Perfect Moment (PMNT) risk factors, FY2026 10-K

Risks Related to Our Business, Our Brand, Our Products and Our Industry

1. 01We 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 concern23% rewritten
2. 02Our financial performance is subject to significant seasonality and variability, which could cause the price of our common stock to decline
3. 03Our business depends on our strong brand, and if we are not able to maintain and enhance our brand we may be unable to sell our products, which would adversely affect our business
4. 04We continue to focus on our direct-to-consumer channel, which may be costly and could materially harm our sales, profitability and financial condition
5. 05A downturn in the global economy will likely affect customer purchases of discretionary items, which could materially impact our sales, profitability and financial condition
6. 06We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can, resulting in a loss of our market share and a decrease in our revenue and profitability
7. 07Use of social media and influencers may adversely affect our reputation or subject us to fines or other penalties
8. 08Our current and future products may experience quality problems from time to time that can result in negative publicity, litigation, product recalls and warranty claims, which could result in decreased revenue and operating margin, and harm to our brand
9. 09If we are unable to manage our operations at our current size or to manage any future growth effectively, our growth may be slowed
10. 10Our sales and profitability may decline as a result of increasing product costs and decreasing selling prices
11. 11Our success depends on our ability to identify and originate product trends as well as to anticipate and react to changing consumer demands in a timely manner
12. 12Our business and results of operations could be materially harmed if we are unable to accurately forecast customer demand for our products
13. 13Our plans to improve and expand our product offerings may not be successful, and implementation of these plans may divert our operational, managerial and administrative resources, which could harm our competitive position and reduce our net revenue and profitability
14. 14We currently do not operate Perfect Moment owned physical retail stores. Our plans to open Perfect Moment owned physical retail stores are dependent on a variety of factors, including store locations being available for lease and the stores being economically viable to operate
15. 15Our limited operating experience and limited brand recognition in new international markets may limit our expansion and cause our business and growth to suffer
16. 16If we fail to attract new customers, we may not be able to increase sales
17. 17We partially depend on our wholesale partners to display and present our products to customers in their wholesale channel, and our failure to maintain and further develop our relationships with our wholesale partners could harm our business
18. 18We rely on payment cards to receive payments and are subject to payment-related risks
19. 19Our success is substantially dependent on the service of certain members of our board or directors and senior management
20. 20We face various risks related to health epidemics, pandemics and similar outbreaks, which may adversely affect our business
21. 21We are subject to many hazards and operational risks that can disrupt our business, some of which may not be insured or fully covered by insurance

Risks Related to Our Supply Chain

1. 22We may be unable to source and sell our merchandise profitably or at all if new trade restrictions are imposed or existing restrictions become more burdensome
2. 23We are dependent on international trade agreements and regulations. The countries in which we produce and sell our products could impose or increase tariffs, duties, or other similar charges that could negatively affect our results of operations, financial position, or cash flows
3. 24We rely on a limited number of third-party suppliers to provide high quality raw materials24% rewritten
4. 25If our independent manufacturers or our suppliers fail to use ethical business practices and fail to comply with changing laws and regulations or our applicable guidelines, our brand image could be harmed due to negative publicity
5. 26Labor-related matters, including labor disputes, relating to our suppliers may adversely affect our operations
6. 27The operations of many of our suppliers are subject to additional risks that are beyond our control
7. 28The fluctuating cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer
8. 29If we encounter problems with our distribution system, our ability to deliver our products to the market and to meet customer expectations could be harmed
9. 30Increasing labor costs and other factors associated with the production of our products in China could increase the costs to produce our products

Risks Related to Information Security and Technology

1. 31Our marketing programs, ecommerce initiatives and use of customer information are governed by an evolving set of laws and enforcement trends and unfavorable changes in those laws or trends, or our failure to comply with existing or future laws, could substantially harm our business and results of operations
2. 32Disruption of our information technology systems or unexpected network interruption could disrupt our business
3. 33Data security breaches and other cyber security events could result in disruption to our operations or financial losses and could negatively affect our reputation, credibility and business

Risks Related to Environmental, Social and Governance Issues

1. 34Climate change, and related legislative and regulatory responses to climate change, may adversely impact our business
2. 35Increased scrutiny from investors and others regarding our environmental, social, governance or sustainability responsibilities could result in additional costs or risks and adversely impact our reputation, employee retention and willingness of customers and suppliers to do business with us

Risks Related to Global Economic, Political and Regulatory Conditions

1. 36Our financial results and ability to grow our business may be negatively impacted by global events beyond our control
2. 37An economic recession, depression, downturn or economic or political uncertainty in our key markets may adversely affect consumer discretionary spending and demand for our products
3. 38Changes in tax laws or unanticipated tax liabilities could adversely affect our effective income tax rate and profitability
4. 39Our failure to comply with trade and other regulations could lead to investigations or actions by government regulators and negative publicity
5. 40Because a significant portion of our net revenue and expenses are generated in countries other than the United States, fluctuations in foreign currency exchange rates have affected our results of operations and may continue to do so in the future

Risks Related to Intellectual Property

1. 41Our fabrics and manufacturing technology generally are not patented and can be imitated by our competitors. If our competitors sell products similar to ours at lower prices, our net revenue and profitability could suffer
2. 42If we are unable to establish and protect our trademarks and other intellectual property rights, counterfeiters may produce copies of our products and such counterfeit products could damage our brand image
3. 43Our trademarks and other proprietary rights could potentially conflict with the rights of others and we may be prevented from selling some of our products

Risks Related to Legal and Governance Matters

1. 44We are subject to periodic claims, litigation, legal proceedings and audits that could result in unexpected expenses and could ultimately be resolved against us
2. 45Our business could be negatively affected as a result of actions of activist stockholders or others
3. 46Anti-takeover provisions in our charter documents and under the General Corporation Law of the State of Delaware could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our management
4. 47Anti-takeover provisions in our charter documents could discourage, delay or prevent a change in control of us and may affect the trading price of our common stock
5. 48These provisions could discourage, delay or prevent a transaction involving a change in control. These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and cause us to take other corporate actions our stockholders desire

Risks Related to Ownership of Our Common Stock

1. 49Our common stock has been delisted from NYSE American and now trades on the OTCQB Venture Market, which may adversely affect the liquidity and market price of our common stock and our ability to raise capitalNew
2. 50We are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors
3. 51If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may be negatively affected
4. 52Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation of our common stock, if any, will be your sole source of gain
5. 53We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all
6. 54Future 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
7. 55As a public company, we incur significant compliance and reporting costsNew
8. 56If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our common stock adversely, the price and trading volume of our common stock could decline