F-1: BrilliA Inc. Shareholder Resale Filing on NYSE American

BrilliA Inc. files a prospectus for the resale of 14.2 million Class A shares by its controlling shareholder, detailing financial performance and strategic plans.

Summary

• BrilliA Inc. is a holding company incorporated in the Cayman Islands, operating through subsidiaries Bra Pro (BVI) and MAP (Indonesia), specializing in ladies intimate apparel.
• The company functions as an Original Design Manufacturer (ODM) and cross-border solution provider, handling design, sourcing, production, and logistics.
• A key strategic initiative is the development of the in-house DIANA brand, targeting higher margins and direct customer engagement in Southeast Asia and Europe.
• Total revenue increased by 15.06% from USD 55.96 million in FY2024 to USD 64.39 million in FY2025, primarily driven by North American sales.
• Net income decreased by 14.16% from USD 3.28 million in FY2024 to USD 2.82 million in FY2025.
• Operating expenses increased significantly by 46.55% from USD 4.77 million in FY2024 to USD 6.99 million in FY2025, due to higher depreciation, employee costs, and professional fees related to public listing.
• The filing relates to the resale of 14,196,696 Class A shares by Salim Podiono, the controlling shareholder, who will beneficially own 0% of Class A shares and 100% of Class B shares post-offering, retaining approximately 81.8% of total voting power.
• The company is an emerging growth company and a foreign private issuer, eligible for reduced reporting requirements under U.S. federal securities laws.

Sentiment

Score: 5

Explanation: The company shows strong revenue growth and improved gross margins, indicating operational strength. However, a notable decline in net income due to significantly increased operating expenses, coupled with high customer concentration and potential conflicts of interest related to the new brand, presents a mixed financial picture. The resale of a large block of shares by a controlling shareholder also introduces market uncertainty.

Positives

• Revenue increased by 15.06% to USD 64.39 million in FY2025, driven by new customer onboarding and expanded orders.
• Gross profit increased by 23.15% to USD 10.11 million in FY2025, with gross profit margin improving from 14.78% to 15.78%.
• Strong design and sourcing capabilities allow for swift transformation of customer concepts into reality, even for complex designs.
• Established strong and stable relationships with key customers in North America, Europe, and Canada, leading to repeat business and referrals.
• Experienced management team with extensive industry experience, guiding sustainable business strategies and market opportunities.
• Vertically integrated operation provides one-stop apparel supply chain services, ensuring high quality at low costs.
• Successful launch of the DIANA brand in Indonesia, with plans for expansion into adjacent product categories and new geographical markets (ASEAN, Europe).
• Improved management of customer credit risk led to a 98.31% decrease in net loss on impairment of financial assets from USD 0.24 million in FY2024 to USD 0.04 million in FY2025.

Negatives

• Net income decreased by 14.16% from USD 3.28 million in FY2024 to USD 2.82 million in FY2025.
• Operating expenses increased significantly by 46.55% to USD 6.99 million in FY2025, primarily due to higher depreciation, employee benefits, and professional fees related to public listing.
• Sales to Europe declined by 35.54% from USD 8.91 million in FY2024 to USD 5.74 million in FY2025, attributed to economic uncertainty from the Ukraine conflict.
• Revenue from services for order management solutions decreased by 100% from USD 193,000 in FY2024 to USD 0 in FY2025.
• High customer concentration, with the top two customers accounting for 79.7% of total revenue in FY2025 (down from 82.2% from top three in FY2024).
• Potential conflict of interest between the controlling shareholder, Mr. Salim, and the company regarding the DIANA brand license, as he has a 25% beneficial interest in the licensor entity, PT Diana Mode Indonesia.
• Launching the DIANA brand could lead to erosion of trust with existing customers, market fragmentation, and customer alienation due to direct competition.

Risks

• Dependence on customers and the ability to provide stylish, quality products.
• Potential conflict of interest with controlling shareholder Mr. Salim regarding the DIANA brand license.
• Risks associated with launching the DIANA brand, including erosion of trust with existing customers, market fragmentation, customer alienation, and innovation stagnation.
• Supply chain interruptions due to third-party supplier delivery issues, quality control failures, increased transportation costs, or pandemics.
• Dependence on third-party contract manufacturers and raw material suppliers, with no long-term contracts.
• Substantial customer concentration, with a limited number of customers accounting for a significant portion of revenues.
• Significant damage to the primary facility in Jakarta Utara, Indonesia, could materially affect operations.
• Reliance on the ability to design in response to changes in consumer preferences in a timely manner.
• Inability to successfully implement business objectives and expansion plans, including lack of sufficient capital, failure to achieve profitability, and difficulties in securing new manufacturers.
• Dependence on key management personnel, particularly Mr. Kendrew, and the ability to attract and retain skilled employees.
• Inability to maintain and protect intellectual property, or claims of infringement by third parties.
• Impact on business and operations due to the ability to enter into or renew the existing license agreement for the DIANA Brand, including financial dependency and accrual of benefits to Mr. Salim.
• Adverse effects from a re-occurrence of COVID-19 or another pandemic.
• Exposure to risks arising from fluctuations of foreign currency exchange rates, particularly Indonesian Rupiah.
• Business operations may be subject to seasonality.
• Uncertainty regarding the effect and impact of the recently enacted Omnibus Law on job creation in Indonesia.
• Current political and social events in Indonesia may adversely affect business.
• Deterioration of political, economic, and security conditions in Indonesia.
• Terrorist activities in Indonesia could destabilize the country.
• Vulnerability to natural disasters and events beyond control in Indonesia.
• Uncertainty in the balance of power between local governments and the central government in Indonesia.
• Changes in U.S. trade policy, including additional tariffs, may adversely affect cost structure and competitive position.
• Risk of not maintaining the listing of Class A Shares on NYSE American.
• Volatility in the trading price of Class A Shares, potentially unrelated to operating performance.
• If securities or industry analysts do not publish research or reports, or adversely change recommendations, market price and trading volume could decline.
• No expected dividends in the foreseeable future, requiring reliance on price appreciation for investment return.
• Sale or availability for sale of substantial amounts of Class A Shares could adversely affect market price.
• Short selling may drive down the market price of Class A Shares.
• Classification as a passive foreign investment company (PFIC) could have adverse U.S. federal income tax consequences for U.S. taxpayers.
• Reliance on Cayman Islands home country practices for corporate governance, which differ from NYSE American standards and may afford less protection to shareholders.
• Controlling shareholder has substantial influence, and interests may not align with other shareholders.
• Management team lacks experience in managing a U.S.-listed public company and complying with applicable laws.
• Significantly increased costs and management time due to NYSE American listing.
• Failure to maintain an effective system of internal controls could affect financial reporting and investor confidence.
• Certain judgments obtained against the company or its auditor by shareholders may not be enforceable due to incorporation in Cayman Islands and operations in BVI/Indonesia.
• Further issuances of Class B Shares may dilute the percentage ownership and influence of Class A shareholders.
• Future grants of employee share options and other share-based awards may have a material adverse effect on results of operation and dilute ownership interests.
• Exposure to liabilities under the Foreign Corrupt Practices Act (FCPA).

Future Outlook

The company plans to continue diversifying its business through the DIANA licensed brand, aiming for higher margins by directly selling products. Strategic plans include expanding the DIANA product line to include sleepwear, baby wear, active wear, and period panties, and establishing retail channels in Indonesia, Singapore, other ASEAN countries, and Europe. The company intends to enhance its design and development capabilities by recruiting additional staff and providing training, and to expand product offerings and geographical reach through its technology platform and customer service infrastructure. Future growth may also involve joint ventures, acquisitions, or strategic alliances, though no immediate plans are in discussion.

Management Comments

• We believe that developing the DIANA line of lingerie and other apparel products could provide us with a good opportunity to obtain higher margins from our operations since we will be directly involved in selling the products to customers.
• Developing the DIANA line allows us to have more control over the development and design of our products which can be used to reinforce our existing customers belief in our design capabilities.
• Our executive management team believes that there are considerable opportunities to capture a larger portion of the international markets, in particular geographical regions such as Asia and Europe.
• We believe that our focus on our design capabilities to match our customers needs has been one of our strengths and key factors that have enabled us to quickly capture market share and customer confidence.
• We believe that the executive management team possess the necessary experience, qualifications, commitment, and leadership skills to manage and sustain our business to ensure that our business continues to develop and grow.

Industry Context

The lingerie ODM and OEM market in Indonesia is highly fragmented and competitive, with an increasing number of players. There's a growing emphasis on price efficiency over quality from customers, and competition from lower labor cost regions like Bangladesh exerts pressure on margins. Despite this, there is a noticeable absence of strong regional lingerie brands in Southeast Asia, which BrilliA aims to address with its DIANA brand. The company differentiates itself by offering comprehensive services, an asset-light approach (no manufacturing facilities), and specializing in intricate, skill-intensive product offerings rather than direct cost competition.

Comparison to Industry Standards

• The company's raw material sourcing adheres to global benchmarks such as WRAP, Oeko-Tex, and GRS quality standards, indicating a commitment to quality that differentiates it from competitors who may prioritize lower costs.
• Unlike competitors in Bangladesh who offer products at reduced prices due to lower labor costs, the company opts to provide higher value by specializing in more intricate, skill-intensive product offerings.
• The company's asset-light approach, abstaining from owning manufacturing facilities, is presented as a distinct advantage, particularly during economic downturns or unexpected events like the COVID-19 outbreak, potentially offering more flexibility than vertically integrated competitors who own manufacturing assets.

Management Changes

Corporate Governance

Legal Proceedings

• As of the date of this prospectus, the company is not a party to any significant legal proceedings in the jurisdictions it operates in or outside.

Related Party Transactions

• Bra Pro engages PT Star Alliance Intimates (39.11% shareholding by Mr. Kendrew Hartanto) as a contract manufacturer, with charges of USD 5,268,000 in FY2025.
• MAP entered into a trademark license agreement with PT Diana Mode Indonesia (25% shareholding by Mr. Salim Podiono and Mr. Nursalim Podiono) for the DIANA brand, effective April 1, 2024, with a minimum royalty of USD 100,000 or IDR 1,500,000,000 per annum or 5% of turnover/profit (whichever is higher).
• MAP entered into a lease agreement with Mr. Salim Podiono to rent the company office for USD 27,000 per month, effective May 28, 2024.
• Mr. Salim Podiono also charged the company management service fees of IDR 688,500,000 per quarter.
• Sales of goods to Lejaby Maison De Creation (100% shareholding by Mr. Salim Podiono) amounted to USD 99,000 in FY2025.
• Sales of goods to PT Diana Retail Indonesia (95% shareholding by Mr. Halim Podiono, sibling of Salim Podiono) amounted to USD 565,000 in FY2025.
• An amount due from related parties of USD 235,000 (from PT Star Alliance Intimates) and USD 601,000 (from PT Diana Retail Indonesia) as of March 31, 2025.
• An amount due to related parties of USD 125,000 (to LGK Hong Kong Ltd.) and USD 52,000 (to Shim Siang Fan) as of March 31, 2025.

Stakeholder Impact

• **Shareholders**: The resale of 14.2 million Class A shares by the controlling shareholder could increase market supply and potentially impact share price. The dual-class share structure (Class A: 1 vote, Class B: 20 votes) means the controlling shareholder retains significant voting power (81.8%), limiting the influence of other Class A shareholders on corporate matters. Future issuances of Class B shares could further dilute Class A voting power. No dividends are expected in the foreseeable future, meaning returns rely solely on price appreciation.
• **Employees**: The company plans to grant employee share options and other share-based awards, which could incentivize performance and align interests with the company's growth. However, these grants will result in share-based compensation expenses and potential dilution for existing shareholders. The recruitment of additional professional management and design staff indicates growth opportunities.
• **Customers**: The launch of the DIANA brand, which will directly compete with existing customers, poses a risk of eroding trust, market fragmentation, and customer alienation. The company's strategy to mitigate this by targeting different markets (premium Asia/Europe for DIANA vs. fast fashion North America for existing customers) and having a separate team for DIANA aims to minimize negative impact.
• **Suppliers/Contract Manufacturers**: The company's dependence on third-party manufacturers and raw material suppliers, without long-term contracts, exposes it to risks of production delays, quality issues, and cost fluctuations. However, the company's asset-light model may offer flexibility in managing these relationships.
• **Creditors**: The company's ability to continue as a going concern depends on aligning funding sources with expenditure requirements and repaying short-term payables. Positive net current assets (USD 16.66 million) and cash balance (USD 7.70 million) as of March 31, 2025, indicate a healthy liquidity position.

Next Steps

• Continue to develop the DIANA brand and expand its product line (sleepwear, baby wear, activewear, period panties).
• Expand DIANA's distribution channels, including online platforms (e-commerce website, Instagram, TikTok, Shopee) and establishing retail channels in Indonesia, Singapore, other ASEAN countries, and Europe.
• Develop new customers through digital marketing, influencer collaborations, and online advertising campaigns.
• Further enhance design and development capabilities by recruiting additional staff and providing internal/external training.
• Broaden existing product offerings and leverage technology platforms to expand into adjacent product categories and segments.
• Consider collaborations, joint ventures, acquisitions, and strategic alliances in Southeast Asia with contractor manufacturers and existing lingerie brands.

Key Dates

Recommendation

While BrilliA Inc. demonstrates strong revenue growth and improved gross margins, indicating a robust core business and effective cost control, the significant increase in operating expenses has led to a decline in net income. The strategic pivot to the DIANA brand offers potential for higher margins and direct customer engagement but introduces substantial risks, including conflicts of interest with existing customers and market fragmentation. The controlling shareholder's resale of a large block of Class A shares, while not a primary capital raise for the company, could create downward pressure on the stock price due to increased supply. Given the mixed financial performance (revenue up, profit down), the inherent risks of the new brand strategy, and the potential market impact of the share resale, a 'hold' recommendation is appropriate. Investors should monitor the execution of the DIANA brand strategy, management's ability to mitigate related party conflicts, and the company's expense management to assess future profitability and stock performance.

Keywords

Lingerie, Apparel, ODM, OEM, Intimate Apparel, Fashion, Supply Chain, Southeast Asia, Indonesia, Cayman Islands, NYSE American, SEC Filing, DIANA Brand, Textile, Manufacturing, Retail, E-commerce, Corporate Governance, Risk Factors