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Perfect Corp.

Perfect Corp.PERF财报

NYSE · 信息技术 · 服务-预包装软件

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 — 2023 vs 2024

Top changes in Perfect Corp.'s 2024 20-F

733 paragraphs added · 669 removed · 501 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

192 edited+64 added−46 removed327 unchanged
AI models, particularly Generative AI models, may produce output or take action that is incorrect, that results in the release of private, confidential or proprietary information, reflects biases included in the data on which they are trained, infringes on the intellectual property rights of others, or is otherwise harmful.
AI models, particularly Generative AI models, may produce output or take action that is incorrect, that results in the release of private, confidential or proprietary information, that reflects biases included in the data on which they are trained, that infringes on the intellectual property rights of others, or that is otherwise harmful.
We do not hold ourselves out as being primarily engaged, or proposing to engage primarily, in the business of investing, reinvesting or trading in securities. Rather, we are primarily engaged in the business of providing online cloud-based SaaS solutions to clients in the beauty and fashion industry, and offering certain consumer mobile beauty apps to end users.
We do not hold ourselves out as being primarily engaged, or proposing to engage primarily, in the business of investing, reinvesting or trading in securities. Rather, we are primarily engaged in the business of offering certain consumer mobile apps to end users and providing online cloud-based SaaS solutions to clients in the beauty and fashion industry.
In the future, we would lose our foreign private issuer status if (1) more than 50% of our outstanding voting securities are owned by U.S. residents and (2) a majority of our directors or executive officers are U.S. citizens or residents, or we fail to meet additional requirements necessary to avoid loss of foreign private issuer status.
In the future, we would lose our foreign private issuer status if (1) more than 50% of our outstanding voting securities are owned by U.S. residents and (2) a majority of our directors or executive officers are U.S. citizens or residents, or if we fail to meet additional requirements necessary to avoid loss of foreign private issuer status.
There is no guarantee that the Warrants will be in the money prior to their expiration no later than October 28, 2027, and as such, the Warrants may expire worthless and we may receive no proceeds from the exercise of the Warrants.
There is no guarantee that the Warrants will be in the money prior to their expiration of no later than October 28, 2027, and as such, the Warrants may expire worthless, and we may receive no proceeds from the exercise of the Warrants.
The trading price of Class A Ordinary Share may fluctuate following the consumption of the Business Combination, and can vary due to general economic conditions and forecasts, our general business condition, and the release of our financial reports.
The trading price of the Class A Ordinary Share may fluctuate following the consumption of the Business Combination, and can vary due to general economic conditions and forecasts, our general business condition, and the release of our financial reports.
If such approval is needed in the future, failure to obtain it may subject us to relevant Taiwan authority’s monetary penalty of from NTD120,000 to NTD25,000,000, and we may be ordered to rectify within a specific timeline; if Perfect Corp. still fails to apply for such approval after receiving the rectification order, the Taiwan authority may order Perfect Corp. to withdraw its investment and suspend its operation in Taiwan.
If such approval is needed in the future, failure to obtain it may subject us to relevant Taiwan authority’s monetary penalty of from NTD120,000 to NTD25,000,000, and we may be ordered to rectify within a specific timeline; if Perfect still fails to apply for such approval after receiving the rectification order, the Taiwan authority may order Perfect to withdraw its investment and suspend its operation in Taiwan.
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.
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; 15 Table of Contents • 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.
In addition, our SaaS subscription-based revenue model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new customers or existing customers that increase their use of our products or upgrade to higher-priced products or product tiers must be recognized over the applicable SaaS subscription term.
In addition, our subscription-based revenue model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new customers or existing customers that increase their use of our products or upgrade to higher-priced products or product tiers must be recognized over the applicable subscription term.
Therefore, the market price and liquidity of Class A Ordinary Shares could be materially adversely affected. We are a “controlled company” within the meaning of the rules of the NYSE and, as a result, can rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
Therefore, the market price and liquidity of our Class A Ordinary Shares could be materially adversely affected. We are a “controlled company” within the meaning of the rules of the NYSE and, as a result, can rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
These lawsuits, any future similar legal proceedings and any government enforcement actions we may become subject to under applicable privacy and data protection laws may cause us significant losses in addition to legal costs, which could adversely affect our business, results of operations and financial condition.
These lawsuits, any future similar legal proceedings and any government enforcement actions we may become subject to under applicable privacy and data protection laws may cause us significant losses in addition to legal and settlement costs, which could adversely affect our business, results of operations and financial condition.
However, there can be no assurance that our existing products will continue to be favored by brands and users of our mobile apps or that we will be able to anticipate or respond to changes in consumer preferences, technological changes and industry trends in a timely manner.
However, there can be no assurance that our existing products will continue to be favored by brands and users of our mobile apps or that we will be able to anticipate or respond to shifts in consumer preferences, technological changes and industry trends in a timely manner.
However, consistent with general industry practice, our business insurance is limited and we may not be able to acquire any insurance for all types of risks we face in our operations in all the jurisdictions where we operate.
However, consistent with general industry practice, our business insurance is limited and we may not be able to acquire insurance for all types of risks we face in our operations in all the jurisdictions where we operate.
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.
Our financial results in any given period can be 27 Table of Contents 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.
Pursuant to the terms of Warrant Agreement, as amended by the Assignment, Assumption and Amendment Agreement, we will have the ability to redeem outstanding Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of Class A Ordinary Shares equals or exceeds $18.00 per share for any 20 trading days within a 30-trading-day period ending on the third trading day prior to the date we give notice of redemption.
Pursuant to the terms of Warrant Agreement, as amended by the Assignment, Assumption and Amendment Agreement, we will have the ability to redeem outstanding Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of Class A Ordinary Shares equals or exceeds $18.00 per share for any 20 trading days within a 30-trading-day period ending on the third trading day prior to the date we issue notice of redemption.
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.
Our global addressable market is mainly driven by the growth in the beauty and fashion markets and the expected marketing and AI- and AR- spending by beauty and fashion brands, which depend on a number of factors, including overall consumer awareness about beauty and fashion 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.
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.
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 inflationary pressures and increases in interest rates, and global conflicts.
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.
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.
We cannot predict whether any strategic investment or acquisition will be accretive to the value of our ordinary shares. It is also possible that any of our future strategic transactions could be viewed negatively by the press, investors, customers or regulators, or subject to regulatory inquiries or proceedings, which may adversely affect our reputation, business, financial condition and prospects.
We cannot predict whether any strategic investment or acquisition will be accretive to the value of our Ordinary Shares. It is also possible that any of our future strategic transactions could be perceived negatively by the press, investors, customers or regulators, or be subject to regulatory inquiries or proceedings, which may adversely affect our reputation, business, financial condition and prospects.
For example, in July 2017, FTSE Russell announced that it would require new constituents of its indices to have greater than 5% of the company’s voting rights in the hands of public shareholders, and S&P Dow Jones announced in the same month that it would no longer admit companies with multiple-class share structures to certain of its indices.
For example, in July 2017, FTSE Russell announced that it would require new constituents of its indices to have more than 5% of the company’s voting rights in the hands of public shareholders, and S&P Dow Jones announced in the same month that it would no longer admit companies with multiple-class share structures to certain of its indices.
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.
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 to our mobile apps, which may render our YouCam apps redundant.
In addition, the Securities Act provides that both federal and state courts have jurisdiction over suits brought to enforce any duty or liability under the Securities Act or the rules and regulations thereunder. Accepting or consent to this forum selection provision does not constitute a waiver by you of compliance with federal securities laws and the rules and regulations thereunder.
In addition, the Securities Act provides that both federal and state courts have jurisdiction over suits brought to enforce any duty or liability under the Securities Act or the rules and regulations thereunder. Accepting or consenting to this forum selection provision does not constitute a waiver by you of compliance with federal securities laws and the rules and regulations thereunder.
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.
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 product offerings.
Many of the new users of our mobile apps are referred by existing users. Maintaining and enhancing our business brands will depend largely on our ability to continue to provide useful, reliable, trustworthy and innovative products and technologies, which may not always be successful or timely.
Many of the new users of our mobile apps or web services are referred by existing users. Maintaining and enhancing our business brands will depend largely on our ability to continue to provide useful, reliable, trustworthy and innovative products and technologies, which may not always be successful or timely.
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.
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.
While we believe these metrics are reasonable estimates of our consumer base for the applicable period of measurement, there are inherent challenges in measuring how our products are used across large populations globally. For example, there may be individuals who have multiple accounts.
While we believe these metrics are reasonable estimates of our client base for the applicable period of measurement, there are inherent challenges in measuring how our products are used across large populations globally. For example, there may be individuals who have multiple accounts.
If our users or partners are not able to access our mobile apps or SaaS or specific features of our products or services, or encounter difficulties in doing so, 21 Table of Contents due to issues or disruptions with AWS, Alibaba Cloud or Google Cloud, or if AWS, Alibaba Cloud or Google Cloud experiences interruptions in service regularly or for a prolonged basis, or other similar issues, we may lose users, partners, or advertising revenue and our business would be seriously harmed.
If our users or partners are not able to access our mobile apps or SaaS or specific features of our products or services, or encounter difficulties in doing so, due to issues or disruptions with AWS, Alibaba Cloud or Google Cloud, or if AWS, Alibaba Cloud or Google Cloud experiences interruptions in service regularly or for a prolonged basis, or other similar issues, we may lose users, partners, or advertising revenue and our business would be seriously harmed.
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.
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, 2025.
Redemption of the outstanding Warrants could force holders to (i) exercise the Warrants and pay the exercise price therefor at a time when it may be disadvantageous to do so, (ii) sell the Warrants at the then-current market price when the holder might otherwise wish to hold onto such warrants or (iii) accept the nominal redemption price, which, at the time the outstanding Warrants are called for redemption, is likely to be substantially less than the market value of such warrants.
Redemption of the outstanding Warrants could force holders to (i) exercise the Warrants and pay the exercise price therefor at a time when it may be disadvantageous to do so, (ii) sell the Warrants at the then-current market price when the holder might otherwise wish to retain such warrants or (iii) accept the nominal redemption price, which, at the time the outstanding Warrants are called for redemption, is likely to be substantially less than the market value of such warrants.
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.
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; • 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 we continue to grow and mature our business, or if our stock price declines, the incentives to attract, retain and motivate employees provided by our equity awards or by future arrangements may not be as effective as in the past.
As we continue to grow and our business matures, or if our stock price declines, the incentives to attract, retain and motivate employees provided by our equity awards or by future arrangements may not be as effective as in the past.
As part of our business strategy, we may make or receive investments in companies, solutions or technologies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional share capital may cause shareholders to experience significant dilution of their ownership interests and the per share value of Class A Ordinary Shares to decline.
As part of our business strategy, we may make or receive investments in companies, solutions or technologies and issue equity securities to pay for any such acquisitions or investments. Any such issuances of additional share capital may cause shareholders to experience significant dilution of their ownership interests and a decline in the per share value of Class A Ordinary Shares.
This concentrated control could discourage, delay or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other shareholders support, or conversely this concentrated control could result in the consummation of such a transaction that our other shareholders do not support.
This concentrated control may discourage, delay or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that other shareholders support, or conversely, this concentrated control may result in the consummation of such a transaction that our other shareholders do not support.
Consequently, a portion of the revenue we report in each period is derived from the recognition of deferred revenue relating to SaaS subscriptions entered into during previous quarters. As a result, a decline in new or renewed SaaS subscriptions in any single reporting period may have a small impact on the revenue that we recognize for such quarter.
Consequently, a portion of the revenue we report in each period is derived from the recognition of deferred revenue relating to subscriptions and contracts entered into during previous quarters. As a result, a decline in new or renewed subscriptions in any single reporting period may have a small impact on the revenue that we recognize for such quarter.
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.
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.
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.
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.
There is no assurance that any future outbreak of such diseases would not have a material adverse effect on our business, financial condition and results of operations. Some of our customers have experienced, and may continue to experience, financial hardships that could result in delayed or even uncollectible payments in the future.
There is no assurance that any future outbreak of such diseases would not have a material adverse effect on our business, financial condition and results of operations. 44 Table of Contents Some of our customers have experienced, and may continue to experience, financial hardships that could result in delayed or even uncollectible payments in the future.
In addition, as we expand into new countries and regions, we may not be able to launch products that appeal to local consumers due to insufficient understanding of local cultures and lifestyles. Our failure to anticipate, identify or react to these particular preferences could adversely affect our sales performance and our results of operations.
In addition, as we expand into new countries and regions, we may not be able to launch products that appeal to local consumers due to an insufficient understanding of local cultures and lifestyles. Our failure to anticipate, identify or react to these specific preferences could adversely affect our sales performance and our results of operations.
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.
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.
Any disruption or failure in our infrastructure could hinder our ability to handle existing or increased traffic on our platform, which could significantly harm our business. Our technical infrastructure is also vulnerable to the risk of damage from natural disasters, such as earthquakes and typhoons, as well as from acts of terrorism or other criminal acts.
Any disruption or failure in our infrastructure could hinder our ability to handle existing or increased traffic on our platform, which could significantly harm our business. 22 Table of Contents Our technical infrastructure is also vulnerable to the risk of damage from natural disasters, such as earthquakes and typhoons, as well as from acts of terrorism or other criminal acts.
GDPR are substantially the same, going forward there is an increasing risk for divergence in application, interpretation and enforcement of the data privacy and cybersecurity laws and regulations as between the EU and the United Kingdom, which may result in greater operational burdens, costs and compliance risks. Additionally, the GDPR and the U.K.
GDPR are substantially the same, going forward there is an increasing risk for divergence in application, interpretation and enforcement of the data privacy and cybersecurity laws and regulations as between the EU and the United Kingdom, which may result in greater operational 29 Table of Contents burdens, costs and compliance risks. Additionally, the GDPR and the U.K.
We are unable to predict the effect that such sales may have on the prevailing market price of our Class A Ordinary Shares and Warrants. Class A Ordinary Shares held by certain of our shareholders are eligible for resale, subject to, in the case of certain shareholders, volume, manner of sale and other limitations under Rule 144.
We are unable to predict the effect that such sales may have on the prevailing market price of our Class A Ordinary Shares and Warrants. 36 Table of Contents Class A Ordinary Shares held by certain of our shareholders are eligible for resale, subject to, in the case of certain shareholders, volume, manner of sale and other limitations under Rule 144.
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.
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.
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”.
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”.
Based on the outcome of examinations by relevant tax authorities, or as a result of the expiration of statutes of limitations for specific jurisdictions, it is possible that the reserves for tax positions taken in previously filed tax returns will materially change from those recorded in our financial statements.
Based on the outcome of examinations by relevant tax authorities, or as a result of the expiration of statutes of limitations for specific jurisdictions, it is possible that the reserves for tax positions taken in previously filed tax returns will 28 Table of Contents materially change from those recorded in our financial statements.
If an increasing number of products with similar or even superior functionality to our products are introduced to the market, we may need to decrease the prices for our products and services in order to remain competitive and, as a result, our margins will be reduced and our operating results will be negatively affected.
If an increasing number of products with similar or even superior functionality to our products are introduced to the market, we may need to lower the prices for our products and services in order to remain competitive and, as a result, our margins may be reduced and our operating results may be negatively affected.
We may face claims relating to information that is published or made available on our products. Our mobile apps, in particular YouCam Makeup and YouCam Perfect, have the attributes of social media and may be misused by individuals or groups of individuals to engage in inappropriate or illegal activities.
We may face claims relating to information that is published or made available on our products. Our mobile apps, in particular YouCam Makeup and YouCam Perfect, have the attributes of social media and may be misused by individuals 17 Table of Contents or groups of individuals to engage in inappropriate or illegal activities.
Chang has control over the day-to-day management and major strategic investments of our Company, subject to authorization and oversight by our Board. In the event of her death, the Ordinary Shares that Ms. Chang owns will be transferred to the persons or entities that she has designated. As a Board member and officer, Ms.
Chang has control over the day-to-day management and major strategic investments of our Company, subject to authorization and oversight by our Board. Upon her death, the Ordinary Shares that Ms. Chang owns will be transferred to the persons or entities that she has designated. As a Board member and officer, Ms.
You may not waive compliance with federal securities laws and the rules and regulations thereunder. The exclusive forum provision in our Articles will not operate so as to deprive the courts of the Cayman Islands from having jurisdiction over matters relating to our internal affairs.
You may not waive compliance with 43 Table of Contents federal securities laws and the rules and regulations thereunder. The exclusive forum provision in our Articles will not operate so as to deprive the courts of the Cayman Islands from having jurisdiction over matters relating to our internal affairs.
As of December 31, 2023, we believe that we do not hold any investment securities. We intend to continue to conduct our operations so that we will not be deemed an investment company.
As of December 31, 2024, we believe that we do not hold any investment securities. We intend to continue to conduct our operations so that we will not be deemed an investment company.
Negative incidents or dissatisfaction in relation to our products and services regardless of all our efforts, could deter current and potential consumers from using our products and services, which could have material adverse effects on our reputation, growth and consumer engagement, and could seriously harm our operational cost structure.
Negative incidents or dissatisfaction in relation to our products and services regardless of all our efforts, could deter current and 21 Table of Contents potential consumers from using our products and services, which could have material adverse effects on our reputation, growth and consumer engagement, and could seriously harm our operational cost structure.
Such administrative 28 Table of Contents fines may range from NTD20,000 to NTD200,000 for each occurrence of a violation, with increased fines ranging from NTD150,000 to NTD15,000,000 available for certain violations of the PDPA. The PRC regulatory and enforcement regime with regard to privacy and data security is evolving.
Such administrative fines may range from NTD20,000 to NTD200,000 for each occurrence of a violation, with increased fines ranging from NTD150,000 to NTD15,000,000 available for certain violations of the PDPA. The PRC regulatory and enforcement regime with regard to privacy and data security is evolving.
Any unfavorable changes of tax laws and regulations in this jurisdiction could increase our effective tax rate and have an adverse effect on our operating results. Foreign government initiatives to restrict or ban access to our products in their countries could seriously harm our business.
Any unfavorable changes of tax laws and regulations in this jurisdiction could increase our effective tax rate and have an adverse effect on our operating results. 31 Table of Contents Foreign government initiatives to restrict or ban access to our products in their countries could seriously harm our business.
Any restriction on access to YouCam apps due to foreign government actions or initiatives, or any withdrawal by us from certain countries because of such actions or initiatives, would adversely affect our MAUs, including by giving our competitors an opportunity to penetrate geographic markets that we cannot access.
Any restriction on access to YouCam apps due to foreign government actions or initiatives, or any withdrawal by us from certain countries because of such actions or initiatives, would adversely affect our active subscribers, including by giving our competitors an opportunity to penetrate geographic markets that we cannot access.
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.
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.
We expect a substantial number of downloads of our mobile apps will continue to be derived from these distribution channels and we expect that we will continue to rely on Apple App Store for downloads of our mobile apps. Accordingly, we believe that maintaining successful partnerships with Apple is critical to our success.
We expect a substantial number of downloads of our mobile apps will continue to be derived from these distribution channels and we expect that we will continue to rely on Apple App Store for downloads of our mobile apps. Accordingly, we believe that maintaining successful partnerships with 23 Table of Contents Apple is critical to our success.
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.
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.
Under current Taiwan laws, regulations and policy, Perfect Corp., the sole shareholder of our Taiwan subsidiary, will be required to obtain an approval from the Investment Commission, Ministry of Economic Affairs of Taiwan for its investment in its Taiwanese subsidiary if more than 30% of its capital is directly or indirectly owned by, or beneficially owned by any PRC person or it is under control by any PRC person.
Under current Taiwan laws, regulations and policy, Perfect, the sole shareholder of our Taiwan subsidiary, will be required to obtain an approval from the Department of Investment Review, Ministry of Economic Affairs of Taiwan for its investment in its Taiwanese subsidiary if more than 30% of its capital is directly or indirectly owned by, or beneficially owned by any PRC person or it is under control by any PRC person.
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.
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.
Any such penalties, proceedings or actions may disrupt our business operations and materially and adversely affect our reputation, business, financial condition and results of operations. Risks Related to the Class A Ordinary Shares and Warrants The price of Class A Ordinary Shares may be volatile, and the value of Class A Ordinary Shares may decline.
Any such penalties, proceedings or actions may disrupt our business operations and materially and adversely affect our reputation, business, financial condition and results of operations. 35 Table of Contents Risks Related to the Class A Ordinary Shares and Warrants The price of Class A Ordinary Shares may be volatile, and the value of Class A Ordinary Shares may decline.
We would also be unable to raise capital through the sale of securities in the United States or to conduct business in the United 29 Table of Contents States. In addition, we may be subject to SEC enforcement actions or civil litigation for alleged violations of U.S. securities laws.
We would also be unable to raise capital through the sale of securities in the United States or to conduct business in the United States. In addition, we may be subject to SEC enforcement actions or civil litigation for alleged violations of U.S. securities laws.
We may not be able to compete 18 Table of Contents effectively with competitors that have superior technological innovative capability, more financial resources and brand power than us, and we cannot predict when such new competitors will enter the AI industry causing increased competition and possibly less desire for our AI solutions.
We may not be able to compete effectively with competitors that have superior technological innovative capability, more financial resources and brand power than us, and we cannot predict when such new competitors will enter the AI industry causing increased competition and possibly less desire for our AI solutions.
We may not be successful if we are not able to innovate, develop and provide new products and services or upgrade our existing products and services in a timely and cost-effective manner to address rapidly evolving consumer preferences, industry trends and technological changes, and any new products and services we develop and provide may expose us to new risks and may not achieve expected returns.
We may not be successful if we are not able to innovate, develop and provide new products and services or upgrade our existing products and services in a timely and cost-effective manner to address rapidly evolving consumer preferences, 12 Table of Contents industry trends and technological changes, and any new products and services we develop and provide may expose us to new risks and may not achieve expected returns.
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.
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.
If we fail to complete, obtain or maintain any of the required licenses or approvals or make the necessary filings, or otherwise fails to comply with the laws and regulations, we may be subject to various penalties, such as the imposition of fines and the discontinuation or restriction of our operations, as well as proceedings and actions.
If we fail to complete, obtain or maintain any of the required licenses or approvals or make the necessary filings such as algorithm filings with Cyberspace Administration of China, or otherwise fails to comply with the laws and regulations, we may be subject to various penalties, such as the imposition of fines and the discontinuation or restriction of our operations, as well as proceedings and actions.
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 development of the markets stops or slows down, our B2B business will be materially and adversely affected. The AI- and AR- beauty and fashion technologies and 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.
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.
To the extent the Warrants are exercised, additional Class A Ordinary Shares will be issued, which will result in the dilution to our 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 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.
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.
For so long as we remain a controlled company under this definition, we are permitted to elect to rely, and currently we intend to rely, on certain exemptions from corporate governance rules, including the exemption from the rule that a majority of our Board must be independent directors.
For so long as we remain a “controlled company” under this definition, we are permitted to elect to rely, and currently we intend to rely, on certain exemptions from corporate governance rules, including the exemption from the rule that a majority of our Board must be independent directors.
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.
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.
Chang owes a fiduciary duty to our shareholders and must act in good faith in a manner she reasonably believes to be in the best interests of our shareholders. As a shareholder, even a controlling shareholder, Ms.
Chang owes a fiduciary duty to our shareholders and must act in good faith in a manner she reasonably believes to be in the best interests of our shareholders. As a shareholder, despite being a controlling shareholder, Ms.
If adequate financing is not available on terms satisfactory to us when we require it, our ability to continue to support the operation and growth of our business could be significantly impaired and our operating results may be adversely affected. We have limited business insurance coverage.
If adequate financing is not available on terms satisfactory to us when we require it, our ability to continue to support the operation and growth of our business could be significantly impaired and our operating results may be adversely affected.
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.
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.
This exclusive forum provision could limit the ability of holders of the Warrants to obtain what they believe to be a favorable judicial forum for disputes related to such agreement.
This exclusive forum 42 Table of Contents provision could limit the ability of holders of the Warrants to obtain what they believe to be a favorable judicial forum for disputes related to such agreement.
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.
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 attract, retain, and motivate highly skilled employees, particularly in AI, machine learning, and advanced algorithms.
In addition, there have been sustained tension 30 Table of Contents between the United States and the PRC over trade policies including tariffs and barriers on imports and exports and government incentives to onshore and/or nearshore production and supply chains to favored jurisdictions.
In addition, there have been sustained tension between the United States and the PRC over trade policies including tariffs and barriers on imports and exports and government incentives to onshore and/or nearshore production and supply chains to favored jurisdictions.
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.
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 app or web service users, brand partners and retailers.
As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company, which we expect to further increase after we are no longer an “emerging growth company”.
As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses that we did not incur as a private company, which we expect to further increase after we are no longer qualified as an “emerging growth company”.
This may incur a risk of possible inadvertent leakage of confidential information. In addition, a hack or data breach initiated by unauthorized third parties may also lead to potential noncompliance with data-related laws and a leakage of confidential information. We may also inadvertently leak such confidential information due to a system breakdown or otherwise without any awareness.
In addition, a hack or data breach initiated by unauthorized third parties may also lead to potential noncompliance with data-related laws and a leakage of confidential information. We may also inadvertently leak such confidential information due to a system breakdown or otherwise without any awareness.
We compete in markets characterized by rapidly changing products and services, evolving consumer preferences, technological advances and continual improvements in product performance characteristics and features.
We compete in markets characterized by rapidly changing products and services, evolving consumer preferences, technological advancements, and continual improvements in product performance and features.
Although we believe that these efforts are likely to benefit the aggregate consumer experience and improve our financial performance over the long term, we may experience disruptions or declines in our MAUs or user activity if new features cause technical issues that diminish the performance or attractiveness of our mobile apps.
Although we believe that these efforts are likely to benefit the aggregate consumer experience and improve our financial performance over the long term, we may experience disruptions or declines in our active subscribers or user activity if new premium features cause technical issues that diminish the performance or attractiveness of our mobile apps and web services.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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AI Object Removal employs advanced algorithms to provide users an easy way to erase objects and remove unwanted people, text, and watermarks in just a few clicks. With AI Image Extender, users can expand their photos beyond their original borders, with our advanced AI technology ensuring the expanded areas blend seamlessly with the original photos.
AI Object Removal employs advanced algorithms to provide users with an easy way to erase objects and remove unwanted people, text, and watermarks in just a few clicks. With AI Image Extender, users can expand their photos beyond their original borders, with our advanced AI technology ensuring the expanded areas blend seamlessly with the original photos.
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.
For example, the California Consumer Privacy Act of 2018 (the “CCPA”), which went into effect on 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.
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.
Powered by our proprietary AI- and 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.
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.
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 Tencent (WeChat). Such partnerships have been critical to our growth as an omni-channel AI/AR service provider.
Through our social media channels and a suite of popular YouCam mobile apps, we inspire young people to be creative, interact with art and photography, and develop appreciation for beauty, providing them with tools to express their unique personalities online.
Through our social media channels and a suite of popular YouCam mobile apps, we inspire young people to be creative, interact with art and photography, and develop appreciation for beauty and fashion, providing them with tools to express their unique personalities online.
If our Taiwan subsidiary needs to pay Perfect Corp., for the purpose of dividend distribution or otherwise, we expect the payment to be funded by our Taiwan subsidiary’s revenue denominated in USD, which is generally not subject to foreign exchange control in Taiwan.
If our Taiwan subsidiary needs to pay Perfect, for the purpose of dividend distribution or otherwise, we expect the payment to be funded by our Taiwan subsidiary’s revenue denominated in USD, which is generally not subject to foreign exchange control in Taiwan.
Leveraging the recent development of AI, we will continue to invest in technology innovation for more cutting-edge features. We aspire to launch more apps with different functionalities to solve problems for users in more countries and regions.
Leveraging the recent development of AI- and AR- technology, we will continue to invest in technology innovation for more cutting-edge features. We aspire to launch more apps with more different functionalities to solve problems for users in more countries and regions.
Other states have also passed comprehensive privacy laws, such as the Virginia Consumer Data Protection Act, the Colorado Privacy Act (“CPA”), the Connecticut Data Privacy Act, the Utah Consumer Privacy Act, and similar laws have been passed or are being considered in other states as well as at the federal level.
Other states have also passed comprehensive privacy laws, such as the Virginia Consumer Data Protection Act, the Colorado Privacy Act, the Connecticut Data Privacy Act, the Utah Consumer Privacy Act, and similar laws have been passed or are being considered in other states as well as at the federal level.
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.
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.
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 are also dedicated to nurturing young talent, with 19% 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.
This allows brands to create the new, seamless, and cohesive shopping experiences that modern shoppers have grown to expect. As of December 31, 2023, 100% of the top 20 beauty groups have incorporated the AI- and AR-technologies into their business model, while 18 of them are our customers.
This allows brands to create the new, seamless, and cohesive shopping experiences that modern shoppers have grown to expect. As of December 31, 2024, 100% of the top 20 beauty groups have incorporated the AI- and AR-technologies into their business model, while 18 of them are our customers.
We have so far accumulated experience in simulating all makeup product categories (lip, eye, face, and hair) covering all ethnic groups. Precise hand tracking technology: Our AgileHand® technology employs physically based rendering method and enhanced environmental lighting to illustrate true-to-life live hand AR effects.
We have so far accumulated experience in simulating all makeup product categories (e.g., lip, eye, face, and hair) covering all ethnic groups. Precise hand tracking technology: Our AgileHand® technology employs physically based rendering method and enhanced environmental lighting to illustrate true-to-life live hand AR effects.
We have a dedicated, seasoned, and stable senior management team that has worked together for over a decade to grow the Company since the very early stages. Our management team is composed of top industry experts and visionaries, all with over two decades of industry experience.
We have a dedicated, seasoned, and stable senior management team that has worked together for over a decade to grow the Company since the very early stage. Our management team is composed of top industry experts and visionaries, all with over two decades of industry experience.
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.
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 competitors.
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.
For each of the three years ended December 31, 2024, 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.
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 these data to provide highly accurate and realistic AR makeover experiences, as well as personalized recommendations.
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 also able to leverage these data collected from virtual try-ons to provide highly accurate and realistic AR makeover experiences, as well as personalized recommendations.
As Generative AI becomes an integral tool for photo editing and beautification, these features allow app users to unlock new possibilities for creative expression and artistry, aligning with the evolving trend for more personalized and expressive digital content. 54 Table of Contents AI Text-to-Image AI Text-to-Image feature is the highlight of the newly launched mobile app YouCam AI Pro.
As Generative AI becomes an integral tool for photo editing and beautification, these features allow users to unlock new possibilities for creative expression and artistry, aligning with the evolving trend for more personalized and expressive digital content. AI Text-to-Image AI Text-to-Image feature is the highlight of the newly launched mobile app YouCam AI Pro.
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.
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, 73 Table of Contents Instagram, X (formerly Twitter), YouTube, and LinkedIn, targeted email marketing, online and offline advertising, and industry event participation.
Our current solutions include virtual try-ons for makeup, nail art, hairstyles, watches, eyewear, jewelry, advanced skin diagnostic and simulation technology and foundation shade finder. Brands and retailers can deploy these solutions through different channels, including mobile apps, websites, in-store kiosks, and third-party e-commerce platforms.
Our current solutions include virtual try-ons for makeup, nail art, hairstyles, watches, eyewear, jewelry, advanced skin diagnostic and simulation, and foundation shade finder. Brands and retailers can deploy these solutions through various channels, including mobile apps, websites, in-store kiosks, and third-party e-commerce platforms.
We work with each brand to bring their shopping experience into the online space, deploying solutions such as virtual try-on, skin analysis, and AI face analysis, paired with ultra-personalized product recommendations. Our solutions can also be deployed in physical stores, enhancing the in-person shopping experience with the latest tech.
We work with each brand to bring their shopping experience into the online space, deploying solutions such as virtual try-ons, skin diagnosis, and AI face analysis, paired with ultra-personalized product recommendations. Our solutions can also be deployed in physical stores, enhancing the in-person shopping experience with the latest tech.
Furthermore, on December 8, 2022, the Ministry of Industry and Information Technology of the PRC released the Administrative Measures for Data Security in Industry and Information Technology Sectors (Trial), effective from January l, 2023, which, among other things, impose specific data security management requirements and certain filing and reporting obligations on processors of important data and core data in industry and information technology sectors.
Furthermore, on December 8, 2022, the Ministry of Industry and Information Technology of the PRC released the Administrative Measures for Data Security in Industry and Information Technology Sectors (Trial), effective from January l, 2023, which, among other things, impose specific data security 72 Table of Contents management requirements and certain filing and reporting obligations on processors of important data and core data in industry and information technology sectors.
A key feature of YouCam family apps that appeals to users lies in the advanced AI- and AR- technologies that can truly solve challenges users encounter in daily life. In addition, our technologies are not only superior, but are also improved and upgraded regularly by our diligent product teams.
A key feature of YouCam family apps and web-based editor that appeals to users lies in the advanced AI- and AR- technologies that can truly solve challenges users encounter in daily life. In addition, our technologies are not only superior, but are also improved and upgraded regularly by our diligent product teams.
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.
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 can transform the world.
In mid-2021, we expanded our path into the fashion tech area, which includes products such as virtual try-on for jewelry, watches, eyewear, and headwear. From 2020, we started to monetize our family of YouCam mobile apps via subscriptions directly from our mobile beauty app users.
From 2020, we started to monetize our family of YouCam mobile apps via subscriptions directly from our mobile beauty app users. In mid-2021, we expanded our path into the fashion tech area, which includes products such as virtual try-ons for jewelry, watches and eyewear.
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.
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.
The DSA entered into force on November 16, 2022, which seeks to update the rules concerning e-commerce, for instance, by providing for enforceable obligations and increased accountability rules for all digital services that connect consumers to goods, services, or content, in relation to, for example, users’ safety and trust, harmful/illegal online content, content moderation and removal, and advertisement targeting.
The DSA entered into force on November 16, 2022, which 71 Table of Contents seeks to update the rules concerning e-commerce, for instance, by providing for enforceable obligations and increased accountability rules for all digital services that connect consumers to goods, services, or content, in relation to, for example, users’ safety and trust, harmful/illegal online content, content moderation and removal, and advertisement targeting.
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.
AI- and AR-adoption among 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 expanding to more countries within each brand.
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.
Big data from over 10 billion real-life try-ons globally every year, combined with our machine learning capabilities enable us to continually refine our platform to provide highly accurate and realistic AI- and AR- powered makeover experiences and personalized recommendations.
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.
We seek to develop long-term relationships that allow us to grow together through synergistic partnerships. Inclusivity — We have built a large inclusive online community, congregating beauty and fashion lovers from all around the world.
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.
Our team has designed patented and patent-pending technologies such as AgileHand® AR and foundation shade matching, AI-powered wrist mapping, physically based rendering, and 50 Table of Contents Generative AI applications to help consumer create and enhance their photos and videos in YouCam family apps and web-based editor. • 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.
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.
Specifically, we provide the following products and services through (i) our iOS and Android mobile apps and cloud platform, 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.
For eyewear, our 3D mapping technology allows brands to effortlessly create accurate virtual glasses using three still images, and using our auto pupillary distance detection, we can create very precise frame sizes for all. To simplify 3D file creation for virtual try-ons, we introduced our interactive 2D image-to-VTO solution in 2023.
For eyewear, our 3D mapping technology allows brands to effortlessly create accurate virtual glasses using three still images, and using our auto pupillary distance detection, we can create very precise frame sizes for all. To simplify 3D file creation for virtual try-ons, we introduced our interactive 2D image-to-virtual try on solution.
For earrings, rings, and necklaces, our proprietary AR 3D model with PBR technology supports high-resolution textures, material reflections, and simulated motion physics with head and body movements to present product renderings with incredible accuracy. High-resolution textures and material reflections give virtual jewelries an incredibly realistic 52 Table of Contents appearance.
For earrings, rings, and necklaces, our proprietary AR 3D model with PBR technology supports high-resolution textures, material reflections, and simulated motion physics with head and body movements to present product renderings with incredible accuracy. High-resolution textures and material reflections give virtual jewelries an incredibly realistic appearance.
These offerings allow users to beautify, edit, and enhance photos and videos, as well as try on makeup and hairstyles virtually. Users can get AI skin analysis in real time. All the functionalities can be accessed easily through mobile devices and in a cost-efficient way.
These offerings allow users to create, edit, and enhance photos and videos, as well as try on makeup and hairstyles virtually. Users can get AI skin analysis in real time. All the functionalities can be accessed easily through mobile devices and in a cost-efficient manner.
Legal and regulatory frameworks that govern AI may also impose obligations and restrictions with respect to privacy and data protection. For example, the EU AI Act will subject AI systems considered high risk to data governance 65 Table of Contents standards for data that is used to train, validate and test such AI systems.
Legal and regulatory frameworks that govern AI may also impose obligations and restrictions with respect to privacy and data protection. For example, the EU AI Act will subject AI systems considered high risk to data governance standards for data that is used to train, validate and test such AI systems.
In addition, our skin diagnosis solutions are not only used by skincare brands, but also adopted by med spa, clinics 51 Table of Contents and dermatologists to provide their patients with highly accurate skin analysis results and give personalized product or treatment recommendations to patients.
In addition, our skin diagnosis solutions are not only used by skincare brands, but also adopted by med spa, clinics and dermatologists to provide their patients with highly accurate skin analysis results and give personalized product or treatment recommendations to patients.
Related Party Transactions — Related Party Transactions with CyberLink and Its Subsidiaries — Rental Agreements.” We do not own any real property. We believe our current facilities are adequate to meet our immediate needs. Legal Proceedings From time to time, we are party to legal proceedings incidental to the conduct of our business.
Related Party Transactions — Related Party Transactions with CyberLink and Its Affiliates — Rental Agreements.” We do not own any real property. We believe our current facilities are adequate to meet our immediate needs. Legal Proceedings From time to time, we are involved in legal proceedings incidental to the conduct of our business.
Using Generative AI, it allows users to easily transform text descriptions into high-resolution digital images. This AI-based tool is capable of generating images in up to 20 artistic styles, including Van Gogh, Pop Art, Anime, Pixel Art, and Cartoon. Users can visualize their ideas without complex design skills.
Capitalizing on the Generative AI technologies, it allows users to easily transform text descriptions into high-resolution digital images. This AI-based tool is capable of generating images in up to 20 artistic styles, including Van Gogh, Pop Art, Anime, Pixel Art, and Cartoon. Users can visualize their ideas without complex design skills.
AI Hair Color AI Hairstyle AI- and AR-Jewelry (Earrings, Rings, and Bracelets) Our AI- and AR-Jewelry technology was introduced in December 2021 and it currently offers virtual try-on experience for earrings, necklaces, bracelets, and rings.
AI- and AR-Jewelry (Earrings, Rings, and Bracelets) Our AI- and AR-Jewelry technology was introduced in December 2021 and it currently offers virtual try-on experience for earrings, necklaces, bracelets, and rings.
With some of the most advanced beauty tech AI- and AR- solutions on the market, we make every effort to protect our intellectual property.
Intellectual Property Intellectual property is fundamental to us. With some of the most advanced beauty tech AI- and AR- solutions on the market, we make every effort to protect our intellectual property.
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.
We intend to consider potential opportunities throughout the AI, 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.
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 diverse global team is composed of talented individuals of various ethnic groups and LGBTQ+ identities, of which 54% are men and 46% are women, with 43% of our managers and executives being female, including the CEO.
Brands can now effortlessly generate hyper-realistic virtual rings, watches, and accessories using simple 2D product images, bypassing costly and time-consuming 3D modeling. Our advanced algorithms create lifelike accessories and timepieces with intricate lighting effects and accurate motions.
Brands can effortlessly generate hyper-realistic virtual rings, watches, and accessories using simple 2D product images, bypassing costly and time-consuming 3D modeling. Our advanced algorithms create lifelike accessories and timepieces 61 Table of Contents with intricate lighting effects and accurate motions.
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.
As of December 31, 2024, we cover 90% (18 out of 20) of the top 20 beauty groups worldwide, and serve global beauty brands, including Estée Lauder, MAC and e.l.f., covering the broad spectrum of brands and products from luxury to mass markets.
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 have 297, 321 and 342 employees globally, as of December 31, 2022, December 31, 2023 and December 31, 2024, 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.
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.
AI- and AR-Nails Our 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.
Sales and Marketing • Sales and Marketing for Enterprise Business Our fast-expanding team of sales representatives spans across nine cities on three continents and has led us to closing deals with 645 cumulative brands as of December 31, 2023 and servicing 90% of the world’s top 20 beauty groups.
Sales and Marketing • Sales and Marketing for B2B Business Our fast-expanding team of sales representatives spans across nine cities on three continents and has led us to closing deals with 732 cumulative brands as of December 31, 2024 and servicing 90% of the world’s top 20 beauty groups.
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 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 from product discovery to personalized recommendation in multiple categories.
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.
With our research and development center placed in Taiwan, we have a significant competitive advantage thanks to the easy access to cost-effective, highly motivated, top-tier tech talent.
Our unique tech capabilities and extensive collection of training data sets help us solidify our product leadership in the beauty AI- and AR-SaaS industry. As of December 31, 2023, our team of 149 technology staff, representing 46.4% of our employees, are dedicated to the constant improvement of our platform, development of new features, as well as creation of new apps.
Our unique tech capabilities and extensive collection of training data sets help us solidify our product leadership in the beauty AI- and AR- industry. As of December 31, 2024, our team of 169 technology staff, representing 49.4% of our employees, are dedicated to the constant improvement of our platform, development of new features, as well as creation of new apps.
For solutions offered to beauty brands and retailers, we do not receive the personal information of consumers in most cases.
For solutions offered to brand consumers and retailers, we do not receive the personal information of consumers in most cases.
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.
Our technology now supports over 89,969 skin tones and 14 makeup textures, covering facial attributes across all ethnicities and ages, and offering a fully inclusive virtual try-on experience, being the most comprehensive in the industry. As of December 31, 2024, we had 35 registered patents and 25 pending patent applications in the beauty tech domain.
AI Replacement is another powerful tool that allows users to 56 Table of Contents replace any object from photos easily and in just a few clicks.
AI Replacement is another powerful tool that allows users to replace any object from photos easily and in just a few clicks.
This capability of building technology in-house differentiates us among competitors and enables us to offer a direct and fast delivery of our solutions to clients without external third-party dependencies. • Omni-Channel Presence, Scalable Platform Our omni-channel, cross-platform coverage significantly increases the stickiness of brands’ products with consumers.
This capability of building technology in-house differentiates us among competitors and enables us to offer a direct and fast delivery of our solutions to clients without external third-party dependencies. • Omni-Channel Presence, Scalable Platform Our omni-channel, cross-platform coverage significantly enhances consumer engagement with brands’ products.
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.
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, 2024, we have 35 patents registered and 25 applications pending.
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.
Our team has obtained their education at the top universities from around the world. The vast majority (87%) of our research and development team hold a master’s degree, and 2% hold a doctorate degree. 40% of the team have amassed over 10 years of industry experience, with another 18% being in the business for five to ten years.
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.
In all of these partnerships, we are one of the few third parties that are allowed to integrate our codes and modules 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 brand’s engagement with consumers.
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 technology highlights include: • Generating around 3,900 real-time facial 3D live meshes backed by visual computing; • Supporting over 20 different makeup textures (e.g., matte and metallic); 69 Table of Contents • Supporting over 20 common skin concerns diagnosis; • Recognizing nearly 90,000 skin tones; • 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 35 patents and 25 pending patent applications as of December 31, 2024.
Leveraging years of multimedia technology and AI development, our product offerings have expanded from makeup virtual try-on and photo editing to more creative features powered by GenAI and more advanced editing, beautification, and enhancement for photos and videos.
Building on years of expertise in multimedia technology and AI development, our product offerings have expanded from makeup virtual try-ons and photo editing to more creative features powered by GenAI, as well as more advanced editing, beautification, and enhancement features for photos and videos.
Innovation is part of our core values, and we are continuously pushing the frontiers of technology to develop AI- and AR-technology and provide new beauty, skincare, fashion solutions and Generative AI functionalities. As of December 31, 2023, we primarily offered 22 SaaS technology solutions, six mobile apps and one online tool.
Innovation is part of our core values, and we are continuously pushing the frontiers of technology to develop AI- and AR-technology and provide new beauty, skincare, fashion tech products integrated with Generative AI solutions. As of December 31, 2024, we primarily offered 31 SaaS technology solutions, six mobile apps and one online editing tool.
AI Avatar Leveraging our latest Generative AI technology and customized Stable Diffusion models, AI Avatar offers a unique platform for users to upload their selfie images and create more than 25 styles of digital avatars for every occasion. These digital twins allow users to creatively express themselves and stand out on social media and online platforms.
AI Avatar offers a unique platform for users to upload their selfie images and create more than 25 styles of digital avatars for every occasion. These digital twins allow users to creatively express themselves and stand out on social media and online platforms.
In our B2C business, we operate a family of YouCam consumer apps designed for photo and video beautification, enhancement, and editing, including but not limited to real-time AR makeup application, skin diagnostics, AI photo background removal, AI Selfie, AI Avatar, and AI Text-to-Image.
For our B2C business, we operate a family of YouCam mobile apps and web-based online editor designed for photo and video beautification, enhancement, and editing, including but not limited to real-time AR makeup application, skin diagnosis, AI photo background removal, AI selfie, AI avatar, and AI text-to-image.
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.
Our B2B business is 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 which affects our business, revenue, and operating results. We expect this seasonality trend to continue.
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.
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 diagnosis, and live selfie backgrounds. YouCam Perfect: a leading AI-powered photo-editing and beauty camera app.
Item 4. Information on the Company A. History and Development of the Company Perfect Corp. was incorporated as a Cayman Islands exempted company on February 13, 2015, following a spin-off from CyberLink. We are a SaaS company dedicated to transforming the world with digital tech innovations that make the digital world beautiful.
Item 4. Information on the Company A. History and Development of the Company Perfect Corp. was incorporated as a Cayman Islands exempted company on February 13, 2015, following a spin-off from CyberLink. We are a leading AI company offering self-developed AI- and AR- powered solutions dedicated to transforming the world with digital tech innovations that make your virtual world beautiful.
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.
It has since then become one of the most popular solutions in our portfolio. We offer AI- and AR-makeup virtual try-on 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.
In 2023, we set the following four pillars as our main AI development strategies to serve clients across beauty, skincare, fashion and mobile app industries: (1) Beauty AI - a complete line of solutions focused in color cosmetics virtual applications providing beauty virtual try-on with high fidelity in color and textures; (2) Skin AI - a complete line of 14 skin concern diagnosis and emulation with High Definition capability, helping consumers to identify their skin needs; (3) Fashion AI - enabling watches and jewelry brands to offer hyper realistic 3D object virtual product try-on in real time; and (4) Generative AI - leveraging on the AI-diffusion-like technology to create new series of AI visual enhancement and creation toolkits, and help consumer with their photos and videos improvements. • Data-Enabled Product Development Strategy Based on consumers’ try-on behaviors across our multiple channels, we are able to get valuable insights into consumers’ behaviors and preferences, as well as popular trends that are developing in the industry, which in turn accelerates the product development process to create innovative products and services that cater to what the consumers want.
In 2024, we continue to follow the four pillars established in 2023 as our primary AI development strategies to serve our brand customers and mobile app users: (1) Beauty AI - a comprehensive suite of solutions focused on color cosmetics virtual applications providing beauty virtual try-ons with high fidelity in color and textures; (2) Skin AI - a complete line of over 15 skin concern diagnostics and simulations with high-definition capability, helping consumers to identify their skin needs; (3) Fashion AI - enabling watch and jewelry brands to offer hyper realistic 3D object virtual product try-on in real time; and (4) Generative AI - leveraging on the AI-diffusion technology to create new series of AI visual enhancement and creation toolkits, helping consumers improve their photos and videos. • Data-Enabled Product Development Strategy Based on consumers’ try-on behaviors across our multiple channels, we are able to gain valuable insights into consumers’ behaviors and preferences, as well as popular trends emerging in the industry, which in turn accelerates the product development process to create innovative products and services that cater to what the consumers want.
The CPRA significantly modifies the CCPA, including adding new privacy rights relating to the use, collection and disclosure of personal information by covered businesses and creating a new enforcement agency, the California Privacy Protection Agency (the “CPPA”). The CPPA will begin enforcing the CPRA and its implementing regulations later in 2024.
The CPRA significantly modifies the CCPA, including adding new privacy rights relating to the use, collection and disclosure of personal information by covered businesses and creating a new enforcement agency, the California Privacy Protection Agency (the “CPPA”).
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.
Research and Development The success of our broad range of AI- and AR-powered solutions is reliant on our technology. We invested significant time, resources and expense into research and development.
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 believe beauty and fashion brands naturally prefer a neutral platform such as us which has deployment capabilities across 68 Table of Contents 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.
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.
The following table sets forth the number of our employees categorized by function as of December 31, 2024. Number of Employees Percentage Sales and Marketing 144 42.1 % Research and Development 169 49.4 % General and Administrative 29 8.5 % Total 342 100.0 % We have a strong depth of knowledge amongst our technology team.
AI Selfie By integrating Generative AI technology into development, AI Selfie transforms users’ photos into artworks, offering a wide selection of 20 distinct artistic styles ranging from Watercolor, Graffiti, Anime, Manga to Pop Art, and even styles inspired by Van Gogh.
AI Headshot empowers users to transform their everyday photos into professional photos that can be presented in various postures. 62 Table of Contents By integrating Generative AI technology into development, AI Selfie transforms users’ photos into artworks, offering a wide selection of 20 distinct artistic styles ranging from Watercolor, Graffiti, Anime, Manga to Pop Art, and even styles inspired by Van Gogh.
Our family of YouCam apps is able to offer unique and superior digital experiences with the help of our advanced technologies, such as Generative AI. The special features from our apps can empower users to express themselves freely and creatively on social media or other platforms using high-quality and ultra-personalized photos/videos edited or generated by YouCam apps.
The special features from our apps can empower users to express themselves freely and creatively on social media or other platforms using high-quality and ultra-personalized photos/videos edited or generated by YouCam apps.
In 2017, we launched our SaaS business model to further monetize the AI technology and gain further support from large brands and retailers. With more beauty solutions such as AI hair color virtual try-on and skin diagnosis solutions being developed, our goal then moved to becoming a one-stop shop for AI- and AR-beauty, skincare, and fashion solutions.
With more beauty solutions such as AI hair color virtual try-on and skin diagnosis solutions being developed, our goal then moved to becoming a one-stop shop for AI- and AR-beauty, skincare, and fashion solutions.
In 2023, we further expanded the partnership with retailer Walmart to enable AR- virtual try-on experience within its shopping app. This expansion broadened our services to a larger global audience and perfectly aligned with our strategy of delivering omni-channel virtual try-on solutions to our clients. We have achieved significant scale and steady growth since our inception in 2015.
We further expanded our strategic partnerships with one of retailer giant, Walmart, in 2023 to enable AR- virtual try-on experience within its shopping apps. This expansion broadened our services to a larger global audience and perfectly aligned with our strategy of delivering omni-channel virtual try-on solutions to our brand customers.
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.
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.
Our momentum of acquiring new brands continues to be strong, growing from 444 cumulative brands as of December 31, 2021 to 509 cumulative brands and 645 cumulative brands as of December 31, 2022 and 2023, respectively, at a CAGR of 20.5% from 2021 to 2023.
In our B2B business, our momentum of acquiring new brands into our brand portfolio continues to be strong, growing from 509 cumulative brands as of December 31, 2022 to 645 cumulative brands and 732 cumulative brands as of December 31, 2023 and 2024, respectively, at a CAGR of 19.9% from 2022 to 2024.
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.
Our offerings can be deployed across a variety of channels, including brand-owned websites, in-store kiosks, 49 Table of Contents retailer websites, and official mobile applications, as well as major third-party platforms such as Alphabet (Google and YouTube), Snap, Alibaba (Taobao and Tmall), and Tencent (WeChat).
We have a wide consumer base with over one billion downloads as of December 31, 2023 and approximately 16.5 million average MAUs of our YouCam apps globally for the year ended December 31, 2023. • Strategic Partners We not only offer enterprise SaaS solutions to multiple notable beauty or fashion accessory brand owners, but have 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).
Our Strategic Partners • Strategic Partners We not only offer enterprise SaaS solutions to multiple notable beauty or fashion accessory brand owners, but have 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).
AI Headshot AI Studio AI Photo Editing Tools: AI Remove Background, AI Blur Background, AI Object Removal, AI Image Extender, AI Replacement, and AI Photo/Video Enhancement In 2023, we launched a set of Generative AI-powered tools for photo editing, including AI Remove Background, AI Blur Background, AI Object Removal, AI Image Extender, AI Replacement, and AI Photo/Video Enhancement, which offers users more powerful tools to enhance, beautify, and upgrade photos.
With the help of this feature, users are able to create visual masterpieces in just a moment, both for work and for entertainment. 63 Table of Contents AI Photo and Video Editing Tools: AI Remove Background, AI Blur Background, AI Object Removal, AI Image Extender, AI Replacement, and AI Photo/Video Enhancement We have launched a set of Generative AI-powered tools for photo editing in 2023, including AI Remove Background, AI Blur Background, AI Object Removal, AI Image Extender, AI Replacement, and AI Photo/Video Enhancement, which offers users more powerful tools to enhance, beautify, and upgrade photos.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

91 edited+47 added−42 removed26 unchanged
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.
We intend to continue to fund our future material cash requirements with net proceeds in connection with our Business Combination, 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.
Interest Income Our interest income primarily consists of interest earned on bank deposits and financial assets at amortized costs. Other Income Our other income primarily consists of subsidies from local government and VAT adjustments. We do not expect material subsidies from local government in the foreseeable future.
Interest Income Our interest income primarily consists of interests earned on bank deposits and financial assets at amortized costs. Other Income Our other income primarily consists of subsidies from local government and VAT adjustments. We do not expect material subsidies from local government in the foreseeable future.
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.
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, 2024 to December 31, 2024, 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.
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.
We believe adjusted net income 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.
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.
As of the date of this annual report, there has been no material change to our liquidity position since December 31, 2024. 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.
These sales, or the possibility that these sales may occur, and any related volatility or decrease in market price of our Class A Ordinary Shares and Warrants, might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. See “ Item 3. Key Information — D.
These sales, or the possibility that these sales may occur, and any related volatility or decrease in market price of our Class A Ordinary Shares and Warrants, might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. See “Item 3. Key Information — D.
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.
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 offerings.
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.
Cost of Sales and Services Our cost of sales and services primarily consists 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 Play and Apple App Store.
Comparison of Year Ended December 31, 2021 to Year Ended December 31, 2022 For the discussion covering items for the fiscal year ended December 31, 2021 and a comparison between the fiscal year ended December 31, 2022 and 2021, please refer to “Item 5. — Operating and Financial Review and Prospects — A.
Comparison of Year Ended December 31, 2022 to Year Ended December 31, 2023 For the discussion covering items for the fiscal year ended December 31, 2023 and a comparison between the fiscal year ended December 31, 2023 and 2022, please refer to “Item 5. — Operating and Financial Review and Prospects — A.
Cash Flows Generated from (Used in) Financing Activities Net cash used in financing activities was $51.5 million in 2023, primarily consisting of $51.1 million representing the payments to purchase Class A Ordinary Shares through our share repurchase program and tender offer, both launched by us in 2023, and $0.4 million in the repayment of the principal portion of lease liabilities.
Net cash used in financing activities was $51.5 million in 2023, primarily consisting of $51.1 million representing the payments to repurchase Class A Ordinary Shares through our share repurchase program and tender offer, both launched by us in 2023, and $0.4 million in the repayment of the principal portion of lease liabilities.
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
See Note 5 “Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty” to our consolidated financial statements elsewhere in this annual report for additional information on our critical accounting estimates. 89 Table of Contents
Accordingly, our effective tax rate will vary depending on the relative proportion of income derived in each jurisdiction, use of tax credits, changes in the valuation of our deferred tax assets and liabilities as well as changes in tax laws.
Accordingly, our effective tax rate will vary depending on the relative proportion of income derived in each jurisdiction, 82 Table of Contents use of tax credits, changes in the valuation of our deferred tax assets and liabilities as well as changes in tax laws.
The increase was primarily due to the increase in payment processing fees paid to third-party digital distribution platforms such as Apple App Store and Google Play in light of the increase in our mobile app subscription revenue.
The increase was primarily due to the increase in payment processing fees paid to third-party digital distribution platforms such as Apple App Store and Google Play resulting from the increase in our mobile app subscription revenue.
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.
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. 80 Table of Contents Components of Results of Operations Revenue Our revenue sources include two major components: AI- and AR- cloud solutions and subscription and licensing.
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.
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.” 87 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) 2022 2023 2024 Cash flows from (used in) operating activities $ (3,305) $ 13,578 $ 13,003 Cash flows from (used in) investing activities (30,258) (637) (8,879) Cash flows from (used in) financing activities 118,028 (51,499) (525) Effects of exchange rates changes on cash and cash equivalents (2,302) (187) (349) Net increase (decrease) in cash and cash equivalents $ 82,163 $ (38,745) $ 3,250 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.
Operating Results — Results of Operations” of our annual report on Form 20-F for the fiscal year ended December 31, 2022 filed with SEC on March 30, 2023.
Operating Results — Results of Operations” of our annual report on Form 20-F for the fiscal year ended December 31, 2023 filed with SEC on March 29, 2024.
As of December 31, 2023, we had cash and cash equivalents of $123.9 million, which primarily consisted of checking accounts, demand deposits and time deposits. Our cash and cash equivalents are primarily denominated in U.S. dollars and we do not currently enter into any hedging arrangements.
As of December 31, 2024, we had cash and cash equivalents of $127.1 million, which primarily consisted of checking accounts, demand deposits and time deposits. Our cash and cash equivalents are primarily denominated in U.S. dollars, and we do not currently enter into any hedging arrangements.
Our typical contract terms with brand customers range from three months to multiple years, among which one-year term is the most common.
Our typical contract terms with brand customers range from three months to multiple years, with one-year term being the most common.
All intercompany accounts and transactions have been eliminated on consolidation. For the purposes of presenting consolidated financial statements, our assets and liabilities and our foreign operations (including subsidiaries in other countries that use currencies which are different from our functional currency) are translated into U.S. dollars using exchange rates prevailing at the end of each reporting period.
For the purposes of presenting consolidated financial statements, our assets and liabilities and our foreign operations (including subsidiaries in other countries that use currencies which are different from our functional currency) are translated into U.S. dollars using exchange rates prevailing at the end of each reporting period.
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.
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.
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.
Furthermore, depending on the nature of the products and services provided, the charges of brand customers can be further divided to one-time fees, recurring fees, or a combination of both.
Our cash requirements for the three years ended December 31, 2023 and any subsequent interim period primarily include our capital expenditure, lease obligations, contractual obligations and other commitments.
Our cash requirements for the year ended December 31, 2024 and any subsequent interim period primarily include our capital expenditure, lease obligations, contractual obligations and other commitments.
Finance Costs Our finance costs consist primarily of interest expenses on our lease liabilities. Income Tax Expense Our income tax expense primarily consists of current income tax expenses. As a global company, we are subject to income taxes in the jurisdictions where we do business. These foreign jurisdictions have different statutory tax rates.
Income Tax Expense Our income tax expense primarily consists of current income tax expenses. As a global company, we are subject to income taxes in the jurisdictions where we do business. These foreign jurisdictions have different statutory tax rates.
Trend Information Although our sales cycle has been elongated in the second half of 2022 and the first half of 2023 due to the worsening macroeconomic environment, we saw a signal of recovery in B2B business opportunities from late 2023, which enables us to enter into new deals and expand our customer base.
Although our enterprise business sales cycle has been elongated in the second half of 2022 and 2023 due to the worsening macroeconomic environment, we saw some early signal of recovery in B2B business opportunities from 2024, which enables us to enter into new deals and expand our customer base.
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.
As the closing price of our Class A Ordinary Shares was $1.68 as of March 27, 2025, 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.
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.
Our capital expenditures are 86 Table of Contents 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, 2022 through December 31, 2024, we incurred capital expenditure of less than $0.4 million annually.
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.
E. Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with IFRS. The preparation of our consolidated financial statements requires us to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue, expenses and related disclosures.
Completion of Business Combination On October 28, 2022, we completed the Business Combination. On October 31, 2022, our Class A Ordinary Shares and Warrants commenced trading on the NYSE under the symbols “PERF” and “PERF WS”, respectively.
On October 31, 2022, our Class A Ordinary Shares and Warrants commenced trading on the NYSE under the symbols “PERF” and “PERF WS”, respectively.
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.
In addition, we have 6-month time deposits of $36.0 million classified as current financial assets at amortized cost according to IFRS as of December 31, 2024 and we do not have any loan and bank borrowings as of the same date.
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.
As of December 31, 2024, our cumulative brand portfolio includes 732 brands, including global industry leaders such as COTY, Estée Lauder Group, LVMH Group, Shiseido Group and Kao Group, with over 822,000 digital SKUs for makeup, hairstyles, haircare, skincare, eyewear, and jewelry products, and over 10 billion virtual product try-ons annually.
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.
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 bases in the beauty and fashion industry, and expand into aesthetic skin beauty segment with a particular focus on med-spa applications. These new developments and expansions may generate long-term cash requirements.
One-time fees are made up of service setup fee, customization fee, and console base fee, which allows brands to create a brand console account on our platform so that they can upload and manage SKUs. Recurring fees are related to granting customers access to the modules over the contract period.
One-time fees are made up of service setup fee, customization fee, and console base fee, which allow brands to create a brand console account on our platform for uploading and managing SKUs. Recurring fees are related to granting customers access to the modules throughout the contract period.
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.
Business — Overview – Our Business”. For details of revenue recognition of our products and services, see “— Components of Results of Operations — Revenue” of the annual report and Note 4 “Summary of Significant Accounting Policies” to our consolidated financial statement.
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.
(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 customized mobile apps designed and created based on customers’ specifications that do not require continuous support from our backend cloud computing infrastructure.
In addition, general and administrative expenses also include allocated facilities costs, such as rent, depreciation expenses, professional service fees and other general corporate expenses.
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 service fees and other general corporate expenses.
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.
Information on the Company — B. Business Overview — Intellectual Property.” D. Trend Information 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.
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 generate recurring revenue from renewals of these licensing agreements by customers. 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.
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.
Any changes or innovations in the beauty and fashion industries and our ability to adapt to such changes or innovations promptly could affect our business and results of operation. Despite the rapid pace of digital transformation in recent years, the adoption of AI- and AR- technologies among beauty and fashion brands and retailers remains relatively low.
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.
(1) AI- and AR- cloud solutions and subscription For AI- and AR- cloud solutions and subscription, we provide online cloud-based solutions to our customers, primarily including premium feature subscriptions for our individual customers and virtual try-on solutions for our brand customers.
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 decrease was primarily due to economic instability and extended sales conversion cycle in the B2B business. 79 Table of Contents As we strengthen 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 and fashion brands.
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 $53.5 million for the year ended December 31, 2023.
Results of Operations Our results of operations for the years ended December 31, 2022, 2023 and 2024 are presented below: Years ended December 31, ($ in thousands, unless otherwise stated) 2022 2023 2024 2023 % Change 2024 % Change Revenue $ 47,300 $ 53,505 $ 60,202 13.1 % 12.5 % Cost of sales and services (7,130) (10,400) (13,258) 45.9 % 27.5 % Gross profit 40,170 43,105 46,944 7.3 % 8.9 % Operating expenses Sales and marketing expenses (24,544) (25,725) (28,213) 4.8 % 9.7 % General and administrative expenses (76,219) (11,582) (8,501) (84.8) % (26.6) % Research and development expenses (10,481) (11,458) (12,000) 9.3 % 4.7 % Expected credit losses — — (1,373) — % (100.0) % Total operating expenses (111,244) (48,765) (50,087) (56.2) % 2.7 % Operating loss (71,074) (5,660) (3,143) (92.0) % (44.5) % Non-operating income and expenses Interest income 2,029 9,498 7,708 368.1 % (18.8) % Other income 75 33 55 (56.0) % 66.7 % Other gains and losses (92,474) 1,675 (316) (101.8) % (118.9) % Finance costs (8) (15) (18) 87.5 % 20.0 % Total non-operating income and expenses (90,378) 11,191 7,429 (112.4) % (33.6) % Income (loss) before income tax (161,452) 5,531 4,286 (103.4) % (22.5) % Income tax benefit (expense) (292) (115) 735 (60.6) % (739.1) % Net income (loss) $ (161,744) $ 5,416 $ 5,021 (103.3) % (7.3) % Comparison of Year Ended December 31, 2023 to Year Ended December 31, 2024 Revenue Total revenue increased by $6.7 million, or 12.5%, from $53.5 million for the year ended December 31, 2023 to $60.2 million for the year ended December 31, 2024.
Operating Results Company Overview Founded in 2015, we are the leading beautiful AI SaaS technology company offering AI- and AR-powered solutions dedicated to making the world more beautiful. We operate a hybrid business model, catering to the needs of enterprise clients and consumer app users.
Operating Results Company Overview Founded in 2015, we are a leading AI technology company offering self-developed AI- and AR- powered solutions dedicated to making your virtual world beautiful. We operate a hybrid business model of B2B business and B2C business.
Other Gains and Losses Our other gains and losses primarily consist of losses on financial liabilities at fair value through profit or loss (“FVTPL”) and foreign exchange gains and losses.
Other Gains and Losses Our other gains and losses primarily consist of losses on financial liabilities at fair value through profit or loss (“FVTPL”) and foreign exchange gains and losses. The FVTPL is primarily associated with our outstanding warrants. Finance Costs Our finance costs primarily consist of interest expenses on our lease liabilities.
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.
The presentation of these non-IFRS financial measures is not intended to be considered in isolation from or as a substitute for the financial information prepared and presented in accordance with IFRS. The items excluded from our adjusted net income are not driven by core results of operations and render comparison of IFRS financial measures with prior periods less meaningful.
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.
We define these non-IFRS financial measures as follows: 85 Table of Contents Adjusted net income (loss) is defined as net income (loss) excluding one-off transaction costs, non-cash equity-based compensation, and non-cash valuation (gain)/loss of financial liabilities. Starting from the first quarter of 2024, we no longer exclude foreign exchange gain (loss) from adjusted net income (loss).
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.
The following table sets forth a breakdown of our revenue for the periods indicated based on the types of customers: Year ended December 31, 2022 2023 2024 US$’000 % of total revenue US$’000 % of total revenue US$’000 % of total revenue Revenue from brands 29,224 61.8 % 25,793 48.2 % 22,445 37.3 % Revenue from Key Customers 20,580 43.5 % 24,271 45.4 % 19,565 32.5 % Revenue from non-Key Customer brands 8,644 18.3 % 1,522 2.8 % 2,880 4.8 % Revenue from mobile apps subscribers 16,230 34.3 % 26,517 49.5 % 36,603 60.8 % Others 1,846 3.9 % 1,195 2.3 % 1,154 1.9 % Total revenue 47,300 100 % 53,505 100 % 60,202 100 % Our ability to sustainably grow our B2B business depends in part on retain.ing our existing brand customers, expanding their use of our services and acquiring new brand customers into our brand portfolio.
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.
Other Income Other income increased by approximately $22 thousand, or 66.7%, from approximately $33 thousand for the year ended December 31, 2023 to approximately $55 thousand for the year ended December 31, 2024.
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.
It is expected to remain profitable in the foreseeable future. Net Income As a result of the foregoing, our net income in 2024 was $5.0 million, compared to net income of $5.4 million in 2023. Adjusted Net Income (Loss) (Non-IFRS) Our adjusted net income in 2024 was $8.3 million, compared to an adjusted net income of $7.0 million in 2023.
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.
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.
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.
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.
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.
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 losses of $0.2 million for the year ended December 31, 2024, as compared to gains of $1.6 million for the year ended December 31, 2023.
Non-IFRS financial measures have limitations as analytical tools, which possibly do not reflect all items of expense that affect our operations. Share-based compensation expenses have been and may continue to be incurred in our business and are not reflected in the presentation of the non-IFRS financial measures.
Non-IFRS financial measures are not defined under IFRS and are not presented in accordance with IFRS. Non-IFRS financial measures have limitations as analytical tools, which possibly do not reflect all items of expense that affect our operations.
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.
These fees are recurring as the service is time-limited and scope-limited, requiring renewal upon the expiration of the service term.
Our business primarily operates in a pre-paid service subscription model, enabling us to collect cash in advance upon the signing of contract and then deliver services pursuant to terms of contract. Net cash generated from operating activities was $13.6 million in 2023, which was primarily due to the increase in interests received and prepayments from our customers .
Our business primarily operates in a prepaid service subscription model, enabling us to collect cash in advance upon the signing of contract and then deliver services pursuant to terms of contract.
Sales and Marketing Expenses Sales and marketing expenses increased by $1.2 million, or 4.8%, from $24.5 million for the year ended December 31, 2022 to $25.7 million for the year ended December 31, 2023.
Total Operating Expenses Total operating expenses increased by $1.3 million, or 2.7%, from $48.8 million for the year ended December 31, 2023 to $50.1 million for the year ended December 31, 2024.
We also allocate a great portion of our resources to technology development as it is the cornerstone of our business success. We work with prestigious universities and research labs to bring young talents and the latest technologies from academic institutions to our company, serving as the bridge between academic study and commercialization.
We have also invested a substantial portion of our resources in technology development, recognizing it as the cornerstone of our business success. By collaborating with prestigious universities and research labs, we bring emerging talents and cutting-edge technologies from academic institutions to our Company, bridging the gap between academic research and commercial application.
This collaboration enables us to access new ideas and the latest technology development at its early stage for planning in advance. Furthermore, we spare no effort in continually improving and upgrading our technologies to ensure the highest quality for our customers.
This collaboration offers us unique opportunities to access innovative ideas and latest technology developments at an early stage, allowing us for proactive planning. Additionally, we are committed to continually improving and upgrading our technologies to ensure the highest quality to our customers.
General and Administrative Expenses General and administrative expenses significantly decreased by $64.6 million, or 84.8%, from $76.2 million for the year ended December 31, 2022 to $11.6 million for the year ended December 31, 2023.
Total Non-Operating Income and Expenses Total non-operating income and expenses decreased by $3.8 million, or 33.6%, from $11.2 million for the year ended December 31, 2023 to $7.4 million for the year ended December 31, 2024.
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.
Material Contractual Obligations and Commitments During the periods presented, we did not have any material contractual obligations and commitments other than two office leases entered into by and between Perfect Taiwan and CyberLink for two years starting from June 1, 2023 and December 1, 2023 respectively, and an office lease entered into by and between Perfect Taiwan and ClinJeff Corp., a related party, for two years starting from May 15, 2024. 88 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.
For these licensing arrangements, the deliverables are handed over to customers and operated by customers on their own infrastructure without additional services from us. Furthermore, depending on the nature of the license provided, some brand customers need to renew the licensing agreements, as the right to use our intellectual property is only granted to them for a specific period.
Furthermore, depending on the type of the licensing services provided, brand customers may elect to renew licensing agreements with us, as the right to use our intellectual property is only granted to them for a specific period. We collect recurring revenue from the renewal of licensing agreements by customers.
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.
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), as supplemental metrics in reviewing and assessing our operating performance and formulating our business plan.
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.
In managing our B2B business, our management vigilantly monitors the revenue contribution from our Key Customers, as these metric provide reliable insights into the growth of our B2B business, due to the following reasons: (i) revenue from Key Customers accounted for approximately 43.5%, 45.4% and 32.5% of our total revenue in 2022, 2023 and 2024, respectively; and (ii) revenue from Key Customers represented 70.4%, 94.1% and 87.2% of our total revenue from our total brand portfolio in 2022, 2023 and 2024, respectively.
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.
Certain 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 are committed to investing in our people and technology, as these are essential for delivering innovative solutions and services that meet our customer needs, expanding our customer base, and maintaining our market leadership in the consumer beauty and AI mobile apps as well as in the beauty and fashion AI- and AR- industry.
We recorded a net income of $5.4 million in 2023, compared to a net loss of $161.7 million in 2022. The first-ever positive net income demonstrated that our overall financial and business situation improved in 2023. We incurred significant listing related expenses and losses in 2022 and not in 2023.
We recorded net losses of $161.7 million in 2022, and recorded a net income of $5.4 million in 2023 and $5.0 million in 2024. Our sustained improvement of operating income in 2023 and 2024 demonstrated the steady growth of our business and the improvement of our overall financial and business situation.
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.
Revenue outside of these three major regions has grown by 36.1% from $1.2 million for the year ended December 31, 2023 to $1.7 million for the same period in 2024. 83 Table of Contents Cost of Sales and Services Cost of sales and services increased by $2.9 million, or 27.5%, from $10.4 million for the year ended December 31, 2023 to $13.3 million for the year ended December 31, 2024.
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.
With respect to geographical contribution, revenue from the Americas has increased 6.3% from $29.9 million for the year ended December 31, 2023 to $31.8 million for the same period in 2024, revenue from Europe has increased by 20.4% from $13.8 million for the year ended December 31, 2023 to $ 16.6 million for the same period in 2024, and revenue from Asia-Pacific has increased by 18.2% from $8.6 million for the year ended December 31, 2023 to $10.1 million for the same period in 2024.
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.
We believe the high consumer engagement and scalability of our platform positions us well to capitalize on this monetization opportunity. In addition to the Key Customers, which are major brand customers, we also generate revenue from other long-tail brand customers which is the non-Key Customer brands.
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.
In terms of the premium features on our mobile apps and web services to which individual customers subscribe through Apple App Store and Google Play and our web-based editor, we currently offer monthly and annual subscription plans, with subscription price varying by countries and regions. We recognize revenue from such services based on the fulfilled contract obligations for each month.
Sales and Marketing Expenses Our sales and marketing expenses consist of personnel-related expenses for salaries, employee benefits, and stock-based compensation for employees engaged in sales and marketing, advertising and promotional fees, cloud-hosting fees as well as allocated facilities and information technology costs.
We expect that our cost of sales and services will increase in absolute dollars in tandem with the growth of our businesses in the foreseeable future, as we continue to invest and broaden our product offerings and scale up our business operations. 81 Table of Contents Sales and Marketing Expenses Our sales and marketing expenses consist of personnel-related expenses for salaries, employee benefits, and stock-based compensation for employees engaged in sales and marketing, advertising and promotional fees, cloud-hosting fees as well as allocated facilities and information technology 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.
The increase was primarily due to the increase of our research and development headcount and related personnel costs. Expected credit losses Expected credit losses were $1.4 million for the year ended December 31, 2024. We did not record expected credit losses for the year ended December 31, 2023.
In addition, the non-IFRS financial measures Perfect uses may differ from the non-IFRS measures used by other companies, including peer companies, and therefore their comparability may be limited. The presentation of these non-IFRS financial measures is not intended to be considered in isolation from or as a substitute for the financial information prepared and presented in accordance with IFRS.
Share-based compensation expenses have been and may continue to be incurred in our business and are not reflected in the presentation of the non-IFRS financial measures. In addition, the non-IFRS financial measures Perfect uses may differ from the non-IFRS measures used by other companies, including peer companies, and therefore their comparability may be limited.
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.
We believe these efforts are crucial to our business, as the success of our AI- and AR-powered solutions relies on technology that provides exceptional accuracy, scalability, and performance. Basis of Presentation Our consolidated financial statements have been prepared in accordance with IFRS. All intercompany accounts and transactions have been eliminated on consolidation.
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.
By closely monitoring these factors and aligning our development efforts with user needs, we aim to maintain the quality and attractiveness of our products while navigating the dynamic industry landscape. • Overall adoption rate of AI- and AR-technologies in beauty and fashion industries Our results of operations are affected by the overall growth and adoption of AI- and AR-technologies in the beauty and fashion industries, which are, in turn, affected by customer demand for these technologies and the pace of 78 Table of Contents brands’ digital transformation.
Moreover, we foster an atmosphere that motivates employees to raise questions and adopt a problem-solving mindset. Our ultimate goal is to keep these talents in the long term and make them a valued asset to our business needs. With the dedication and contributions from these talented and experienced individuals, we may keep a leading position in the industry.
We also foster a working environment that motivates employees to raise questions and adopts a problem-solving mindset. Our ultimate goal is to retain these talents in the long term and turn them into valuable asset for our business success.
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.
Our contract consideration is fixed and determined by the following factors: (i) the functionality of the modules (e.g., makeup, skincare, shade finder, jewelry); (ii) the duration of the contract period; (iii) the geographical coverage, such as the number of countries or regions for module deployment or the number of website domains for integration into our modules; (iv) the maximum number of SKUs that a brand can utilize at the same time; and (v) any additional manpower hours required for customization, if any.
With the unique and premium features powered by our superior AI- and AR-technologies, these apps have attracted an increasing number of active subscribers, growing from around 439,000 and 604,000 as of December 31, 2021 and 2022 respectively, to over 879,000 active subscribers as of December 31, 2023, representing a CAGR of approximately 41.6% from 2021 to 2023.
These apps and online services, powered by our AI- and AR- technologies, have attracted a growing number of active subscribers, reaching a record high of over one million active subscribers as of December 31, 2024, up from 879,000 active subscribers as of December 31, 2023.
We have put in a great deal of efforts to invest in people. We recruit talents from renowned universities and academic institutions in different regions. Our approach to talent development involves implementing employee training programs across various disciplines and exercises including lectures, experience sharing from seniors, study groups, as well 73 Table of Contents as conferences and external forums.
We have invested considerable resources in our people. We recruit talents from renowned universities and academic institutions across various regions. We have built up a comprehensive talent development program that includes diverse training programs featuring lectures, senior experience sharing, study groups, and participation in conferences and external forums.
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.
The decrease was primarily due to the decrease of interest income and other gains and losses. 84 Table of Contents Interest Income Interest income decreased by $1.8 million, or 18.8%, from $9.5 million for the year ended December 31, 2023 to $7.7 million for the year ended December 31, 2024.
Years ended December 31, ($ 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.
Years ended December 31, ($ in thousands, unless otherwise stated) 2022 2023 2024 Net Income (Loss) $ (161,744) $ 5,416 $ 5,021 One-off Transaction Costs 71,152 33 299 Non-Cash Equity-Based Compensation 2,175 3,210 2,774 Non-Cash Valuation (Gain)/Loss of financial liabilities 93,777 (1,641) 227 Foreign Exchange (Gain)/Loss (1,303) — — Adjusted Net Income (1) $ 4,057 $ 7,018 $ 8,321 Note: (1) In accordance with the changed definition of “adjusted net income” that is detailed in the “Use of Non-IFRS Financial Measures” section above, we have made a retrospective adjustment to our adjusted net income for the year ended December 31, 2023 not adjusting for “foreign exchange gains” (which amounted to a gain of $34 thousand for the period, as previously disclosed in our Form 6-K furnished to the SEC on February 28, 2024).
We recognized operating expenses of $40.1 million, $111.2 million and $48.8 million in 2021, 2022, and 2023, respectively. Going forward, our increasing scale of business and advancement in technology may lead to lower marginal operating costs and expenses.
We recognized operating expenses of $111.2 million, $48.8 million and $50.1 million in 2022, 2023, and 2024, respectively. As we scale our business and advance our technology, we anticipate that marginal operating costs and expenses may decrease. 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.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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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. 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 a party to a service agreement with us dated September 26, 2019 and as amended on January 24, 2022. Under the service agreement, Ms.
Exercise Price . The exercise price will not be less than the par value per share. Notwithstanding the foregoing, the exercise price of options granted to U.S.
Exercise Price . The exercise price will be not less than the par value per share. Notwithstanding the foregoing, the exercise price of options granted to U.S.
(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.
(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 Yi-Chen Huang. The above information is based on the Schedule 13G filed by Yi-Chen Huang, among others, on February 2, 2024.
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.
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 adversely affected.
Chang beneficially owns (a) 10,622,620 Class B Ordinary Shares held by GOLDEN EDGE CO., LTD., a British Virgin Islands company in which Ms. Alice H. Chang has a controlling interest, (b) 4,669,346 Class B Ordinary Shares held by DVDonet.com.
Chang beneficially owns (a) 10,622,620 Class B Ordinary Shares held by GOLDEN EDGE CO., LTD., a British Virgin Islands company in which Alice H. Chang has a controlling interest, (b) 4,669,346 Class B Ordinary Shares held by DVDonet.com.
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.
Inc., a British Virgin Islands company wholly owned by World Speed Company Limited, which is a British Virgin Islands company wholly owned by Alice H. Chang, (c) 523,008 Class B Ordinary Shares held by World Speed Company Limited, a British Virgin Islands company wholly owned by Alice H. Chang, (d) 973,744 Class B Ordinary Shares held by Alice H.
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.
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, 2025 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.
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.
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, 2024.
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.
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, 96 Table of Contents • the performance of our internal audit function, and • the performance of our independent registered public accounting firm.
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.
On October 28, 2022, our Board adopted a resolution that 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.
Item 6. Directors, Senior Management and Employees A. Directors and Senior Management The following table sets forth certain information relating to our executive officers and directors as of the date of this annual report. Our Board is comprised of seven directors. Name Age Position(s) Alice H.
Item 6. Directors, Senior Management and Employees A. Directors and Senior Management The following table sets forth certain information relating to our executive officers and directors as of the date of this annual report. Our Board is comprised of six directors. Name Age Position(s) Alice H.
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.
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, 2025, none of our Class B Ordinary Shares was held by record holders in the United States.
Subject to the adjustment provisions in the Share Incentive Plan, the maximum aggregate number of the Ordinary Shares that may be issued upon exercise of all options to be granted under the Share Incentive Plan shall be 5,311,310 Ordinary Shares; up to 5,311,310 Ordinary Shares may be issued under the Share Incentive Plan to participants who are citizens of the U.S., residents of the U.S. or are otherwise subject to the federal income tax laws of the U.S.
Subject to the adjustment provisions in the Share Incentive Plan, the maximum aggregate number of the Ordinary Shares that may be issued upon exercise of all options to be granted under the Share Incentive Plan shall be 5,311,310 Ordinary Shares; up to 5,311,310 Ordinary Shares may be issued under the Share Incentive Plan to 92 Table of Contents participants who are citizens of the U.S., residents of the U.S. or are otherwise subject to the federal income tax laws of the U.S.
Prior to that, Mr. Tsao also worked at Citibank for nine years across various functions. Mr. Tsao holds an MBA from National Taiwan University and a B.Sc. from Tsinghua University. He is also a Chartered Financial Analyst Charterholder. Chung-Hui (Christine) Jih has served as our non-executive director since October 28, 2022. Ms.
Prior to that, Mr. Tsao also worked at Citibank for nine years across various functions. Mr. 91 Table of Contents Tsao holds an MBA from National Taiwan University and a B.Sc. from Tsinghua University. He is also a Chartered Financial Analyst Charterholder. Chung-Hui (Christine) Jih has served as our non-executive director since October 28, 2022. Ms.
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.
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.
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.
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. Liu worked as a senior engineering manager at NVIDIA Corporation (Nasdaq: NVDA). Mr.
In the event of our dissolution or liquidation, each award will terminate immediately prior to the consummation of such action, unless otherwise determined by the CEO or other senior officer(s) designated by the Board. Change in Control .
Dissolution or Liquidation . In the event of our dissolution or liquidation, each award will terminate immediately prior to the consummation of such action, unless otherwise determined by the CEO or other senior officer(s) designated by the Board. 93 Table of Contents Change in Control .
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.
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.
Such determination, without the consent of any participant, may provide (without limitation) for one or more of the following in the event of a change of control: (i) the termination or continuation of such outstanding awards by us (if Perfect Corp. is the surviving corporation); (ii) the assumption of such outstanding awards by the surviving corporation or its parent; or (iii) the substitution by the surviving corporation or its parent of new options or equity awards for such awards.
The determination may, without limitation, provide for one or more of the following in the event of a change of control: (i) the termination or continuation of such outstanding awards by us (if Perfect is the surviving corporation); (ii) the assumption of such outstanding awards by the surviving corporation or its parent; or (iii) the substitution by the surviving corporation or its parent of new options or equity awards for such awards.
The Share Incentive Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Code, to our or our affiliates’ employees, directors, agents, consultants or service providers as selected by the administrator.
The Share Incentive Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, to our or our affiliates’ employees, directors, agents, consultants or service providers as selected by the administrator.
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.
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. 97 Table of Contents The total number of Ordinary Shares outstanding as of March 20, 2025 is 101,848,671 shares, consisting of 85,059,953 Class A Ordinary Shares and 16,788,718 Class B Ordinary Shares.
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 90 Table of Contents 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.
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.
In fulfilling their duty of care to us, our directors must ensure 95 Table of Contents compliance with our Articles, as amended and restated from time to time, and the class rights vested thereunder in the holders of the shares.
Board Practices Board of Directors Our Board consists of seven directors as of the date of this annual report. Of these seven directors, three are independent.
Board Practices Board of Directors Our Board consists of six directors as of the date of this annual report. Of these six directors, three are independent.
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.
Chang 63 CEO and Chairwoman of the Board Michael Aw 49 Non-executive Director Jau-Hsiung Huang 65 Non-executive Director Meng-Shiou (Frank) Lee 63 Independent Non-executive Director Philip Tsao 64 Independent Non-executive Director Chung-Hui (Christine) Jih 63 Independent Non-executive Director Pin-Jen (Louis) Chen 46 Executive Vice President and Chief Strategy Officer Wei-Hsin Tsen (Johnny Tseng) 57 Senior Vice President and Chief Technology Officer Weichuan (Wayne) Liu 55 Chief Growth Officer and President of Americas Hsiao-Chuan (Iris) Chen 56 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 (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.
Chang (1) 597,256 *% 16,788,718 100 % 66.6 % 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 — — — — — Meng-Shiou (Frank) Lee — — — — — Philip Tsao 5,311 (2) *% — — *% Chung-Hui (Christine) Jih — — — — — All directors and executive officers as a group 2,054,636 2.4 % 16,788,718 100 % 67.2 % Five Percent or More Shareholders: GOLDEN EDGE CO., LTD. — — 10,622,620 (1) 63.3 % 42.0 % DVDonet.com.
If an award of option should expire or become unexercisable for any reason without having been exercised in full, or if the Ordinary Shares are issued under the Share Incentive Plan and later forfeited due to the failure to vest, the unissued or forfeited Share Incentive Plan that was subject thereto shall, unless the Share Incentive Plan shall have been terminated, continue to be or again be available for issuance pursuant to future awards and grants under the Share Incentive Plan.
If an award of option should expire or become unexercisable for any reason without having been exercised in full, or if the Ordinary Shares issued under the Share Incentive Plan are later forfeited due to the failure to vest, the unissued or forfeited shares shall, unless the Share Incentive Plan shall have been terminated, remain or become available for future issuance pursuant to subsequent awards and grants under the Share Incentive Plan.
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.
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 % ________________________________ * 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.
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).
To our knowledge, as of March 20, 2025, 41,405,708 Class A Ordinary Shares, or 48.67% 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).
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, and (e) 597,256 Class A Ordinary Shares held by Alice H. Chang. (2) Represents Class A Ordinary Shares indirectly held by Philip Tsao through Perfect AA Corp.
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.
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.
Taxpayer Participants will be no less than 100% of such fair market value on the date of grant. Exercise Period . The term of each option will be five years from the grant date, subject to exceptions as provided in the Share Incentive Plan. Any options not exercised during the term will be cancelled and forfeited. Non-Transferability of Awards .
Taxpayer Participants, the exercise price of options will be no less than 100% of such fair market value on the date of grant. Exercise Period . The term of each option will be five years from the grant date, subject to exceptions as provided in the Share Incentive Plan.
(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 above information is based on the Schedule 13D filed by CyberLink, among others, on February 13, 2023. 98 Table of Contents (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.
Other than by will or the laws of descent and distribution, the participants may not sell, transfer, assign, pledge or otherwise dispose of any option granted under the Share Incentive Plan unless approved by the CEO or other senior officer(s) designated by the Board. Dissolution or Liquidation .
Any options not exercised during the term will be cancelled and forfeited. Non-Transferability of Awards . Other than by will or the laws of descent and distribution, the participants may not sell, transfer, assign, pledge or otherwise dispose of any option granted under the Share Incentive Plan, unless approved by the CEO or other senior officer(s) designated by the Board.
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.
Taxpayer Participants who own shares representing more than 10% of the voting power of all classes of our shares at the time of grant shall be no less than 110% of the fair market value, as determined pursuant to the Share Incentive Plan on the date of grant. For all other U.S.
Under the Share Incentive Plan to be adjusted to reflect the Recapitalization, shares to be issued upon exercise of options shall be Class B Ordinary Shares if the participant of the Share Incentive Plan is one of the Founder Parties, and shares to be issued upon exercise of options shall be Class A Ordinary Shares if the participant of the Share Incentive Plan is not one of the Founder Parties.
(the “U.S. Taxpayer Participants”). Under the Share Incentive Plan, shares to be issued upon the exercise of options shall be Class B Ordinary Shares if the participant of the Share Incentive Plan is one of the Founder Parties; otherwise, shares to be issued upon exercise of options shall be Class A Ordinary Shares.
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.
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.
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.
For the year ended December 31, 2024, options to purchase an aggregate of 50,045 Class A Ordinary Shares were granted to our employees and other eligible grantees under the Share Incentive Plan at exercise prices of $2.13 to $2.22 per Class A Ordinary Share.
(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.
(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.
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.
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. 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.
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.
After this period, 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 to the termination or otherwise as may be required in accordance with the provisions of the Share Incentive Plan.
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.
Compensation For the year ended December 31, 2024, we paid an aggregate of $3.1 million in cash and benefits to our executive officers and directors, including $0.5 million in share-based compensation related to previously granted stock options that remain unvested and/or vested stock options that remain unexercised.
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.
For the year ended December 31, 2024, no options to purchase Class A Ordinary Shares were granted to our directors under the Director Equity Incentive Plan.
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.
Lee currently serves as the CEO at First Elite CAPs & Co, a Taiwan-based accounting company, and is a Professor-level Part-time Technical Expert of National Taipei University of Business and Vice-Chairman of the Board at Taipei CPA Association. Mr.
Removed
Lyu currently serves as the General Manager of Tmall Fast-Moving Consumer Goods Business Division at Alibaba Group Holding Limited (NYSE: BABA, SEHK: 9988, together with its subsidiaries, the “Alibaba Group”) where she is responsible for the business operations and strategic development of the division. Prior to that, Ms.
Added
For the year ended December 31, 2024, (i) no option has been granted to our directors and executive officers under the Share Incentive Plan, and (ii) no Award (as defined below) has been granted under the Director Equity Incentive Plan to our directors.
Removed
Lyu served at various positions in the Alibaba Group, including as the General Manager of Tmall International Business Division from October 2021 to February 2022, General Manager of Koala International Business Division from November 2020 to October 2021, and General Manager of Taobao International Business Division from January 2019 to November 2020. Ms.
Added
The term for the Share Incentive Plan is ten years, commencing from December 13, 2021, being the date on which the Share Incentive Plan was approved and adopted by our Board.
Removed
Lyu first joined the Alibaba Group in August 2011 as the Vice General Manager of Tmall Apparel Business Division. Ms. Lyu holds an MBA of the joint program from Donghua University in Shanghai and Westminster College in the United States.
Added
Director Equity Incentive Plan Our Director Equity Incentive Plan was approved and adopted by our Board on October 23, 2023, for the purpose of attracting, retaining, and motivating Directors, aligning their interests with stockholders, and promoting the success of the Company.
Removed
(6) Represents Class A Ordinary Shares directly held by Taobao China Holding Limited, a limited liability company incorporated in Hong Kong.
Added
The Director Equity Incentive Plan provides for the grant of restricted share awards, restricted share units and other share-based awards or cash-based awards (“Awards”) in compliance with the requirements of Section 409A of the Internal Revenue Code of 1986 to the directors selected by the administrator. All directors are eligible to participate in this Director Equity Incentive Plan.
Removed
Taobao China Holding Limited is a wholly owned subsidiary of Taobao Holding Limited, an exempted company incorporated with limited liability incorporated in the Cayman Islands, which is a wholly owned subsidiary of Alibaba Group Holding Limited, which is a public company listed on the New York Stock Exchange and Hong Kong Stock Exchange.
Added
The following sets forth a summary of material terms of the Director Equity Incentive Plan, which are qualified in their entirety by the Director Equity Incentive Plan filed as Exhibits 4.25 to this annual report. Authorized Shares.
Removed
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.
Added
Subject to the adjustment provisions in the Director Equity Incentive Plan, the maximum aggregate number of the Class A Ordinary Shares that may be subject to Awards under the Director Equity Incentive Plan shall be 1,000,000 Class A Ordinary Shares.
Removed
The above information is based on the Schedule 13G filed by Perfect AA Corp. , among others, on February 2, 2024.
Added
If an Award is forfeited, repurchased, expired, or settled in cash, the related Class A Ordinary Shares will be available for future grants or sales under the Director Equity Incentive Plan (unless it has terminated). However, Class A Ordinary Shares that have already been issued will not be returned to the Director Equity Incentive Plan or available for future distribution.
Added
Plan Administration. Our Board, the CEO or any other executive officer(s) designated by our Board from time to time (the “administrator”) will have authority to administer the Director Equity Incentive Plan, and the administrator’s decision (save as otherwise provided herein) shall be final and binding on all parties.
Added
The administrator will have authority, in its discretion, to (i) select directors eligible for Awards, (ii) determine the number of shares to be covered by each Award, (iii) approve forms of award agreements or amend any outstanding award agreement, (iv) determine the terms and conditions of the Awards, including vesting and restrictions, (v) construe, interpret the terms of or reconcile any inconsistency in this Director Equity Incentive Plan, and (vi) exercise all powers granted under the Director Equity Incentive Plan, prescribe, amend and rescind rules and regulations relating thereto.
Added
Types of Awards. The Director Equity Incentive Plan permits the grant of the grant of restricted share awards, restricted share units and other share-based awards or cash-based awards. Eligibility. Only our directors are eligible for the Director Equity Incentive Plan. Award Agreement.
Added
Each Award will be evidenced by an award agreement that will specify the period of restriction (if any), the number of shares granted, and such other terms and conditions as the administrator, in its sole discretion, will determine. 94 Table of Contents Term of the Plan.
Added
The Director Equity Incentive Plan will terminate on the day before the tenth anniversary of October 23, 2023, unless otherwise terminated earlier in accordance with the Director Equity Incentive Plan. The administrator may at any time amend, alter, suspend or terminate this Director Equity Incentive Plan. Vesting Schedule.
Added
Subject to the terms and conditions set forth in the award agreement, the shares covered the Award shall vest in accordance with the vesting schedule set forth on the cover page of the award agreement. The administrator may accelerate vesting of restricted stock awards or restricted stock units. Non-Transferability of Awards.
Added
Unless otherwise determined by the administrator, Awards may not be sold, pledged, assigned, hypothecated, or otherwise transferred in any manner other than by will or by the laws of descent and distribution.
Added
Notwithstanding the foregoing, the administrator may permit, under such terms and conditions that it deems appropriate in its sole discretion, a participant to transfer any Award to any person or entity that the administrator so determines. Change in Control.
Added
In the event of a change of control as defined in the Director Equity Incentive Plan, each outstanding Award will be treated as the Administrator determines without a participant’s consent. Termination. The administrator may at any time amend, alter, suspend or terminate this Director Equity Incentive Plan.
Added
No amendment, alteration, suspension or termination of this Director Equity Incentive Plan will materially impair the rights of any participant, unless mutually agreed otherwise between the participant and the administrator, which agreement must be in writing and signed by the participant and the Company.
Added
Termination of this Director Equity Incentive Plan will not affect the administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under this Director Equity Incentive Plan prior to the date of such termination.

Item 7. Management's Discussion & Analysis

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

30 edited+7 added−7 removed11 unchanged
Forward Purchase Agreements — FPA Investment In connection with the Provident Initial Public Offering, Provident entered into Forward Purchase Agreements and a joinder agreement with the FPA Investors, pursuant to which the FPA Investors purchased from Provident an aggregate of 5,500,000 Provident Class A Ordinary Shares and an aggregate of 2,750,000 Forward Purchase Warrants for an aggregate purchase price of $55,000,000 prior to the Closing.
Forward Purchase Agreements — FPA Investment In connection with the Provident Initial Public Offering, Provident entered into a Forward Purchase Agreements and a joinder agreement with the FPA Investors, pursuant to which, the FPA Investors purchased from Provident an aggregate of 5,500,000 Provident Class A Ordinary Shares and an aggregate of 2,750,000 Forward Purchase Warrants for an aggregate purchase price of $55,000,000 prior to the Closing.
These agreements include: Sponsor Letter Agreement Concurrently with the execution of the Business Combination Agreement on March 3, 2022, Perfect Corp., Provident and the Sponsor entered into the Sponsor Letter Agreement, pursuant to which 1,710,000 Class A Ordinary Shares held by Sponsor as of immediately after the First Merger Effective Time (the “Forfeited Shares”) were forfeited and cancelled for no consideration immediately after the Closing.
These agreements include: Sponsor Letter Agreement Concurrently with the execution of the Business Combination Agreement on March 3, 2022, Perfect, Provident and the Sponsor entered into the Sponsor Letter Agreement, pursuant to which 1,710,000 Class A Ordinary Shares held by Sponsor as of immediately after the First Merger Effective Time (the “Forfeited Shares”) were forfeited and cancelled for no consideration immediately after the Closing.
No cash consideration is payable under the MakeupDirector Cross License Agreement. Each of Perfect Corp. and CyberLink receives its consideration for its license to the other party from the license that the other party grants to it.
No cash consideration is payable under the MakeupDirector Cross License Agreement. Each of Perfect and CyberLink receives its consideration for its license to the other party from the license that the other party grants to it.
Related Party Transactions Agreements Related to the Business Combination In connection with, and pursuant to, the Business Combination Agreement, certain agreements were entered into between Perfect Corp., Provident and certain related parties following the Business Combination.
Related Party Transactions Agreements Related to the Business Combination In connection with, and pursuant to, the Business Combination Agreement, certain agreements were entered into between Perfect, Provident and certain related parties following the Business Combination.
Subject to the terms and conditions contemplated by the Sponsor Letter Agreement, upon the occurrence of a Sponsor Earnout Event (as defined below) during the period from and after the Closing Date until the fifth anniversary of the Closing Date (the “Earnout Period”), Perfect Corp. will issue up to 1,175,624 Class A Ordinary Shares (the “Sponsor Earnout Shares”) to Sponsor, with (i) 50% of the Sponsor Earnout Shares issuable if over any twenty (20) trading days within any 30-trading-day period during the Earnout Period the daily volume-weighted average price of the Class A Ordinary Shares is greater than or equal to $11.50, and (ii) 50% of the Sponsor Earnout Shares issuable if over any 20 trading days within any 30-trading-day period during the Earnout Period the daily volume-weighted average price of the Class A Ordinary Shares is greater than or equal to $13.00 (each, a “Sponsor Earnout Event”).
Subject to the terms and conditions contemplated by the Sponsor Letter Agreement, upon the occurrence of a Sponsor Earnout Event (as defined below) during the period from and after the Closing Date until the fifth anniversary of the Closing Date (the “Earnout Period”), Perfect will issue up to 1,175,624 Class A Ordinary Shares (the “Sponsor Earnout Shares”) to Sponsor, with (i) 50% of the Sponsor Earnout Shares issuable if over 99 Table of Contents any twenty (20) trading days within any 30-trading-day period during the Earnout Period the daily volume-weighted average price of the Class A Ordinary Shares is greater than or equal to $11.50, and (ii) 50% of the Sponsor Earnout Shares issuable if over any 20 trading days within any 30-trading-day period during the Earnout Period the daily volume-weighted average price of the Class A Ordinary Shares is greater than or equal to $13.00 (each, a “Sponsor Earnout Event”).
New Registration Rights Agreement On October 28, 2022, Perfect Corp., the Sponsor and certain shareholders of Perfect Corp. entered into the New Registration Rights Agreement containing customary registration rights for the Sponsor and the shareholders of Perfect Corp. who are parties thereto.
New Registration Rights Agreement On October 28, 2022, Perfect, the Sponsor and certain shareholders of Perfect entered into a New Registration Rights Agreement containing customary registration rights for the Sponsor and the shareholders of Perfect who are parties thereto.
Perfect Shareholder Lock-Up Agreement On October 28, 2022, Perfect Corp., Provident and certain Perfect Corp.’s shareholders (the “Perfect Lock-Up Shareholders”) entered into the Perfect Shareholder Lock-Up Agreement, pursuant to which each Perfect Lock-Up Shareholder agreed not to transfer (i) any Ordinary Shares held by such Perfect Lock-Up Shareholder immediately after the Second Merger Effective Time, (ii) any Ordinary Shares issuable upon the exercise of options or warrants to purchase Ordinary Shares held by such Perfect Lock-Up Shareholder immediately after the Second Merger Effective Time (along with such options or warrants themselves), (iii) any Ordinary Shares acquirable upon the conversion, exercise or exchange of any securities convertible into or exercisable or exchangeable for Ordinary Shares held by such Perfect Lock-Up Shareholder immediately after the Second Merger Effective Time (along with such securities themselves) and (iv) any Shareholder Earnout Shares to the extent issued pursuant to the Business Combination Agreement ((i) through (iv) collectively, the “Perfect Shareholder Locked-Up Shares”) during the applicable lock-up period, subject to customary exceptions.
Perfect Shareholder Lock-Up Agreement On October 28, 2022, Perfect, Provident and certain Perfect’s shareholders (the “Perfect Lock-Up Shareholders”) entered into a Perfect Shareholder Lock-Up Agreement, pursuant to which, each Perfect Lock-Up Shareholder agreed not to transfer (i) any Ordinary Shares held by such Perfect Lock-Up Shareholder immediately after the Second Merger Effective Time, (ii) any Ordinary Shares issuable upon the exercise of options or warrants to purchase Ordinary Shares held by such Perfect Lock-Up Shareholder immediately after the Second Merger Effective Time (along with such options or warrants themselves), (iii) any Ordinary Shares acquirable upon the conversion, exercise or exchange of any securities convertible into or exercisable or exchangeable for Ordinary Shares held by such Perfect Lock-Up Shareholder immediately after the Second Merger Effective Time (along with such securities themselves), and (iv) any Shareholder Earnout Shares to the extent issued pursuant to the Business Combination Agreement during the applicable lock-up period, subject to customary exceptions.
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.
Assignment, Assumption and Amendment Agreement On October 28, 2022, Perfect, Provident, and Continental entered into an Assignment, Assumption and Amendment Agreement, pursuant to which, Provident assigned to Perfect 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 Perfect’s assumption of the Provident Warrants.
CyberLink shall pay to Perfect Taiwan (i) a royalty calculated based on twelve percent (12%) of net revenue of sales of YouCam and (ii) a royalty fee of $1 for each copy of YouCam sold.
CyberLink shall pay to Perfect Taiwan (i) a royalty calculated based on 12% of net revenue of sales of YouCam and (ii) a royalty fee of $1 for each copy of YouCam software sold.
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.
Item 7. Major Shareholders and Related Party Transactions A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees — E. Share Ownership.” B.
The rent was paid to CyberLink Japan on a quarterly basis. On June 1, 2021, Perfect Japan entered into amendment to the Japan Office Sharing Agreement, pursuant to which the monthly sharing fee was changed from JPY805,407 to JPY978,128. Other Related Party Transactions Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees — B.
The monthly sharing fee shall be paid to CyberLink Japan on a quarterly basis. On June 1, 2021, Perfect Japan entered into an amendment to this agreement, pursuant to which the monthly sharing fee was adjusted from JPY805,407 to JPY978,128. Other Related Party Transactions Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees — B.
Pursuant to the PerfectCam Cross License Agreement, (i) Perfect Corp. grants to CyberLink a non-exclusive and non-transferable worldwide license to use its AR technology of facial feature detection and makeup generation to be embedded into CyberLink’s PerfectCam software (“PerfectCam”), and CyberLink may sublicense its own developed SDK of PerfectCam derived from Perfect Corp.’s AR technology to its customers and other third parties; and (ii) CyberLink grants to Perfect Corp. a non-exclusive and non-transferable worldwide license to use, reproduce, distribute and sell PerfectCam and derivative work created and developed by or on behalf of CyberLink based on the AR technology provided by us under the PerfectCam Cross License Agreement.
Cross License Agreement and Assignment Agreement — PerfectCam On August 8, 2017, Perfect Corp. entered into a cross license agreement with CyberLink (the “PerfectCam Cross License Agreement”), pursuant to which, (i) Perfect grants to CyberLink a non-exclusive and non-transferable worldwide license to use its AR technology of facial feature detection and makeup generation to be embedded into CyberLink’s PerfectCam software, and CyberLink may sublicense its own developed SDK of PerfectCam software derived from Perfect’s AR technology to its customers and other third parties; and (ii) CyberLink grants to Perfect a non-exclusive and non-transferable worldwide license to use, reproduce, distribute and sell PerfectCam software and the derivative work created and developed by or on behalf of CyberLink based on the AR technology provided by us under the PerfectCam Cross License Agreement.
Compensation.” Share Incentive Plan See “Item 6. Directors, Senior Management and Employees — B. Compensation — Share Incentive Plan.” Shareholders Agreement Perfect Corp., certain of its shareholders and Alice H.
Compensation.” 102 Table of Contents Share Incentive Plan See “Item 6. Directors, Senior Management and Employees — B. Compensation — Share Incentive Plan.” Director Equity Incentive Plan See “Item 6. Directors, Senior Management and Employees — B. Compensation — Director Equity Incentive Plan.” Shareholders Agreement Perfect Corp., certain of its shareholders and Alice H.
(the “Perfect Voting Shareholders”) entered into the Perfect Shareholder Voting Agreement, pursuant to which each Perfect Voting Shareholder agreed to, among other things, (i) attend any shareholder meeting of Perfect Corp. to establish a quorum for the purpose of approving the Business Combination, and (ii) vote the Pre-Recapitalization Shares and any other Perfect securities acquired by such Perfect Voting Shareholder in favor of approving the transactions contemplated by the Business Combination Agreement.
Perfect Shareholder Voting Agreement Concurrently with the execution of the Business Combination Agreement on March 3, 2022, Perfect, Provident and certain shareholders of Perfect (the “Perfect Voting Shareholders”) entered into a Perfect Shareholder Voting Agreement, pursuant to which, each Perfect Voting Shareholder agreed to, among other things, (i) attend any shareholder meeting of Perfect to establish a quorum for the purpose of approving the Business Combination, and (ii) vote the Pre-Recapitalization Shares and any other Perfect securities acquired by such Perfect Voting Shareholders in favor of approving the transactions contemplated by the Business Combination Agreement.
Subscription Agreements — PIPE Investment Concurrently with the execution of the Business Combination Agreement on March 3, 2022, Provident, Perfect Corp. and the PIPE Investors entered into Subscription Agreements and certain assignment, assumption and consent agreements, pursuant to which the PIPE Investors subscribed for and purchased Provident Class A Ordinary Shares at $10.00 per share for an aggregate purchase price of $50,000,000 prior to the Closing.
Subscription Agreements — PIPE Investment Concurrently with the execution of the Business Combination Agreement on March 3, 2022, Provident, Perfect and the PIPE Investors entered into Subscription Agreements and certain assignment, assumption and consent agreements, pursuant to which, the PIPE Investors subscribed for and purchased Provident Class A Ordinary Shares at $10.00 per share for an aggregate purchase price of $50,000,000 prior to the Closing. 100 Table of Contents At the First Merger Effective Time, each Provident Class A Ordinary Share issued in the PIPE Investment was cancelled in exchange for one Class A Ordinary Share.
CyberLink shall share twenty-five percent (25%) of the net revenue from the sales of PerfectCam and fifty percent (50%) of the net revenue from the sublicense of the SDK of PerfectCam.
CyberLink shall share 25% of the net revenue from the sales of PerfectCam and 50% of the net revenue from the sublicense of the SDK of PerfectCam software.
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.
Services Outsourcing Agreement On January 1, 2019, Perfect Taiwan entered into a services outsourcing agreement 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 at an hourly rate of NTD1,000, NTD900, NTD750, and NTD700, respectively.
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.
Rental Agreements On June 1, 2017, Perfect Taiwan entered into a property lease agreement with CyberLink, pursuant to which, Perfect Taiwan will 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, at a monthly rent of NTD538,842, for the use as office space.
Pursuant to the MakeupDirector Cross License Agreement, (i) Perfect Corp. grants to (a) CyberLink a non-exclusive and non-transferable license to use Perfect Corp.’s digital makeover technology and (b) CyberLink and CyberLink MakeupDirector users non-exclusive access to the contents and features of Beauty Circle, a beauty social platform owned by Perfect Corp.; and (ii) CyberLink grants to Perfect Corp. a non-exclusive and non-transferable worldwide license to (a) distribute CyberLink’s MakeupDirector software to users of Perfect Corp.’s mobile apps and (b) advertise for certain software applications of Perfect Corp. within certain CyberLink’s software and websites as specified under the MakeupDirector Cross License Agreement.
Related Party Transactions with CyberLink and Its Affiliates Licensing Agreements Cross License Agreement — MakeupDirector On July 1, 2016, Perfect Corp. entered into a cross license agreement with CyberLink (the “MakeupDirector Cross License Agreement”), pursuant to which, (i) Perfect grants to (a) CyberLink a non-exclusive and non-transferable license to use Perfect’s digital makeover technology, and (b) CyberLink and CyberLink MakeupDirector users non-exclusive access to the contents and features of Beauty Circle, a beauty social platform owned by Perfect; and (ii) CyberLink grants to Perfect a non-exclusive and non-transferable worldwide license to (a) distribute CyberLink’s MakeupDirector software to users of Perfect’s mobile apps, and (b) advertize for certain software applications of Perfect within certain CyberLink’s software and websites as specified under the MakeupDirector Cross License Agreement.
In the event that, during the Earnout Period, there is a Change of Control (as defined in the Sponsor Letter Agreement) (or a definitive agreement providing for a Change of Control has been entered into prior to the expiration of the Earnout Period and such Change of Control is ultimately consummated) or any liquidation, bankruptcy or similar proceeding of Perfect Corp., then any Sponsor Earnout Shares that have not been previously issued by Perfect Corp.
In the event that, during the Earnout Period, there is a Change of Control (as defined in the Sponsor Letter Agreement) (or a definitive agreement providing for a Change of Control has been entered into prior to the expiration of the Earnout Period and such Change of Control is ultimately consummated) or any liquidation, bankruptcy or similar proceeding of Perfect, then any Sponsor Earnout Shares that have not been previously issued by Perfect (whether or not previously earned) will be deemed earned and will be issued by Perfect to the Sponsor upon such event, unless in the case of a Change of Control, the value of the consideration to be received by the holders of Ordinary Shares in such transaction is less than the share price threshold applicable to the applicable Sponsor Earnout Event.
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.
On November 26, 2021, Perfect Taiwan entered into another property lease agreement with CyberLink, pursuant to which, Perfect Taiwan will lease premises located on 6F-1, No. 98, Minquan Rd., Xindian Dist., New Taipei City 231, Taiwan, at a monthly rent of NTD116,530, for the use as office space.
The term of the Services Outsourcing Agreement is one (1) year starting from January 1, 2019 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.
The initial term of this services outsourcing agreement is one year commencing from January 1, 2019, and will automatically renew for an additional one year on each anniversary, unless either party provides written notice of termination to the other party at least 30 days prior to the expiration of the relevant term.
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.
The term of the YouCam License Agreement is three years, commencing from November 30, 2019 and will automatically renew for an additional one year, unless either party provides written notice of termination to the other party at least one year prior to the expiration of relevant term.
The term of the PerfectCam Cross License Agreement is three (3) years starting from August 8, 2017 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 PerfectCam Cross License Agreement is three years, commencing from August 8, 2017 and will automatically renew for an additional three years, unless either party provides a written notice of termination to the other party at least one year prior to the expiration of relevant term.
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.
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.
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.
The term of the MakeupDirector Cross License Agreement is three years, commencing from July 1, 2016 and will automatically renew for an additional three years, unless either party provides written notice of termination to the other party at least one year prior to the expiration of relevant term.
On January 1, 2018, Perfect Corp., Perfect Mobile Corporation (“Perfect Taiwan”), a wholly-owned subsidiary of Perfect Corp., and CyberLink entered into an assignment agreement, pursuant to which Perfect Corp. agreed to assign all its rights and obligations under the PerfectCam Cross License Agreement to Perfect Taiwan, and as a result, Perfect was released of any liabilities and Perfect Taiwan undertook all the rights and obligations under the PerfectCam Cross License Agreement.
On January 1, 2018, Perfect Corp., Perfect Taiwan, a wholly-owned subsidiary of Perfect, and CyberLink entered into an assignment agreement, pursuant to which, Perfect agreed to assign all its rights and obligations under the PerfectCam Cross License Agreement to Perfect Taiwan, and as a result, Perfect Corp. was released of all liabilities accrued thereunder, and Perfect Taiwan succeeded Perfect Corp. and undertook all the rights and obligations under the PerfectCam Cross License Agreement. 101 Table of Contents License Agreement — YouCam On November 30, 2019, Perfect Taiwan entered into a license agreement with CyberLink (the “YouCam License Agreement”), pursuant to which, 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 and the SDK thereof.
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.
The initial lease term was for two years, commencing from June 1, 2017, with rent paid to CyberLink on a monthly basis. In 2019, 2021 and 2023, Perfect Taiwan renewed this agreement under the same terms as the original agreement.
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.
The initial lease term was for two years, commencing from December 1, 2021, with rent paid to CyberLink on a monthly basis. In 2023, Perfect Taiwan renewed this agreement under the same terms as the original agreement.
(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.
(Japan), a wholly-owned subsidiary of Perfect, organized and existing under the laws of Japan (“Perfect Japan”), entered into an office sharing agreement, with CyberLink Inc., a wholly-owned subsidiary of CyberLink, organized and existing under the laws of Japan (“CyberLink Japan”), pursuant to which, Perfect Japan will share a portion of CyberLink Japan’s premises at a monthly sharing fee of JPY805,407.
Removed
(whether or not previously earned) will be deemed earned and will be issued by Perfect Corp. to the Sponsor upon such event, unless in the case of a Change of Control, the value of the consideration to be received by the holders of Ordinary Shares in such transaction is less than the share price threshold applicable to the applicable Sponsor Earnout Event.
Added
The lock-up requirements expired on October 28, 2022.
Removed
The lock-up requirements will cease to apply after the later of (i) the date on which the daily volume-weighted average price of the Class A Ordinary Shares equals or exceeds $12.00 per share for any 20 trading days within any consecutive 30-trading-day period after October 28, 2022 and (ii) the date that is 180 days after October 28, 2022.
Added
The MakeupDirector Cross License Agreement was automatically renewed for an additional three-year term on July 1, 2019 and July 1, 2022, respectively.
Removed
At the First Merger Effective Time, each Provident Class A Ordinary Share issued in the PIPE Investment was cancelled in exchange for one Class A Ordinary Share.
Added
The YouCam License Agreement was automatically renewed for an addition one-year term on December 1, 2022, December 1, 2023 and December 1, 2024, respectively.
Removed
Related Party Transactions with CyberLink and Its Subsidiaries Licensing Agreements Cross License Agreement — MakeupDirector Perfect Corp. has entered into a cross license agreement, dated as of July 1, 2016 and automatically renewed on July 1, 2019, and July 1, 2022, with CyberLink (the “MakeupDirector Cross License Agreement”).
Added
On May 15, 2024, Perfect Taiwan entered into a property lease agreement with ClinJeff Corp., pursuant to which, Perfect Taiwan will lease premises located on 4F-1, No. 98, Minquan Rd., Xindian Dist., New Taipei City 231, Taiwan, at a monthly rent of NT$ 116,530, for the use as office space.
Removed
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”).
Added
The lease term was for two years, commencing from May 15, 2024 to April 30, 2026, and will not automatically renew, unless both parties negotiate the leasing terms three months prior to the expiration of this agreement, and sign a written lease agreement one month prior to the expiration of this agreement.
Removed
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 rent shall be paid to ClinJeff Corp. on a monthly basis. On January 1, 2020, Perfect Corp.
Removed
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.
Added
The initial term was for one year commencing from January 1, 2020, and will automatically renew for an additional one year on each anniversary, unless either party provides written notice of termination to the other party at least 30 days prior to the expiration of the relevant term.

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