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Perfect Corp.

Perfect Corp.PERF決算レポート

NYSE · 情報技術 · サービス-オフィス用ソフトウェア

Perfect World Co., Ltd. is a Chinese mass media company based in Beijing. It was founded in 2004 by Chi Yufeng. The company consists of two business segments: Perfect World Games, a video game publisher, and Perfect World Pictures, a film production company.

What changed in Perfect Corp.'s 20-F — 2022 vs 2023

Top changes in Perfect Corp.'s 2023 20-F

720 paragraphs added · 626 removed · 472 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

169 edited+102 added−61 removed294 unchanged
Our global addressable market is mainly driven by the growth in the beauty market and the expected marketing and AR- and AI-spending by beauty brands, which depend on a number of factors, including overall consumer awareness about beauty products and services, brands’ deployment of digital marketing to create meaningful customer interaction and engagement, brands’ investment in omni-channels to build relationships with their customers, budgetary constraints of brands, regulatory changes and changes in broader economic conditions.
Our global addressable market is mainly driven by the growth in the beauty market and the expected marketing and AI- and AR- spending by beauty brands, which depend on a number of factors, including overall consumer awareness about beauty products and services, brands’ deployment of digital marketing to create meaningful customer interaction and engagement, brands’ investment in omni-channels to build relationships with their customers, budgetary constraints of brands, regulatory changes and changes in broader economic conditions.
A number of factors could negatively affect the growth of brand portfolio and level of consumer engagement, including that: ● we may be not be able to continue to offer products and services that meet evolving consumer preferences and demands; ● our competitors may launch or develop products and services similar to ours or with better consumer experience, and consumers may increasingly engage with such competing products or services and less with our products and services; ● we may not be able to timely develop and introduce new or enhanced products and services that respond to market trends or advances, or the new or enhanced products and services that we introduce may not reach wide market acceptance or popularity; ● we may fail to provide adequate customer service to brands and consumers or maintain existing relationships with brands; ● we may fail to address consumer concerns related to privacy and information-sharing, safety or security; ● we may encounter technical or other problems that prevent us from delivering our products and services in a rapid and reliable manner or otherwise negatively affect the consumer experience; or ● we may fail to maintain our brand image or our reputation may be damaged.
A number of factors could negatively affect the growth of brand portfolio and level of consumer engagement, including that: • we may not be able to continue to offer products and services that meet evolving consumer preferences and demands; • our competitors may launch or develop products and services similar to ours or with better consumer experience, and consumers may increasingly engage with such competing products or services and less with our products and services; • we may not be able to timely develop and introduce new or enhanced products and services that respond to market trends or advances, or the new or enhanced products and services that we introduce may not reach wide market acceptance or popularity; • we may fail to provide adequate customer service to brands and consumers or maintain existing relationships with brands; • we may fail to address consumer concerns related to privacy and information-sharing, safety or security; • we may encounter technical or other problems that prevent us from delivering our products and services in a rapid and reliable manner or otherwise negatively affect the consumer experience; or • we may fail to maintain our brand image or our reputation may be damaged.
Our current and potential competitors may also develop and market new technologies and products that render our existing or future products less competitive, unmarketable or obsolete. For example, the mobile device manufacturers may enhance the built-in camera apps in their smartphones with AR- and AI-technologies providing similar functionality of our mobile apps, which may render our YouCam apps redundant.
Our current and potential competitors may also develop and market new technologies and products that render our existing or future products less competitive, unmarketable or obsolete. For example, the mobile device manufacturers may enhance the built-in camera apps in their smartphones with AI- and AR- technologies providing similar functionality of our mobile apps, which may render our YouCam apps redundant.
Similarly, brands may develop their own AR- and AI-beauty technology solutions in-house.
Similarly, brands may develop their own AI- and AR- beauty technology solutions in-house.
The PDPA applies in principle to all of the data collection and processing activities taking place in Taiwan without regard to whether the data subjects are Taiwanese nationals or not.
The PDPA applies in principle to all of data collection and processing activities taking place in Taiwan without regard to whether the data subjects are Taiwanese nationals or not.
Pursuant to the PDPA, violating PDPA with an intent to make unlawful profit for oneself or a third party or with an intent to damage the interest of another may lead to criminal penalties.
Pursuant to the PDPA, violating the PDPA with an intent to make unlawful profit for oneself or a third party or with an intent to damage the interest of another may lead to criminal penalties.
Our Articles provide that, unless we consent in writing to the selection of an alternative forum, the United States District Court for the Southern District of New York shall be the exclusive forum (or, if such court lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the Securities Act or the Securities Exchange Act, as amended, regardless of whether such legal suit, action, or proceeding also involves parties other than us.
Our Articles provide that, unless we consent in writing to the selection of an alternative forum, the United States District Court for the Southern District of New York shall be the exclusive forum (or, if such court lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the Securities Act or the Exchange Act, as amended, regardless of whether such legal suit, action, or proceeding also involves parties other than us.
In particular, we expect to encounter inherent risks and challenges in the developing and rapidly evolving beauty technologies and fashion tech markets, which include our ability to, among other things: ● grow our brand portfolio and enhance level of consumer engagement with brands; ● develop or implement additional strategic initiatives to further increase monetization of our products and services; ● successfully expand our business operations and enhance the value of our brand globally; ● develop and launch diversified and distinguishable products and premium features to effectively address the needs of brands; ● maintain and strengthen our competitive edge on our key technologies, including our AgileFace® face-rendering technology, true-to-life AR technology, AI technology and machine-learning capabilities and big-data analytics; ● maintain a reliable, secure, high-performance and scalable technology infrastructure that can efficiently handle increased usage; ● develop and maintain relationships with brands, digital distribution platforms and other third parties; ● successfully compete with other companies that are currently in, or may in the future enter, the markets that we operate in, or duplicate the features of our products; ● maintain our innovative company culture and continue to attract, retain and motivate talented employees; and ● defend ourselves against litigation, regulatory interference, claims concerning intellectual property or privacy or other aspects of our business.
In particular, we expect to encounter inherent risks and challenges in the developing and rapidly evolving beauty technologies, skin tech and fashion tech markets, which include our ability to, among other things: • grow our brand portfolio and enhance level of consumer engagement with brands; • develop or implement additional strategic initiatives to further increase monetization of our products and services; • successfully expand our business operations and enhance the value of our brand globally; • develop and launch diversified and distinguishable products and premium features to effectively address the needs of brands; • maintain and strengthen our competitive edge on our key technologies, including our AR face-rendering technology, true-to-life AR technology, AI technology and machine-learning capabilities and big-data analytics; • maintain a reliable, secure, high-performance and scalable technology infrastructure that can efficiently handle increased usage; • develop and maintain relationships with brands, digital distribution platforms and other third parties; • successfully compete with other companies that are currently in, or may in the future enter, the markets that we operate in, or duplicate the features of our products; • maintain our innovative company culture and continue to attract, retain and motivate talented employees; and • defend ourselves against litigation, regulatory interference, claims concerning intellectual property or privacy or other aspects of our business.
The cybersecurity review may be initiated by competent authorities where risks to national security are found, such as risks of Core Data, Important Data (both of which are defined in the Cybersecurity Review measures) and the large scale of personal information being stolen, leaked, damaged, illegally utilized, transferred outside the territory of PRC.
In addition, the cybersecurity review may be initiated by competent authorities where risks to national security are found, such as risks of Core Data, Important Data (both of which are defined in the Cybersecurity Review measures) and the large scale of personal information being stolen, leaked, damaged, illegally utilized, transferred outside the territory of PRC.
We launched our AR Makeup solution in 2015 and have offered other solutions and products over the recent years. We are still in the process of expanding into the fashion tech market. Our limited operating history makes it difficult to effectively assess our future prospects or forecast our future results.
We launched our AR Makeup solution in 2015 and have offered other solutions and products over the recent years. We are still in the process of expanding into the skin tech and fashion tech market. Our limited operating history makes it difficult to effectively assess our future prospects or forecast our future results.
Since commencement of trading on October 31, 2022, the price of our Class A Ordinary Shares closed above $10.00 on certain days; however, the short track record is not indicative of any future price of our Class A Ordinary Shares. Any such redemption may have similar consequences to a redemption described above.
Since commencement of trading on October 31, 2022, the price of our Class A Ordinary Shares closed above $10.00 on certain days; however, the track record is not indicative of any future price of our Class A Ordinary Shares. Any such redemption may have similar consequences to a redemption described above.
Our success is dependent on the continued popularity and perceived precision of our technology solutions. Our success depends on our ability to continuously offer quality products that are attractive to brands and users of our mobile apps and our ability to effectively respond to changes in overall consumer demographics, tastes and preferences.
Our success is dependent on the continued popularity and perceived quality of our technology solutions. Our success depends on our ability to continuously offer quality products that are attractive to brands and users of our mobile apps and our ability to effectively respond to changes in overall consumer demographics, tastes and preferences.
Factors that could cause fluctuations in the trading price of Class A Ordinary Shares include the following: ● actual or anticipated fluctuations in our financial condition or results of operations; ● variance in our financial performance from expectations of securities analysts; ● changes in the pricing of our solutions; ● changes in laws or regulations applicable to our platform; ● announcements by us or our competitors of significant business developments, acquisitions or new offerings; ● significant data breaches, disruptions to or other incidents involving our platform; ● our involvement in litigation; ● conditions or developments affecting the SaaS industry; ● future sales of Class A Ordinary Shares by us or our shareholders, as well as the anticipation of lock-up releases; ● changes in senior management or key personnel; ● the trading volume of our securities; 26 Table of Contents ● changes in the anticipated future size and growth rate of our markets; ● publication of research reports or news stories about us, our competitors or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts; ● general economic and market conditions; and ● other events or factors, including those resulting from war, incidents of terrorism, global pandemics or responses to these events.
Factors that could cause fluctuations in the trading price of Class A Ordinary Shares include the following: • actual or anticipated fluctuations in our financial condition or results of operations; • variance in our financial performance from expectations of securities analysts; • changes in the pricing of our solutions; • changes in laws or regulations applicable to our platform; • announcements by us or our competitors of significant business developments, acquisitions or new offerings; • significant data breaches, disruptions to or other incidents involving our platform; • our involvement in litigation; • conditions or developments affecting the SaaS industry; • future sales of Class A Ordinary Shares by us or our shareholders, as well as the anticipation of lock-up releases; • changes in senior management or key personnel; • the trading volume of our securities; • changes in the anticipated future size and growth rate of our markets; • publication of research reports or news stories about us, our competitors or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts; • general economic and market conditions; and • other events or factors, including those resulting from war, incidents of terrorism, global pandemics or responses to these events.
As the number of brands, users of our mobile apps and transactions and the amount of data that our infrastructure supports continue to grow, we will need to improve our operational, financial and management controls as well as our reporting systems and procedures.
As the number of cumulative brands, users of our mobile apps and transactions and the amount of data that our infrastructure supports continue to grow, we will need to improve our operational, financial and management controls as well as our reporting systems and procedures.
The process of integrating an acquired company, business, or technology or acquired personnel into our Company, as well as the performance of an acquired company, business, or technology or acquired personnel, are subject to various risks and challenges, including: ● diverting management time and focus from operating our business; ● disrupting our ongoing business operations; ● customer acceptance of the acquired company’s offerings; ● implementing or remediating the controls, procedures, and policies of the acquired company; ● integrating the acquired business onto our systems and ensuring the acquired business meets our financial reporting requirements and timelines; ● retaining and integrating acquired employees, including aligning incentives between acquired employees and existing employees, as well as managing costs associated with eliminating redundancies or transferring employees on acceptable terms with minimal business disruption; ● maintaining important business relationships and contracts of the acquired business; ● liability for pre-acquisition activities of the acquired company; ● litigation or other claims or liabilities arising in connection with the acquired company; ● impairment charges associated with goodwill, investments, and other acquired intangible assets; and ● other unforeseen operating difficulties and expenditures.
The process of integrating an 11 Table of Contents acquired company, business, or technology or acquired personnel into our Company, as well as the performance of an acquired company, business, or technology or acquired personnel, are subject to various risks and challenges, including: • diverting management time and focus from operating our business; • disrupting our ongoing business operations; • customer acceptance of the acquired company’s offerings; • implementing or remediating the controls, procedures, and policies of the acquired company; • integrating the acquired business onto our systems and ensuring the acquired business meets our financial reporting requirements and timelines; • retaining and integrating acquired employees, including aligning incentives between acquired employees and existing employees, as well as managing costs associated with eliminating redundancies or transferring employees on acceptable terms with minimal business disruption; • maintaining important business relationships and contracts of the acquired business; • liability for pre-acquisition activities of the acquired company; • litigation or other claims or liabilities arising in connection with the acquired company; • impairment charges associated with goodwill, investments, and other acquired intangible assets; and • other unforeseen operating difficulties and expenditures.
In addition, the interpretation and application of consumer and data protection laws in such jurisdictions are often uncertain, complicated and subject to change, including differentiated requirements for different groups of people or different types of data.
In addition, the interpretation and application of consumer privacy and data protection laws in such jurisdictions are often uncertain, complicated and subject to change, including differentiated requirements for different groups of people or different types of data.
However, we cannot guarantee that our efforts to expand sales to our existing brands in our portfolio will be successful or that such brands will renew their subscriptions with us for a similar or greater contract period or on the same or more favorable terms. 2 Table of Contents Our business performance has been and will continue to be significantly dependent on our ability to increase the level of consumer engagement with both brands and our mobile apps.
However, we cannot guarantee that our efforts to expand sales to our existing brands in our portfolio will be successful or that such brands will renew their subscriptions with us for a similar or greater contract period or on the same or more favorable terms. 9 Table of Contents Our business performance has been and will continue to be significantly dependent on our ability to increase the level of consumer engagement with both brands and our mobile apps.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including: ● the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; ● the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and ● the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified significant event.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including: • the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; • the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and 36 Table of Contents • the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified significant event.
The popularity of photo-editing software has been fueled by the rise of the selfie culture, the popularity of social media and the increasing user adoption of smartphones and availability of high-definition cameras in smartphones.
The popularity of photo and video editing software has been fueled by the rise of the selfie culture, the popularity of social media and the increasing user adoption of smartphones and availability of high-definition cameras in smartphones.
Given our limited operating history and the rapidly evolving nature of AR- and AI-beauty technologies and fashion tech markets, we may not be able to accomplish any of our objectives. In addition, our historical rapid growth has placed and may continue to place significant demands on our management and our operational and financial resources.
Given our limited operating history and the rapidly evolving nature of AI-and AR- beauty technologies and skin, fashion and jewelry tech markets, we may not be able to accomplish any of our objectives. In addition, our historical rapid growth has placed and may continue to place significant demands on our management and our operational and financial resources.
If the development of the markets stops or slows down, our business will be materially and adversely affected. The AR- and AI-beauty technologies and fashion tech markets are relatively new and rapidly evolving, which subjects our business to uncertainties and challenges relating to the growth and profitability of these markets as a whole.
If the development of the markets stops or slows down, our business will be materially and adversely affected. The AI- and AR- beauty technologies and skin, fashion and jewelry tech markets are relatively new and rapidly evolving, which subjects our business to uncertainties and challenges relating to the growth and profitability of these markets as a whole.
If the demand for photo-editing software slows, if we fail to accurately predict customer demand and preferences for our mobile apps, or if we fail to timely adjust to meet shifting trends in popular culture and technology, our business and operating results will be materially and adversely affected. 1 Table of Contents We have a new business model and a short operating history in developing and rapidly evolving markets for our products and services, which makes it difficult to evaluate our future prospects.
If the demand for photo and video editing software slows, if we fail to accurately predict customer demand and preferences for our mobile apps, or if we fail to timely adjust to meet shifting trends in popular culture and technology, our business and operating results will be materially and adversely affected. 8 Table of Contents We have a new business model and a short operating history in developing and rapidly evolving markets for our products and services, which makes it difficult to evaluate our future prospects.
The Warrant Agreement, as amended by the Assignment, Assumption and Amendment Agreement, provided that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including under the Securities Act, would be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submitted to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim.
The Warrant Agreement, as amended by the Assignment, Assumption and Amendment Agreement, provided that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including under the Securities Act, would be brought and enforced in the courts of the State of New 40 Table of Contents York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submitted to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim.
In response to the COVID-19 pandemic, authorities in jurisdictions where we operate, or in which our partners, customers, or others operate, have put in place quarantines, shelter-in-place orders, physical distancing requirements and similar government orders and restrictions in order to control the spread of the disease.
For example, in response to the COVID-19 pandemic, authorities in jurisdictions where we operate, or in which our partners, customers, or others operate, have put in place quarantines, shelter-in-place orders, physical distancing requirements and similar government orders and restrictions in order to control the spread of the disease.
The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2023.
The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2024.
Our consumer metrics are also affected by technology on certain mobile devices that automatically runs in the background of our mobile apps when another phone function is used, and this activity can cause our system to miscount the consumer metrics associated with such account. Some of our demographic data may be incomplete or inaccurate.
Our consumer metrics are also affected by technology on certain mobile devices that automatically runs in the background of our mobile apps when another phone function is used, and this activity can cause our system to miscount the consumer metrics associated with such account. 16 Table of Contents Some of our demographic data may be incomplete or inaccurate.
We believe that our business brands, including the brands of our mobile apps such as YouCam, have significantly contributed to the success of our business. We also believe that maintaining and enhancing our business brands is critical to expanding our base of users, advertisers and brand partners.
We believe that our business brands, including the brands of our mobile apps such as YouCam, have significantly contributed to the success of our business. We also believe that maintaining and enhancing our business brands is critical to expanding our base of mobile users, brand partners and retailers.
As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. 28 Table of Contents We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our ordinary shares.
As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our ordinary shares.
Further, for Regulated Transactions involving New Taiwan Dollar equivalent to over USD 1 million, relevant documents shall be verified by banks before such transactions can be processed. In addition, if annual accumulated settlement amount of Regulated Transactions exceeds USD 50 million, such foreign exchange settlement is subject to the approval of the Central Bank of Taiwan.
Further, for Regulated Transactions involving New Taiwan Dollar equivalent to over USD 1 million, relevant documents shall be verified by banks before such transactions can be processed. In addition, if annual accumulated settlement amount of Regulated Transactions exceeds USD 50 million, such foreign exchange settlement is subject to the 31 Table of Contents approval of the Central Bank of Taiwan.
If our remediation of these material weaknesses is not effective, or if we experience additional material weaknesses or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to report our financial results accurately, prevent fraud or file our periodic reports as a public company in a timely manner.
If our remediation of these material weaknesses is not effective, or if we experience additional material weaknesses or otherwise fail to maintain an 37 Table of Contents effective system of internal controls in the future, we may not be able to report our financial results accurately, prevent fraud or file our periodic reports as a public company in a timely manner.
In addition, the introduction of new products and services, or changes to existing products and services, may result in new or enhanced governmental or regulatory scrutiny, litigation or other complications that could adversely affect our reputation, business and operating results. 7 Table of Contents We also aim to continuously create new premium features and content, and innovate and improve on our existing products.
In addition, the introduction of new products and services, or changes to existing products and services, may result in new or enhanced governmental or regulatory scrutiny, litigation or other complications that could adversely affect our reputation, business and operating results. We also aim to continuously create new premium features and content, and innovate and improve on our existing products.
We may experience service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, hardware failure, capacity constraints due to an overwhelming number of people accessing our products and services simultaneously, computer viruses, denial of service or fraud or security attacks.
We may experience service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software 20 Table of Contents errors, hardware failure, capacity constraints due to an overwhelming number of people accessing our products and services simultaneously, computer viruses, denial of service or fraud or security attacks.
The introduction of new technologies and the influx of new entrants into the markets may intensify competition in the future, which could harm our business and our ability to increase revenues, increase or maintain brand portfolio and consumer base and maintain our prices. Our current operations are international in scope, and we plan to further expand globally.
The introduction of new technologies and the influx of new entrants into the markets may intensify competition in the future, which could harm our business and our ability to increase revenues, increase or maintain brand portfolio and consumer base and maintain our prices. 12 Table of Contents Our current operations are international in scope, and we plan to further expand globally.
Any incidents where our consumers’ information is accessed without authorization, or is improperly used, or incidents that violate our terms of service or policies, could damage our reputation and our brand image and diminish our competitive position. We are subject to data privacy and protection laws and regulations adopted by governmental agencies.
Any incidents where our consumers’ information is accessed without authorization, or is improperly used, or incidents that 19 Table of Contents violate our terms of service or policies, could damage our reputation and our brand image and diminish our competitive position. We are subject to data privacy and protection laws and regulations adopted by governmental agencies.
We expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”) and the other rules and regulations of the SEC and the NYSE. We recognize revenue from SaaS subscriptions to our products over the terms of these subscriptions.
We expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”) and the other rules and regulations of the SEC and the NYSE. 25 Table of Contents We recognize revenue from SaaS subscriptions to our products over the terms of these subscriptions.
If we do not maintain a current and effective prospectus relating to the Class A Ordinary Shares issuable upon exercise of the Perfect Public Warrants as part of the Transactions, at the time that holders wish to exercise such Perfect Public Warrants, they will only be able to exercise them on a “cashless basis”.
If we do not maintain a current and effective prospectus relating to the Class A Ordinary Shares issuable upon exercise of the Perfect Public Warrants as part of the Transactions, at the time that holders wish to exercise such Perfect 41 Table of Contents Public Warrants, they will only be able to exercise them on a “cashless basis”.
Our financial results in any given period can be influenced by numerous factors occurring in a particular period, many of which we are unable to predict or are outside of our control, including: ● development and introduction of new products or services by us or our competitors and the market reaction to such new products or services; ● our ability to renew our subscriptions with, and expand sales of our products and solutions to, our existing brand in our portfolio; ● ability of our data service providers to scale effectively and timely to provide the necessary technical infrastructure to offer our services; ● growth and diversification of our revenue sources; 18 Table of Contents ● increases in marketing, sales and other operating expenses that we may incur to grow and expand our operations and to remain competitive; ● changes in budgets of brands and retailers and in the timing of their budget cycles and purchasing decisions, including cost-cutting measures or other effects of the COVID-19 pandemic; ● seasonal fluctuations in spending by brands.
Our financial results in any given period can be influenced by numerous factors occurring in a particular period, many of which we are unable to predict or are outside of our control, including: • development and introduction of new products or services by us or our competitors and the market reaction to such new products or services; • our ability to renew our subscriptions with, and expand sales of our products and solutions to, our existing brand in our portfolio; • ability of our data service providers to scale effectively and timely to provide the necessary technical infrastructure to offer our services; • growth and diversification of our revenue sources; • increases in marketing, sales and other operating expenses that we may incur to grow and expand our operations and to remain competitive; • changes in budgets of brands and retailers and in the timing of their budget cycles and purchasing decisions, including cost-cutting measures; • seasonal fluctuations in spending by brands.
Changes in subjective assumptions, estimates and judgments by our management related to complex accounting matters or changes in the IFRS could significantly affect our financial condition and results of operations.
Changes in subjective assumptions, estimates and judgments by our management related to complex accounting matters or changes in the IFRS may significantly affect our financial condition and results of operations.
We cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to these material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses.
Controls and Procedures — Internal Control over Financial Reporting.” We cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to these material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses.
Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely manner or at all) that may have an adverse impact on our business operations.
Furthermore, the PRC legal system is based in part on 32 Table of Contents government policies and internal rules (some of which are not published in a timely manner or at all) that may have an adverse impact on our business operations.
Our business depends on attracting and retaining high-quality personnel, and failure to attract or maintain such personnel could adversely affect our business. Our future success depends on our ability to continue to attract, retain and motivate highly skilled employees, especially talent in artificial intelligence, machine learning and advanced algorithms.
Our business depends on attracting and retaining high-quality personnel, and failure to attract or maintain such personnel could adversely affect our business. Our future success depends on our ability to continue to attract, retain and motivate highly skilled employees, especially talent in AI, machine learning and advanced algorithms.
Competition for highly skilled personnel in our industry is intense, in particular in the fields of artificial intelligence and data science, and we expect some of our competitors or other participants in the technology industry with access to more substantial resources to pursue top talent aggressively.
Competition for highly skilled personnel in our industry is intense, in particular in the fields of AI and data science, and we expect some of our competitors or other participants in the technology industry with access to more substantial resources to pursue top talent aggressively.
If we inappropriately use or incorporate open source software subject to certain types of open source licenses that challenge the proprietary nature of our software products, we may be required to re-engineer our products, discontinue the sale of our products and solutions or take other remedial actions.
If we inappropriately use or incorporate open source software 22 Table of Contents subject to certain types of open source licenses that challenge the proprietary nature of our software products, we may be required to re-engineer our products, discontinue the sale of our products and solutions or take other remedial actions.
As a result of all of the above, you may not have the same protections afforded to shareholders of a company that is not a foreign private issuer. 29 Table of Contents We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
As a result of all of the above, you may not have the same protections afforded to shareholders of a company that is not a foreign private issuer. We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
If we fail to adequately address any of the challenges and manage our growth effectively, our overall business performance and our business may be seriously harmed. 4 Table of Contents Any businesses we will invest in or acquire may not perform as expected or be successfully integrated.
If we fail to adequately address any of the challenges and manage our growth effectively, our overall business performance and our business may be seriously harmed. Any businesses we will invest in or acquire may not perform as expected or be successfully integrated.
We intend to continue to implement our data and machine-learning strategy to enhance our platform and provide a wider range of products and services with higher precision and even higher true-to-life accuracy, as well as further personalization and individualized recommendations for our consumers.
We intend to continue to implement our data and AI strategy to enhance our platform and provide a wider range of products and services with higher precision and even higher true-to-life accuracy, as well as further personalization and individualized recommendations for our consumers.
New laws and regulations governing new areas of data protection or imposing more stringent requirements may be introduced in various jurisdictions, including the United States, the European Union, the United Kingdom and the PRC, in which we conduct business or where we may expand.
New laws and regulations governing data protection or those imposing more stringent requirements may be introduced in various jurisdictions, including the United States, the European Union, the United Kingdom and the PRC, in which we conduct business or where we may expand.
Such lengthy sales cycle for the evaluation and implementation of our solutions, in particular for highly customized applications, may cause a delay between increasing operating expenses for such sales efforts and generation of corresponding revenue upon successful sales.
Such lengthy sales cycle for the evaluation and implementation of our solutions, in particular for highly customized applications, may cause a delay between increasing operating expenses for such sales 13 Table of Contents efforts and generation of corresponding revenue upon successful sales.
To the extent the warrants are exercised, additional Class A Ordinary Shares will be issued, which will result in dilution to our shareholders and increase the number of Class A Ordinary Shares eligible for resale in the public market.
To the extent the warrants are exercised, additional Class A Ordinary Shares will be issued, which will result in dilution to our 39 Table of Contents shareholders and increase the number of Class A Ordinary Shares eligible for resale in the public market.
In addition, if the U.S. dollar appreciates significantly versus other major currencies, the demand for the products and services of our customers and for our goods and services will likely decrease, which will negatively affect our revenue.
In addition, if the U.S. dollar appreciates significantly versus other 42 Table of Contents major currencies, the demand for the products and services of our customers and for our goods and services will likely decrease, which will negatively affect our revenue.
Our business partners primarily comprise top global beauty brands. In 2020, 2021 and 2022, our five largest business partners in aggregate contributed approximately 40%, 32% and 28% of our revenues, respectively. We expect that a limited number of our business partners will continue to contribute a significant portion of our revenues in the near future.
Our business partners primarily comprise top global beauty brands. In 2021, 2022 and 2023, our five largest business partners in aggregate contributed approximately 32%, 28% and 21% of our revenues, respectively. We expect that a limited number of our business partners will continue to contribute a significant portion of our revenues in the near future.
The collection, process, and use of personal data in Taiwan is primarily subject to the Personal Data Protection Act (the “PDPA”) and the Enforcement Rules as well as other applicable rulings or regulations issued by the relevant competent authorities, in particular the sectoral rules on the security maintenance plans stipulated by the regulator of different industries.
The collection, process, and use of personal data in Taiwan is primarily subject to the PDPA and the enforcement rules of the PDPA as well as other applicable rulings or regulations issued by the relevant competent authorities, in particular the sectoral rules on the security maintenance plans stipulated by the regulator of different industries.
In addition, the trading price of Class A Ordinary Shares is likely to be volatile and could be subject to fluctuations in response to various factors, some of which are beyond our control.
In addition, the trading 33 Table of Contents price of Class A Ordinary Shares is likely to be volatile and could be subject to fluctuations in response to various factors, some of which are beyond our control.
Historically, the fourth quarter has typically been the quarter with the largest bookings from brands and retailers, which impacts revenue, unbilled revenue, deferred revenue, accounts receivable and amortized commissions in future periods; ● system failures or breaches of security or privacy of our system; ● amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments and other non-cash charges; ● impact of new accounting pronouncements; ● unforeseen contingencies, such as adverse litigation judgments, settlements or other litigation-related costs; ● fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies; ● changes in laws and regulations that affect our business; and ● changes in business or macroeconomic conditions, including the impact of the COVID-19 pandemic, inflationary pressures and increases in interest rates, and global conflicts, including the Russia-Ukraine war.
Historically, the fourth quarter has typically been the quarter with the largest bookings from brands and retailers, which impacts revenue, unbilled revenue, deferred revenue, accounts receivable and amortized commissions in future periods; • system failures or breaches of security or privacy of our system; • amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments and other non-cash charges; • impact of new accounting pronouncements; • unforeseen contingencies, such as adverse litigation judgments, settlements or other litigation-related costs; 26 Table of Contents • fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies; • changes in laws and regulations that affect our business; and • changes in business or macroeconomic conditions, including the impact of inflationary pressures and increases in interest rates, and global conflicts.
We expect to face particular challenges in global expansion and operations including: ● increased costs associated with developing solutions and products and providing support in different languages; ● increased costs in marketing and advertising to promote our products effectively in different markets; ● localizing our products, services, content and features to ensure that they are culturally attuned to the different markets; ● increased competition from competitors that have strong positions in particular markets; ● increased costs associated with recruiting and retaining talented and capable employees in foreign countries and maintaining our Company culture across all of our offices; ● greater difficulty in receiving payments from different geographies, including difficulties associated with exchange rate fluctuations, transfer of funds, longer cycles for payment and collecting accounts receivable, especially in emerging markets; ● compliance with applicable foreign laws and regulations, including laws and regulations with respect to economic sanctions and export controls, anti-corruption, anti-bribery and anti-kickback, data privacy, cybersecurity and consumer protection that may conflict with local customs and practices in some jurisdictions in which we operate, and the risk of penalties if our practices are deemed not to be in compliance; ● more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information, particularly in Europe and other jurisdictions; ● limited or insufficient intellectual property protection or difficulties enforcing our rights to intellectual property; ● political, social and economic instability in some countries; ● exposure to different tax jurisdictions and potential adverse tax consequences; and 6 Table of Contents ● related stay-at-home, business closure, and other restrictive orders and travel restrictions associated with the COVID-19 pandemic.
We expect to face particular challenges in global expansion and operations including: • increased costs associated with developing solutions and products and providing support in different languages; • increased costs in marketing and advertising to promote our products effectively in different markets; • localizing our products, services, content and features to ensure that they are culturally attuned to the different markets; • increased competition from competitors that have strong positions in particular markets; • increased costs associated with recruiting and retaining talented and capable employees in foreign countries and maintaining our Company culture across all of our offices; • greater difficulty in receiving payments from different geographies, including difficulties associated with exchange rate fluctuations, transfer of funds, longer cycles for payment and collecting accounts receivable, especially in emerging markets; • compliance with applicable foreign laws and regulations, including laws and regulations with respect to economic sanctions and export controls, anti-corruption, anti-bribery and anti-kickback, data privacy, cybersecurity and consumer protection that may conflict with local customs and practices in some jurisdictions in which we operate, and the risk of penalties if our practices are deemed not to be in compliance; • more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information, particularly in Europe and other jurisdictions; • limited or insufficient intellectual property protection or difficulties enforcing our rights to intellectual property; • political, social and economic instability in some countries; and • exposure to different tax jurisdictions and potential adverse tax consequences.
Little legal precedent governs the interpretation of these licenses; therefore, the potential impact of these terms on our business is unknown and may result in unanticipated obligations regarding our technologies.
Very few legal precedent governs the interpretation of these licenses; therefore, the potential impact of these terms on our business is unknown and may result in unanticipated obligations regarding our technologies.
By exercising their registration rights and selling a large number of our Class A Ordinary Shares, these shareholders could cause the prevailing market price of our Class A Ordinary Shares to decline.
By exercising their registration rights and selling a large number of our Class A 34 Table of Contents Ordinary Shares, these shareholders could cause the prevailing market price of our Class A Ordinary Shares to decline.
Violations of data protection laws may lead to administrative penalties, including warnings, orders for rectification, suspension or termination of related businesses issued by competent authorities, revocation of business permits or licenses, or monetary fines (of up to 50 million RMB or 5% of annual turnover); civil liabilities including compensation for infringement upon legitimate rights and interests of individuals and public interests litigation by the People’s Procuratorate depending on the severity and impact of the case; and even criminal liabilities in more severe cases.
Violations of data protection laws may lead to administrative penalties, including warnings, orders for rectification, suspension or termination of related businesses issued by competent authorities, revocation of business permits or licenses, or monetary fines; civil liabilities including compensation for infringement upon legitimate rights and interests of individuals and public interests litigation by the People’s Procuratorate depending on the severity and impact of the case; and even criminal liabilities in more severe cases.
We may in the future elect to follow home country practices with regard to other matters. As a result, you may not be provided with the benefits of certain corporate governance requirements of the NYSE applicable to U.S. domestic public companies. See “Item 6. Directors, Senior Management and Employees”.
We may in the future elect to follow home country practices with regard to other matters. As a result, you may not be provided with the benefits of certain corporate governance requirements of the NYSE applicable to U.S. domestic public companies. See “Item 6.
If we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404.
If we fail to maintain the adequacy of our internal control over financial reporting in accordance with the COSO Criteria, as may be modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404.
In particular, we believe that the growth of our revenue depends on a number of factors, in particular our ability to: ● deepen our penetration into the top 20 beauty groups; ● expand our reach among the indie beauty brands; ● expand our product portfolio coverage to new industries, such as fashion and clothing; ● enhance data and machine learning technologies to advance our platform; and ● pursue strategic alliances, investments and acquisition opportunities across categories and geographies.
In particular, we believe that the growth of our revenue depends on a number of factors, in particular our ability to: • deepen our penetration into the top 20 beauty groups; • expand our reach among the indie beauty brands; • expand our product portfolio coverage to new industries, such as fashion, skincare, jewelry and clothing; • enhance data and AI model development technologies to advance our platform; and • pursue strategic alliances, investments and acquisition opportunities across categories and geographies.
Data privacy laws restrict our storage, use, processing, disclosure, transfer and protection of non-public personal information provided to us by our consumers. Violating existing or future regulatory orders or consent decrees could subject us to substantial monetary fines and other penalties that could seriously harm our business.
Data privacy laws restrict our storage, use, processing, disclosure, transfer and protection of non-public personal information provided to us by our consumers. Violating existing or future laws or regulations could subject us to substantial monetary fines and other penalties that could seriously harm our business.
We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
Directors, Senior Management and Employees.” We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
Risks Related to Our Technology, Data Privacy and Intellectual Property Security breaches, improper access to or disclosure of our data or consumer data, other hacking and phishing attacks on our systems, or other cyberattacks may cause our products and solutions to be perceived as not being secure, which could harm our reputation and adversely affect our business.
Security breaches, improper access to or disclosure of our data or consumer data, other hacking and phishing attacks on our systems, or other cyberattacks may cause our products and solutions to be perceived as not being secure, which could harm our reputation and adversely affect our business.
In addition, we also currently rely on third-party mobile apps distribution channels such as iOS App Store to distribute most of our mobile apps to users.
In addition, we also currently rely on third-party mobile apps distribution channels such as iOS App Store and Android Google Play to distribute most of our mobile apps to users.
Even though our revenues have grown over the years, from $29.9 million in 2020 to $40.8 million in 2021, and to $47.3 million in 2022, our revenue growth rate has slowed in recent years and may do so in the future due to a variety of factors.
Even though our revenues have grown over the years, from $40.8 million in 2021 to $47.3 million in 2022, and to $53.5 million in 2023, our revenue growth rate has slowed in recent years and may do so in the future due to a variety of factors.
If we fail to meet the challenges presented by our increasingly globalized operations, our business may be materially and adversely affected. Our business operations are international in scope, with approximately 51% of our revenue coming from the United States in North America, 10% coming from Japan in Asia, and 7% coming from France in Europe in 2022.
If we fail to meet the challenges presented by our increasingly globalized operations, our business may be materially and adversely affected. Our business operations are international in scope, with approximately 46.7% of our revenue coming from the United States in North America, 8.0% coming from Japan in Asia, and 7.8% coming from France in Europe in 2023.
This concentrated control will limit or preclude your ability to influence corporate matters for the foreseeable future and could discourage others from pursuing change of control transactions that our shareholders may view as beneficial.
Compensation — Share Incentive Plan” for further details. This concentrated control will limit or preclude your ability to influence corporate matters for the foreseeable future and could discourage others from pursuing change of control transactions that our shareholders may view as beneficial.
Our brand portfolio and the level of consumer engagement with brands and our mobile apps are critical to our success. We had a total of approximately 509 brands in our brand portfolio as of December 31, 2022, providing services to approximately 90% of the top 20 beauty groups that have adopted AR- and AI-technologies.
Our brand portfolio and the level of consumer engagement with brands and our mobile apps are critical to our success. We had 645 brands in our cumulative brand portfolio as of December 31, 2023, providing services to approximately 90% of the top 20 beauty groups that have adopted AI- and AR- technologies.
In February 2022, due to the military conflicts between Russia and Ukraine, several major economies, including the United States, the United Kingdom and the European Union imposed economic sanctions against Russia and certain Russian persons and entities.
For example, due to the military conflicts between Russia and Ukraine, several major economies, including the United States, the United Kingdom and the European Union imposed economic sanctions against Russia and certain Russian persons and entities.
Our ability to achieve and sustain profitability is also affected by market and regulatory development related to, among others, mobile apps, online marketing and artificial intelligence.
Our ability to sustain profitability is also affected by market and regulatory development related to, among others, mobile apps, online marketing and AI.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with the applicable accounting standards, which for us, is IFRS.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with the applicable accounting standards, which for us, is IFRS.
As a result, our businesses, financial condition, results of operations and prospects, as well as the trading price of our issued equity instruments, including our securities, may be materially and adversely affected.
As a result, our businesses, financial condition, results of operations and prospects, as well as the trading price of our issued securities, including our Ordinary Shares and Warrants, may be materially and adversely affected.
For example, the PRC government regulates industry development by imposing industrial policies. The PRC government also plays a significant role in China’s economic growth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, regulating financial services and institutions and providing preferential treatment to particular industries or companies.
The PRC government also plays a significant role in China’s economic growth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, regulating financial services and institutions and providing preferential treatment to particular industries or companies.
We have implemented control procedures, and have an internal team that monitors the content uploaded by users. 9 Table of Contents While these procedures aim to detect and block illegal, fraudulent, violent, pornographic or other inappropriate content or activities conducted through the misuse of our mobile apps, particularly those that violate applicable laws and regulations, they may not be able to block all such content uploads or activities in real time due to the time lag between content upload and the inspection by our internal team.
While these procedures aim to detect and block illegal, fraudulent, violent, pornographic or other inappropriate content or activities conducted through the misuse of our mobile apps, particularly those that violate applicable laws and regulations, they may not be able to block all such content uploads or activities in real time due to the time lag between content upload and the inspection by our internal team.
The success of our broad range of AR- and AI-powered business and consumer solutions is reliant on technology. We currently have 24 SaaS technology solutions and six mobile apps. Our ability to attract and retain consumers largely depends on our ability to maintain and scale our technical infrastructure.
The success of our broad range of AI- and AR- powered business and consumer solutions is reliant on technology. We currently primarily offer 22 SaaS technology solutions, six mobile apps and one online tool. Our ability to attract and retain consumers largely depends on our ability to maintain and scale our technical infrastructure.
Risks Related to Laws and Regulations Our business is subject to complex and evolving domestic and international laws and regulations regarding privacy and data protection.
Risks Related to Laws and Regulations Our business is subject to complex and evolving U.S. and international laws and regulations regarding privacy, data protection and AI.
On January 17, 2023, the SEC declared effective a registration statement on Form F-1, under which the selling securityholders identified therein or their permitted transferees may offer and sell, from time to time, up to 38,850,406 Class A Ordinary Shares, 9,350,000 Warrants and 9,350,000 Class A Ordinary Shares underlying such Warrants.
On October 18, 2023, the SEC declared effective a registration statement on Form F-3, under which the selling securityholders identified therein or their permitted transferees may offer and sell, from time to time, up to 38,542,254 Class A Ordinary Shares, 9,350,000 Warrants and 9,350,000 Class A Ordinary Shares underlying such Warrants.
If the dividend payments or other payments by our Taiwan subsidiary to us involves the currency conversion from New Taiwan Dollar to United States Dollar, such conversion would be subject to the foregoing foreign exchange control. See “Item 4. Information on the Company — B.
If the dividend payments or other payments by our Taiwan subsidiary to us involves the currency conversion from New Taiwan Dollar to United States Dollar, such conversion would be subject to the foregoing foreign exchange control. See “Item 4. Information on the Company — B. Business Overview — Regulation — Exchange Controls in Taiwan” for additional details.
The AR- and AI-beauty technologies and fashion tech markets are rapidly evolving. Our current primary competition comes from companies that offer products and services that compete with some but not all of the functionality present on our platform, and there may be an increasing number of similar solutions offered by additional competitors in the future.
Our current primary competition comes from companies that offer products and services that compete with some but not all of the functionality present on our platform, and there may be an increasing number of similar solutions offered by additional competitors in the future.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Through these strategic partnerships with world-class tech giants, we help brands build in beauty AR- and AI-integrations into social, search, streaming, and e-commerce platforms, allowing global coverage of brands’ end-consumers, and an integrated consumer engagement and shopping experience.
Through these strategic partnerships with world-class tech giants, we help brands build in beauty AI- and AR-integrations into social, search, streaming, and e-commerce platforms, allowing global coverage of brands’ end-consumers, and an integrated consumer engagement and shopping experience.
AR- and AI-adoption amongst beauty groups is still at an early stage, and we believe there is still significant runway for us to further expand our reach within the groups, specifically through cross-selling to sister brands within each of the beauty groups, upselling more modules and functions to brands and enabling more SKUs in all categories, and upscaling to more countries within a brand.
AI- and AR-adoption amongst beauty groups is still at an early stage, and we believe there is still a significant runway for us to further expand our reach within the groups, specifically through cross-selling to sister brands within each of the beauty groups, upselling more modules and functions to brands and enabling more SKUs in all categories, and upscaling to more countries within a brand.
Our offering includes AR- and AI-virtual makeup try-on, foundation shade finder, AR- and AI-virtual try-on for accessories, including jewelry, headpieces, hats, and eyewear, AR- and AI-virtual try-on for hairstyles and personal diagnostic products, including skin analysis and face analyzer.
Our offering includes AI- and AR- virtual makeup try-on, foundation shade finder, AI- and AR-virtual try-on for accessories, including jewelry, headpieces, hats, and eyewear, AI- and AR-virtual try-on for hairstyles and personal diagnostic products, including skin analysis and face analyzer.
Our platform is very difficult for competitors to replicate and creates a high barrier to entry. As a result, we have been able to secure multi-year, multi-country contracts with top beauty giants, as well as build a highly engaged consumer base for our platform.
Our platform is very difficult for competitors to replicate and creates a high entry barrier. As a result, we have been able to secure multi-year, multi-country contracts with top beauty giants, as well as build a highly engaged consumer base for our platform.
We offer AR- and AI-makeup solutions to beauty brands around the world to help enhance consumer experience with virtual makeup try-on. Consumers can try on products in brands’ online and offline stores through our platform.
We offer AI- and AR-makeup solutions to beauty brands around the world to help enhance consumer experience with virtual makeup try-on. Consumers can try on products in brands’ online and offline stores through our platform.
One of our flagship products under AR- and AI-makeup is the AI foundation shade finder and matcher. Finding the perfect foundation shade has always been a beauty problem facing consumers and brands alike due to the complexity of identifying the accurate skin tones of individual consumers.
One of our flagship products under AI- and AR-makeup is the AI foundation shade finder and matcher. Finding the perfect foundation shade has always been a beauty problem facing consumers and brands alike due to the complexity of identifying the accurate skin tones of individual consumers.
In all of these partnerships, we are one of the few third parties that are allowed to integrate their code directly into that of the large tech platforms, which makes the consumer experience via our AR- and AI-engine much more seamless. Our omni-channel, cross-platform coverage significantly increases the stickiness of its products with consumers.
In all of these partnerships, we are one of the few third parties that are allowed to integrate their code directly into that of the large tech platforms, which makes the consumer experience via our AI- and AR-engine much more seamless. Our omni-channel, cross-platform coverage significantly increases the stickiness of its products with consumers.
We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our consolidated business prospects, financial condition, liquidity, results of operation, cash flows or capital levels. C.
We are not presently a party to any legal proceedings the resolution of which we believe would have a material adverse effect on our consolidated business prospects, financial condition, liquidity, results of operation, cash flows or capital levels. C.
For example, the California Consumer Privacy Act of 2018, which went into effect January 1, 2020, defines “personal information” broadly enough to include online identifiers provided by individuals’ devices, and imposes more stringent obligations on companies regarding the level of information and control they provide to users about the collection and sharing of their data.
For example, the California Consumer Privacy Act of 2018 (the “CCPA”), which went into effect January 1, 2020, defines “personal information” broadly enough to include online identifiers provided by individuals’ devices, and imposes more stringent obligations on companies regarding the level of information and control they provide to users about the collection and sharing of their data.
As we re-imagine the way everyone tries on products, we are reducing the environmental impact of each purchase by decreasing the amount of plastic waste and reducing the carbon footprint traditionally associated with physical testers. Our Values Innovative — Innovation, strategic thinking and teamwork are at the heart of everything we do.
As we re-imagine the way everyone virtually tries on products, we are reducing the environmental impact of each purchase by decreasing the amount of plastic waste and reducing the carbon footprint traditionally associated with physical testers. Our Values Innovative — Innovation, strategic thinking and teamwork are at the heart of everything we do.
Brands that already use our platform are able to utilize the same set of SKUs that are already configured for other channels, and directly “switch on” a similar try-on experience in the brand’s official stores in Tmall and Taobao.
Brands that already use our platform are able to utilize the same set of SKUs that is already configured for other channels, and directly “switch on” a similar try-on experience in the brand’s official stores in Tmall and Taobao.
With a balance of beauty domain experience and technology expertise, as well as innovative, entrepreneurial minds, we are able to build a digital platform that may transform the world.
With a balance of beauty domain experience and technology expertise, as well as innovative, entrepreneurial minds, we are able to build up a digital platform that may transform the world.
We simulate real-life physics, including built materials, textures, micro-reflections, and light scattering, together with enhanced environmental lighting developed with proprietary visual computing algorithmic to mimic natural lighting and apply realistic effects on the virtual products. This allows us to illustrate true-to-life live virtual try-on effects for rings, bracelets, watches, nail polish, and more.
We simulate real-life physics, including built materials, textures, micro-reflections, and light scattering, together with enhanced environmental lighting developed with proprietary visual computing algorithmic to mimic natural lighting and apply realistic effects on the virtual products. This allows us to illustrate true-to-life live virtual try-on effects for rings, bracelets, watches, nail polish, etc.
D. Property, Plants and Equipment Please refer to “— B. Business Overview — Facilities” for a discussion of our property, plants and equipment. Item 4A.Unresolved Staff Comments None.
Property, Plants and Equipment Please refer to “— B. Business Overview — Facilities” for a discussion of our property, plants and equipment. Item 4A. Unresolved Staff Comments None.
Since early 2019, we introduced beauty tech AI and formed numerous partnerships with e-commerce and social media leaders, including Alphabet (Google and YouTube), Meta (Instagram), and Snap, as well as Asia tech platforms such as Alibaba (Taobao and Tmall). Such partnerships have been critical to our growth as an omni-channel service provider.
Since early 2019, we introduced beauty tech AI and formed numerous partnerships with e-commerce and social media leaders, including Alphabet (Google and YouTube), Meta (Instagram), and Snap, as well as with Asia tech platforms such as Alibaba (Taobao and Tmall) and WeChat. Such partnerships have been critical to our growth as an omni-channel AI/AR service provider.
Our solution covers a wide range of virtual makeup products, including, but not limited to, foundations, lipsticks, blushes, eyeliners, mascaras, and eyeshadows. In addition, we are able to combine multiple product try-ons to create instant makeovers of a complete look, allowing consumers to see the full effects of brands’ products instantly.
Our solution covers a wide range of virtual makeup products, including, but not limited to, foundations, lipsticks, blushes, eyeliners, mascaras, and eyeshadows. In addition, we are able to combine multiple product try-ons to create instant makeovers of a complete look, allowing consumers to see the full effect of brands’ products instantly.
AR- and AI-Nails In 2021, we launched for our brand customers virtual try-ons for nails, a customizable solution that allows try-ons for different polish shades (single and multi-color), as well as a wide array of nail polish textures (e.g., cream, jelly, sheer, matte, etc.), through our proprietary AgileHand® technology.
AI- and AR-Nails In 2021, we launched for our brand customers virtual try-ons for nails, a customizable solution that allows try-ons for different polish shades (single and multi-color), as well as a wide array of nail polish textures (e.g., cream, jelly, sheer, matte) and nail art, through our proprietary AgileHand® technology.
For solutions offered to beauty brands and retailers, we do not receive personal information of the end-consumers in most of the cases.
For solutions offered to beauty brands and retailers, we do not receive the personal information of consumers in most cases.
Brand Challenges Solutions Brand A ​ · Provide consumers with new ways to experience products which reflect Brand A’s legacy of creating innovative, sophisticated, and high-performance beauty products ​ · Lip Virtual Try-on: enabled lipstick virtual try-on · Real-time skin-tone detection leveraging knowledge base of 89,969 skin tones to help consumers find their preferred foundation shade ​ ​ ​ ​ ​ Brand B ​ · Focus on inclusivity to deploy AR- and AI-technologies suitable for all skin tones and face shapes across age, ethnicity and gender ​ · Enable omni-channel digital transformation by offering best-in-class virtual try-on technology to ensure precise shade accuracy and promote inclusivity ​ ​ ​ ​ ​ Brand C ​ · Engage consumers through best-in-class AR to provide virtual try-on experiences ​ · Deploy AR platform as an integral part of Brand C ’ s website and mobile app to enhance discovery experience for online consumers ​ ​ ​ ​ ​ Brand D ​ · From an AR technical standpoint, brows are difficult to implement due to degree of precision required ​ · Utilize our advanced facial-point detection to precisely and accurately deliver subtle complexities through brow start, arch, and tail ​ ​ ​ ​ ​ Brand E ​ · Enable users to perform skin diagnostics, receive product recommendations and track skincare journey ​ · Create bespoke skin diagnostics tool to provide users with real-time skincare analysis through utilizing AR- and AI- technologies to scan users ’ face to provide instantaneous and detailed analysis ​ 53 Table of Contents We have a strong ability to deepen our existing relationships with brands.
Brand Challenges Solutions Brand A • Provide consumers with new ways to experience products which reflect Brand A’s legacy of creating innovative, sophisticated, and high-performance beauty products • Lip Virtual Try-on: enabled lipstick virtual try-on • Real-time skin-tone detection leveraging knowledge base of 89,969 skin tones to help consumers find their preferred foundation shade Brand B • Focus on inclusivity to deploy AI- and AR- technologies suitable for all skin tones and face shapes across age, ethnicity and gender • Enable omni-channel digital transformation by offering best-in-class virtual try-on technology to ensure precise shade accuracy and promote inclusivity Brand C • Engage consumers through AR to provide virtual try-on experiences • Deploy AR platform as an integral part of Brand C’s website and mobile app to enhance discovery experience for online consumers Brand D • From an AR technical standpoint, brows are difficult to implement due to the degree of precision required • Utilize our advanced facial-point detection to precisely and accurately deliver subtle complexities through brow start, arch, and tail Brand E • Enable users to perform skin diagnostics, receive product recommendations and track skincare journey • Create bespoke skin diagnostics tool to provide users with real-time skincare analysis through utilizing AI- and AR- technologies to scan users’ face to provide instantaneous and detailed analysis We have a strong ability to deepen our existing relationships with brands.
Our solutions can be implemented across multiple platforms, including brand-owned channels such as brands’ official mobile apps, official websites, and in-store kiosks, as well as leading third-party platforms, including Alphabet (Google and YouTube), Snap and Alibaba (Taobao and Tmall).
Our solutions can be implemented across multiple platforms, including brand-owned channels such as brands’ official websites, in-store kiosks, retailer websites, and brands’ official mobile apps, as well as leading third-party platforms, including Alphabet (Google and YouTube), Snap, Alibaba (Taobao and Tmall) and WeChat.
We believe beauty brands naturally prefer a neutral platform such as us which have deployment capabilities across all sales channels and social networks, as it provides brands with the peace of mind that the same set of SKUs only needs to be configured once and can then be flexibly deployed across sales channels for consistent consumer experience. 52 Table of Contents Brand Success Stories We have successfully helped our brand customers to achieve increased sales, increased basket size, as well as other visible improvement in terms of ROI.
We believe beauty brands naturally prefer a neutral platform such as us which has deployment capabilities across all sales 61 Table of Contents channels and social networks, as it provides brands with the peace of mind that the same set of SKUs only needs to be configured once and can then be flexibly deployed across sales channels for consistent consumer experience. 62 Table of Contents • Brand Success Stories We have successfully helped our brand customers to achieve increased sales, increased basket size, as well as other visible improvement in terms of ROI.
We maintain offices in Taiwan, Japan, the United States and China to serve our geographically diverse customer base. We lease all of our facilities. For additional information about the lease, see “Item 7. Major Shareholders and Related Party Transactions — B.
We maintain offices in Taiwan, Japan, the United States, France and China to serve our geographically diverse customer base. We lease all of our offices. For additional information about the lease, see “Item 7. Major Shareholders and Related Party Transactions — B.
Our ability to deepen relationships with brands is a testimony to the eminence of our solutions. Research and Development The success of our broad range of AR- and AI-powered solutions is reliant on technology. We invested significant time, resources and expense into R&D.
Our ability to deepen relationships with brands is a testimony to the eminence of our solutions. Research and Development The success of our broad range of AI- and AR-powered solutions is reliant on technology. We invested significant time, resources and expense into research and development.
Our net loss increased from $156.9 million in 2021 to $161.7 million in 2022, mainly due to one-off transaction cost and non-cash fair value adjustment of convertible preferred shares in the course of the Transactions.
Our net loss increased from $156.9 million in 2021 to $161.7 million in 2022, primarily due to one-off transaction cost and non-cash fair value adjustment of convertible preferred shares in the course of the Transactions.
Our fully seamless integrations across all platforms lead to a high level of consumer loyalty. We believe we are also uniquely positioned as the only omni-channel beauty AR- and AI-solutions provider globally.
Our fully seamless integrations across all platforms lead to a high level of consumer loyalty. We believe we are also uniquely positioned as the leading omni-channel beauty AI- and AR-solutions provider globally.
For each of the three years ended December 31, 2022, our revenue subject to foreign exchange controls in Taiwan represented less than 1.0% of our total revenue, and our revenue denominated in NTD was fully used for our Taiwan subsidiary’s operation.
For each of the three years ended December 31, 2023, our revenue subject to foreign exchange controls in Taiwan represented less than 1.0% of our total revenue, and our revenue denominated in NTD was fully used for our Taiwan subsidiary’s operation.
Our artificial intelligence and machine learning capabilities We have powerful AI technology that taps into deep and machine learning algorithms built on data from over 10 billion real-life try-ons every year around the world. We are able to leverage this data to provide highly accurate and realistic AR makeover experiences, as well as personalized recommendations.
AI and machine learning capabilities: We have powerful AI technology that taps into deep and machine learning algorithms built on data from over 10 billion real-life try-ons every year around the world. We are able to leverage this data to provide highly accurate and realistic AR makeover experiences, as well as personalized recommendations.
Our outbound leads are driven by our sales team through attending trade shows and networking events, and proactively searching out for new leads through channels such as press releases, Zoominfo and newsletters. Once we have obtained the leads, our sales team works closely with potential clients to convert the leads into our sales pipeline.
Our outbound leads are driven by our sales team through attending trade shows and networking events, and proactively searching out for new leads through channels such as press releases, lead database and newsletters. Once we have obtained the leads, our sales team works closely with potential clients to convert the leads into our sales pipeline.
We deliver company-wide privacy training regularly, and review and adjust our privacy policies in accordance with the changes of laws and regulations. Certification and Compliance Adhering to the highest standards in protecting the data of both the brands that we work with and the end users of our solutions is our core commitment.
We deliver company-wide privacy training regularly, and review and adjust our privacy policies in accordance with the changes of laws and regulations. 66 Table of Contents Certification and Compliance Adhering to the highest standards in protecting the data of both the brands that we work with and the end users of our solutions is our core commitment.
As one of the few third-party service providers that are allowed to integrate their source code directly into those of the large tech platforms, we can seamlessly integrate our AI engine, enhancing the consumer experience and data communication. 39 Table of Contents Compelling Value Proposition to Brands We have proven to significantly deliver on brands’ ROI, both online and offline.
As one of the few third-party service providers that are allowed to integrate their source code directly into those of the large tech platforms, we can seamlessly integrate our AI engine, enhancing the consumer experience, conversion and data communication. • Compelling Value Proposition to Brands We have proven to significantly deliver on brands’ ROI, both online and offline.
Our technology now supports over 89,969 skin tones and 14 makeup textures, which encompass facial attributes across all ethnicities and ages, offering a fully inclusive virtual try-on experience, the most comprehensive in the industry. As of December 31, 2022, we had 25 registered patents and 24 pending patent applications in the beauty tech domain.
Our technology now supports over 89,969 skin tones and 14 makeup textures, which encompass facial attributes across all ethnicities and ages, offering a fully inclusive virtual try-on experience, the most comprehensive in the industry. As of December 31, 2023, we had 32 registered patents and 25 pending patent applications in the beauty tech domain.
Powered by our proprietary AgileFace® technology, our solution has ultra-accurate facial detection capability to conduct a full range of skin tone analysis for instant and realistic results. Our ultra-realistic effects help color match to real products and provide true-to-life effects to match brands’ product characteristics. It provides realistic makeup textures, including metallic, pearly, shine effects, and many more.
Powered by our proprietary Makeup AR technology, our solution has ultra-accurate facial mapping capability to conduct a full range of skin tone analysis for instant and realistic results. Our ultra-realistic effects help color match to real products and provide true-to-life effects to match brands’ product characteristics. It provides realistic makeup textures, including metallic, pearly, shine effects, and many more.
The YouCam platform is a suite of six freemium apps, including: YouCam Makeup: an award-winning virtual beauty app that offers a full suite of virtual makeover tools, including real-time AR makeup application, selfie retouch, hair color and style retouch, skin diagnostics, and live selfie backgrounds. YouCam Perfect: a leading photo-editing and beauty camera app.
The YouCam platform is primarily composed of a suite of six freemium apps, including: YouCam Makeup: an award-winning virtual beauty app that offers a full suite of virtual makeover tools, including real-time AR makeup application, selfie retouch, hair color and style retouch, skin diagnostics, and live selfie backgrounds. YouCam Perfect: a leading AI-powered photo-editing and beauty camera app.
We intend to consider potential opportunities throughout the beauty and fashion value chains that will enable us to consolidate and extend market leadership, accelerate our expansion into new verticals and geographies, create synergies from our technology integration, and drive revenue growth and margin expansion.
We intend to consider potential opportunities throughout the beauty and 48 Table of Contents fashion value chains that will enable us to consolidate and extend market leadership, accelerate our expansion into new verticals and geographies, create synergies from our technology integration, and drive revenue growth and margin expansion.
Taiwan The collection, processing and use of personal data in Taiwan are primarily subject to the Personal Data Protection Act (the “PDPA”) and the Enforcement Rules of the Personal Data Protection Act as well as other applicable rules or regulations issued by the relevant competent authorities, in particular the sectoral rules on the security maintenance plans stipulated by the regulator of different industries.
Taiwan The collection, processing and use of personal data in Taiwan are primarily subject to the PDPA and the enforcement rules of the PDPA as well as other applicable rules or regulations issued by the relevant competent authorities, in particular the sectoral rules on the security maintenance plans stipulated by the regulator of different industries.
Laws, regulations and industry standards related to the collection of consumers’ data are constantly evolving in various jurisdictions in which we conduct business or where we may expand, including, without limitation, the following: United States In the United States, various federal and state regulators, including governmental agencies such as the FTC, have adopted, or are considering adopting, laws and regulations concerning privacy and data protection.
Laws, regulations and industry standards related to the collection of consumers’ data are constantly evolving in various jurisdictions in which we conduct business or where we may expand, including, without limitation, the following: United States In the United States, there are various laws and regulations concerning privacy and data protection, and federal and state regulators, including the FTC, have adopted, or are considering adopting, regulations concerning privacy and data protection.
Operating Results — Components of Results of Operations — Revenue.” AR- and AI-Makeup AR- and AI-makeup solution is our first SaaS tech solution for the beauty brands, launched in 2015. It has since then become one of the most popular solutions in our portfolio.
Operating and Financial Review and Prospects — A. Operating Results — Components of Results of Operations — Revenue.” AI- and AR-Makeup AI- and AR-makeup solution is our first SaaS tech solution for the beauty brands, launched in 2015. It has since then become one of the most popular solutions in our portfolio.
We employ a wide range of marketing activities to engage with existing and potential business and consumer partners. These include regular press releases, social media campaigns across all major channels, including Facebook, Instagram, Twitter, YouTube, TikTok, and LinkedIn, targeted email marketing, online and offline advertising, and industry events participation.
We employ a wide range of marketing activities to engage with existing and potential business and consumer partners. These include regular press releases, social media campaigns across all major channels, including Facebook, Instagram, X (formerly Twitter), YouTube, and LinkedIn, targeted email marketing, online and offline advertising, and industry event participation.
Our Strengths We believe we have the following competitive strengths that have been instrumental to our leading position and will continue to fuel our success in the fast-growing beauty AR- and AI-market and beyond. Beauty AR- and AI-SaaS Leadership We are the leader in the nascent beauty AR- and AI-SaaS industry.
Our Strengths We believe we have the following competitive strengths that have been instrumental to our leading position as a beautiful AI company and will continue to fuel our success in the fast-growing beauty AI- and AR-market and beyond. • Beauty AI- and AR-SaaS Leadership We are the leader in the nascent beauty AI- and AR-SaaS industry.
The team’s passion, dedication and entrepreneurial spirit have been critical to our successful track record. Under the leadership of our Chief Executive Officer, Alice H. Chang, our management team has been remarkably stable, with 90% of the senior management team being with us since our inception.
The team’s passion, dedication and entrepreneurial spirit have been critical to our successful track record. Under the leadership of our CEO, Alice H. Chang, our management team has been remarkably stable, with 90% of the senior management team being with us since our inception.
Still, we cooperate with brands and retailers to comply with relevant laws and protect data privacy, including assessing the effectiveness of privacy protection of brands and retailers before entering into contracts with them, allocating the privacy protection responsibilities through contractual arrangement, and continuously improving our internal data protection mechanism.
Still, we cooperate with brands and retailers to comply with relevant laws and protect data privacy, including assessing the effectiveness of privacy protection of brands and retailers before entering into contracts with them, allocating the privacy protection responsibilities through contractual arrangements, and continuously improving our internal data protection mechanisms.
We are also dedicated to nurturing young talent, with 37% of our team hired fresh out of university. These talents bring energy, excitement and out-of-the-box ideas that help us keep innovating and stay on top of industry trends. We respect everyone equally and hire employees based on talent only.
We are also dedicated to nurturing young talent, with 39% of our team were hired fresh out of university. These talents bring energy, excitement and out-of-the-box ideas that help us keep innovating and staying on top of industry trends. We respect everyone equally and hire employees based on talent only.
We seek to develop long-term business relationships that allow us to grow together through synergistic partnerships. 37 Table of Contents Inclusivity — We have built a large inclusive online community, congregating beauty lovers from all around the world.
We seek to develop long-term business relationships that allow us to grow together through synergistic partnerships. Inclusivity — We have built a large inclusive online community, congregating beauty lovers from all around the world.
In particular, the GDPR includes obligations and restrictions concerning the consent and rights of individuals to whom the personal data relates, the transfer of personal data out of the European Economic Area or the United Kingdom, security breach notifications, and the security and confidentiality of personal data.
In particular, the GDPR and the U.K. GDPR include obligations and restrictions concerning the consent and rights of individuals to whom the personal data relates, the transfer of personal data out of the European Economic Area or the United Kingdom, security breach notifications, and the security and confidentiality of personal data.
We were able to benefit from their wealth of experience as global industry leaders.
We were able to benefit from their years of experience as global industry leaders.
Specifically, we provide the following services through (i) our cloud platform, or (ii) licensing our customers offline SDK or AR/AI offline solutions or mobile apps designed based on customers’ specifications, the revenue of which is recognized in “AR/AI cloud solutions and subscription” and “licensing” components of our revenue, respectively. See “Item 5. Operating and Financial Review and Prospects — A.
Specifically, we provide the following services through (i) our cloud platform and iOS and Android mobile apps, or (ii) licensing our customers offline SDK or AI- and AR- offline solutions or mobile apps designed based on customers’ specifications, the revenue of which is recognized in “AR/AI cloud solutions and subscription” and “licensing” components of our revenue, respectively. See “Item 5.
Regulation Data Privacy Privacy and data protection laws play a significant role in our business, which restrict our storage, use, processing, disclosure, transfer and protection of non-public personal information provided to us by our consumers.
Regulation • Data Privacy Privacy and data protection laws play a significant role in our business, as they restrict our storage, use, processing, disclosure, transfer and protection of personal information provided to us by our consumers.
We rely on a combination of patent, trademark, copyright, unfair competition, and trade secret laws, as well as confidentiality procedures and contractual restrictions to establish, maintain and protect our proprietary rights. As of December 31, 2022, we have 25 patents registered and 24 applications pending.
We rely on a combination of patent, trademark, copyright, unfair competition, and trade secret laws, as well as confidentiality procedures and contractual restrictions to establish, maintain and protect our proprietary rights. 64 Table of Contents As of December 31, 2023, we have 32 patents registered and 25 applications pending.
Our Strategies We believe the key strategies below will fuel our continued growth: Deepen Penetration with Top 20 Beauty Groups We have deep-rooted relationships with top beauty groups, and we currently cover 18 of the top 20 beauty groups. As of December 31, 2022, we cover 103 brands within the top 20 beauty groups.
Our Strategies We believe the key strategies below will fuel our continued growth: • Deepen Penetration with Top 20 Beauty Groups We have deep-rooted relationships with top beauty groups, and we currently cover 18 of the top 20 beauty groups. As of December 31, 2023, we cover 90% of the top 20 beauty groups.
Many brands have testified the positive experiences we brought to them and have become our active endorsers. We have a diverse customer base, with Key Customers accounting for approximately 43.5% of our 2022 revenue.
Many brands have testified the positive experiences we brought to them and have become our active endorsers. We have a diverse customer base, with Key Customers accounting for approximately 45.4% of our 2023 revenue.
With the R&D center placed in Taiwan, we have a great competitive advantage thanks to the easy access to cost-effective, highly motivated, top tech talent.
With the research and development center placed in Taiwan, we have a great competitive advantage thanks to the easy access to cost-effective, highly motivated, top tech talent.
As of the date of this annual report, we cover 90% (18 out of 20) of the top 20 beauty groups worldwide, and serve global beauty brands, including Estée Lauder, MAC and Neutrogena, covering the broad spectrum of brands and products from luxury to mass markets.
As of December 31, 2023, we cover 90% (18 out of 20) of the top 20 beauty groups worldwide, and serve global beauty brands, including Estée Lauder, MAC and Neutrogena, covering the broad spectrum of brands and products from luxury to mass markets.
We have developed proprietary AR- and AI-technologies with over 200 points of real-time facial landmarks and over 3,900 real-time facial 3D live meshes backed by visual computing, which has enabled us to detect consumers’ facial features more accurately and offer much more true-to-life effects compared to our peers.
We have developed proprietary AI- and AR-technologies with over 3,900 real-time facial 3D live meshes backed by visual computing, which has enabled us to offer much more true-to-life effects compared to our peers.
The number of our Key Customers has increased from 99 in 2020 to 124 and 152 in 2021 and 2022, respectively, at a CAGR of 23.9%. We also have a well-diversified portfolio and are not just reliant on top 20 beauty groups.
The number of our Key Customers has increased from 124 in 2021 to 152 and 162 in 2022 and 2023, respectively, at a CAGR of 14.3% from 2021 to 2023. We also have a well-diversified portfolio and are not just reliant on top 20 beauty groups.
Our technology highlights include: ● Using 200-point real-time landmarks to map consumers’ facial features; ● Generating 3,900 real-time facial 3-D live meshes backed by visual computing; ● Supporting over 10 different makeup textures (e.g., matte and metallic); ● Recognizing nearly 90,000 skin tones; ● Employing over 10 million data sets to train AI deep-learning algorithms for the best performance across all ethnicities and skin tones; and ● Protecting our intellectual property with 25 patents and 24 pending patent applications as of December 31, 2022.
Our technology highlights include: • Using around 200-point real-time landmarks to map consumers’ facial features; • Generating around 3,900 real-time facial 3D live meshes backed by visual computing; • Supporting over 10 different makeup textures (e.g., matte and metallic); • Supporting 14 common skin concerns diagnosis; • Recognizing nearly 90,000 skin tones; 63 Table of Contents • Employing over 10 million data sets to train AI deep-learning algorithms for the excellent performance across all ethnicities and skin tones; and • Protecting our intellectual property with 32 patents and 25 pending patent applications as of December 31, 2023.
Our vision is to transform the world with digital tech innovations. We believe that our platform transforms how brands and consumers interact and creates opportunities to connect that were not possible before. With our best-in-class, hyper-realistic virtual try-on solutions, we are disrupting the traditional online and in-store shopping journey by creating instant, seamless and engaging omni-channel shopping experiences.
We believe that our platform transforms how brands and consumers interact and creates opportunities to connect that were not possible before. With our excellent, hyper-realistic virtual try-on solutions, we are disrupting the traditional online and in-store shopping journey by creating instant, seamless and engaging omni-channel shopping experiences.
We are a team that is able to be extremely agile and adapt to the dynamically changing market, given our flat hierarchy structure. This also allows us to quickly make decisions, pivot if needed, and accurately execute strategies. 58 Table of Contents Facilities Our corporate headquarters, as well as our core R&D team, is in New Taipei City, Taiwan.
We are a team that is able to be extremely agile and adapt to the dynamically changing market, given our flat hierarchical structure. This also allows us to quickly make decisions, pivot if needed, and accurately execute strategies. Facilities Our corporate headquarters, as well as our core research and development team, is based in New Taipei City, Taiwan.
We also formed strategic partnerships with world-class tech giants, including Alphabet (Google and YouTube), and Snap, as well as Asia tech platforms such as Alibaba (Taobao and Tmall), providing us with a wide reach to promote our virtual try-on solutions and continuous technological advancement amongst their platforms. We have achieved significant scale and growth since our inception in 2015.
We also formed strategic partnerships with world-class tech giants, including Alphabet (Google and YouTube), and Snap, as well as Asia tech platforms such as Alibaba (Taobao and Tmall) and Tencent (WeChat), providing us with a wide reach to promote our virtual try-on solutions and continuous technological advancement amongst their platforms.
We see huge potential in not only supporting the largest players in the market, but also working with indie brands. These brands have significantly grown in popularity in recent years, primarily fueled by consumers seeking niche brands and products online.
We see considerable potential in not only supporting the largest players in the market, but also working with indie brands, beauty retailers and beauty salons around the world. These shopping channels and brands have significantly grown in popularity in recent years, primarily fueled by consumers seeking niche brands and products online.
We strive to guarantee best practices when it comes to making sure all of our partners’ and users’ data remain secure at all times. 56 Table of Contents Exchange Controls in Taiwan Under applicable regulations in Taiwan, the inflow and outflow of foreign currency that do not involve the exchange of New Taiwan Dollar is free, while currency conversion between New Taiwan Dollar and foreign currency is subject to exchange transactions declarations pursuant to the Taiwan Foreign Exchange Control Act.
Our dedication to this matter is reflected in the number of safety certification and compliance our solutions have received to date and we strive to guarantee best practices when it comes to making sure all of our partners’ and users’ data remain secure at all times. • Exchange Controls in Taiwan Under applicable laws and regulations in Taiwan, the inflow and outflow of foreign currency that do not involve the exchange of New Taiwan Dollar is free, while currency conversion between New Taiwan Dollar and foreign currency is subject to exchange transactions declarations pursuant to the Taiwan Foreign Exchange Control Act.
The DSL, the PIPL and the CSL constitute the three fundamental pillars of Chinese data protection legislation, and together with various systematic supplemental regulations, measures, and standards, form the cybersecurity and data protection legislative framework in China. Our Effort of Privacy Protection We are committed to protecting personal data.
The DSL, the PIPL and the CSL constitute the three fundamental pillars of Chinese data protection legislation, and together with various systematic supplemental regulations, measures, and standards, form the cybersecurity and data protection legislative framework in China.
Our diverse global team is composed of talented individuals of various ethnic groups and LGBTQ+ identities, of which 53% are men and 47% are women, with 44% of our managers and executives identifying as female, including the Chief Executive Officer.
Our diverse global team is composed of talented individuals of various ethnic groups and LGBTQ+ identities, of which 53% are men and 47% are women, with 46% of our managers and executives being female, including the CEO.
Our team has obtained their education at the top universities from around the world. The vast majority (90%) of our R&D team hold a master’s degree, and 3.6% hold a PhD. 40% of the team have amassed over 10 years of industry experience, with another 24% being in the business for five to ten years.
Our team has obtained their education at the top universities from around the world. The vast majority (85%) of our research and development team hold a master’s degree, and 3% hold a doctorate degree. 39% of the team have amassed over 10 years of industry experience, with another 19% being in the business for five to ten years.
The number of brands within our coverage also increased in this period, from 338 brands as of December 31, 2020 to 444 and 509 as of December 31, 2021 and 2022, respectively, at a CAGR of 22.7%.
The number of cumulative brands within our coverage also increased in this period, from 444 brands as of December 31, 2021 to 509 and 645 as of December 31, 2022 and 2023, respectively, at a CAGR of 20.5% from 2021 to 2023.
We believe we compete favorably based on the following competitive factors: ● Technology accuracy and platform scalability ● Omni-channel presence ● Product offerings ● Ease of use and reliability ● Research and development talent With regards to mobile apps that we offer, we directly compete with several market players, including Lensa, Facetune2, Meitu, Picsart, Camera 360, and B612.
We believe we compete favorably based on the following competitive factors: • Technology accuracy and platform scalability • Omni-channel presence • Product offerings • Ease of use and reliability • Research and development talent With regards to mobile apps that we offer, we directly compete with several market players, including Wonder, Arta, FaceApp, BeautyPlus, AirBrush, Videoleap, FaceTune, Remini, and Lensa.
Our upselling capabilities are also exceptional, with an average of 122% NDRR for the three years from 2020 to 2022, and 94% average retention rate among Key Customers for the same period.
Our upselling capabilities are also exceptional, with an average of 104.6% NDRR for the three years from 2021 to 2023, and 90% average retention rate among Key Customers for the same period.
With the true-to-life virtual try-on effects, consumers have reported spending more time on brands’ websites (over 300% for Marianna Naturals), increasing purchase conversion (over 200% for e.l.f.), and increasing online basket size (over 30% for Tarte Cosmetics). We also bring positive impact to the environment by helping brands reduce waste of beauty sampling and overconsumption.
With the true-to-life virtual try-on effects, consumers have reported spending more time on brands’ websites (101% increase for Benefit Cosmetics), increasing purchase conversion (300% increase for NARS), and increasing online basket size (30% larger for Clinique). 46 Table of Contents We also bring positive impact to the environment by helping brands reduce waste of beauty sampling and overconsumption.
We are also in the process of expanding into the fashion tech area, which includes products such as virtual try-on for eyewear, jewelry, headwear, and watches. 49 Table of Contents We are uniquely positioned to combine any of the above solutions to create a comprehensive online experience, dedicated to brands that offer many categories of beauty and fashion items.
We have also expanded the AI-driven virtual try-on products into the fashion tech area, providing products such as watches, jewelry and eyewear for fashion and luxury brands. Thus, we are uniquely positioned to combine any of the above solutions to create a comprehensive online experience, dedicated to brands that offer many categories of beauty and fashion items.
Our solutions also promote brands to rethink the way they source products and design packaging, and to reduce the harmful impact on the environment. With our sustainable solutions and zero waste virtual try-on technology, we help beauty brands get closer to achieving their ESG goals, and prove to their consumers that they are worthy of such consumers’ trust.
With our sustainable solutions and zero waste virtual try-on technology, we help beauty brands get closer to achieving their ESG goals, and prove to their consumers that they are worthy of such consumers’ trust.
Our Products and Services We provide an AR- and AI-platform that provides true-to-life virtual try-ons across multiple platforms, including brand-owned channels such as brand’s official mobile apps, official websites, and in-store kiosks, as well as leading third-party platforms such as Alphabet (Google and YouTube), Snap, Alibaba (Taobao and Tmall), WeChat, Douyin/TikTok and Shopify.
We believe our platform can provide entertaining yet personalized experiences to users, and empower them to express themselves in a creative and fun way. 50 Table of Contents • Products and Services We provide an AI- and AR-platform that provides true-to-life virtual try-ons across multiple platforms, including brand-owned channels such as brand’s official mobile apps, official websites, and in-store kiosks, as well as leading third-party platforms such as Alphabet (Google and YouTube), Snap, Alibaba (Taobao and Tmall), WeChat, Douyin and Shopify.
Our team has designed our patented and patent-pending technologies such as AgileFace® and AgileHand® AR, foundation shade matching, AI-powered wrist mapping, physically based rendering, and application of makeup effects to source images, photo albums and product promotions. 40 Table of Contents Seasoned Management Team with Proven Track Record We are led by a seasoned yet innovative executive team, with an average of over 20 years of experience in the technology industry.
Our team has designed our patented and patent-pending technologies such 47 Table of Contents as AgileHand® AR and foundation shade matching, AI-powered wrist mapping, physically based rendering, and Generative AI application to help consumer create and enhance their photos and videos in YouCam family apps. • Seasoned Management Team with Proven Track Record We are led by a seasoned yet innovative executive team, with an average of over 20 years of experience in the technology industry.
Since October 2021, Kao has discontinued all in-store hair bundle color samples in Japan in favor of its hair color simulation tool, powered by our AR- and AI-Hair technology. We are also working to expand AR- and AI-Hair penetration into hair salons.
Since October 2021, Kao has discontinued all in-store hair bundle coloring samples in Japan in favor of its hair color simulation tool, powered by our AI- and AR-Hair technology. We are also working to expand AI- and AR-Hair penetration into hair salons. In 2023, we launched the new AI Hairstyle with TRESemmé, a prominent haircare brand under Unilever group.
Historically, the fourth quarter has typically been the quarter with the largest bookings of our solutions from brands and retailers to coincide with the year-end holiday shopping season, which affects our business, revenue, and operating results.
Seasonality We are subject to seasonal fluctuations in spending by brands. Historically, the fourth quarter has typically been the quarter with the largest bookings of our solutions from brands and retailers to coincide with the year-end holiday shopping season, which affects our business, revenue, and operating results. We expect this seasonality trend to continue.
The following table sets forth the number of our employees categorized by function as of December 31, 2022. ​ ​ Number of ​ ​ ​ Employees Percentage Sales and Marketing 138 46.4 % Research and Development 134 45.1 % General and Administrative 25 8.5 % Total 297 100.0 % ​ We have a strong depth of knowledge amongst our technology team.
The following table sets forth the number of our employees categorized by function as of December 31, 2023. Number of Employees Percentage Sales and Marketing 144 44.9 % Research and Development 149 46.4 % General and Administrative 28 8.7 % Total 321 100.0 % 68 Table of Contents We have a strong depth of knowledge amongst our technology team.
Our development center is located in Taiwan, which gives us easy access to a world-class, cost-effective pool of engineering talent, adding to our strong competitive advantage. None of our employees are represented by a labor union.
W e have 271, 297 and 321 employees globally, as of December 31, 2021, December 31, 2022 and December 31, 2023, respectively. Our research and development center is located in Taiwan, which gives us easy access to a world-class, cost-effective pool of engineering talent, adding to our strong competitive advantage. None of our employees are represented by a labor union.
We continue to innovate and expand our product portfolio through consumer feedback and data gathered from our platform. With the rapid advancements into fashion tech, we plan to replicate our success from the beauty market and dominate the fashion vertical as well. We strive to not just be a beauty tech company, but also a fashion tech company.
Moreover, we continue to innovate and enlarge our product portfolio through consumer feedback and data gathered from our platform. With the rapid advancements into fashion tech and expansion into more diverse user cases, we plan to replicate our success from the beauty market and dominate the fashion vertical as well.
Alibaba: Since 2019, we have natively integrated our makeup AR solutions into Alibaba’s Tmall and Taobao platforms (the largest e-commerce sites in China).
These partnerships provide us with a wide reach to promote our virtual try-on solutions. Alibaba: Since 2019, we have natively integrated our makeup AR solutions into Alibaba’s Tmall and Taobao platforms (the largest e-commerce sites in China).
Big data from over 10 billion real-life try-ons globally every year and our machine learning capabilities enable us to continuously refine our platform to provide highly accurate and realistic AR makeover experiences and personalized recommendations. Our unique tech capabilities and extensive collection of training data sets help us solidify our product leadership in the beauty AR- and AI-SaaS industry.
Big data from over 10 billion real-life try-ons globally every year and our machine learning capabilities enable us to continually refine our platform to provide highly accurate and realistic AI- and AR- makeover experiences and personalized recommendations.
Nail art brands can deploy the solution both online and in-store, allowing consumers to test out latest colors and styles seamlessly, elevating the shopping experience for nail polish products.
Nail art brands can deploy the solution both online and in-store, allowing consumers to test out the latest colors and styles seamlessly, elevating the shopping experience for nail polish and nail art products. 53 Table of Contents AI- and AR-Men’s Grooming Aside from the offerings for women, we also provide men’s grooming products.
In addition to detecting skin concerns, our AI engine can also generate visual simulation that tracks gradual improvements directly on a consumer’s face. It can also give recommendations to consumers that can be tailored to brands’ products and clinical tests. Our skincare solution is proven to be highly accurate against dermatological tests.
In addition to detecting skin concerns, our AI engine can also generate visual simulation that tracks gradual improvements directly on a consumer’s face, giving users simulations of the progress they can expect to see over time. It can also give recommendations to consumers that can be tailored to brands’ products and clinical tests.

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Key Factors Affecting Our Results of Operations Our results of operations are affected by the following factors: Overall adoption rate of AR- and AI-technology in beauty and fashion industries Our results of operations are affected by the overall growth and adoption of AR- and AI-technology in the beauty and fashion industries, which in turn, is affected by customer demand for these technologies and the speed of digital transformation of brands.
Key Factors Affecting Our Results of Operations Our results of operations are affected by the following factors: • Overall adoption rate of AI- and AR-technology in beauty and fashion industries Our results of operations are affected by the overall growth and adoption of AI- and AR-technology in the beauty and fashion industries, which in turn, is affected by customer demand for these technologies and the speed of digital transformation of brands.
Leveraging our deep industry and technology know-how and a wide existing customer network that we have built in the beauty AR- and AI-SaaS space, we also look to expand into synergistic categories and further expand our product portfolio outside of beauty to expand our brand base.
Leveraging our deep industry and technology know-how and a wide existing customer network that we have built in the beauty AI- and AR-SaaS space, we also look to expand into synergistic categories and further expand our product portfolio outside of beauty to expand our brand base.
The first and second components constitute our core SaaS solutions. (1) AR/AI cloud solutions and subscription For AR/AI cloud solutions and subscription, we provide online cloud-based services to our customers, primarily including virtual try-on solutions provided to our brand customers and app premium subscription provided to individual customers.
The first and second components constitute our core SaaS solutions. (1) AI- and AR- cloud solutions and subscription For AI- and AR- cloud solutions and subscription, we provide online cloud-based services to our customers, primarily including virtual try-on solutions provided to our brand customers and app premium subscription provided to individual customers.
These fees are recurring as the service is time-limited and scope-limited, and subject to renewal upon the expiration of the service term. For brand customers, AR/AI cloud solutions are the major revenue contributor.
These fees are recurring as the service is time-limited and scope-limited, and subject to renewal upon the expiration of the service term. For brand customers, AI- and AR- cloud solutions are the major revenue contributor.
We expect our research and development expenses to increase in the future as we expand our team of technology and product development professionals and continue to invest in technology infrastructure and innovative AR- and AI-solutions to enhance and broaden our product offering.
We expect our research and development expenses to increase in the future as we expand our team of technology and product development professionals and continue to invest in technology infrastructure and innovative AI- and AR-solutions to enhance and broaden our product offering.
Changes in any of these general industry conditions and our ability to adapt to such changes could affect our business and results of operation. Despite the rapid pace of digital transformation in recent years, the estimated adoption of AR- and AI-technology amongst beauty brands remains low.
Changes in any of these general industry conditions and our ability to adapt to such changes could affect our business and results of operation. Despite the rapid pace of digital transformation in recent years, the estimated adoption of AI- and AR-technology amongst beauty and fashion brands remains low.
Given the substantial number of Class A Ordinary Shares registered for potential resale by the selling securityholders, the sale of shares by the selling securityholders, or the perception in the market that the selling securityholders of a large number of shares intend to sell their shares, could increase the volatility of the market price of our Class A Ordinary Shares or result in a significant decline in the public trading price of our Class A Ordinary Shares.
Given the substantial number of Class A Ordinary Shares registered for potential resale by the selling securityholders, the sale of shares by the selling securityholders, or the perception in the market that the selling securityholders holding a large number of shares intend to sell their shares, could increase the volatility of the market price of our Class A Ordinary Shares or result in a significant decline in the public trading price of our Class A Ordinary Shares.
As we deepen long-term relationships with existing brands, we aim to increase the average recurring fees per brand through a combination of cross-selling across sister brands, geographies and verticals of beauty groups, and upselling incremental SKUs, modules and functions to beauty brands.
As we deepen long-term relationships with existing brands, we aim to increase the average recurring fees per brand through a combination of cross-selling across sister brands, geographies and verticals of beauty and luxury groups, and upselling incremental SKUs, modules and functions to beauty brands.
The items excluded from our adjusted net income and adjusted EBITDA are non-cash expenses or not driven by core results of operations and render comparison of IFRS financial measures with prior periods less meaningful.
The items excluded from our adjusted net income are non-cash expenses or not driven by core results of operations and render comparison of IFRS financial measures with prior periods less meaningful.
We see significant opportunities to continue to drive the digitization and proliferation of AR- and AI-solutions in the beauty and fashion industries.
We see opportunities to continue to drive the digitization and proliferation of AI- and AR-solutions in the beauty and fashion industries.
With respect to non-zero tax jurisdictions, any related deferred tax assets do not qualify for recognition because of the cumulative losses. Hence, none of the adjusted net income in each of the three years ended December 31, 2022 was subject to income tax effects.
With respect to non-zero tax jurisdictions, any related deferred tax assets do not qualify for recognition because of the cumulative losses. Hence, none of the adjusted net income in each of the three years ended December 31, 2023 was subject to income tax effects.
Our net loss increased from $156.9 million in 2021 to $161.7 million in 2022, mainly due to one-off transaction cost and non-cash fair value adjustment of convertible preferred shares in the course of the Transactions.
Our net loss increased from $156.9 million in 2021 to $161.7 million in 2022, primarily due to one-off transaction cost and non-cash fair value adjustment of convertible preferred shares in the course of the Transactions.
We also offer omni-channel, cross-platform solutions which can be implemented across multiple platforms, including brand-owned channels such as brands’ official mobile apps, official websites, in-store kiosks, as well as leading third-party platforms, including Alphabet (Google and YouTube), Meta (Instagram), Snap and Alibaba (Taobao and Tmall). We are able to provide customized solutions for each brand.
We also offer omni-channel, cross-platform solutions which can be implemented across multiple platforms, including brand-owned channels such as brands’ official mobile apps, official websites, in-store kiosks, as well as leading third-party platforms, including Alphabet (Google and YouTube), Snap, WeChat and Alibaba (Taobao and Tmall). We are able to provide customized solutions for each brand.
Our net loss increased from $156.9 million in 2021 to $161.7 million in 2022, mainly due to one-off transaction cost and non-cash fair value adjustment of convertible preferred shares in the course of the Transactions.
Our net loss increased from $156.9 million in 2021 to $161.7 million in 2022, primarily due to one-off transaction cost and non-cash fair value adjustment of convertible preferred shares in the course of the Transactions.
One-off transaction cost in 2022 included non-cash listing expense, which refers to the excess of the fair value of our Class A Ordinary Shares issued over the fair value of Provident’s identifiable net assets on the Closing Date, and professional services expenditures that we incurred in connection with the Transactions.
One-off transaction cost in 70 Table of Contents 2022 included non-cash listing expense, which refers to the excess of the fair value of our Class A Ordinary Shares issued over the fair value of Provident’s identifiable net assets on the Closing Date, and professional services expenditures that we incurred in connection with the Transactions.
Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity. Components of Results of Operations Revenue Our revenue sources include four major components: AR/AI cloud solutions and subscription, licensing, advertisement and others.
Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity. Components of Results of Operations Revenue Our revenue sources include three major components: AI- and AR- cloud solutions and subscription, licensing and advertisement.
Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information — D. Risk Factors” and elsewhere in this annual report. 59 Table of Contents A.
Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information — D. Risk Factors” and elsewhere in this annual report. A.
We expect that our general and administrative expenses will increase in absolute dollars as we scale up our operations. Research and Development Expenses Our research and development expenses primarily consist of salaries and benefits, including share-based compensation, for our technology and product development personnel, and depreciation and other associated corporate costs.
We expect that our general and administrative expenses will increase in absolute dollars as we scale up our operations. 75 Table of Contents Research and Development Expenses Our research and development expenses primarily consist of salaries and benefits, including share-based compensation, for our technology and product development personnel, and depreciation and other associated corporate costs.
Net cash used in financing activities was $63,000 in 2021, primarily consisting of $0.3 million representing the proceeds from our employees’ exercising of their stock options, offset by $0.4 million in the repayment of the principal portion of lease liabilities.
Net cash used in financing activities was approximately $63 thousand in 2021, primarily consisting of $0.3 million representing the proceeds from our employees’ exercising of their stock options, offset by $0.4 million in the repayment of the principal portion of lease liabilities.
Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with IFRS. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures.
E. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with IFRS. The preparation of these consolidated financial statements require us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures.
We believe adjusted net income (loss) and adjusted EBITDA provide useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our business performance.
We believe adjusted net income (loss) provides useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our business performance.
See Note 5 “Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty” to our consolidated financial statements included elsewhere in this annual report for additional information on our critical accounting estimates.
See Note 5 “Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty” to our consolidated financial statements included elsewhere in this annual report for additional information on our critical accounting estimates. 82 Table of Contents
We intend to fund our future material cash requirements with net proceeds from the Transactions, equity contributions from our shareholders and payments received from our customers. We will continue to make cash commitments, including capital expenditures, to support the growth of our business. On October 28, 2022, we completed the Business Combination.
We intend to fund our future material cash requirements with net proceeds in connection with our Business Combination with Provident, equity contributions from our shareholders and payments received from our customers. We will continue to make cash commitments, including capital expenditures, to support the growth of our business. On October 28, 2022, we completed the Business Combination.
Cost of Sales and Services Our cost of sales and services consists primarily of kiosk hardware cost, certain R&D personnel-related expenses allocated to cost of sales and services which are directly related to revenue and services activities, warranty provision as well as third-party payment processing fees for distribution partners such as Google and Apple.
Cost of Sales and Services Our cost of sales and services consists primarily of kiosk hardware cost, certain research and development personnel-related expenses allocated to cost of sales and services which are directly related to revenue and services activities, warranty provision as well as third-party payment processing fees for distribution partners such as Google and Apple.
Furthermore, as part of our growth strategy, we have plans to further invest in R&D, develop new AR- and AI-solutions, broaden our customer base in the beauty industry, and expand into synergistic categories like fashion solutions. These new developments and expansions may generate long-term cash requirements.
Furthermore, as part of our growth strategy, we have plans to further invest in research and development, develop new AI- and AR-solutions, broaden our customer base in the beauty industry, and expand into synergistic categories like skin and fashion solutions. These new developments and expansions may generate long-term cash requirements.
In addition, we will consume cash for additional expenses as a public company for, among other things, D&O liability insurance, director fees and additional internal and external accounting, legal and administrative resources, including increased audit and legal fees.
In addition, we will consume cash for additional expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources, including increased audit and legal fees.
We define these non-IFRS financial measures as follows: Adjusted net income is defined as net income (loss) excluding one-off transaction costs (e.g., costs related to the Transactions), non-cash equity-based compensation, non-cash valuation (gain)/loss of preferred shares, and foreign exchange (gain)/loss. The majority of these adjustments relate to items in zero tax jurisdictions.
We define these non-IFRS financial measures as follows: 78 Table of Contents Adjusted net income is defined as net income (loss) excluding one-off transaction costs (e.g., costs related to the Transactions), non-cash equity-based compensation, non-cash valuation (gain)/loss of financial liabilities, and foreign exchange (gain)/loss. The majority of these adjustments relate to items in zero tax jurisdictions.
Net cash used in operating activities was $3.3 million in 2022, and net cash generated from operating activities was $1.5 million in 2021 and $2.2 million in 2020, respectively. The negative operating cash flows in 2022 were mainly due to the payment of insurance premium for directors’ and officers’ insurance policy after our listing on the NYSE.
Net cash used in operating activities was $3.3 million in 2022 and net cash generated from operating activities was $1.5 million in 2021. The negative operating cash flows in 2022 were primarily due to the payment of insurance premium for directors’ and officers’ insurance policy after our listing on the NYSE.
As of the date of this annual report, there has been no material change to our liquidity position since the closing of the Business Combination. To the extent that our current resources are insufficient to satisfy our cash requirements in the future, we may need to seek additional equity or debt financing.
As of the date of this annual report, there has been no material change to our liquidity position since December 31, 2023. To the extent that our current resources are insufficient to satisfy our cash requirements in the future, we may need to seek additional equity or debt financing.
We intend to continue to work on providing a seamless and easy solution for these indie brands, as capturing this brand base is expected to be important to fuel the growth of our business.
We see growth opportunities amongst these smaller beauty brands. We intend to continue to work on providing a seamless and easy solution for these indie brands, as capturing this brand base is expected to be important to fuel the growth of our business.
As the closing price of our Class A Ordinary Shares was $6.15 as of March 28, 2023, we believe that holders of the Warrants are currently unlikely to exercise their Warrants. Accordingly, we do not expect to rely on the cash exercise of Warrants to fund our operations.
As the closing price of our Class A Ordinary Shares was $2.48 as of March 28, 2024, we believe that holders of the Warrants are currently unlikely to exercise their Warrants. Accordingly, we do not expect to rely on the cash exercise of Warrants to fund our operations.
Certain large expenses, such as the professional advisors’ fees in connection with our ongoing reporting obligations as a public company, however, will negatively affect our profitability in the next few years. 62 Table of Contents Our people and technology We focus on investing in our people and technology, which are crucial for us to create innovative products and services that cater to what the consumers want, and to further grow our customer base.
Certain large expenses, such as the professional advisors’ fees in connection with our ongoing reporting obligations as a public company, however, may negatively affect our profitability in the next few years. • Our people and technology We focus on investing in our people and technology, which are crucial for us to create innovative products and services that cater to what the consumers want, to further grow our customer base, and to maintain our leading position in the industry.
Other than as disclosed above and elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2022 to December 31, 2022, that are reasonably likely to have a material effect on our revenue, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. 73 Table of Contents E.
Other than as disclosed above and elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2023 to December 31, 2023, that are reasonably likely to have a material effect on our net sales or revenue, income from continuing operations, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Those revenue streams are immaterial to us. For further details on our revenue recognition, see Note 4 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this annual report.
For further details on our revenue recognition, see Note 4 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this annual report.
We believe the stickiness and scalability of our platform well positions us to capture this monetization opportunity. 61 Table of Contents In addition to the Key Customers, which are large brand customers, we also generate revenue from other customers. In 2020, 2021 and 2022, non-Key Customers contributed 34.7%, 46.8% and 56.5% of our total revenue, respectively.
We believe the stickiness and scalability of our platform well positions us to capture this monetization opportunity. In addition to the Key Customers, which are large brand customers, we also generate revenue from other customers. In 2021, 2022 and 2023, non-Key Customers contributed 46.8%, 56.5% and 54.6% of our total revenue, respectively.
Risk Factors — Risks Related to the Class A Ordinary Shares and Warrants — Sales of a substantial number of our securities in the public market by our existing securityholders could cause the price of our Class A Ordinary Shares and Warrants to fall.” Cash Flows Summary Presented below is a summary of our operating, investing, and financing cash flows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ($ in thousands, unless otherwise stated) 2020 2021 2022 Cash flows from (used in) operating activities $ 2,193 $ 1,548 $ (3,305) Cash flows from (used in) investing activities ​ 7,840 ​ (213) ​ (30,258) Cash flows from (used in) financing activities ​ 39,806 ​ (63) ​ 118,028 Effects of exchange rates changes on cash and cash equivalents ​ 896 ​ 163 ​ (2,302) Net increase (decrease) in cash and cash equivalents ​ $ 50,735 ​ $ 1,435 ​ $ 82,163 ​ Cash Flows Generated from (Used in) Operating Activities Cash flows generated or used in operating activities primarily relate to the collection of accounts receivables, payment of provision and payables, net interest received and income tax paid.
Risk Factors — Risks Related to the Class A Ordinary Shares and Warrants — Sales of a substantial number of our securities in the public market by our existing securityholders could cause the price of our Class A Ordinary Shares and Warrants to fall.” 80 Table of Contents Cash Flows Summary Presented below is a summary of cash flows from or used in our operating, investing, and financing activities: Year ended December 31, ($ in thousands, unless otherwise stated) 2021 2022 2023 Cash flows from (used in) operating activities $ 1,548 $ (3,305) $ 13,578 Cash flows from (used in) investing activities (213) (30,258) (637) Cash flows from (used in) financing activities (63) 118,028 (51,499) Effects of exchange rates changes on cash and cash equivalents 163 (2,302) (187) Net increase (decrease) in cash and cash equivalents $ 1,435 $ 82,163 $ (38,745) Cash Flows Generated from (Used in) Operating Activities Cash flows generated from or used in operating activities primarily relate to the collection of accounts receivables, payment of provision and payables, net interest received and income tax paid.
The global consumer discretionary industry and consumer spending are expected to continue to face a range of challenges during 2023, such as global high inflation, elongated sales cycles, significant fluctuations in foreign exchange rates, and geopolitical tensions and conflict.
Still, the global consumer discretionary industry and consumer spending are expected to continue to face a range of challenges in 2024, such as global high inflation, significant fluctuations in foreign exchange rates, and geopolitical tensions and conflict.
We have strong customer retention and loyalty, especially among the Key Customers, with a NDRR of 145%, 125% and 97% and a retention rate of 95%, 92% and 94% for the years ended 2020, 2021 and 2022, respectively, representing an average NDRR of 122% and an average retention rate of 94% during such period.
We have strong customer retention and loyalty, especially among the Key Customers, with a NDRR of 125%, 97% and 92% and a retention rate of 92%, 94% and 83% for the years ended 2021, 2022 and 2023, respectively, representing an average NDRR of 105% and an average retention rate of 90% during such period.
With respect to geographical contribution, revenue from the United States has increased by 20.4% from $20.2 million for the year ended December 31, 2021 to $24.3 million for the same period in 2022, revenue from Japan has increased by 4.4% from $4.5 million for the year ended December 31, 2021 to $4.7 million for the same period in 2022, and revenue from France has increased by 7.0% from $3.2 million for the year ended December 31, 2021 to $3.4 million for the same period in 2022.
With respect to geographical contribution, revenue from the United States has increased by 2.9% from $24.3 million for the year ended December 31, 2022 to $25.0 million for the same period in 2023, revenue from Japan has decreased by 8.8% from $4.7 million for the year ended December 31, 2022 to $4.3 million for the same period in 2023, and revenue from France has increased by 21.5% from $3.4 million for the year ended December 31, 2022 to $4.2 million for the same period in 2023.
As of December 31, 2022, our total customer base includes over 500 brands, including global industry leaders such as Estée Lauder Group, LVMH, COTY and Shiseido, with over 550,000 digital SKUs for makeup, haircare, skincare, eyewear, and jewelry products, and over 10 billion virtual product try-ons annually.
For our enterprise business, as of December 31, 2023, our cumulative customer base includes 645 brands, including global industry leaders such as Estée Lauder Group, LVMH, COTY and Shiseido, with over 704,000 digital SKUs for makeup, haircare, skincare, eyewear, and jewelry products, and over 10 billion virtual product try-ons annually.
On January 17, 2023, the SEC declared effective a registration statement on Form F-1, under which the selling securityholders identified therein or their permitted transferees may offer and sell, from time to time, up to 38,850,406 Class A Ordinary Shares, 9,350,000 Warrants and 9,350,000 Class A Ordinary Shares underlying such Warrants.
On October 18, 2023, the SEC declared effective a registration statement on Form F-3, under which the selling securityholders identified therein or their permitted transferees may offer and sell, from time to time, up to 38,542,254 Class A Ordinary Shares, 9,350,000 Warrants and 9,350,000 Class A Ordinary Shares underlying such Warrants.
Despite these challenges, we remain confident in our long-term growth prospects and retains our commitment to iterating our products and services, further enhancing our digital solutions, expanding our customer base, diversifying our revenue streams, and further optimizing operating efficiency.
Despite these challenges, we remain confident in the recovery in our sales cycle and our long-term growth prospects, as well as retaining our commitment to iterating our products and services, further enhancing our digital solutions, expanding our customer base, diversifying our revenue streams, and further optimizing operating efficiency.
For details of our products and services, see “Item 4. Information on the Company — B. Business Overview — Our Business.” For details of revenue recognition of our products and services, see “— Components of Results of Operations — Revenue” below and Note 4 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this annual report.
Business Overview — Our Business.” For details of revenue recognition of our products and services, see “— Components of Results of Operations — Revenue” below and Note 4 “Summary of Significant Accounting Policies” to our 71 Table of Contents consolidated financial statements included in this annual report.
In terms of the premium value-added functions in our mobile apps to which individual customers subscribe through Apple App Store and Google Play, we currently offer monthly and yearly subscription plans. The price of such premium functions service varies by country. We recognize revenue from such service based on the fulfilled contract obligation period each month.
In terms of the premium value-added functions in our mobile apps to which individual customers subscribe through Apple App Store and Google Play, we currently offer monthly and yearly subscription plans. The price of such premium functions service varies by country.
Cost of Sales and Services Cost of sales and services increased by $1.4 million, or 24.3%, from $5.7 million for the year ended December 31, 2021 to $7.1 million for the year ended December 31, 2022.
Cost of Sales and Services Cost of sales and services increased by $3.3 million, or 45.9%, from $7.1 million for the year ended December 31, 2022 to $10.4 million for the year ended December 31, 2023.
The following table sets forth our average MAUs and average monthly active subscribers of our mobile apps for the years indicated: ​ ​ Year ended December 31, (in millions) 2020 2021 2022 ​ ​ ​ ​ ​ ​ ​ Average MAUs 35.4 25.1 17.8 Average monthly active subscribers (1) 0.21 0.35 0.49 Note: (1) Monthly active subscribers refer to paying users who subscribe to our mobile apps’ premium functions and maintain an active subscription at the end of the measured month.
The following table sets forth our average MAUs and average monthly active subscribers of our mobile apps for the years indicated: Year ended December 31, 2021 2022 2023 Average MAUs (in millions) 25.1 17.8 16.5 Average monthly active subscribers (in thousands) (1) 353 494 774 72 Table of Contents ________________________________ Note: (1) Monthly active subscribers refer to paying users who subscribe to our mobile apps’ premium functions and maintain an active subscription at the end of the measured month.
Revenue outside of these three major countries has grown by 15.6% from $12.9 million for the year ended December 31, 2021 to $14.9 million for the same period in 2022.
Revenue outside of these three major countries has grown by 34.9% from $14.9 million for the year ended December 31, 2022 to $20.0 million for the same period in 2023.
Our contract terms are decided based on the following considerations: (1) functionality of the subscribed modules (e.g., makeup, skincare, hair, nail, etc.); (2) length of the service; (3) geographical coverage, such as the number of countries/regions to deploy the modules or the number of website domains to integrate our modules; (4) maximum numbers of product SKUs that a brand can utilize at the same time; and (5) additional manpower hours used for conducting the customization, if any. 63 Table of Contents Furthermore, depending on the nature of the services provided, the charges of brand customers could be further divided to one-time fees, recurring fees, or the combination of both.
Our contract terms are decided based on the following considerations: (1) functionality of the subscribed modules (e.g., makeup, skincare, hair, nail); (2) length of the service; (3) geographical coverage, such as the number of countries/regions to deploy the modules or the number of website domains to integrate our modules; (4) maximum numbers of product SKUs that a brand can utilize at the same time; and (5) additional manpower hours used for conducting the customization, if any.
See “— Use of Non-IFRS Financial Measures” below for more information. 69 Table of Contents Use of Non-IFRS Financial Measures In addition to the measures presented in our consolidated financial statements, we use certain non-IFRS financial measures, including adjusted net income (loss) and adjusted EBITDA, to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.
Use of Non-IFRS Financial Measures In addition to the measures presented in our consolidated financial statements, we use certain non-IFRS financial measures, including adjusted net income (loss), to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.
The number of our Key Customers has increased from 99 in 2020 to 124 and 152 in 2021 and 2022, respectively, at a CAGR of 23.9%. As we grow and continue to expand our product offerings, we expect to significantly increase our penetration beyond beauty and into other fashion areas as well.
The number of our Key Customers has increased from 124 in 2021 to 162 in 2023, at a CAGR of 14.3%. As we grow and continue to expand our product offerings, we expect to increase our penetration beyond beauty and into other fashion areas as well.
Cash Flows Generated from (Used in) Investing Activities Cash used in investing activities primarily relates to acquisition of financial assets, proceeds from disposal of financial assets, acquisition of property, plant and equipment, acquisition of intangible assets, and changes in guarantee deposits paid. Net cash used in investing activities was $30.3 million in 2022, primarily from the acquisition of financial assets.
Cash Flows Generated from (Used in) Investing Activities Cash flows generated from or used in investing activities primarily relates to acquisition of financial assets, proceeds from disposal of financial assets, acquisition of property, plant and equipment, acquisition of intangible assets, and changes in guarantee deposits paid. Net cash used in investing activities was approximately $637 thousand in 2023.
We have 124 Key Customers in 2021, and have further added 28 additional Key Customers for the year ended December 31, 2022.
We have 152 Key Customers in 2022, and have further added 10 additional Key Customers for the year ended December 31, 2023.
(2) Licensing We collect licensing fees from (1) licensing self-developed technologies, which include offline SDK and AR/AI offline solutions to brand customers and (2) licensing mobile apps designed and created based on customers’ specifications that do not require continuous support from our backend cloud computing infrastructure.
We recognize revenue from such service based on the fulfilled contract obligation period each month. 74 Table of Contents (2) Licensing We collect licensing fees from (1) licensing self-developed technologies, which include offline SDK and AI- and AR- offline solutions to brand customers and (2) licensing mobile apps designed and created based on customers’ specifications that do not require continuous support from our backend cloud computing infrastructure.
Net cash generated from investing activities was $7.8 million in 2020, primarily from the proceeds from disposal of financial assets. 72 Table of Contents Cash Flows Generated from (Used in) Financing Activities Net cash from financing activities was $118.0 million in 2022, primarily consisting of gross proceeds of $112.9 million from the Transactions, and $5.6 million from the proceeds of the exercising of employee stock options, partially offset by $0.5 million in the repayment of the principal portion of lease liabilities.
Net cash from financing activities was $118.0 million in 2022, primarily consisting of gross proceeds of $112.9 million from the Transactions, and $5.6 million from the proceeds of the exercise of employee stock options, partially offset by $0.5 million in the repayment of the principal portion of lease liabilities.
Research and Development Expenses Research and development expenses increased by $0.6 million, or 6.5%, from $9.8 million for the year ended December 31, 2021 to $10.5 million for the year ended December 31, 2022. The increase was primarily due to an increase in R&D headcount and related personnel costs.
Research and Development Expenses Research and development expenses increased by $1.0 million, or 9.3%, from $10.5 million for the year ended December 31, 2022 to $11.5 million for the year ended December 31, 2023. The increase was primarily due to the increase of our research and development headcount and related personnel costs.
Nevertheless, we raised $105 million from PIPE Investors and FPA Investors, which, together with the proceeds from non-redeeming Provident shareholders, amounted to $119 million in gross proceeds, and added $113 million in net proceeds to our balance sheet.
Nevertheless, we raised $105 million from PIPE Investors and FPA Investors, which, together with the proceeds from non-redeeming Provident shareholders, amounted to $119 million in gross proceeds, and added $113 million in net proceeds to our balance sheet. We would receive the proceeds from any exercise of any outstanding Warrants that are exercised for cash pursuant to their terms.
In managing our business, our management closely monitors our NDRR and retention rate of our Key Customers, which can provide reliable guidance for the growth of our business due to the following reasons: (i) revenue from Key Customers accounted for approximately 65.3%, 53.2% and 43.5% of our total revenue in 2020, 2021 and 2022, respectively, and our primary strategic focus is to allocate more resources to grow our brand customer base; (ii) revenue from all brands represented 74.7%, 65.5% and 61.8% of our total revenue in 2020, 2021 and 2022, respectively, and Key Customers constituted the core of our brand customers since revenue from Key Customers accounted for 87.5%, 81.2% and 70.4% of the revenue from all brands for the respective year; and (iii) compared to other operating metrics, NDRR and retention rate are good indicators of the sustainability of our revenue associated with services provided to our brand customers.
In managing our B2B business, our management closely monitors our NDRR and retention rate of our Key Customers, which can provide reliable guidance for the growth of our B2B business primarily due to the following reasons: (i) revenue from Key Customers accounted for approximately 53.2%, 43.5% and 45.4% of our total revenue in 2021, 2022 and 2023, respectively; (ii) revenue from Key Customers represented 81.2%, 70.4% and 94.1% of our total revenue from brands in 2021, 2022 and 2023, respectively; and (iii) compared to other operating metrics, NDRR and retention rate are good indicators of the sustainability of our revenue associated with services provided to our brand customers.
The following table sets forth a breakdown of our revenue for the years indicated based on the types of customers: ​ ​ Year ended December 31, ​ 2020 2021 2022 ​ ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ ​ total ​ ​ ​ total ​ ​ ​ total ​ ​ US$’000 revenue US$’000 revenue US$’000 revenue Revenue from brands 22,302 74.7 % 26,691 65.5 % 29,224 61.8 % Revenue from Key Customers (1) 19,512 65.3 % 21,666 53.2 % 20,580 43.5 % Revenue from non-Key Customer brands (2) 2,790 9.4 % 5,025 12.3 % 8,644 18.3 % Revenue from mobile apps subscribers 5,802 19.4 % 11,636 28.5 % 16,230 34.3 % Revenue from advertisement network service providers ​ 1,742 ​ 5.8 % 2,398 ​ 5.9 % 1,819 3.8 % Others 27 0.1 % 35 0.1 % 27 0.1 % Total revenue 29,873 100 % 40,760 100 % 47,300 100 % Notes: (1) Represents 87.5%, 81.2% and 70.4% of our revenue from brands in 2020, 2021 and 2022, respectively.
The following table sets forth a breakdown of our revenue for the years indicated based on the types of customers: Year ended December 31, 2021 2022 2023 US$’000 % of total revenue US$’000 % of total revenue US$’000 % of total revenue Revenue from brands 26,691 65.5 % 29,224 61.8 % 25,793 48.2 % Revenue from Key Customers 21,666 53.2 % 20,580 43.5 % 24,271 45.4 % Revenue from non-Key Customer brands 5,025 12.3 % 8,644 18.3 % 1,522 2.8 % Revenue from mobile apps subscribers 11,636 28.5 % 16,230 34.3 % 26,517 49.5 % Revenue from advertisement network service providers 2,398 5.9 % 1,819 3.8 % 1,162 2.2 % Others 35 0.1 % 27 0.1 % 33 0.1 % Total revenue 40,760 100 % 47,300 100 % 53,505 100 % Our ability to increase revenue depends in part on retaining our existing brands and expanding their use of our services.
With our cutting-edge, hyper-realistic virtual try-on solutions, we are transforming the traditional online and in-store shopping journey by creating instant, seamless and engaging omni-channel shopping experiences.
Our platform transforms how brands and consumers interact and create opportunities to connect that were not possible before. With our cutting-edge, hyper-realistic virtual try-on solutions, we are transforming the traditional online and in-store shopping journey by creating instant, seamless and engaging omni-channel shopping experiences.
Personnel-related expenses primarily include salaries, benefits, and share-based compensation. In addition, general and administrative expenses also include allocated facilities costs, such as rent, depreciation expenses, professional services fees and other general corporate expenses.
In addition, general and administrative expenses also include allocated facilities costs, such as rent, depreciation expenses, professional service fees and other general corporate expenses.
Interest Income Interest income increased by $1.9 million, or 1448.9%, from $0.13 million for the year ended December 31, 2021 to $2.0 million for the year ended December 31, 2022. The significant increase was primarily due to higher interest rates of our bank deposits and cash proceeds from the Transactions.
Interest Income Interest income increased by $7.5 million, or 368.1%, from $2.0 million for the year ended December 31, 2022 to $9.5 million for the year ended December 31, 2023. The increase was primarily due to higher interest rates and higher time-weighted balance of our bank deposits in 2023 compared to 2022.
From January 1, 2020 through December 31, 2022, we incurred capital expenditure of less than $300,000 annually. Our lease obligations consist of the commitments under the rental agreements for our office premises. Our contractual obligations primarily consist of minimum commitments for marketing activities. From a dollar amount perspective, both lease obligations and contractual obligations have been immaterial.
Our lease obligations consist of the commitments under the rental agreements for our office premises. Our contractual obligations primarily consist of minimum commitments for marketing activities. From a dollar amount perspective, both lease obligations and contractual obligations have been immaterial.
Off-Balance Sheet Arrangements During the periods presented, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which were established for the purpose of facilitating off-balance sheet arrangements.
Material Contractual Obligations and Commitments During the periods presented, we did not have any material contractual obligations and commitments other than the convertible preferred shares that were converted into Ordinary Shares upon the Closing. 81 Table of Contents Off-Balance Sheet Arrangements During the periods presented, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which were established for the purpose of facilitating off-balance sheet arrangements.
The typical contract term is for one month. The numbers of advertisements are delivered and the associated fees are tracked on a daily basis, and we recognize revenue on a monthly basis based on the daily collected information. (4) Others Other revenue includes miscellaneous revenue streams such as hardware sales that do not fall under the aforementioned revenue types.
The typical contract term is for one month. The numbers of advertisements are delivered and the associated fees are tracked on a daily basis, and we recognize revenue on a monthly basis based on the daily collected information.
We also expect our sales and marketing expenses as a percentage of revenue to fluctuate period-over-period in the near term as we invest to accelerate market adoption of our technologies, and to decrease over the long term as we benefit from greater scale. 64 Table of Contents General and Administrative Expenses Our general and administrative expenses primarily consist of personnel-related expenses for employees involved in general corporate functions, including administration, legal, human resources, accounting and finance.
We also expect our sales and marketing expenses as a percentage of revenue to fluctuate period-over-period in the near term as we invest to accelerate market adoption of our technologies, and to decrease over the long term as we benefit from greater scale.
Any proceeds from the exercise of the Warrants would increase our liquidity, but our ability to fund our operations is not dependent upon receipt of cash proceeds from the exercise of the Warrants. 71 Table of Contents There is no assurance that our Warrants will be in the money prior to their expiration or that the holders of the Warrants will elect to exercise any or all of such Warrants.
There is no assurance that our Warrants will be in the money prior to their expiration or that the holders of the Warrants will elect to exercise any or all of such Warrants.
Our continued investment in technology also contributes to the increase of operational efficiency, enabling the same number of employees to deliver higher productivity over time. In addition, we believe that we will continue to benefit from economies of scale as we continue to actively manage the level of our general and administrative expenses.
In addition, we believe that we will continue to benefit from economies of scale as we continue to actively manage the level of our general and administrative expenses.
We are looking to expand into fashion (in areas such as eyewear, nail design, watches, accessories, and jewelry), clothing (such as clothes, hats, scarves, and shoes), and beyond fashion (such as solutions for hair salons, dental and orthodontics services, plastic surgery, live-streaming and video conferencing).
We are looking to expand into fashion (in areas such as jewelry, eyewear, nail design, watches, and accessories), and beyond fashion (such as solutions for hair salons, dental and orthodontics services, plastic surgery). Some of these services have already been deployed, and we are in discussions with various fashion brands in these areas as well.
Going forward, our increasing scale of business and advancement in technology may lead to lower marginal operating costs and expenses. We expect our customer acquisition efforts to benefit from our strong brand recognition and word-of-mouth referrals as we expand our customer base.
We expect our customer acquisition efforts to benefit from our strong brand recognition and word-of-mouth referrals as we expand our brand customer base.
Moreover, such non-IFRS measures are used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting. 70 Table of Contents B.
Moreover, such non-IFRS measures are used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting. B. Liquidity and Capital Resources Since inception, we have financed our operations mainly through equity contributions from our shareholders and payments received from our customers.
Our cash and cash equivalents are primarily denominated in U.S. dollars and we do not currently enter into any hedging arrangements. In addition, we have 6-month time deposits of $30.0 million classified as current financial assets at amortized cost according to IFRS as of the same date.
In addition , we have 6-month time deposits of $30.3 million cl assified as current financial assets at amortized cost according to IFRS and we do not have any loan and bank borrowings as of the same date.
Our momentum of acquiring new brands continues to be strong, growing from 338 brands as of December 31, 2020 to 444 and 509 as of December 31, 2021 and 2022, respectively, at a CAGR of 22.7%.
Our total revenue increased from $40.8 million in 2021 to $53.5 million in 2023, at a CAGR of 14.6%. Our momentum of acquiring new brands continues to be strong, growing from 444 cumulative brands as of December 31, 2021 to 509 and 645 as of December 31, 2022 and 2023, respectively, at a CAGR of 20.5% from 2021 to 2023.
Other Income Other income decreased by $43,000, or 36.4%, from $118,000 for the year ended December 31, 2021 to $75,000 for the year ended December 31, 2022.
Other Income Other income decreased by approximately $42 thousand, or 56%, from approximately $75 thousand for the year ended December 31, 2022 to approximately $33 thousand for the year ended December 31, 2023.
The success of our broad range of AR- and AI-powered business and consumer solutions is reliant on technology, which offers top-notch accuracy, scalability and performance.
Given that the success of our broad range of AI- and AR-powered business and consumer solutions is reliant on technology, which offers top-notch accuracy, scalability and performance, the above-mentioned efforts significantly contributes to the success of our business. Basis of Presentation Our consolidated financial statements have been prepared in accordance with IFRS.
Other Gains and Losses Other gains and losses, primarily consisting of adjustment in non-cash valuation loss on financial liabilities at fair value through profit or loss, changed favorably by $59.2 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily because the incremental fair value of our convertible redeemable preferred shares in 2022 was smaller than the incremental fair value in 2021.
Other Gains and Losses Other gains and losses, primarily consisting of adjustment in non-cash valuation gains (losses) on financial liabilities at fair value through profit or loss, were recorded as gains of $1.7 million for the year ended December 31, 2023, as compared to losses of $92.5 million for the year ended December 31, 2022, primarily due to the increase in fair value of convertible redeemable preferred shares in 2022, which were then converted to Class A Ordinary Shares and Class B Ordinary Shares upon recapitalization immediately before the Business Combination.
Such non-Key Customers primarily include non-Key Customer brands, consumers subscribing for premium value-added functions in our mobile apps and advertisement network service providers that display ads in our mobile apps. We monitor our mobile apps subscription business through MAUs and monthly active subscribers, and benchmark product ratings of, and functionalities offered by, our main mobile app competitors.
Such non-Key Customers primarily include non-Key Customer brands, consumers subscribing for premium value-added functions in our mobile apps and advertisement network service providers that display advertisements in our mobile apps. Our ability to generate revenues from our mobile app business primarily relies on converting app users to subscribers.
Adjusted Net Income (Loss) (Non-IFRS) Our adjusted net income in 2022 was $4.1 million, compared to an adjusted net loss of $1.8 million in 2021.
Net Income As a result of the foregoing, our net income in 2023 was $5.4 million, compared to net loss of $161.7 million in 2022. Adjusted Net Income (Loss) (Non-IFRS) Our adjusted net income in 2023 was $6.98 million, compared to an adjusted net income of $4.06 million in 2022.
For a reconciliation of adjusted EBITDA to net income (loss), please see the following reconciliation table. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year ended December 31 ​ ​ 2020 2021 2022 Items (Expressed in thousands of United States dollars) Net Income (Loss) $ (5,593) $ (156,852) $ (161,744) Depreciation and Amortization Expense ​ 492 ​ 645 ​ 766 Income Tax Expense ​ 385 ​ 417 ​ 292 Interest Income and Finance costs ​ (234) ​ (122) ​ (2,021) One-off Transaction Costs ​ — ​ 1,594 ​ 71,152 Non-Cash Equity-Based Compensation ​ 336 ​ 1,782 ​ 2,175 Non-Cash Valuation Loss of Financial Liabilities ​ 2,022 ​ 150,745 ​ 93,777 Foreign Exchange (Gain)/Loss ​ 770 ​ 893 ​ (1,303) Adjusted EBITDA ​ $ (1,822) ​ $ (898) ​ $ 3,094 ​ Non-IFRS financial measures are not defined under IFRS and are not presented in accordance with IFRS.
Years ended December 31, ($ in thousands, unless otherwise stated) 2021 2022 2023 Net Income (Loss) $ (156,852) $ (161,744) $ 5,416 One-off Transaction Costs 1,594 71,152 33 Non-Cash Equity-Based Compensation 1,782 2,175 3,210 Non-Cash Valuation (Gain)/Loss of financial liabilities 150,745 93,777 (1,641) Foreign Exchange (Gain)/Loss 893 (1,303) (34) Adjusted Net Income (Loss) $ (1,838) $ 4,057 $ 6,984 Non-IFRS financial measures are not defined under IFRS and are not presented in accordance with IFRS.
Currently, the applicable tax rate in our headquarters in Taiwan is 20% while the tax rate for unappropriated earnings is 5%. 65 Table of Contents Results of Operations Our results of operations for the years ended December 31, 2020, 2021 and 2022 are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2021 % ​ 2022 % ($in thousands, unless otherwise stated) 2020 2021 2022 Change Change Revenue 29,873 40,760 47,300 36.4 % 16.0 % Cost of Sales and Services (3,962) (5,736) (7,130) 44.8 % 24.3 % Gross profit 25,911 35,024 40,170 35.2 % 14.7 % Operating expenses: ​ Sales and marketing expenses (18,107) (25,287) (24,544) 39.7 % (2.9) % General and administrative expenses (3,078) (4,936) (76,219) 60.4 % 1,444.1 % Research and development expenses (7,567) (9,838) (10,481) 30.0 % 6.5 % Total operating expenses..
Currently, the applicable tax rate in our headquarters in Taiwan is 20% while the tax rate for unappropriated earnings is 5%. 76 Table of Contents Results of Operations Our results of operations for the years ended December 31, 2021, 2022 and 2023 are presented below: Years ended December 31, ($ in thousands, unless otherwise stated) 2021 2022 2023 2022 % Change 2023 % Change Revenue $ 40,760 $ 47,300 $ 53,505 16.0 % 13.1 % Cost of sales and services (5,736) (7,130) (10,400) 24.3 % 45.9 % Gross profit 35,024 40,170 43,105 14.7 % 7.3 % Operating expenses Sales and marketing expenses (25,287) (24,544) (25,725) (2.9) % 4.8 % General and administrative expenses (4,936) (76,219) (11,582) 1444.1 % (84.8) % Research and development expenses (9,838) (10,481) (11,458) 6.5 % 9.3 % Total operating expenses (40,061) (111,244) (48,765) 177.7 % (56.2) % Operating loss (5,037) (71,074) (5,660) 1311.0 % (92.0) % Non-operating income and expenses Interest income 131 2,029 9,498 1448.9 % 368.1 % Other income 118 75 33 (36.4) % (56.0) % Other gains and losses (151,638) (92,474) 1,675 (39.0) % (101.8) % Finance costs (9) (8) (15) (11.1) % 87.5 % Total non-operating income and expenses (151,398) (90,378) 11,191 (40.3) % (112.4) % Income (loss) before income tax (156,435) (161,452) 5,531 3.2 % (103.4) % Income tax expense (417) (292) (115) (30.0) % (60.6) % Net income (loss) $ (156,852) $ (161,744) $ 5,416 3.1 % (103.3) % Comparison of Year Ended December 31, 2022 to Year Ended December 31, 2023 Revenue Total revenue increased by $6.2 million, or 13.1%, from $47.3 million for the year ended December 31, 2022 to $53.5 million for the year ended December 31, 2023.
Our cash requirements for the three years ended December 31, 2022 and any subsequent interim period primarily include our capital expenditure, lease obligations, contractual obligations and other commitments. Our capital expenditures are primarily related to purchase of certain servers in our ordinary course of business and ERP system upgrade, which has been immaterial from a dollar amount perspective.
Our capital expenditures 79 Table of Contents are primarily related to purchase of certain servers in our ordinary course of business and ERP system upgrade, which has been immaterial from a dollar amount perspective. From January 1, 2021 through December 31, 2023, we incurred capital expenditure of less than $350,000 annually.

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We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors. Employment Agreements Alice H. Chang is party to a service agreement with us dated September 26, 2019 and as amended on January 24, 2022 (the “Service Agreement”). Under the Service Agreement, Ms.
We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors. Employment Agreements Alice H. Chang is party to a service agreement with us dated September 26, 2019 and as amended on January 24, 2022. Under the service agreement, Ms.
Meng-Shiou (Frank) Lee has served as our non-executive director since October 28, 2022 and has extensive experience in the accounting and finance industry. Mr. Lee currently serves as the Chief Executive Officer at First Elite CAPs & Co, a Taiwan-based accounting company, and is an Adjunct Lecturer at National Chung Cheng University and Director at CPA Associations R.O.C. in Taiwan.
Meng-Shiou (Frank) Lee has served as our non-executive director since October 28, 2022 and has extensive experience in the accounting and finance industry. Mr. Lee currently serves as the CEO at First Elite CAPs & Co, a Taiwan-based accounting company, and is an Adjunct Lecturer at National Chung Cheng University and Director at CPA Associations R.O.C. in Taiwan. Mr.
Taxpayer Participants who owns shares representing more than 10% of the voting power of all classes of our shares at the time of grant, the exercise price will be no less than 110% of the fair market value as determined pursuant to the Share Incentive Plan on the date of grant; and the exercise price of options granted to any other U.S.
Taxpayer Participants who owns shares representing more than 10% of the voting power of all classes of our shares at the time of grant, the exercise price will be no less than 110% of the fair market value 86 Table of Contents as determined pursuant to the Share Incentive Plan on the date of grant; and the exercise price of options granted to any other U.S.
Huang holds a Ph.D. in computer science from the University of California, Los Angeles, and a B.Sc. in electrical engineering from National Taiwan University. 75 Table of Contents Jianmei Lyu has served as our non-executive director since March 2022 and has over 17 years of experience in the consumer and retail industries. Ms.
Huang holds a Ph.D. in computer science from the University of California, Los Angeles, and a B.Sc. in electrical engineering from National Taiwan University. Jianmei Lyu has served as our non-executive director since March 2022 and has over 17 years of experience in the consumer and retail industries. Ms.
In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated from time to time, and the class rights vested thereunder in the holders of the shares.
In fulfilling their duty of care to us, our directors must ensure compliance with our Articles, as amended and restated from time to time, and the class rights vested thereunder in the holders of the shares.
(7) Represents (i) 4,891,467 Class A Ordinary Shares issued as entitlement shares for the cancellation of 5,327,500 Provident Class B Ordinary Shares previously held by the Sponsor, (ii) 3,000,000 Class A Ordinary Shares consisting of (a) 2,000,000 Class A Ordinary Shares converted from 2,000,000 Provident Class A Ordinary Shares acquired by an affiliate of the Sponsor in connection with the FPA Investment and (b) 1,000,000 Class A Ordinary Shares issuable upon the exercise of 1,000,000 82 Table of Contents Perfect Forward Purchase Warrants acquired by an affiliate of the Sponsor in connection with the FPA Investment, and (iii) 6,600,000 Class A Ordinary Shares issuable upon the exercise of 6,600,000 Warrants converted from 6,600,000 Private Placement Warrants previously held by the Sponsor.
(4) Represents (i) 4,891,467 Class A Ordinary Shares issued as entitlement shares for the cancellation of 5,327,500 Provident Class B Ordinary Shares previously held by the Sponsor, (ii) 3,000,000 Class A Ordinary Shares consisting of (a) 2,000,000 Class A Ordinary Shares converted from 2,000,000 Provident Class A Ordinary Shares acquired by an affiliate of the Sponsor in connection with the FPA Investment and (b) 1,000,000 Class A Ordinary Shares issuable upon the exercise of 1,000,000 Perfect Forward Purchase Warrants acquired by an affiliate of the Sponsor in connection with the FPA Investment, and (iii) 6,600,000 Class A Ordinary Shares issuable upon the exercise of 6,600,000 Warrants converted from 6,600,000 Private Placement Warrants previously held by the Sponsor.
The audit committee is responsible for, among other things: ● the quality and integrity of our financial statements, ● internal control over financial reporting and disclosure controls and procedures, ● our compliance with legal and regulatory requirements, ● our independent registered public accounting firm’s qualifications and independence, ● the performance of our internal audit function, and ● the performance of our independent registered public accounting firm.
The audit committee is responsible for, among other things: • the quality and integrity of our financial statements, 88 Table of Contents • internal control over financial reporting and disclosure controls and procedures, • our compliance with legal and regulatory requirements, • our independent registered public accounting firm’s qualifications and independence, • the performance of our internal audit function, and • the performance of our independent registered public accounting firm.
We have registered an aggregate of 5,311,310 Ordinary Shares available for issuance under the Share Incentive Plan in the registration statement on Form S-8 (File No. 333-268059) filed with the SEC on October 28, 2022.
We have registered an 85 Table of Contents aggregate of 5,311,310 Ordinary Shares available for issuance under the Share Incentive Plan in the registration statement on Form S-8 (File No. 333-268059) filed with the SEC on October 28, 2022.
Our Board shall have such powers and authorizations related to the administration of the Share Incentive Plan as are consistent with our memorandum and articles of association and applicable laws.
Our Board shall have such powers and authorizations related to the administration of the Share Incentive Plan as are consistent with our Articles and applicable laws.
Jau-Hsiung Huang has served as our non-executive director since July 2019. Dr. Huang founded CyberLink in February 1996 and has served as its chairman of the board of directors since January 2001 and its Chief Executive Officer since September 2015. Dr.
Jau-Hsiung Huang has served as our non-executive director since July 2019. Dr. Huang founded CyberLink in February 1996 and has served as its chairman of the board of directors since January 2001 and its CEO since September 2015. Dr.
His accounting experience includes working as a Certified Public Accountant at Deloitte Touche Tohmatsu Limited in its Taiwan office from July 1988 to July 1997 and at First Elite CAPs & Co since July 1997. Mr. Lee holds an M.A. in accounting from National Chengchi University and a B.A. in accounting from National Taiwan University.
His accounting experience includes working as a Certified Public Accountant at Deloitte Touche Tohmatsu Limited in its Taiwan office 84 Table of Contents from July 1988 to July 1997 and at First Elite CAPs & Co since July 1997. Mr. Lee holds an M.A. in accounting from National Chengchi University and a B.A. in accounting from National Taiwan University.
Jih has been serving as an independent director at CTBC Securities Company Limited, a Taiwan-based financial holding company, since May 2020. From January 2007 to August 2019, Ms. Jih was the Chairwoman and Chief Executive Officer of BNP Paribas Asset Management Taiwan Company Limited. From July 2003 to January 2007, Ms.
Jih has been serving as an independent director at CTBC Securities Company Limited, a Taiwan-based financial holding company, since May 2020. From January 2007 to August 2019, Ms. Jih was the chairwoman and CEO of BNP Paribas Asset Management Taiwan Company Limited. From July 2003 to January 2007, Ms.
Inc., a British Virgin Islands company wholly owned by World Speed Company Limited, which is a British Virgin Islands company wholly owned by Ms. Alice H. Chang, (c) 523,008 Class B Ordinary Shares held by World Speed Company Limited, a British Virgin Islands company wholly owned by Ms. Alice H.
Inc., a British Virgin Islands company wholly owned by World Speed Company Limited, which is a British Virgin Islands company wholly owned by Ms. Alice H. Chang, (c) 523,008 Class B Ordinary Shares held by World Speed Company Limited, a British Virgin Islands company wholly owned by Ms. Alice H. Chang, (d) 973,744 Class B Ordinary Shares held by Ms.
Ms. Jih holds an MBA from Indiana University and a BBA from National Chengchi University. Family Relationships Jau-Hsiung Huang and Alice H. Chang are husband and wife. There are no other familial relationships among our directors and executive officers. 76 Table of Contents B.
Ms. Jih holds an MBA from Indiana University and a BBA from National Chengchi University. Family Relationships Jau-Hsiung Huang and Alice H. Chang are husband and wife. There are no other familial relationships among our directors and executive officers. B.
Because a portion of these shares are held by brokers or other nominees, we cannot ascertain the exact number of Class A Ordinary Shares ultimately held by holders in the United States. As of March 15, 2023, none of our Class B Ordinary Shares was held by record holders in the United States.
Because a portion of these shares are held by brokers or other nominees, we cannot ascertain the exact number of Class A Ordinary Shares ultimately held by holders in the United States. As of March 20, 2024, none of our Class B Ordinary Shares was held by record holders in the United States.
Mr. Lee has served on the board of directors at several publicly listed companies, including Mechema Chemicals International Company Limited (TWSE: 4721) since June 2017, China Electric Manufacturing Corp. (TWSE: 1611) since June 2019, and TOPCO Technologies Corp. (TWSE: 3388) since May 2020. Mr. Lee has been practicing as a Certified Public Accountant since 1988.
Lee has served on the board of directors at several publicly listed companies, including Mechema Chemicals International Company Limited (TWSE: 4721) since June 2017, and TOPCO Technologies Corp. (TWSE: 3388) since May 2020. Mr. Lee has been practicing as a Certified Public Accountant since 1988.
Chen spent 22 years at CyberLink since February 2000, with her last two roles being the Special Assistant of the Chief Executive Officer’s Office since March 2021 and the Head of Finance and Accounting since February 2000. Prior to joining CyberLink, Ms. Chen worked at Deloitte from September 1994 to August 1997. Ms.
Chen spent 22 years at CyberLink since February 2000, with her last two roles being the special assistant of the CEO since March 2021 and the Head of Finance and Accounting since February 2000. Prior to joining CyberLink, Ms. Chen worked at Deloitte from September 1994 to August 1997. Ms.
Chang ​ 61 ​ Chief Executive Officer and Chairwoman of the Board Michael Aw ​ 47 ​ Non-executive Director Jau-Hsiung Huang ​ 63 ​ Non-executive Director Jianmei Lyu ​ 41 ​ Non-executive Director Meng-Shiou (Frank) Lee ​ 61 ​ Independent Non-executive Director Philip Tsao ​ 62 ​ Independent Non-executive Director Chung-Hui (Christine) Jih ​ 61 ​ Independent Non-executive Director Pin-Jen (Louis) Chen ​ 44 ​ Executive Vice President and Chief Strategy Officer Wei-Hsin Tsen (Johnny Tseng) ​ 55 ​ Senior Vice President and Chief Technology Officer Weichuan (Wayne) Liu ​ 53 ​ Chief Growth Officer and President of Americas Hsiao-Chuan (Iris) Chen ​ 54 ​ Vice President and Head of Finance and Accounting ​ The business address of each director and executive officer is 14F, No. 98 Minquan Road, Xindian District, New Taipei City 231, Taiwan.
Chang 62 CEO and chairwoman of the Board Michael Aw 48 Non-executive Director Jau-Hsiung Huang 64 Non-executive Director Jianmei Lyu 42 Non-executive Director Meng-Shiou (Frank) Lee 62 Independent Non-executive Director Philip Tsao 63 Independent Non-executive Director Chung-Hui (Christine) Jih 62 Independent Non-executive Director Pin-Jen (Louis) Chen 45 Executive Vice President and Chief Strategy Officer Wei-Hsin Tsen (Johnny Tseng) 56 Senior Vice President and Chief Technology Officer Weichuan (Wayne) Liu 54 Chief Growth Officer and President of Americas Hsiao-Chuan (Iris) Chen 55 Vice President and Head of Finance and Accounting The business address of each director and executive officer is 14F, No. 98 Minquan Road, Xindian District, New Taipei City 231, Taiwan.
In general, in identifying and evaluating nominees for directors, our Board considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, character, and the ability to exercise sound judgement, and relevant skills and experience, including financial literacy, and experience in the context of the needs of our Board. 80 Table of Contents D.
In general, in identifying and evaluating nominees for directors, our Board considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, character, and the ability to exercise sound judgement, and relevant skills and experience, including financial literacy, and experience in the context of the needs of our Board. D. Employees See “Item 4.
Employees See “Item 4. Information on the Company — B. Business Overview — Employees and Human Capital.” E.
Information on the Company — B. Business Overview — Employees and Human Capital.” E.
Share Ownership The following table sets forth information regarding the beneficial ownership of Ordinary Shares to the extent known to us as of the date of this annual report by: ● each person who beneficially owns 5.0% or more of the outstanding Ordinary Shares; ● each person who is our executive officer or director; and ● all of our executive officers and directors as a group.
Share Ownership Except as specifically noted, the following table sets forth information regarding the beneficial ownership of Ordinary Shares to the extent known to us as of March 20, 2024 by: • each person who beneficially owns 5.0% or more of the outstanding Ordinary Shares; • each person who is our executive officer or director; and • all of our executive officers and directors as a group.
For the year ended December 31, 2022, options to purchase 344,350 Class A Ordinary Shares were granted to our executive officers and directors as a group under the Share Incentive Plan at exercise prices of $3.95 per Class A Ordinary Share. None of such options have been vested and exercised as of December 31, 2022.
For the year ended December 31, 2023, options to purchase 330,180 Class A Ordinary Shares were granted to our executive officers and directors as a group under the Share Incentive Plan at exercise prices of $4.93 per Class A Ordinary Share. None of such options have been vested and exercised as of December 31, 2023.
Compensation For the year ended December 31, 2022, we paid an aggregate of $2.8 million in cash and benefits to our executive officers and directors, of which $0.4 million was paid in the form of stock options.
Compensation For the year ended December 31, 2023, we paid an aggregate of $3.05 million in cash and benefits to our executive officers and directors, of which $0.55 million was paid in the form of stock options.
For the year ended December 31, 2022, options to purchase an aggregate of 2,142,545 Class A Ordinary Shares were granted to our directors, executive officers and other grantees under the Share Incentive Plan at exercise prices of $3.95 per Class A Ordinary Share.
For the year ended December 31, 2023, options to purchase an aggregate of 2,280,495 Class A Ordinary Shares were granted to our directors, executive officers and other grantees under the Share Incentive Plan at exercise prices of $2.43 to $7.2 per Class A Ordinary Share.
Duties of Directors Under the laws of the Cayman Islands, our directors owe fiduciary duties to our Company, including a duty of loyalty, a duty to act honestly, and a duty to act in what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose.
Duties of Directors Under the laws of the Cayman Islands, our directors owe fiduciary duties to our Company, including a duty of loyalty, a duty to act honestly, and a duty to act in what they consider in good faith to be in our best interests.
The functions and powers of our Board include, among others: ● convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; ● declaring dividends and distributions; ● appointing officers and determining the term of office of the officers; ● exercising the borrowing powers of our Company and mortgaging the property of our Company; and ● approving the transfer of shares in our Company, including the registration of such shares in our register of members. 79 Table of Contents Terms of Directors and Executive Officers Our Board is divided into three classes: Class I, Class II and Class III.
The functions and powers of our Board include, among others: • convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; • declaring dividends and distributions; • appointing officers and determining the term of office of the officers; • exercising the borrowing powers of our Company and mortgaging the property of our Company; and • approving the transfer of shares in our Company, including the registration of such shares in our register of members.
Aw has served on the board of directors at Pomelo Fashion Company Limited, a technology-driven modern fashion brand in Southeast Asia since October 2017 and Horangi Private Limited Company, a high-growth cybersecurity SaaS company in Southeast Asia, since January 2020. In addition, Mr.
Aw has served on the board of directors at Pomelo Fashion Company Limited, a technology-driven modern fashion brand in Southeast Asia since October 2017. In addition, Mr.
Chang and (d) 973,744 Class B Ordinary Shares held by Ms. Alice H. Chang. (2) Represents Class A Ordinary Shares indirectly held by Philip Tsao through Perfect AA Corp.
Alice H. Chang, and (e) 84,044 Class A Ordinary Shares held by Ms. Alice H. Chang. (2) Represents Class A Ordinary Shares indirectly held by Philip Tsao through Perfect AA Corp.
Chang — — 16,788,718 (1) ​ 100 % 62.3 % Wei-Hsin Tsen (Johnny Tseng) 862,769 * % — — * % Weichuan (Wayne) Liu 377,103 * % — — * % Pin-Jen (Louis) Chen 283,491 * % — — * % Jau-Hsiung Huang 148,274 * % — — * % Hsiao-Chuan (Iris) Chen 69,932 * % — — * % Michael Aw — — — — — ​ Jianmei Lyu — — — — — ​ Meng-Shiou (Frank) Lee — — — — — ​ Philip Tsao 5,311 (2) ​ * % — — * % Chung-Hui (Christine) Jih — — — — — ​ All directors and executive officers as a group 1,746,880 1.7 % 16,788,718 100 % 63.0 % Five Percent or More Shareholders: ​ GOLDEN EDGE CO., LTD. — — 10,622,620 (1) ​ 63.3 % 39.4 % DVDonet.com.
Chang (1) 84,044 *% 16,788,718 100 % 66.4 % Wei-Hsin Tsen (Johnny Tseng) 762,330 *% — — *% Weichuan (Wayne) Liu 353,471 *% — — *% Pin-Jen (Louis) Chen 118,062 *% — — *% Jau-Hsiung Huang 148,274 *% — — *% Hsiao-Chuan (Iris) Chen 69,932 *% — — *% Michael Aw — — — — — Jianmei Lyu — — — — — Meng-Shiou (Frank) Lee — — — — — Philip Tsao 5,311 (2) *% — — *% Chung-Hui (Christine) Jih — — — — — All directors and executive officers as a group 1,541,424 1.8 % 16,788,718 100 % 67.0 % Five Percent or More Shareholders: GOLDEN EDGE CO., LTD. — — 10,622,620 (1) 63.3 % 42.0 % DVDonet.com.
Liu worked as a senior engineering manager at NVIDIA Corporation (Nasdaq: NVDA). Mr. Liu holds an MBA from Santa Clara University, an M.Sc. from Case Western Reserve University, a B.Sc. from National Tsing Hua University, and a Ph.D. degree in electrical engineering from University of Southern California.
Liu holds an MBA from Santa Clara University, an M.Sc. from Case Western Reserve University, a B.Sc. from National Tsing Hua University, and a Ph.D. degree in electrical engineering from University of Southern California.
The Share Incentive Plan has a term of ten years from December 13, 2021, being the date on which the Share Incentive Plan was approved and adopted by our Board, after which no further options shall be granted, but the provisions of the Share Incentive Plan shall remain in full force and effect to the extent necessary to give effect to the exercise of any options granted prior thereto or otherwise as may be required in accordance with the provisions of the Share Incentive Plan. 78 Table of Contents Insurance and Indemnification To the extent permitted under Cayman Islands law, we are empowered to indemnify our directors against any liability they incur by reason of their directorship.
The Share Incentive Plan has a term of ten years from December 13, 2021, being the date on which the Share Incentive Plan was approved and adopted by our Board, after which no further options shall be granted, but the provisions of the Share Incentive Plan shall remain in full force and effect to the extent necessary to give effect to the exercise of any options granted prior thereto or otherwise as may be required in accordance with the provisions of the Share Incentive Plan.
Our directors also owe to our Company a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances.
Our directors 87 Table of Contents must also exercise their powers only for a proper purpose. Our directors also owe to our Company a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances.
Awards of options granted under the Share Incentive Plan are evidenced by grant notices that set forth, consistent with the Share Incentive Plan, the terms, conditions and limitations for each award. Conditions of Awards .
Our or our affiliates’ employees, directors, agents, consultants or service providers are eligible to participate in the Share Incentive Plan. Grant Notices . Awards of options granted under the Share Incentive Plan are evidenced by grant notices that set forth, consistent with the Share Incentive Plan, the terms, conditions and limitations for each award. Conditions of Awards .
Inc — — 4,669,346 (1) ​ 27.8 % 17.3 % CyberLink International 36,960,961 (3) ​ 36.4 % — — 13.7 % Taobao China Holding Limited 10,887,904 (4) ​ 10.7 % — — 4.0 % GS Entities 8,065,686 (5) ​ 7.9 % — — 3.0 % CCV Entities 5,725,425 (6) ​ 5.6 % — — 2.1 % Provident Acquisition Holdings Ltd. 14,491,467 (7) ​ 13.3 % — — 5.2 % Perfect AA Corp (8) 5,115,694 5.0 % — — 1.9 % * Less than 1%. 81 Table of Contents † For each person or group, percentage of class is calculated by dividing the number of Class A Ordinary Shares or Class B Ordinary Shares beneficially owned by such person or group by the total Class A Ordinary Shares or Class B Ordinary Shares, respectively. †† For each person or group, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of Class A Ordinary Shares and Class B Ordinary Shares.
Inc — — 4,669,346 (1) 27.8 % 18.5 % CyberLink International 36,960,961 (3) 43.5 % — — 14.6 % Provident Acquisition Holdings Ltd. 14,491,467 (4) 17.0 % — — 5.7 % Yi-Chen Huang 4,567,425 (5) 5.4 % — — 1.8 % Taobao China Holding Limited 4,419,823 (6) 5.2 % — — 1.7 % Perfect AA Corp 4,318,337 (7) 5.1 % — — 1.7 % ________________________________ * Less than 1%. † For each person or group, percentage of class is calculated by dividing the number of Class A Ordinary Shares or Class B Ordinary Shares beneficially owned by such person or group by the total Class A Ordinary Shares or Class B Ordinary Shares, respectively.
The number of directors in each class shall be as nearly equal as possible. On October 28, 2022, our Board adopted a resolution that each of Jianmei Lyu and Philip Tsao be classified as a Class I Director, each of Michael Aw and Chung-Hui (Christine) Jih be classified as a Class II Director, and each of Alice H.
On October 28, 2022, our Board adopted a resolution that each of Jianmei Lyu and Philip Tsao be classified as a Class I Director, each of Michael Aw and Chung-Hui (Christine) Jih be classified as a Class II Director, and each of Alice H. Chang, Jau-Hsiung Huang and Meng-Shiou (Frank) Lee be classified as a Class III Director.
Our Board shall have the full power and authority to take all actions and to make all determinations required or provided for under the Share Incentive Plan, and to amend or terminate the Share Incentive Plan and adopt a new plan, as long as the participants’ economic interests that he or she would be otherwise entitled to are not materially adversely affected. 77 Table of Contents If our Board proposes any amendment to the Share Incentive Plan that will have a material adverse effect on the economic interest of the participants, such amendment will take effect after the approval of the option holders representing a majority of then-granted options.
Our Board shall have the full power and authority to take all actions and to make all determinations required or provided for under the Share Incentive Plan, and to amend or terminate the Share Incentive Plan and adopt a new plan, as long as the participants’ economic interests that he or she would be otherwise entitled to are not materially adversely affected.
Tseng joined us at our inception in June 2015 as the Senior Vice President of Research and Development, leading the Company’s engineering efforts. Prior to joining Perfect, Dr. Tseng spent 18 years at CyberLink, where he served as the Senior Vice President of its Research and Development Department, and was a director and manager of its Architecture Department. Dr.
Dr. Tseng also served as our director from July 2018 to October 2022. Dr. Tseng joined us at our inception in June 2015 as the Senior Vice President of Research and Development, leading the Company’s engineering efforts. Prior to joining Perfect, Dr.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of the Company. F. Disclosure of A Registrant’s Action to Recover Erroneously Awarded Compensation Not Applicable.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of the Company. F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation There was no erroneously awarded compensation that was required to be recovered pursuant to the Company’s clawback policy during the fiscal year ended December 31, 2023.
Liu joined us at our inception in June 2015 as the Vice President of Business Development and Marketing and the General Manager of the Company’s U.S. subsidiary. Prior to joining us, Mr. Liu served as the Associate Vice President of Business Development at CyberLink from October 2009 to May 2015. From January 2003 to September 2009, Mr.
Weichuan (Wayne) Liu has served as our Chief Growth Officer and President of Americas since March 2022. Mr. Liu joined us at our inception in June 2015 as the Vice President of Business Development and Marketing and the General Manager of the Company’s U.S. subsidiary. Prior to joining us, Mr.
(8) Perfect AA Corp. is a British Virgin Islands company that holds Class A Ordinary Shares of the Company on behalf of employees who have exercised their stock options.
The above information is based on the Schedule 13G filed by Alibaba Group Holding Limited, among others, on January 29, 2024. (7) Perfect AA Corp. is a British Virgin Islands company that holds Class A Ordinary Shares of the Company on behalf of employees who have exercised their stock options.
Chen holds an M.Sc. and a B.Sc. in computer science from National Taiwan University. 74 Table of Contents Wei-Hsin Tsen (Johnny Tseng) has served as our Senior Vice President and Chief Technology Officer since January 2019. Dr. Tseng also served as our director from July 2018 to October 2022. Dr.
Chen spent 12 years at CyberLink, where he served as the Vice President of Business Development and Marketing, Head of Consumer Business, and as a development engineer. Mr. Chen holds an M.Sc. and a B.Sc. in computer science from National Taiwan University. Wei-Hsin Tsen (Johnny Tseng) has served as our Senior Vice President and Chief Technology Officer since January 2019.
The Service Agreement also includes certain restrictive covenants, which include confidentiality and non-disclosure restrictions and non-competition restrictions that apply during the term and for certain periods following specified terminations of service.
Chang agreed to serve as our CEO, until her appointment is terminated by Ms. Chang’s death, disability or a termination by a decision of the Board. The service agreement also includes certain restrictive covenants, which include confidentiality and non-disclosure restrictions and non-competition restrictions that apply during the term and for certain periods following specified terminations of service.
(3) Represents (a) 36,660,961 Class A Ordinary Shares issued to CyberLink International in connection with the Recapitalization before the Closing and (b) 300,000 Class A Ordinary Shares held by CyberLink International in connection with its PIPE Investment. (4) Represents Class A Ordinary Shares directly held by Taobao China Holding Limited, a limited liability company incorporated in Hong Kong.
(3) Represents (a) 36,660,961 Class A Ordinary Shares issued to CyberLink International in connection with the Recapitalization before the Closing and (b) 300,000 Class A Ordinary Shares held by CyberLink International in 90 Table of Contents connection with its PIPE Investment. The above information is based on the Schedule 13D filed by CyberLink, among others, on February 13, 2023.
To our knowledge, as of March 15, 2023, 7,680,653 Class A Ordinary Shares, or 7.57% of the total outstanding Class A Ordinary Shares, were held by 12 record holders in the United States.
To our knowledge, as of March 20, 2024, 37,405,708 Class A Ordinary Shares, or 43.98% of the total outstanding Class A Ordinary Shares, were held by three record holders in the United States (including Cede & Co., the nominee of the Depository Trust Company).
However, these shares are not included in the computation of the percentage ownership of any other person. Each holder of Class A Ordinary Shares is entitled to one vote per share, and each holder of Class B Ordinary Shares is entitled to ten (10) votes per share.
However, these shares are not included in the computation of the percentage ownership of any other person.
The total number of Ordinary Shares outstanding as of the date of this annual report is 118,263,795 shares, consisting of 101,475,077 Class A Ordinary Shares and 16,788,718 Class B Ordinary Shares. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of ​ ​ Class A Ordinary ​ % of ​ Class B Ordinary ​ % of ​ voting Beneficial Owners Shares Class† Shares Class† power†† Directors and Executive Officers: ​ Alice H.
Beneficial Owners Class A Ordinary Shares % of Class† Class B Ordinary Shares % of Class† % of voting power†† Directors and Executive Officers: Alice H.
Tseng holds a Ph.D. and a B.Sc. in computer science as well as an EMBA from National Taiwan University. Weichuan (Wayne) Liu has served as our Chief Growth Officer and President of Americas since March 2022. Mr.
Tseng spent 18 years at CyberLink, where he served as the Senior Vice President of its Research and Development Department, and was a director and manager of its Architecture Department. Dr. Tseng holds a Ph.D. and a B.Sc. in computer science as well as an EMBA from National Taiwan University.
We have obtained directors’ and officers’ insurance to insure such persons against certain liabilities.
Insurance and Indemnification To the extent permitted under Cayman Islands law, we are empowered to indemnify our directors against any liability they incur by reason of their directorship. We have obtained directors’ and officers’ insurance to insure such persons against certain liabilities.
Removed
Chen spent 12 years at CyberLink, where he served as the Vice President of Business Development and Marketing, Head of Consumer Business, and as a development engineer. Mr.
Added
Liu served as the Associate Vice President of 83 Table of Contents Business Development at CyberLink from October 2009 to May 2015. From January 2003 to September 2009, Mr. Liu worked as a senior engineering manager at NVIDIA Corporation (Nasdaq: NVDA). Mr.
Removed
Chang agreed to serve as our CEO until January 24, 2024, subject to earlier termination due to Ms. Chang’s death or disability or a termination by a unanimous decision of the Board.
Added
If our Board proposes any amendment to the Share Incentive Plan that will have a material adverse effect on the economic interest of the participants, such amendment will take effect after the approval of the option holders representing a majority of then-granted options. Types of Awards. The Share Incentive Plan permits the awards of options. Eligibility.
Removed
Types of Awards. The Share Incentive Plan permits the awards of options. Eligibility. Our or our affiliates’ employees, directors, agents, consultants or service providers are eligible to participate in the Share Incentive Plan. Grant Notices .
Added
Terms of Directors and Executive Officers Our Board is divided into three classes: Class I, Class II and Class III. The number of directors in each class shall be as nearly equal as possible.
Removed
Chang, Jau-Hsiung Huang and Meng-Shiou (Frank) Lee be classified as a Class III Director.
Added
Each holder of Class A Ordinary Shares is entitled to one vote per share, and each holder of Class B Ordinary Shares is entitled to ten (10) votes per share. 89 Table of Contents The total number of Ordinary Shares outstanding as of March 20, 2024 is 101,848,671 shares, consisting of 85,059,953 Class A Ordinary Shares and 16,788,718 Class B Ordinary Shares.
Removed
(5) Represents (a) 6,452,549 Class A Ordinary Shares held by Goldman Sachs Asia Strategic II Pte.
Added
The percentages are calculated based on 85,059,953 Class A Ordinary Shares and 16,788,718 Class B Ordinary Shares. †† For each person or group, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of Class A Ordinary Shares and Class B Ordinary Shares.
Removed
Ltd., a private company limited by shares incorporated under the laws of Singapore (“GSAS II”), which is an indirect wholly-owned subsidiary of The Goldman Sachs Group, Inc., (b) 1,058,794 Class A Ordinary Shares held by StoneBridge 2020, L.P., a limited partnership formed and existing under the laws of the State of Delaware, United States (“StoneBridge 2020”), of which an affiliate of The Goldman Sachs Group, Inc. is the general partner, and (c) 554,343 Class A Ordinary Shares held by StoneBridge 2020 Offshore Holdings II, L.P., an exempted limited partnership registered in the Cayman Islands (“StoneBridge 2020 II”, together with GSAS II and StoneBridge 2020, the “GS Entities”), of which an affiliate of The Goldman Sachs Group, Inc. is the general partner.
Added
(5) Yi-Chen Huang beneficially owns (a) 4,333,816 Class A Ordinary Shares held by Ideal Max Management Limited, a British Virgin Islands company wholly owned by Mr. Yi-Chen Huang and (b) 233,609 Class A Ordinary Shares held by Mr. Yi-Chen Huang. The above information is based on the Schedule 13G filed by Yi-Chen Huang, among others, on February 2, 2024.
Removed
By virtue of the relationships among The Goldman Sachs Group, Inc. and the GS Entities, The Goldman Sachs Group, Inc. may be deemed a beneficial owner of the shares held by the GS Entities. The Goldman Sachs Group, Inc. disclaims beneficial ownership of such securities except to the extent of its pecuniary interest therein.
Added
(6) Represents Class A Ordinary Shares directly held by Taobao China Holding Limited, a limited liability company incorporated in Hong Kong.
Removed
(6) Represents (a) 2,503,760 Class A Ordinary Shares held by Ningbo New Summit Private Equity Fund I L.P. and (b) 3,221,665 Class A Ordinary Shares held by CCV Fund I LP (together with Ningbo New Summit Private Equity Fund I L.P., the “CCV Entities”).
Added
The above information is based on the Schedule 13G filed by Perfect AA Corp. , among others, on February 2, 2024.
Removed
Ningbo New Summit Private Equity Fund I L.P. is a limited partnership established under the laws of the PRC. The general partner of it is Ningbo CCV Private Equity Investment Management L.P., which is ultimately controlled by Mr. Wei Zhou. Each of Ningbo CCV Private Equity Investment Management L.P. and Mr.
Removed
Zhou may be deemed to exercise voting and investment control over the shares held by Ningbo New Summit Private Equity Fund I L.P. CCV Fund I LP is a limited partnership established under law of the Cayman Islands. The general partner of it is CCV Fund I GP Limited, which is ultimately controlled by Mr. Wei Zhou.
Removed
Each of CCV Fund I GP Limited and Mr. Zhou may be deemed to exercise voting and investment control over the shares held by CCV Fund I LP. Each of Mr. Zhou, Ningbo CCV Private Equity Investment Management L.P. and CCV Fund I GP Limited disclaims beneficial ownership in the securities except to the extent their pecuniary interest therein.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

12 edited+5 added−0 removed31 unchanged
(Japan), a wholly-owned subsidiary of Perfect Corp. organized and existing under the laws of Japan (“Perfect Japan”), has entered into an office sharing agreement (the “Japan Office Sharing Agreement”), dated as of January 1, 2020, as amended on June 1, 2021, with CyberLink Inc., a wholly-owned subsidiary of CyberLink organized and existing under the laws of Japan (“CyberLink Japan”), to share a portion of CyberLink Japan’s premises for a monthly sharing fee of JPY805,407 for one (1) year starting from January 1, 2020 and shall be automatically renewed for an additional one (1) year at each anniversary, subject to written notice of termination by either party at least 30 days prior to the expiry of the relevant term.
(Japan), a wholly-owned subsidiary of Perfect Corp. organized and existing under the laws of Japan (“Perfect Japan”), has entered into an office sharing agreement (the “Japan Office Sharing Agreement”), dated as of January 1, 2020, as amended on June 1, 2021, and automatically renewed for an one-year term on each anniversary, with CyberLink Inc., a wholly-owned subsidiary of CyberLink organized and existing under the laws of Japan (“CyberLink Japan”), to share a portion of CyberLink Japan’s premises for a monthly sharing fee of JPY805,407 for one (1) year starting from January 1, 2020 and shall be automatically renewed for an additional one (1) year at each anniversary, subject to written notice of termination by either party at least 30 days prior to the expiry of the relevant term.
Cross License Agreement and Assignment Agreement — PerfectCam Perfect Corp. has entered into a cross license agreement, dated as of August 8, 2017 and renewed on January 1, 2021, with CyberLink (the “PerfectCam Cross License Agreement”).
Cross License Agreement and Assignment Agreement — PerfectCam Perfect Corp. has entered into a cross license agreement, dated as of August 8, 2017 and automatically renewed on January 1, 2021, with CyberLink (the “PerfectCam Cross License Agreement”).
For each of CyberLink International, Founder Parties, Pin-Jen (Louis) Chen and Wei-Hsin Tsen (Johnny Tseng), the applicable lock-up period will be 12 months from and after October 28, 2022. 84 Table of Contents Perfect Shareholder Voting Agreement Concurrently with the execution of the Business Combination Agreement on March 3, 2022, Perfect Corp., Provident and certain shareholders of Perfect Corp.
For each of CyberLink International, Founder Parties, Pin-Jen (Louis) Chen and Wei-Hsin Tsen (Johnny Tseng), the applicable lock-up period will be 12 months from and after October 28, 2022. 92 Table of Contents Perfect Shareholder Voting Agreement Concurrently with the execution of the Business Combination Agreement on March 3, 2022, Perfect Corp., Provident and certain shareholders of Perfect Corp.
Item 7. Major Shareholders and Related Party Transactions A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees — E. Share Ownership.” 83 Table of Contents B.
Item 7. Major Shareholders and Related Party Transactions A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees — E. Share Ownership.” 91 Table of Contents B.
The term of the MakeupDirector Cross License Agreement is three (3) years starting from July 1, 2016 and shall be automatically renewed for an additional three (3) years, subject to written notice of termination by either party at least one (1) year prior to renewal of the term.
The term of the MakeupDirector Cross License Agreement is three (3) years starting from July 1, 2016 and shall be 93 Table of Contents automatically renewed for an additional three (3) years, subject to written notice of termination by either party at least one (1) year prior to renewal of the term.
Ltd., StoneBridge 2020, L.P. and StoneBridge 2020 Offshore Holdings II, L.P.) may appoint one (1) director. Such director appointment rights were reflected in our Fourth Amended and Restated Memorandum and Articles of Association as well as our Fifth Amended and Restated Memorandum and Articles of Association.
Ltd., StoneBridge 2020, L.P. and StoneBridge 2020 Offshore Holdings II, L.P.) may appoint one (1) director. Such director appointment rights were reflected in our Fourth Amended and Restated Memorandum and Articles of Association as well as our Fifth Amended and Restated Memorandum and Articles of Association. We have adopted the Articles which no longer contains such rights.
License Agreement — YouCam Perfect Taiwan has entered into a license agreement (the “YouCam License Agreement”), dated as of November 30, 2019, with CyberLink. Pursuant to the YouCam License Agreement, Perfect Taiwan grants to CyberLink a non-exclusive, non-transferable and non-sublicensable worldwide license to use its AR technology to be embedded into CyberLink’s YouCam software (“YouCam”) and the SDK of YouCam.
Pursuant to the YouCam License Agreement, Perfect Taiwan grants to CyberLink a non-exclusive, non-transferable and non-sublicensable worldwide license to use its AR technology to be embedded into CyberLink’s YouCam software (“YouCam”) and the SDK of YouCam.
Rental Agreements Perfect Taiwan entered into a property lease agreement, dated as of June 1, 2017 (the “Taiwan Property Lease Agreement”), with CyberLink for a monthly rental of NTD538,842 to lease premises for use as offices (the “Office Leases”) for two years starting from June 1, 2017. The rental was paid to CyberLink on a monthly basis.
Rental Agreements Perfect Taiwan entered into a property lease agreement, dated as of June 1, 2017 (the “Taiwan Property Lease Agreement”), with CyberLink for a monthly rental of NTD538,842 to lease premises located on the 14th floor of No. 98, No. 98-1, No. 100 and No. 100-1, Minquan Rd., Xindian Dist., New Taipei City 231, Taiwan for use as offices (the “Office Leases”) for two years starting from June 1, 2017.
The term of the YouCam License Agreement is three (3) years starting from November 30, 2019 and shall be automatically renewed for an additional one (1) year, subject to written notice of termination by either party at least one (1) year prior to renewal of the term. 86 Table of Contents Services Outsourcing Agreement Perfect Taiwan has entered into a services outsourcing agreement (the “Services Outsourcing Agreement”), dated as of January 1, 2019, with CyberLink, pursuant to which CyberLink agrees to provide support and assistance in legal services, network infrastructure and equipment maintenance services, marketing activity support and employee training programs to Perfect Taiwan for an hourly rate of NTD1,000, NTD900, NTD750, and NTD700, respectively.
Services Outsourcing Agreement Perfect Taiwan has entered into a services outsourcing agreement (the “Services Outsourcing Agreement”), dated as of January 1, 2019 and automatically renewed for an one-year term on each anniversary, with CyberLink, pursuant to which CyberLink agrees to provide support and assistance in legal services, network infrastructure and equipment maintenance services, marketing activity support and employee training programs to Perfect Taiwan for an hourly rate of NTD1,000, NTD900, NTD750, and NTD700, respectively.
On June 1, 2019 and June 1, 2021, respectively, Perfect Taiwan renewed the Office Leases on the same terms as those of the 2017 Taiwan Property Lease Agreement. Perfect Corp.
The rental was paid to CyberLink on a monthly basis. In 2019, 2021 and 2023, respectively, Perfect Taiwan renewed the Office Leases on the same terms as those of the 2017 Taiwan Property Lease Agreement.
Assignment, Assumption and Amendment Agreement On October 28, 2022, Perfect Corp., Provident, and Continental entered into the Assignment, Assumption and Amendment Agreement pursuant to which Provident assigned to Perfect Corp. all of its rights, interests, and obligations in and under the Warrant Agreement, and the terms and conditions of such Warrant Agreement were amended to reflect the assumption of the Provident Warrants by Perfect Corp. 85 Table of Contents Related Party Transactions with CyberLink and Its Subsidiaries Licensing Agreements Cross License Agreement — MakeupDirector Perfect Corp. has entered into a cross license agreement, dated as of July 1, 2016 and automatically renewed on July 1, 2019, with CyberLink (the “MakeupDirector Cross License Agreement”).
Assignment, Assumption and Amendment Agreement On October 28, 2022, Perfect Corp., Provident, and Continental entered into the Assignment, Assumption and Amendment Agreement pursuant to which Provident assigned to Perfect Corp. all of its rights, interests, and obligations in and under the Warrant Agreement, and the terms and conditions of such Warrant Agreement were amended to reflect the assumption of the Provident Warrants by Perfect Corp.
We have adopted the Sixth Amended and Restated Memorandum and Articles of Association which no longer contains such rights. 87 Table of Contents Director and Officer Indemnification We have entered into indemnification agreements with our directors and executive officers.
Director and Officer Indemnification We have entered into indemnification agreements with our directors and executive officers.
Added
Related Party Transactions with CyberLink and Its Subsidiaries Licensing Agreements Cross License Agreement — MakeupDirector Perfect Corp. has entered into a cross license agreement, dated as of July 1, 2016 and automatically renewed on July 1, 2019, and July 1, 2022, with CyberLink (the “MakeupDirector Cross License Agreement”).
Added
License Agreement — YouCam Perfect Taiwan has entered into a license agreement (the “YouCam License Agreement”), dated as of November 30, 2019 and automatically renewed on December 1, 2022, with CyberLink.
Added
The term of the YouCam License Agreement is three (3) years starting from November 30, 2019 and shall be automatically renewed for an additional one (1) year, subject to written notice of termination by either party at least one (1) year prior to renewal of the term.
Added
Perfect Taiwan entered into another property lease agreement, dated as of November 26, 2021 (the “Taiwan Property Lease Agreement for 6F”), with CyberLink for a monthly rental of NTD116,530 to lease premises located on 6F-1, No. 98, Minquan Rd., Xindian Dist., New Taipei City 231, Taiwan for use as offices (the “Office Lease for 6F”) for two years starting from December 1, 2021.
Added
The rental was paid to CyberLink on a monthly basis. In 2023, Perfect Taiwan renewed the Office Lease for 6F on the same terms as those of the 2021 Taiwan Property Lease Agreement for 6F. 94 Table of Contents Perfect Corp.

Other PERF 10-K year-over-year comparisons