DEF 14A: Perfect Moment Seeks Shareholder Nod for Reverse Split, Capital

Perfect Moment Ltd. is seeking stockholder approval for a reverse stock split to maintain NYSE American listing, an increase in authorized shares, and several equity financing transactions.

Summary

• An Annual Meeting of Stockholders is scheduled for January 14, 2026, to address nine key proposals.
• The company proposes a reverse stock split at a ratio between 1-for-5 and 1-for-20 to regain compliance with NYSE American listing requirements.
• Stockholders will vote on increasing the authorized number of common shares from 100,000,000 to 500,000,000 to provide flexibility for future corporate needs, including capital raises and acquisitions.
• Approval is sought for the automatic conversion of Series AA Convertible Preferred Stock at a reduced price of $0.46822 per share (down from $1.1601), which would result in the issuance of approximately 11,458,298 common shares.
• The company is seeking approval for the potential issuance of common stock equal to 20% or more of presently outstanding shares under a $25 million Equity Line of Credit (ELOC) with Mast Hill, L.P.
• Approval is also requested for the potential issuance of 3,172,858 common shares and related warrants (Warrant 1 for 3,204,908 shares, and potentially Warrant 2) to X3 Higher Moment Fund LLC at an exercise price of $0.46822 per share.
• The appointment of Weinberg & Company, P.A. as the independent registered public accounting firm for the fiscal year ending March 31, 2026, is up for ratification.
• A proposal to adjourn the Annual Meeting is included, if necessary, to solicit additional proxies or establish a quorum.
• As of November 21, 2025, there were 35,221,933 shares of Common Stock outstanding and 924,921 shares of Series AA Preferred Stock outstanding.
• Max Gottschalk and Jane Gottschalk, who are husband and wife, beneficially own 20.21% of the company's common stock each.
• Mark Buckley was terminated as CEO on January 31, 2025, and Jeff Clayborne was terminated as CFO on January 31, 2025.
• Jane Gottschalk was appointed President effective February 3, 2025, and Chath Weerasinghe was appointed Chief Financial Officer and Chief Operating Officer effective February 3, 2025.

Sentiment

Score: 3

Explanation: The company is addressing critical issues like NYSE listing compliance and capital needs, which is a necessary step for survival. However, the underlying problems (non-compliance, low stock price, significant dilution from multiple financing rounds at low valuations, and recent management turnover) indicate substantial operational and financial challenges. The related party transactions, while disclosed, add a layer of complexity. The overall sentiment is negative due to the severity of the challenges and the dilutive nature of the proposed solutions.

Positives

• The company is taking proactive steps to address its NYSE American listing compliance issues through a proposed reverse stock split.
• The proposed increase in authorized shares and various financing proposals (ELOC, X3) aim to provide essential capital and flexibility for future growth and strategic opportunities.
• New executive appointments, including a Chief Financial Officer and Chief Operating Officer with relevant industry experience, could strengthen management.
• The company has established corporate governance structures, including independent Audit, Compensation, and Nominating and Corporate Governance Committees.

Negatives

• The company is not in compliance with NYSE American minimum stockholders' equity and other listing standards, necessitating a reverse stock split.
• The proposed financing transactions (Series AA conversion, ELOC, X3) will result in significant dilution for existing common stockholders.
• The reduction in the Series AA Preferred Stock conversion price from $1.1601 to $0.46822 implies a lower valuation for the common stock in this conversion.
• A reverse stock split carries risks, including no guarantee of a sustained price increase, potential decrease in liquidity, and higher transaction costs for odd lot holders.
• The termination of the former CEO and CFO within the last fiscal year indicates management instability.
• Several related party transactions, including a personal guarantee by the Chairman and equity issuances to Chairman-controlled entities, raise potential governance concerns.

Risks

• The reverse stock split may not result in a sustained increase in the market price of the common stock.
• The reverse stock split may decrease the liquidity of the common stock due to a reduced number of outstanding shares.
• The reverse stock split may result in some stockholders owning odd lots (less than 100 shares), which can be more difficult to sell or incur higher transaction costs per share.
• The reverse stock split may lead to a decrease in the overall market capitalization of the company if the per share price does not increase proportionally.
• Future issuance of shares from the authorized increase, Series AA Preferred Stock conversion, ELOC, and X3 proposals will have a dilutive effect on earnings per share, book value per share, and voting rights of existing stockholders.
• Failure to approve the authorized shares increase could severely limit the company's ability to access capital markets, pursue strategic business development, and support growth plans.
• The ELOC Transaction and X3 Proposal involve issuing shares at potentially less than the NYSE American Minimum Price, requiring stockholder approval to avoid further limitations.
• The X3 Proposal, if approved, may result in a change of control of the company under NYSE American Company Guide Section 713(b).
• The X3 Purchase Agreement includes provisions such as preemptive rights, right of first refusal on financing, and weighted average anti-dilution price protection, which could be restrictive for the company's future financing activities.
• The X3 Purchase Agreement requires X3's consent for certain equity issuances until the annual meeting.

Future Outlook

The company's future outlook is focused on regaining compliance with NYSE American listing standards through a reverse stock split and securing additional capital. The proposed increase in authorized shares and various equity financing transactions (Series AA conversion, ELOC, X3) are intended to provide the necessary financial flexibility for growth, potential acquisitions, and employee incentives. The company aims to improve its marketability and liquidity, although there is no assurance that the reverse stock split will result in a sustained price increase.

Management Comments

• The Board of Directors strongly believes that the Reverse Stock Split is necessary to maintain our listing on the NYSE American.
• The Board believes that the increased market price of our Common Stock expected as a result of implementing a Reverse Stock Split could improve the marketability and liquidity of our Common Stock and encourage interest and trading in our Common Stock.
• We believe that having the additional authorized shares available to the Company for issuance, upon approval of the Board, will be beneficial to us and our stockholders by allowing us to promptly consider and respond to future business opportunities as they arise, including in relation to acquisition opportunities, which are competitive and time-sensitive.

Industry Context

The company's need for a reverse stock split and multiple equity financing proposals reflects challenges common to smaller, publicly traded companies in maintaining exchange listing standards and securing growth capital. The fashion and apparel industry is competitive, and the pursuit of an Equity Line of Credit and strategic investments from funds like X3 Higher Moment Fund LLC indicates a strong need for cash infusion to support operations, expansion, and potentially M&A activities in a dynamic market.

Comparison to Industry Standards

• N/A. The filing primarily focuses on corporate governance, compliance, and financing proposals, rather than operational or financial performance metrics that would allow for direct comparison to industry benchmarks or specific comparable companies.

Management Changes

Corporate Governance

Legal Proceedings

• To the best of our knowledge, none of the directors or executive officers have been involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K during the past ten years.

Related Party Transactions

• Max Gottschalk (Chairman) receives consulting fees of £12,000 per month (since December 2022) from PMA, a subsidiary. Total fees were $185,703 for FY2025 and $181,000 for FY2024.
• Max Gottschalk provided a $4,000 personal guarantee for the company's trade finance facility without receiving consideration.
• In March 2025, the company issued 344,797 shares of Series AA Preferred Stock at $5.8005 per share for gross proceeds of $2,000,000 to a company controlled by Max Gottschalk.
• In May 2025, the company entered into a $500,000 promissory note with an entity controlled by Max Gottschalk. This note, including $8,000 in accrued interest, was extinguished in June 2025 by issuing 1,692,694 shares of common stock at $0.30 per share to the same entity.

Stakeholder Impact

• Shareholders face significant potential dilution from the proposed Series AA Preferred Stock conversion, Equity Line of Credit, and X3 financing proposals.
• Shareholders will experience a reduction in the number of shares held due to the reverse stock split, which may also lead to higher transaction costs for odd lots.
• The reverse stock split and capital raises are intended to maintain the company's NYSE American listing, which benefits all shareholders by preserving market access and liquidity.
• Employees and consultants benefit from the 2021 Equity Incentive Plan, which provides equity-based compensation, and new executive appointments may bring fresh leadership.
• Creditors and new investors (Mast Hill, L.P. and X3 Higher Moment Fund LLC) are providing crucial capital, but their agreements include terms that could impact existing equity holders.

Next Steps

• Stockholders will vote on the proposed amendments and transactions at the Annual Meeting on January 14, 2026.
• If approved, the Board will determine the final ratio for the reverse stock split and effect it no later than June 11, 2026.
• If approved, the Certificate of Amendment for the Series AA Preferred Stock conversion will be filed promptly after the annual meeting.
• If approved, the company will proceed with utilizing the Equity Line of Credit and the X3 financing mechanisms.
• The company will file a Current Report on Form 8-K to announce the preliminary and final voting results within four business days following the Annual Meeting.
• The company must provide quarterly updates to NYSE Regulation staff regarding its plan to regain compliance with listing standards.
• If stockholder approval for Proposal Six (X3 Proposal) is not obtained at the Annual Meeting, the company will hold additional stockholder meetings quarterly thereafter until approval is secured.

Key Dates

Recommendation

The company is facing severe challenges, including non-compliance with NYSE American listing standards, necessitating a reverse stock split. This action, while aimed at compliance, often signals underlying issues and can lead to further stock price volatility and reduced liquidity. The multiple proposed capital raises (Series AA conversion, ELOC, X3) are highly dilutive, with shares being issued at significantly reduced prices (e.g., $0.30 for note extinguishment, $0.46822 for X3 and new Series AA conversion price). This indicates a distressed need for capital and a substantial erosion of value for existing shareholders. The recent management turnover and related party transactions, while disclosed, add to the risk profile. Given the substantial dilution, precarious financial position, and the inherent risks of a reverse stock split, a seasoned investor would likely recommend selling to avoid further potential losses.

Keywords

Perfect Moment Ltd., Proxy Statement, Reverse Stock Split, NYSE American Listing, Authorized Shares Increase, Equity Line of Credit, ELOC, Series AA Preferred Stock, Convertible Preferred Stock, Warrants, X3 Higher Moment Fund, Capital Raise, Dilution, Corporate Governance, Director Election, Executive Compensation, Related Party Transactions, Fashion, Apparel