the valuation of stock-based

compensation awards.

Actual results may differ from these judgements and estimates under different assumptions or conditions and any

such differences may be material.

believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies

relate to the more significant areas involving management’s judgements and estimates.

majority of the Company’s revenue is recognized at a point in time based on the transfer of control.

In addition, the majority

of the Company’s contracts do not contain variable consideration and contract modifications are minimal.

The majority of the Company’s

revenue arrangements generally consists of a single performance obligation to transfer promised goods.

Revenue is reported net of markdowns,

discounts and sales taxes collected from customers on behalf of taxing authorities.

Revenue is also presented net of an allowance for

expected returns where contracts include the right of return.

estimate returns on an ongoing basis to estimate the consideration from the customer that we expect to ultimately receive.

Consideration

in determining our estimates for returns may include agreements with customers, the Company’s return policy and historical and

current trends.

We record the returns as a reduction to net sales in our consolidated statements of operations and the recognition of

a provision for returns within accrued expenses in our consolidated balance sheets and the estimated value of inventory expected to be

returned as an adjustment to inventories, net.

is comprised of direct-to-consumer ecommerce revenue through the Company’s website and revenue related to wholesalers.

is recognized when performance obligations are satisfied through the transfer of control of promised goods to the Company’s customers.

Control transfers once a customer has the ability to direct the use of, and obtain substantially all of the benefits from, the product.

This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance.

For direct-to-consumer

ecommerce revenue, the Company receives payment before the customer receives the promised goods.

Revenue is only recognized once the

goods have been delivered to the customer.

Sales to wholesale customers are recognized when the customer has control which will depend

on the agreed upon International Commercial Terms (“inco-terms”).

For inventories sold on consignment to wholesalers, the

Company records revenue when the inventory is sold to the third-party customer by the wholesaler.

The Company may issue merchant credits,

which are essentially refund credits.

The merchant credits are initially deferred and subsequently recognized as revenue when tendered

Company’s business is significantly affected by the pattern of seasonality common to most retail apparel businesses.

Historically,

the Company has recognized a significant portion of its revenue in the fourth fiscal quarter of each year as a result of increased net

revenue during the ski season.

receivable primarily arise out of sales to wholesale accounts and ecommerce partners.

The allowance for doubtful accounts represents

management’s best estimate of probable credit losses in accounts receivable using the incurred loss methodology.

Receivables are

written off against the allowance when management believes that it is probable the amount receivable will not be recovered.

Additionally,

the Company records higher allowances in the first and third quarters following its peak sales seasons after the Company determines it

to be probable that it will not collect the related receivables.

consisting of finished goods, inventories in transit, and raw materials, are initially recognized at cost and subsequently measured at

the lower of cost or net realizable value.

Cost is determined on a first-in, first-out basis and is comprised of all costs of purchases,

costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Company periodically reviews its inventories and makes a provision as necessary to appropriately value goods that are obsolete, have

quality issues, or are damaged.

The amount of the provision is equal to the difference between the cost of the inventory and its net

realizable value based upon assumptions about product quality, damages, future demand, selling prices, and market conditions.

in market conditions result in reductions in the estimated net realizable value of its inventory below its previous estimate, the Company

would increase its provision in the period in which it made such a determination.

addition, the Company provides for inventory shrinkage based on historical trends from actual physical inventory counts.

Inventory shrinkage

estimates are made to reduce the inventory value for lost or stolen items.

The Company performs a physical inventory at least count once

a year and adjusts the shrinkage reserve accordingly.

Company maintains the 2021 Plan, which provides for the grant of incentive stock options, non-statutory stock options, stock appreciation

rights, restricted stock awards, restricted stock units and performance units and performance shares to employees, directors and consultants

of the Company or any parent or subsidiary of the Company.

The purpose of the 2021 Plan is to enable the Company to attract and retain

the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and

consultants of the Company or any parent or subsidiary of the company, and to promote the success of the Company’s business.

Company has historically granted stock options to non-employees in exchange for the provision of services, both under the 2021 Plan and

outside of the 2021 Plan.

Company accounts for such awards based on ASC 505 and 718, whereby the value of the award is measured on the date of grant and recognized

as compensation expense on a straight-line basis over the vesting period.

The Company measures fair value as of the grant date for options

and warrants using the Black Scholes option pricing model and for common share awards using a weighted average of the Black Scholes method

and probability-weighted expected return method (PWERM).

inputs into the Black Scholes option pricing model are subjective and generally require significant judgment.

The fair value of the shares

of common and preferred stock has historically been determined by the Company’s management with the assistance of third-party specialists

as there was no public market for the common stock.

The fair value is obtained by considering a number of objective and subjective factors,

including the valuation of comparable companies, sales of preferred stock to unrelated third parties, projected operating and financial

performance, the lack of liquidity of common and preferred stock and general and industry specific economic outlook, amongst other factors.

The expected term represents the period that the Company’s stock options are expected to be outstanding and is determined using

the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as the Company’s stock

option exercise history does not provide a reasonable basis upon which to estimate expected term.

Because the Company is privately held

and does not have an active trading market for its common and preferred stock for a sufficient period of time, the expected volatility

was estimated based on the average volatility for comparable publicly traded companies, over a period equal to the expected term of the

stock option grants.

The risk-free rate assumption is based on the U.S.

Treasury zero coupon issues in effect at the time of grant for

periods corresponding with the expected term of the option.

The Company has never paid dividends on its common stock and does not anticipate

paying dividends on common stock in the foreseeable future.

Therefore, the Company uses an expected dividend yield of zero.

preparation of financial statements in conformity with U.S.

generally accepted accounting principles requires management to make

estimates and assumptions.

Predicting future events is inherently an imprecise activity and, as such, requires the use of significant

Actual results may vary from our estimates in amounts that may be material to the financial statements.

An accounting policy

is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain

at the time the estimate is made, and if different estimates that reasonably could have been used or changes in the accounting estimates

that are reasonably likely to occur periodically, could materially impact our consolidated financial statements.

critical accounting policies, estimates, and judgements are as follows, and see Note 2.

Summary of Significant Accounting Policies included

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

customers and record sales reserves to reduce revenue, net.

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

Receivable and Credit Losses

make ongoing estimates relating to the collectability of accounts receivable and maintain an allowance for estimated losses resulting

from the inability of our customers to make required payments.

In determining the amount of the reserve, we consider historical levels

of credit losses and significant economic developments within the retail environment that could impact the ability of our customers to

pay outstanding balances and make judgments about the creditworthiness of significant customers based on ongoing credit evaluations.

Because we cannot predict future changes in the financial stability of our customers, actual future losses from uncollectible accounts

may differ from estimates.

If the financial condition of customers were to deteriorate, resulting in their inability to make payments,

a larger reserve might be required.

In the event we determine a smaller or larger reserve is appropriate, we would record a benefit or

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.

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

and planning teams to identify items at risk of non-recovery.

This includes analysis of aged inventory by collection season, unit sales

velocity, and margin erosion.

Provisions are updated quarterly and recorded in the period in which such assessments are made.

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

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

of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification,

the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.

Changes in the estimated fair value of the liability-classified warrants are recognized as a non-cash gain or loss on the accompanying

consolidated statements of operations and comprehensive loss.

We assess the classification of our warrants at each reporting date to

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.

We recognize compensation expense

for awards with only service conditions on a straight-line basis over the requisite service period for the entire award.

factors change, and we utilize different assumptions including the probability of achieving performance conditions, share-based compensation

cost on future award grants may differ significantly from share-based compensation cost recognized on past award grants.

any modifications or cancellations of the underlying unvested securities, we may be required to accelerate any remaining unearned share-based

compensation cost or incur incremental cost.

Share-based compensation cost affects our compensation and benefits expenses.

to the below, see Note 11 – Stock Based Compensation to our audited consolidated financial statements for additional detail.

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

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

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:

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.

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

share-based compensation cost recognized on past award grants.

Higher volatility and longer expected terms result in an increase to share-based

compensation determined at the date of grant.

Future share-based compensation cost will increase to the extent that we grant additional

share-based awards to employees and non-employees.

If there are any modifications or cancellations of the underlying unvested securities,

we may be required to accelerate any remaining unearned share-based compensation cost or incur incremental cost.

Share-based compensation

cost affects our selling, general and administrative expenses.

future periods, we expect share-based compensation to increase, due in part to our existing unrecognized share-based compensation and

as we issue additional share-based awards to continue to attract and retain employees.

make assumptions, judgments and estimates to determine our current provision for income taxes, our deferred tax assets and liabilities

and our uncertain tax positions.

Our judgments, assumptions and estimates relative to the current provision for income tax take into

account current tax laws, our interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign

and domestic tax authorities.

Changes in tax law or our interpretation of tax laws and the resolution of current and future tax audits

could significantly affect our ability to utilize our net operating loss carryforwards.

assumptions, judgments and estimates relative to the value of a deferred tax asset take into account predictions of the amount and category

of future taxable income.

Actual operating results and the underlying amount and category of income in future years could cause our current

assumptions, judgments and estimates of recoverable net deferred tax assets to be inaccurate.

Changes in any of the assumptions, judgments

and estimates mentioned above could cause our actual income tax obligations to differ from our estimates, which could materially affect

our financial position, results of operations or cash flows.

assumptions, judgement and estimates relative to uncertain tax positions take into account whether a tax position is more likely than

not to be sustained upon examination by the relevant taxing authority based on the technical merits of the position and the largest benefit

that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority.

Changes in tax

law or our interpretation of tax laws and the resolution of current and future tax audits could significantly affect our ability to utilize

our net operating loss carryforwards.

Contingencies

are involved in legal proceedings regarding contractual and employment relationships and a variety of other matters.

We record contingent

liabilities when a loss is assessed to be probable and its amount is reasonably estimable.

If it is reasonably possible that a material

loss could occur through ongoing litigation, we provide disclosure in the footnotes to our financial statements.

Assessing probability

of loss and estimating the amount of probable losses requires analysis of multiple factors, including in some cases judgments about the

potential actions of third-party claimants and courts.

Should we experience adverse court judgments or should negotiated outcomes differ

to our expectations with respect to such ongoing litigation it could have a material adverse effect on our results of operations, financial

position, and cash flows.

Accounting Pronouncements

43 unchanged sentences

hedged it may result in harm to our business, results of operations and financial condition.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

is made to the financial statements, which begin on page F-1 of this Annual Report.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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