美國
證券交易委員會
華盛頓特區20549
表格
(MARk ONE)
截至2024年6月30日季度結束
從__________至過渡期 __________
委員會文件號碼：
（根據其組織憲章規定的正式名稱）
| (依據所在地或其他管轄區) | (國稅局雇主識別號碼) | |
| 的註冊地或組織地點) | 識別號碼) |
| (總部辦公地址) | （郵政編碼） |
(註冊人電話號碼，包括區號)
無可奉告
(如與上次報告不同，列明前名稱、前地址及前財政年度)
根據法案第12(b)條登記的證券：
| 每種類別的名稱 | 交易標的（s） | 每個註冊交易所的名稱 | ||
| 輝瑞公司面臨數起分開的訴訟，這些訴訟仍在進行中，需等待第三項索賠條款的裁決。2023年9月，我們與輝瑞公司同意合併2022和2023年的訴訟，並將審判日期從2024年11月推遲至2025年上半年，具體時間將由法院確定。 股票市場 | ||||
| 輝瑞公司面臨數起分開的訴訟，這些訴訟仍在進行中，需等待第三項索賠條款的裁決。2023年9月，我們與輝瑞公司同意合併2022和2023年的訴訟，並將審判日期從2024年11月推遲至2025年上半年，具體時間將由法院確定。 股票市場 |
請以勾選表示，登記者（1）是否在過去12個月內按照證券交易法第13或15(d)條的規定提交了所有應提交的報告（或對於登記者必須提交這些報告的較短期間，以及（2）是否在過去90天內一直受到此類提交要求的規定。
請勾選指示序號，證明登記者已依照S-T法規第232.405節（本章節第232.405條）的第405條款規定，在過去12個月內（或者在要求提交此類檔案的較短期間內）已經遞交了每一個互動數據檔案。
請勾選是否公司是大型加速發行人、加速發行人、非加速發行人、較小的報告公司或新興成長型公司。請參閱《交易所法》第120億2條對「大型加速發行人」、「加速發行人」、「較小的報告公司」和「新興成長型公司」的定義。
| 大型加速歸檔人 | ☐ | 加速歸檔人 | ☐ |
| ☒ | 小型報告公司 | ||
| 新興成長型企業 |
若為新興成長型公司，請勾選該選項以指示公司選擇不使用依據第13(a)條的《交易所法》提供的任何新的或修訂的財務會計標準的延長過渡期進行遵循。
請標記是否登記申報人為外殼公司（根據《交易所法》第120億2章之定義）。是 ☐
截至2024年10月15日，已經有 A類普通股，面值$0.0001，以及1股V類普通股，面值$0.0001，已核發並流通。
AERIES科技公司, INC.
表格10-Q
截至2024年6月30日季度結束
目 錄
i
關於前瞻性聲明的注意事項
本報告中的某些陳述可能構成《聯邦證券法》的「前瞻性陳述」。我們的前瞻性陳述包括但不限於，關於我們或我們管理團隊對未來期望、希望、信念、意圖或策略的陳述。此外，任何提及未來事件或情況的投影、預測或其他描述，包括任何基本假設的陳述，均為前瞻性陳述。「預期」、「相信」、「繼續」、「可能」、「估計」、「期望」、「打算」、「可能」、「未來的」、「有潛力的」、「預測」、「計畫」、「可能的」、「潛力」、「預測」、「應該」、「將」等類似表述可能識別出前瞻性陳述，但沒有這些字眼並不意味著該陳述不是前瞻性的。
本報告中所載的前瞻性陳述基於目前對未來發展及其對我們可能產生的影響的期望和信念。 我們無法保證對我們產生影響的未來發展將是我們預期的。 這些前瞻性陳述涉及多個風險、不確定因素（其中一些超出我們的控制）或其他假設，可能導致實際結果或表現與這些前瞻性陳述所表達或暗示的實際結果或表現有重大不同。 其他因素等可能導致實際結果和事件時間與前瞻性陳述中表達的預期結果或其他期望存在重大差異：
| ● | Aeries的市場機遇； | |
| ● | 我們能否保持納斯達克上級普通股和認股權證的上市地位，以及這些證券的潛在流動性和交易； | |
| ● | 我們是否能夠認識到業務合併預期的好處，這可能受到競爭等因素的影響，我們能否有利可圖地實現增長和管理增長，並保留我們的關鍵員工； | |
| ● | 我們的業務拓展努力，以最大限度地發揮我們的潛在價值，並保留和擴大我們的客戶基礎； | |
| ● | 我們對於費用、未來營業收入、資本需求和額外融資需求的估算； | |
| ● | 我們的財務表現; | |
| ● | 我們能否繼續作為一直營業的實體； | |
| ● | 我們現有的現金及現金等價物足以支付我們的營業費用和資本支出要求； | |
| ● | 我們成功保留或招聘高級職員、主要員工或董事，或對這些職位進行必要的更改； | |
| ● | 美國和外國司法管轄區適用法律或法規的變化； | |
| ● | 我們開發和保持有效內部控制的能力； | |
| ● | 與網絡安全概念和數據隱私相關的風險； | |
| ● | 一般經濟和政治環境，如俄烏衝突和以哈莫斯衝突的影響，以及COVID-19爆發等大流行病，經濟衰退，利率期貨，通貨膨脹，本地和全國選舉，燃料價格，國際貨幣波動，外交和貿易關係變化，政治不穩定，戰爭或恐怖主義行為以及自然災害；和 | |
| ● | 本報告中討論的其他因素。 |
如果這些風險或不確定性之一或多個實現，或者我們的任何假設證明不正確，實際結果可能與這些前瞻性陳述中所預測的結果在實質方面有所不同。這些風險和不確定性中的一些在未來可能會被放大，而且可能會有我們目前認為不重大或未知的其他風險。無法預測或識別所有此類風險。我們不承擔任何義務來更新或修訂任何前瞻性陳述，除非根據適用的證券法律可能需要。
ii
第一部分 ——財務信息中期報告
第1項。基本報表簡明合併財務報表
利瑞科技有限公司及其附屬公司
縮表合併資產負債表
截至2024年6月30日和2024年3月31日
(以千美元計算，股份和每股價位除外)
| |
|
六月30日, 2024 |
|
|
三月31日, 2024 |
| ||
| (未經查核) | ||||||||
| 資產 | ||||||||
| 流動資產: | ||||||||
| 現金及現金等價物 | $ | $ | ||||||
| 應收帳款，扣除$3,934和$3,564的折讓金額，分別截至2024年6月30日和2023年12月31日。 |
||||||||
| 預付費用及其他流動資產，扣除$准備金， |
||||||||
| 全部流動資產 | $ | $ | ||||||
| 物業及設備，扣除折舊後淨值 | ||||||||
| 經營租賃資產權利 | ||||||||
| 递延税款贷项 | ||||||||
| 長期投資，減除1,006,029元的呆帳 |
||||||||
| 其他資產，減除1,006,029元的呆帳 |
||||||||
| 資產總額 | $ | $ | ||||||
| 負債、可贖回的非控制權益和股東權益（赤字） | ||||||||
| 流動負債： | ||||||||
| 應付賬款 | $ | $ | ||||||
| 應計的酬勞及相關福利，流動 | ||||||||
| 營運租賃負債，流動 | ||||||||
| 短期借款 | ||||||||
| 看跌採購協議買方選權負債 | ||||||||
| 其他流動負債 | ||||||||
| 流動負債合計 | $ | $ | ||||||
| 長期負債 | ||||||||
| 營業租賃負債，非流動 | ||||||||
| 衍生權證負債 | ||||||||
| 递延所得税负债 | ||||||||
| 其他負債 | ||||||||
| 總負債 | $ | $ | ||||||
| 合同和應付之可能負債（註10） | ||||||||
| 可贖回非控制權益 | ||||||||
| 股东权益（赤字） | ||||||||
| 優先股，$ 面額為0.0001； 授權股份為 已發行或流通 | ||||||||
| A類普通股，每股 $ 面額為0.0001； 授權股份為 截至2024年6月30日，已發行流通股本為 截至2024年3月31日，已發行並流通的股份數。 | ||||||||
| V級普通股，$ 面額為0.0001； 已許可、發行並流通的股份 | ||||||||
| 淨股東投資與額外已實收資本 | ||||||||
| 累積其他全面損失 | ( |
) | ( |
) | ||||
| 累積虧損 | ( |
) | ( |
) | ||||
| Total Aeries Technology, Inc.股東資本赤字 | $ | ( |
) | $ | ( |
) | ||
| 非控制權益 | ||||||||
| 股東權益總額 (赤字) | ( |
) | ||||||
| 總負債、可贖回非控制權益和股東權益（赤字） | $ | $ | ||||||
相關附註是這些基本報表的一個不可或缺的部分。
1
利瑞科技有限公司及其附屬公司
綜合營業損益匯縮陳述
截至2024年6月30日和2023年6月30日的三個月。
(以千美元計算，股份和每股價位除外)
(未經查核)
| 結束於三個月的期間 6月30日 2024 |
結束於三個月的期間 6月30日 2023 |
|||||||
| 凈收益 | $ | $ | ||||||
| 營業成本 | ||||||||
| 毛利潤 | ||||||||
| 營業費用 | ||||||||
| 銷售、一般及行政費用 | ||||||||
| 營業費用總計 | ||||||||
| 營業收入 | ( |
) | ||||||
| 其他收入/（費用） | ||||||||
| 看跌期權負債公允價值變動 | ( |
) | ||||||
| 衍生權證負債公允價值變動 | ||||||||
| 利息收入 | ||||||||
| 利息費用 | ( |
) | ( |
) | ||||
| 其他收益/(費用)，淨額 | ( |
) | ||||||
| 其他收益/(費用)，淨額 | ( |
) | ||||||
| 營業稅前利潤（虧損） | ( |
) | ||||||
| 所得稅支出/利益 | ( |
) | ||||||
| 凈利潤 / （虧損） | $ | ( |
) | $ | ||||
| 減：歸屬於非控制權益的凈利潤（虧損） | ( |
) | ||||||
| 減：歸屬於可贖回非控制權益的凈利潤 | ||||||||
| 歸屬於Aeries Technology, Inc.股東的凈利潤（虧損） | $ | ( |
) | $ | ||||
| 普通A股加權平均流通股數，基本和稀釋(1) | ||||||||
| 普通A股基本和稀釋每股凈虧損(1) | $ | ) | ||||||
| (1) |
相關附註是這些基本報表的一個不可或缺的部分。
2
利瑞科技有限公司及其附屬公司
綜合收益/損益簡明合併財務報表
截至2024年6月30日和2023年6月30日的三個月。
(以千美元計算，股份和每股價位除外)
(未經查核)
| 結束於三個月的期間 六月三十日， 2024 |
結束於三個月的期間 六月三十日， 2023 |
|||||||
| 凈利潤 / （虧損） | $ | ( |
) | $ | ||||
| 其他全面收入/(損失)，稅後 | ||||||||
| 外匯轉換調整 | ( |
) | ||||||
| 員工福利計劃義務未被認可的精算利益/(損失) | ( |
) | ( |
) | ||||
| 其他綜合損失，稅後淨數。 | ( |
) | ( |
) | ||||
| 税后综合收益/（亏损） | $ | ( |
) | $ | ||||
| 减：归属于非控股权益的综合收益/（亏损） | ( |
) | ||||||
| 减：归属于可赎回非控股权益的综合收益 | ||||||||
| Aeries Technology, Inc.股东应占的综合收益/（亏损）总额 | $ | ( |
) | $ | ||||
附註是這些未經審計的簡明綜合財務報表的一個組成部分。
3
利瑞科技有限公司及其附屬公司
可贖回款項的簡明綜合變動表
非控股權益和股東權益（資本）
截至2024年6月30日和2023年6月30日的三個月。
(以美元千位計，除股份和每股金額外)
(未經查核)
| 可贖回的 | 普通A類股份/ | 普通股 | 淨值 股東的 投資 及 其他 |
其他未分配盈餘 | 總Aeries Technology, Inc. | 總計 股東權益 |
||||||||||||||||||||||||||||||||||||||
| 非控制權 | 普通股 | V類 | 實收資本 | 累計 | 全面性 | 股東 | 非控制權益 | 股權 | ||||||||||||||||||||||||||||||||||||
| 利息 | 股份 | 金額 | 股份 | 金額 | 資本 | 赤字 | 損失 | 赤字 | 利息 | （赤字） | ||||||||||||||||||||||||||||||||||
| 截至2024年4月1日的結餘 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||||||||||||||||
| 股份交易前期間的淨虧損 | - | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| 股份交易前綜合虧損的其他項 | - | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| 根據股份交易協議發行A類普通股 | - | ( |
) | |||||||||||||||||||||||||||||||||||||||||
| 與定向增發相關的A類普通股發行 | - | |||||||||||||||||||||||||||||||||||||||||||
| 通過發行A類普通股解決應付賬款 | - | |||||||||||||||||||||||||||||||||||||||||||
| 股票給予報酬 | - | |||||||||||||||||||||||||||||||||||||||||||
| 股份交易後期間的凈利潤/(虧損) | - | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| 該期間其他全面虧損後發帖交易所分享 | ( |
) | - | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| 2024年6月30日的結餘 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||||
普通股類A/ 普通股 |
淨值 股東的投資和額外 已實收資本 |
保留收益 | 赤字 其他 Cumulative effect of the adoption of ASU 2023-08 |
總計
Aark 新加坡有限公司的 股東的 |
非控制權益 | 總計 股東的 |
||||||||||||||||||||||||||
| 分享* | 金額 | 資本 | 盈餘 | 損失 | 股東權益 | 利息 | 股東權益 | |||||||||||||||||||||||||
| 結餘 截至2023年4月1日 | $ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
| 根據ASC 326條款進行的過渡期調整，稅後淨額 | - | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||
| 調整後截至2023年4月1日的餘額 | ( |
) | ||||||||||||||||||||||||||||||
| 本期淨收益 | - | |||||||||||||||||||||||||||||||
| 其他 全面虧損 | - | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||
| 股票-based 補償 | - | |||||||||||||||||||||||||||||||
| 淨股東投資變動 | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
| 截至2023年6月30日的結餘 | $ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
附註是這些未經審計的簡明綜合財務報表的一個組成部分。
4
利瑞科技有限公司及其附屬公司
簡明財務報表現金流量表
截至2024年6月30日和2023年的三個月
(以美元千位計算，除股份和每股金額外)
(未經查核)
| 結束於三個月的期間 6月30日 2024 |
結束於三個月的期間 6月30日 2023 |
|||||||
| 來自經營活動的現金流量 | ||||||||
| 凈利潤 / （虧損） | $ | ( |
) | $ | ||||
| 調整以協調凈利潤/（虧損）與營運活動中使用的/提供的淨現金： | ||||||||
| 折舊和攤銷費用 | ||||||||
| 以股份為基礎之報酬支出 | ||||||||
| 递延税（利益）/費用 | ( |
) | ||||||
| 長期投資應收收入 | ( |
) | ( |
) | ||||
| 預期信用損失準備 | ||||||||
| 出售房地產和設備之盈利 | ( |
) | ||||||
| 其餘餘額撇清 | ( |
) | ||||||
| 看跌期權負債公允價值變動 | ( |
) | ||||||
| 衍生權證負債公允價值變動 | ||||||||
| 發行股份損失抵銷應付帳款 | ||||||||
| 未實現的匯兌（利得）/ 損失 | ( |
) | ||||||
| 營運資產和負債的變化： | ||||||||
| 應收帳款 | ( |
) | ||||||
| 預付費用及其他流動資產 | ( |
) | ( |
) | ||||
| 經營租賃資產權利 | ( |
) | ||||||
| 其他資產 | ( |
) | ( |
) | ||||
| 應付賬款 | ( |
) | ||||||
| 應計的酬勞及相關福利，流動 | ( |
) | ( |
) | ||||
| 其他流動負債 | ||||||||
| 營業租賃負債 | ( |
) | ||||||
| 其他負債 | ||||||||
| 營運活動產生的淨現金（流出）/流入 | ( |
) | ||||||
| 來自投資活動的現金流量 | ||||||||
| 購置財產和設備 | ( |
) | ( |
) | ||||
| 物業和設備的出售 | ||||||||
| 向聯屬公司發放貸款 | ( |
) | ( |
) | ||||
| 收取向聯屬公司的貸款款項 | ||||||||
| 投資活動中使用的淨現金 | ( |
) | ( |
) | ||||
| 財務活動中的現金流量 | ||||||||
| 短期借款的淨收益 | ( |
) | ||||||
| 支付保險融資負債 | ( |
) | ||||||
| 長期負債的籌資 | ||||||||
| 還債長期借款 | ( |
) | ( |
) | ||||
| $ | ( |
) | ( |
) | ||||
| 支付遞延交易成本 | ( |
) | ( |
) | ||||
| 凈股東權益的淨變動 | ( |
) | ||||||
| 發行A類普通股的收入，扣除發行成本後的淨額 | ||||||||
| 籌資活動提供的淨現金 | ||||||||
| 匯率變動對現金及現金等價物的影響 | ( |
) | ||||||
| 現金及現金等價物淨增加 | ||||||||
| 期初現金及現金等價物餘額 | ||||||||
| 本期現金及現金等價物餘額 | $ | $ | ||||||
| 補充現金流量披露： | ||||||||
| 支付利息的現金 | $ | $ | ||||||
| 支付的現金所得稅，扣除退款後淨額 | $ | $ | ||||||
| 補充揭露與非現金投資及融資活動有關之事項： | ||||||||
| 包括應付帳款和其他流動負債中未支付的递延交易成本 | $ | $ | ||||||
| 按融資租賃義務取得的設備 | $ | $ | ||||||
| 包括應付帳款中的財產和設備購買 | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
AERIES TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of United States dollars except share and per share amounts)
(Unaudited)
Note 1- Nature of Operations
Unless the context otherwise requires, Aeries Technology, Inc. (formerly Worldwide Webb Acquisition Corp. (“WWAC”), formed in the Cayman Islands on March 5, 2021) and its subsidiaries, excluding the fintech and investing business activities, is herein referred to as the “Company”, “ATI”, the “registrant”, “us,” “we” and “our” in these consolidated financial statements. Aark Singapore Pte. Ltd., a Singapore private company limited by shares (“AARK”) and its subsidiaries, excluding the fintech and investing business activities, is herein referred to as the “Carve-out Entity”. The Company is a global provider of professional and management services and technology consulting, specializing in the establishment and management of dedicated delivery centers known as “Global Capability Centers” (“GCCs”) for portfolio companies of private equity firms and mid-market enterprises. Our engagement models are designed to provide a mix of deep vertical specialty, functional expertise, and digital systems and solutions to scale, optimize and transform a client’s business operations. The Company has subsidiaries in India, Mexico, Singapore, UAE and the United States.
Demerger and Business Combination
On March 11, 2023, WWAC entered into a Business Combination Agreement (as amended, the “Merger Agreement”) with WWAC Amalgamation Sub Pte. Ltd., a Singapore private company limited by shares and a direct wholly-owned subsidiary of WWAC (“Amalgamation Sub”), and AARK. Pursuant to the Merger Agreement, Amalgamation Sub and AARK amalgamated and continued as one company, with AARK being the surviving entity, and as a result thereof, Aeries Technology Group Business Accelerators Pvt. Ltd., an Indian private company limited by shares became an indirect subsidiary of WWAC (the “Amalgamation” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). Following the closing of the Business Combination, WWAC changed its corporate name to Aeries Technology, Inc.
AARK was engaged in management consulting, fintech and investing business. However, only the management consulting business was subject to the Merger Agreement and therefore in connection with the Business Combination, AARK entered into a Demerger Agreement with Aarx Singapore Pte. Ltd. and their respective shareholders on March 25, 2023 to spin off the fintech business which was a part of AARK but not subject to the Merger Agreement. Subsequently, the board of directors of AARK ratified two resolutions on May 24, 2023. These resolutions effectively spun off the investing business which was part of AARK but not subject to the Merger Agreement. These transactions will collectively be referred to as “Demerger Transactions”.
Pursuant to the Merger Agreement, all AARK ordinary shares that were issued and outstanding prior to the effective time of the Amalgamation remained issued and outstanding following the Amalgamation and continued to be held by the former sole shareholder of AARK. The Company issued a Class V ordinary share to NewGen Advisors and Consultants DWC-LLC (“NewGen”). NewGen is a business associate of Mr. Raman Kumar (the “Former AARK Sole Shareholder”). NewGen has agreed to hold the Class V ordinary share to protect the interest of the Former AARK Sole Shareholder, in the event of certain extraordinary events as described in ATI’s amended and restated memorandum and articles of association, including a hostile takeover or the appointment or removal of directors at ATI level. While the Class V ordinary share does not carry any direct economic rights, it does carry voting rights equal to 1.3% which will ratchet up to 51% voting rights upon occurrence of the extraordinary events described above at the ATI level. All of the shares of Amalgamation Sub that were issued and outstanding as of the transaction date were converted into a number of newly issued AARK ordinary shares. In accordance with principles of Financial Accounting Standards Board’s Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”) and based on the economic interest held by the shareholders post the transaction as well as the underlying rights, it was assessed that AARK is the accounting acquirer and WWAC is the accounting acquiree. The Business Combination closed on November 6, 2023 (“Closing Date”) and resulted in ATI owning
6
Reverse Recapitalization
As mentioned above – Demerger and Business Combination, the Business Combination was closed on November 6, 2023 and has been accounted for as a reverse recapitalization because AARK has been determined to be the accounting acquirer under ASC 805 based on the evaluation of the following facts and circumstances taken into consideration:
| ● | The Former AARK Sole Shareholder, who controlled AARK prior to the Business Combination, will retain a majority of the outstanding shares of ATI after giving effect to the Exchange Agreements. The Exchange Agreements are further discussed in Note 10; |
| ● | AARK has the ability to elect a majority of the members of ATI’s governing body; |
| ● | AARK’s executive team makes up the executive team of ATI; |
| ● | AARK represents an operating entity (group) with operating assets, revenues, and earnings significantly larger than WWAC. |
Under a reverse recapitalization, while ATI was the legal acquirer, it has been treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of pre-combination AARK issuing stock for the net assets of ATI, accompanied by a recapitalization. The net assets of ATI have been stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of pre-combination AARK and relate to the management consulting business.
Immediately following the Business Combination, there were Class A ordinary shares outstanding with a par value of $. Additionally, there were Private Placement Warrants (defined below) and Public Warrants (defined below) outstanding with a right to purchase
Upon closing of the Business Combination, the total number of ATI’s Class A ordinary shares issued and outstanding was . Further, certain Class A ordinary shareholders entered into non-redemption agreements executed on November 3, 2023 and November 5, 2023, to reverse redemptions for an aggregate of 1,652,892 Class A ordinary shares while waiving their right to receive any “Bonus Shares” issued under the Merger Agreement. In connection with the closing, holders of Class A ordinary shares of ATI were redeemed at a price per share of approximately $10.69. AARK incurred approximately $
The number of Class A ordinary shares issued and outstanding immediately following the consummation of the Business Combination were:
| Public Shareholders (Redeemable Class A ordinary shares), including Bonus Shares(1) | ||||
| Shares held by Worldwide Webb Acquisition Sponsor, LLC (the “Sponsor”) and other initial holders(2)(3) | ||||
| Shares held by Innovo Consultancy DMCC(4) | ||||
| Shares held by FPA (as defined below) Holders(5) | ||||
| Total(6) |
| (1) | |
| (2) |
7
| (3) | |
| (4) | |
| (5) | |
| (6) |
As a result of the Business Combination, the Company’s Class A ordinary shares trades under the ticker symbol “AERT” and its public warrants (the “Public Warrants”) trade under the ticker symbol “AERTW” on the Nasdaq Stock Market. Prior to the consummation of the Business Combination, the Company’s Class A ordinary shares were traded on Nasdaq Stock Market under the symbol “WWAC.”
Note 2 - Summary of Significant Accounting Policies
準備基礎
The information presented below supplements the Significant Accounting Policies information presented in the annual report on Form 10-K for the year ended March 31, 2024. There have been no changes in accounting policies during the three months ended June 30, 2024, from those disclosed in the annual consolidated financial statements and related notes for the year ended March 31, 2024, except for those described below and also as described in “Recently Adopted Accounting Pronouncements” below.
All intercompany balances and transactions have been eliminated in consolidation.
Periods prior to demerger transactions
這些簡明綜合財務報表是在2023年5月24日之前按照拆分方式從AARk的會計記錄中提取的，包括截至2022年12月31日的中期期間，即這些簡明綜合財務報表不包括與合併協議根據的與ATI無關的金融科技和投資業務的財務結果。這些簡明綜合財務報表是從Aark Singapore Pte. Ltd.、Aeries Technology Group Business Accelerators Pvt Ltd.（ATGBA）、其附屬公司和受控信託的歷史會計記錄中衍生出來的。僅包括與管理諮詢業務活動明確可識別的那些資產和負債在公司的簡明綜合資產負債表中。公司的簡明綜合損益表和綜合收益表包括所有管理諮詢業務活動的營業收入和費用，排除了排除的金融科技和投資業務活動的某些費用的分攤。這些分攤是基於管理認為合理的方法進行的；然而，由拆分實體取消認的金額未必代表若排除的業務獨立於拆分實體經營時將反映在簡明綜合財務報表中的金額。
拆分交易前期的綜合基本報表不包括以下內容： (a) 僅用於資助AARk投資業務所進行的活動的現金及現金等價物， (b) 與金融科技和投資業務融資相關的長期債務及相關應付利息/費用， (c) 金融科技和投資業務相關的應收關聯方款項， (d) 投資業務所進行的投資， (e) 金融科技業務的交易及其他應收款項，和 (f) 歸因於金融科技和投資業務的營業收入、銷售成本、其他收入、諮詢費用、銀行手續費和扣繳稅款，以及被排除業務某些費用的分配；這些分配基於管理層認為合理的方法進行；然而，AARk否認的金額未必代表若被排除的業務獨立於AARk經營時將反映在綜合基本報表中的金額。
8
基本報表的簡明綜合損益表和簡明綜合資產負債表之間的分配差異，於基本報表的「淨股東投資及資本公積」部分體現在權益中。
非控制權益代表公司未擁有的股權，並記錄於公司擁有少於100%股權的簡明合併實體中。當母公司保留其控制權時，對母公司所有權益的變動將被視為股權交易。
拆股交易後的時期。
從2023年5月25日開始至2024年6月30日止，在金融科技和投資業務分拆後，ATI的簡明綜合基本報表已根據Aark Singapore Pte. Ltd.、ATGBA及其子公司和受控信託的財務記錄，在簡明綜合基本報表的基礎上準備。
新興成長公司
該公司是一家“新興成長型公司”，根據證券法第2(a)條的定義，受到2012年《啓動我們業務創業法案》（“JOBS Act”）的修改，該公司可以利用某些豁免措施，避開其他公開公司適用但新興成長型公司不必遵守的各種報告要求，包括但不限於不需要遵守《薩班斯-奧克斯利法案》第404條的審計保證要求，減少在其定期報告和代理聲明中對高管薪酬的披露義務，以及豁免對高管薪酬進行不具約束力意見投票和股東批准未經批准的任何黃金降落傘支付要求。
此外，JOBS法案第102(b)(1)條款豁免新成長公司須遵守新制定或修訂的財務會計準則，直到私人公司（即那些尚未生效證券法登記聲明或沒有證券在交易所登記的公司）必須遵守新制定或修訂的財務會計準則。JOBS法案規定，新成長公司可以選擇退出延長過渡期並遵守適用於非新成長公司的要求，但一旦選擇退出，則無法撤回。公司選擇不退出該延長過渡期，這表示當制定或修訂準則對公開公司或私人公司有不同的應用日期時，作為新興增長公司的公司可以在私人公司採納新制定或修訂的準則時採納新制定或修訂的標準。這可能會使得比較公司的簡明合併財務報表與另一家既非新興增長公司也沒有選擇退出使用延長過渡期的公開公司變得困難或不可能，因為所使用的會計準則可能存在潛在的差異。
經營概念
附錄的未經審核的簡明合併基本報表是使用持續經營基礎會計方法準備的，該方法預期資產的實現和償還業務正常進行中的債務。報告的持續經營基礎假設公司在這些基本報表發布後的一年內繼續運作，並能夠實現其資產並在正常業務過程中履行其債務和承諾。
截至2024年6月30日止三個月，公司已報告淨損失。這可能對公司在這些基本報表可通過提交美國證券交易委員會之日起至少12個月內能否持續營業構成重大疑慮。截至2024年6月30日，公司擁有現金及現金等價物餘額 $
公司過去通常是通過從業務中產生的現金、從Kotak Mahindra 銀行的循環信貸和來自相關方的貸款來為其業務和擴張提供資金。管理層預期將來12個月以及可預見的未來，將有足夠的現金來源、現金儲備和債務能力來資助我們的業務、成長和擴張計劃。
9
公司繼續作為持續經營體之能力，取決於成功執行我們的減災計劃等因素，其中包括：(i)從現有或新的信貸安排籌集額外的所有基金類型、(ii)通過FPAs或私下配售籌集資金，以及(iii)將目前的負債重組為權益或長期負債。公司希望通過這些措施在預期的時間範圍內達成其目標，並且預期透過上述安排可獲得的資金將足以消除有關公司持續經營體能力的懷疑。合併基本報表未包括任何調整，關於已記錄資產的收回或負債的分類，如果公司無法作為持續經營體，可能需要進行調整。
這些基本報表是根據持續營運基礎來準備的，假設公司將繼續經營可預見的未來並能夠在業務正常運作過程中實現其資產並偿付其負債。
估計的使用
根據US GAAP，編制簡明綜合財務報表需要管理層進行影響簡明綜合財務報表日期資產和負債金額及報告營業收入和費用數額的估計和假設。受這些估計和假設影響的重要項目包括但不限於營業收入確認、信用損失準備、以股份為基礎的薪酬、FPA看跌期權負債和私人認股權負債的公平估值、固定資產和設備的有用壽命、所得稅會計、用於營運租賃負債和使用權資產的增量借貸利率的確定、與員工福利相關的義務以及財務報表的割離，包括資產、負債和費用的分配。管理層認為其依賴的估計和判斷是合理的，這些估計和判斷是根據公司當時可得到的信息作出的。實際結果可能會有所不同。
板塊報告
該公司營運為一個營運部門。該公司的首席營運決策者是其首席執行官，他檢視以綜合基礎呈現的財務資訊，以作營運決策、評估財務表現和分配資源之用。
預先購買協議
2023年11月3日和2023年11月5日，WWAC與Sandia Investment Management LP、sea Otter Trading, LLC、YA II PN, Ltd和Meteora Capital Partners, LP（統稱「FPA持有人」）簽訂了一份場外交易股權預付轉讓協議。同時還與FPA持有人簽署了一份認購協議（「認購協議」），用於通過新增股份發行或從現有持有人購買股份（「回收股份」）來認購FPA持有人持有的底層FPA股份。提及FPAs和認購協議已被分開核算。
FPAs條款規定新發行 A類普通股股份給FPA持有人以贖回價（即每股10.69美元），並通過贖回逆轉購買 循環股份。 ATI將從FPA持有人處收取約3,711,667股的發行股份，該股份被視為提前支付給FPA持有人，涉及履約轉期合同。 根據FPA，ATI有義務支付預付款額為美元
| ● | $ |
| ● | $ |
10
在一年的合同期限結束時，對於FPA持有人持有的每一股未售出的股份，ATI有責任支付給FPA持有人一筆金額$。
由FPA持有人持有的可選終止權使預付轉股契約在經濟上類似於一種具有FPA持有人權利的寫看跌期權，有權將所有或部分普通A類股票出售給ATI。 ATI在12個月到期期間有權選擇把預付款退還或基礎股票交還，而FPA持有人將根據ATI股價的變動情況自行決定。 ATI有權在12個月到期期間選擇要求預付款退還或基礎股票，而FPA持有人將根據ATI股價的波動情況自行決定。
2024年4月8日，公司完成了一筆公開股本私人投資（PIPE）交易，當時A類普通股的報價約為每股2.21美元。公司與Sandia Investment Management LP、海獭交易商LLC、YA II PN有限公司和Meteora Capital Partners, LP（合稱「FPA持有人」）簽訂了預先購買協議。這些協議包含了一項價格重設功能，可根據特定的預定條件進行股價調整，包括由PIPE交易觸發的條件。截至報告日期，此價格重設功能已啟動，導致場外交易（OTC）股權預付協商交易的新股價為每股2.21美元。
這項調整對初次記錄在資產負債表上的衍生負債的公允價值有影響。未來的公允價值波動將會反映在收益中。更多詳細資訊，請參考附註13：公允價值衡量。
金融性資產包（FPAs）由兩個獨立的金融工具組成，其會計處理如下：
| 1) | 總預付款項為$42,760（「預付款項金額」），包括上述討論的$3,083的淨現金流出。預付款項金額已被列入負債中，以反映整體安排的實質，即再購股票的淨回購和根據訂閱協議向FPA持有人出售新發行股票的情況，而沒有收到$39,678的基礎交易對象。 |
| 2) | 「FPA看跌期權」包括實質上書面的看跌期權和預期到期考慮。FPA看跌期權是一項衍生工具，公司按照ASC 480-10記錄為負債並以公平價值計量。該工具需在每個資產負債表日進行重新計量，公平價值變動則在簡明綜合損益表中予以確認。請參見附註13。 |
衍生金融工具和FPA看跌期權負債
公司根據ASC 815-40指引，按照下文所定義的認股權（以下稱「認股權」）處理，其中儀器（如下文所定義）不符合權益處理標準，必須記錄為負債。公司根據ASC 480-10指引，將FPA看跌期權負債記為金融負債。認股權和FPA共同稱為「儀器」。儀器在每個資產負債表日期受到再測量，直至行使，任何公平價值變動均會在公司的簡明綜合經營報告中確認。有關認股權相關條款的進一步討論請參見附註11，關於確定認股權和FPA價值的方法請參見附註13。
2023年12月，公司通過發行普通A類股，偿付到達成的供應商結余，金額達 給某些供應商欠款。 如果在協議日期前三個交易日內的普通A類股成交量加權平均價格（“VWAP”）高於與協議日期六個月周年日前三個交易日內的VWAP，需要為差額發行ATI的額外普通A類股。這代表公司所編製的衍生財務工具，按照ASC 815-40中包含的指南進行會計處理，包括後續按公允價值重新計量，變動將在公司的簡明綜合損益表中予以認定。
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對於按負債會計的衍生金融工具，衍生工具最初按其公允價值於創始時記錄，並在每個報告日期重新估值，公平價值變動在綜合損益表中報告。 衍生金融工具的分類，包括此類工具應當記錄為負債還是權益，每個報告期末進行評估。 衍生負債按是否在資產負債表日起算12個月內可能需要淨現金結算或轉換工具進行分類為流動或非流動。
公允價值衡量
公平值被定義為在計量日期，在資產的主要或最有利市場中，市場參與者之間進行有秩序交易時，資產可獲得的交易價格或移轉負債時支付的價格（退出價格）。用於計量公平值的估值技術應該最大程度利用可觀察輸入，並最小化未觀察輸入的使用。在縮表綜合財務報表中以公平值記錄的資產和負債根據用於計量其公平值的輸入所涉及的判斷程度進行分類。
與估值資產或負債相關的主觀性程度相關的層次如下所示：
一級 - 資產或負債的未調整報價，該報價是在測量日期當天於活躍市場中針對相同的資產或負債所報價。
二級- 可觀察的輸入，可以直接或間接地觀察到。這些價格可能基於在活躍市場中對於相同或類似證券的報價價格，或是在非活躍市場上未被報價但經市場數據證實的輸入。
第3級 - 受到少量或沒有市場活動支持，並反映管理層在計量日定價該資產或負債時最佳估計，考慮到估值技術和模型輸入中固有的風險。
一項金融工具在估值層次中的分類是基於對公允價值衡量具有重大影響的最低層級。
金融工具的公允價值
除了上述的認股權和FPA外，公司資產和負債的公允價值，符合財務會計準則委員會（“FASB”）ASC 820“公允價值衡量和披露”，接近於簡明綜合資產負債表中所表示的攜帶金額。
現金及現金等價物
現金包括公司的現金和銀行存款。公司認為現金等價物是具有原始到期期限不超過三個月的高流動性投資。
信用集中風險
公司可能面臨信用風險的財務工具主要包括現金及現金等價物、應收賬款、對聯屬公司的貸款和投資。公司將現金存在公司認為信用質素較高的金融機構，並限制與任何一家銀行的信用風險擴大，並持續評估與其往來的銀行的信用質素。截至2024年6月30日和2024年3月31日，有一個客戶佔公司應收賬款餘額的10%或以上。公司預期其長期投資產生的信用風險有限，因為這些投資主要涉及公司的聯屬公司，其信用評級高於公司投資政策中所定義的最低允許信用評級。作為風險管理流程的一部分，公司通過定期評估其投資對手方的信用狀況來限制與長期投資相關的信用風險。
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就公司的營業收入而言，在截至2024年6月30日和2023年的三個月中，分別有四個和三個客戶的收入超過了總收入的某個比例。
| 結束於三個月的期間 6月30日 |
||||||||
| 2024 | 2023 | |||||||
| 客戶一 | % | % | ||||||
| 客戶二 | % | % | ||||||
| 客戶三 | % | % | ||||||
| 客戶四 | % | n/a | ||||||
應收帳款淨額
The Company records a receivable when an unconditional right to consideration exists, such that only the passage of time is required before payment of consideration is due. Timing of revenue recognition may differ from the timing of invoicing to customers. If revenue recognized on a contract exceeds the billings, then the Company records an unbilled receivable for that excess amount, which is included as part of accounts receivable, net in the Company’s condensed consolidated balance sheets.
在公司採用ASU 2016-13前，「金融工具-信用虧損（Topic 326）」，應收帳款餘額是以公司對客戶帳戶收款可回收性的評估為基礎減少的應收帳款，根據Topic 326，應收帳款以開立金額記錄，扣除信用虧損準備金。公司定期檢討信用虧損準備金的充分性，考慮了多個因素。在確定任何所需的準備金時，管理層考慮了根據當前市場條件調整的歷史損失、目前應收帳款的逾期情況、目前付款條款和對未來損失預估的期望。截至2024年3月31日，信用虧損準備金為$，並分類在「應收帳款淨額」的簡明合併資產負債表內。有關採納Topic 326的相關資訊，請參見下面的「採納的最近會計準則聲明」部分。
以下表格提供了公司呆帳準備情況的詳細資料（以千為單位）：
| 三個月結束 6月30日 |
||||||||
| 2024 | 2023 | |||||||
| 截至4月1日的期初餘額 | $ | $ | ||||||
| 根據ASC 326對應收帳款進行的過渡期調整（通過保留收益） | ||||||||
| 截至4月1日的調整餘額 | $ | $ | ||||||
| 費用和支出中新增的過帳 | ||||||||
| 截至6月30日的期末餘額 | $ | $ | ||||||
Long-Term Investments
The Company’s long-term investments consist of debt and non-marketable equity investments in privately held companies in which the Company does not have a controlling interest or significant influence, which have maturities in excess of one year and the Company does not intend to sell.
Debt investments of mandatorily redeemable preference shares, which are classified as held-to-maturity since the Company has the intent and contractual ability to hold these securities to maturity. These investments are reported at amortized cost and are subject to an ongoing impairment evaluation. Income from these investments is recorded in “Interest income” in the condensed consolidated statements of operations.
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Under Topic 326, expected credit losses are recorded and reduced from the amortized cost of the held-to-maturity securities. Expected credit losses for long-term investments are calculated using a probability of default method. Credit losses are recorded within “Selling, general & administrative expenses” in the condensed consolidated statements of operations when an event or circumstance indicates a decline in value has occurred. Allowance for credit losses was $
以下表格提供了公司信用損失准備金的詳細資料：
| 三個月結束 6月30日 |
||||||||
| 2024 | 2023 | |||||||
| 截至4月1日的期初餘額 | $ | $ | ||||||
| 根據ASC 326對長期投資（通過保留收益）的過渡期調整 | ||||||||
| 截至4月1日的調整餘額 | $ | $ | ||||||
| 增加計入信用損失變動項目 | ( |
) | ||||||
| 截至6月30日的期末餘額 | $ | $ | ||||||
公司在簡明合併賬目表中將這些長期投資列入「長期投資」。
基本每股淨損利是藉由將適用於普通股東的收入/虧損除以期間內普通股平均已發行股份數以計算。稀釋每股淨損利是通過使用期間內普通股和潛在的稀釋普通股的加權平均已發行股份數來計算。由於這些工具並非具稀釋性，公司在計算每股稀釋淨損利時未考慮在其首次公開發行（“首次公開發行”）中售出的認股權證和定向增發購買普通股的影響，以及FPA看跌期權負債的影響。
最近已採納的會計準則
2016年6月，FASB發布了ASU 2016-13《金融工具-信用虧損》（“主題326”）：金融工具的信用虧損測量。主題326要求對以攤銷成本衡量的金融資產以及某些資產負債表外承諾（貸款承諾、保函、金融擔保以及其他類似工具）進行預期信用虧損的測量和確認。公司在2023年4月1日的採用日期（請參閱第10號附註-承諾和條件）。對於此擔保的預期信用虧損是使用違約機率方法估算的。公司在2023年4月1日通過採用了ASU 2016-13，使用修改後的追溯方法。從2023年4月1日開始的報告期的結果以會計準則”ASC“ 326呈現，而以前的金額持續按照以前適用的美國通用會計準則報告。
與信用損失相關的支出在簡明綜合營運報告的「銷售、一般及行政支出」中進行分類。
尚未採納的最近會計準則
在2020年8月，FASB發佈了新的標準（ASU 2020-06），以降低會計處理可換股債務和其他權益連結工具的複雜性。對於具有現金換股功能的某些可換股債務工具，這些變化在會計模型中是簡化的折衷方案（不分離“股權”組成部分以推定市場利率，和更簡單分析嵌入式股權特徵），並可能對攤薄後每股收益產生不利影響，因為需要使用換股方法。這個新標準也將影響公開和私人公司普遍發行的其他金融工具。例如，有利轉換特徵的分離模型被取消，簡化了發行可換股債務和可換優先股的發行人分析。此外，為了達到股權分類和/或符合對與實體自身股權掛鉤的合約豁免的特定要求被移除，從而使更多獨立工具和嵌入式特徵避免按市價計入會計。新標準對於SEC申報者（除了小型報告公司）在2021年12月31日後開始的財政年度和該年內的中期期間生效，而對於其他公司則晚兩年。公司可以在2020年12月15日後開始的財政年度初採用這一標準。這一標準可以採用修正追溯法或全面追溯法。公司目前正在檢討已發布的標準，並且認為這不會對公司產生重大影響。
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2023年10月，財務會計準則委員會發布了ASU 2023-06，揭示改進：對SEC披露更新和簡化倡議的編碼修訂，修訂了與財務會計準則編碼（“Codification”）中各個子主題相關的披露或展示要求。每項修訂的有效日期將是SEC從S-X法規或S-k法規中刪除相關披露的日期，不得提前採納。如果到2027年6月30日，SEC尚未將相關要求從S-X法規或S-k法規中刪除，則相關修訂的待定內容將從Codification中刪除，並不會對任何實體生效。公司正在評估這項ASU對基本報表和相關披露將產生的影響。
2023年12月，FASB發布了ASU 2023-09，有關所得稅（第740條）改善所得稅披露，要求上市公司在每年度揭示比率調節中的具體類別，並提供滿足定量閾值的調解項目所需的額外信息。 ASU 2023-09對於截至2025年3月31日結束的公司的財政年度生效。公司目前正在評估更新的影響。
2024年3月，FASb發佈了ASU 2024-01號，有關股票報酬（“ASC 718”）範疇利益激勵和類似獎勵的應用，旨在解決在確定利益分享和類似獎勵是否應按照題目718還是題目710來記錄的實務多樣性問題。該更新並未改變題目718或題目710的範圍；然而，它提供了實施指南和示例，以幫助實體確定利益分享或類似獎勵是否屬於題目718的範圍內。該ASU將對從2025年4月1日開始的年度期間生效，包括這些年度內的中期期間。公司目前正在評估該ASU對其未經審計的綜合基本報表的影響。
公司目前正在評估更新的影響。
Note 3 - Short-term borrowings
| June 30, 2024 |
March 31, 2024 |
|||||||
| Short-term borrowings | $ | $ | ||||||
| Current portion of vehicle loan | ||||||||
| $ | $ | |||||||
2023 年 5 月，本公司修訂其循環信貸款安排（「修訂信貸設施」），從印度盧比增加總借貸能力
在結束日期前，WWAC修改了應支付給Shearman＆Sterling LLP的付款條件，後者是一家為WWAC提供法律諮詢服務的跨國律師事務所。這導致WWAC向Shearman＆Sterling LLP應支付的金額從$4,800應付帳款減少為$4,000的期票，可在四個等額分期支付。隨後，在支付$1,500的情況下對期票進行修改，剩餘的$2,500承諾分為兩個等額分期支付。 Sherman＆Sterling LLP欠款$2,500被披露為短期債務，因為ATI有無條件的義務在從2024年6月30日起的不到十二個月的期間內解決這筆債務。
有關車輛貸款的額外資訊，請參閱附註4- 長期負債。
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註記4 - 長期負債
長期債務包括以下項目：
|
六月三十日， 2024 |
3月31日 2024 |
|||||||
| ATGBA的董事貸款 | $ | $ | ||||||
| 聯屬公司貸款 | ||||||||
| 車輛貸款的非流動部分 | ||||||||
| $ | $ | |||||||
如需了解有關ATGBA董事Rao先生向附屬公司提供的貸款以及從聯屬公司取得的貸款的詳細資訊，請參閱相應的附註8-相關方交易-分別為(g)和(d)。
汽車貸款
2022年12月7日，公司進行了一筆車輛貸款，由車輛抵押，金額為11,450印度盧比（或約等於2024年6月30日匯率下的$
截至2024年6月30日，未來各財政年度的債務到期情況如下：
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 債務總到期時間 | $ |
Note 5 - Revenue
Disaggregation of Revenue
The Company presents and discusses revenues by customer location. The Company believes this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors.
The following table shows the disaggregation of the Company’s revenues by major customer location. Revenues are attributed to geographic regions based upon billed client location. Substantially all of the revenue in our North America region relates to operations in the United States.
| Three Months Ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| North America | $ | $ | ||||||
| Asia Pacific and Other | ||||||||
| Total revenue | $ | $ | ||||||
16
Contract balances
Contract assets comprise amounts where the Company’s right to bill is contingent on something other than the passage of time. As of June 30, 2024 and March 31, 2024, the Company’s contract assets were $
Contract liabilities, or deferred revenue, comprise amounts collected from the Company’s customers for revenues not yet earned and amounts which are anticipated to be recorded as revenues when services are performed. The amount of revenue recognized in the three months ended June 30, 2024 and 2023 that was included in deferred revenue at the beginning of each period was $
As of June 30, 2024 and March 31, 2024 the Company’s deferred revenue was $
Note 6 - Employee Compensation and Benefits
The Company has employee benefit plans in the form of certain statutory and other programs covering its employees.
Defined Benefit Plan - Gratuity
The Company’s subsidiaries in India have defined benefit plans comprising of gratuity under Payments of Gratuity Act, 1972 covering eligible employees in India. The present value of the defined benefit obligations and other long-term employee benefits is determined based on actuarial valuation using the projected unit credit method. The rate used to discount defined benefit obligation is determined by reference to market yields at the balance sheet date on Indian government bonds for the estimated term of obligations.
Actuarial gains or losses arising on account of experience adjustment and the effect of changes in actuarial assumptions are initially recognized in the condensed consolidated statements of comprehensive income, and the unrecognized actuarial loss is amortized to the condensed consolidated statements of operations over the average remaining service period of the active employees expected to receive benefits under the plan.
Changes in “Other comprehensive income/ (loss)” during the three months ended June 30, 2024 and 2023 were as follows:
| Three Months Ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| Net actuarial loss | $ | $ | ||||||
| Amortization of net actuarial loss | ( |
) | ( |
) | ||||
| Deferred tax benefit | ( |
) | ( |
) | ||||
| Unrecognized actuarial loss on employee benefit plan obligations | $ | $ | ||||||
Net defined benefit plan costs for the three months ended June 30, 2024 and 2023 include the following components:
| Three Months Ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| Service costs | $ | $ | ||||||
| Interest costs | ||||||||
| Amortization of net actuarial loss | ||||||||
| Net defined benefit plan costs | $ | $ | ||||||
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Note 7 - Income Taxes
The Company determines its tax provision for interim periods using an estimate of its annual effective tax rate adjusted for discrete items, if any, that are considered in the relevant period. The Company updated its estimate of the annual effective tax rate, and if its estimated tax rate changes, the Company will be making a cumulative adjustment.
The Company’s effective tax rate (“ETR”) is
The change in ETR was primarily due to significant increase in recognition of deferred tax benefit on losses in certain subsidiaries having a lower jurisdictional tax rates along with a reduction in taxable income resulting in lower current tax during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.
Note 8 - Related Party Transactions
| Name of the related party | Relationship | |
Summary of significant transactions and balances due to and from related parties are as follows:
| Three Months Ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| Cost sharing arrangements | ||||||||
| Aeries Financial Technologies Private Limited (b) | ||||||||
| Bhanix Finance And Investment Limited (b) | ||||||||
| Corporate guarantee commission | ||||||||
| Bhanix Finance And Investment Limited | ||||||||
| Corporate guarantee expense | ||||||||
| Aeries Technology Products And Strategies Private Limited (j) | ||||||||
| Interest expense | ||||||||
| Aeries Technology Products And Strategies Private Limited (d) | ||||||||
| Mr. Vaibhav Rao (g) | ||||||||
| Interest income | ||||||||
| Aeries Financial Technologies Private Limited (f), (h) | ||||||||
| Aeries Technology Products And Strategies Private Limited (e), (h) | ||||||||
| Legal and professional fees paid | ||||||||
| Ralak Consulting LLP (c) | ||||||||
| Management consultancy service | ||||||||
| Aark II Pte Limited (a) | ||||||||
| Office management and support services expense | ||||||||
| Aeries Technology Products And Strategies Private Limited (i) | ||||||||
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| June 30, | March 31, | |||||||
| 2024 | 2024 | |||||||
| Accounts payable | ||||||||
| Aeries Technology Products And Strategies Private Limited (i) | $ | $ | ||||||
| Accounts receivable | ||||||||
| Aark II Pte Limited (a) | ||||||||
| Aeries Financial Technologies Private Limited (b) | ||||||||
| Bhanix Finance And Investment Limited (b) | ||||||||
| TSLC Pte Limited (a) | ||||||||
| Interest payable (classified under other current liabilities) | ||||||||
| Aeries Technology Products And Strategies Private Limited (d) | ||||||||
| Interest receivable (classified under prepaid expenses and other current assets) | ||||||||
| Aeries Technology Products And Strategies Private Limited (e) | ||||||||
| Investment in 0.001% Series-A Redeemable preference share | ||||||||
| Aeries Financial Technologies Private Limited (h) | ||||||||
| Investment in 10% Cumulative redeemable preference shares | ||||||||
| Aeries Technology Products And Strategies Private Limited (h) | ||||||||
| Loan from Members of immediate families of Venu Raman Kumar | ||||||||
| Mr. Vaibhav Rao (g) | ||||||||
| Loans from affiliates | ||||||||
| Aeries Technology Products and Strategies Private Limited (d) | ||||||||
| Loans to affiliates (classified under other assets) | ||||||||
| Aeries Financial Technologies Private Limited (f) | ||||||||
| Aeries Technology Products And Strategies Private Limited (e) | ||||||||
| (a) | |
| (b) | |
| (c) | |
| (d) | |
| (e) | |
| (f) | |
| (g) | |
| (h) | |
| (i) | |
| (j) |
The Company has also executed two Exchange Agreements: (1) with AARK and Mr. Raman Kumar in his capacity as a shareholder of AARK; and (2) with ATGBA and Mr. Sudhir Appukuttan Panikassery, Mr. Ajay Khare, and Mr. Unnikrishnan Balakrishnan Nambiar, key managerial personnel of ATGBA in their capacity as shareholders of ATGBA (together referred to as “counterparties”). Under the Exchange Agreements, the counterparties would have a right to exchange the shares held by them in AARK or ATGBA into shares of ATI or cash subject to the conditions specified in the Exchange Agreement. Refer Note 10 for details. Additionally, pursuant to the Business Combination, 5,638,530 Class A ordinary shares have been issued to Innovo Consultancy DMCC, which is wholly owned by Mr. Kumar.
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Note 9 - Stock-Based Compensation
Aeries Technology, Inc. 2023 Equity Incentive Plan
The board of directors of WWAC approved the Aeries Technology, Inc. 2023 Equity Incentive Plan (the “Plan”) on March 11, 2023, subject to approval by WWAC’s shareholders’. The Plan was approved by WWAC’s shareholders on November 2, 2023 and the Plan became effective upon the consummation of the Business Combination. The maximum number of Class A ordinary shares that may be issued under the Plan may not exceed Class A ordinary shares, subject to certain adjustments set forth in the Plan.
Pursuant to the Plan, Company granted Mr. Sudhir Appukuttan Panikassery an option to purchase on or prior to the expiration date, June 7, 2034, all or part of 5,151,005 Class A ordinary shares, par value $0.0001 per share. The option was fully vested and exercisable on the grant date, June 8, 2024. The entire option was exercised on June 25, 2024. Accordingly, the Company recorded stock-based compensation expense of $7,314 within “Selling, general & administrative expenses” in the Condensed Consolidated statements of operations.
Restricted Share Unit Award
Compensation cost for stock awards, which include restricted stock units (“RSUs”), is measured at the fair value on the grant date and recognized as expense, net of estimated forfeitures. The fair value of stock awards is based on the quoted price of our common stock on the grant date. We measure the fair value of RSUs using fair value of our quoted stock due to grant date and vesting date being same. Compensation cost for RSUs is recognized on a straight line over vesting period.
The following table summarizes the activities for vested RSUs for the quarter ending June 30, 2024:
| Restricted Stock Units | ||||||||
| Number of Shares |
Grant Date Fair Value |
|||||||
| Unvested as of April 1, 2024 | ||||||||
| Granted | $ | |||||||
| Vested | ( |
) | $ | |||||
| Forfeited / Canceled | ||||||||
| Unvested as of June 30, 2024 | ||||||||
The fair value of RSUs granted during the three months ended June 30, 2024 and 2023, as of the grant date and vesting date (i.e. May 22, 2024), was $5,432 and $0, respectively.
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Aeries Employees Stock Option Plan, 2020
On August 1, 2020, ATGBA’s board of directors approved and executed the Aeries Employees Stock Option Plan (“ESOP”), which was subsequently amended on July 22, 2022. Under ESOP, the company has authorized to grant up to options to eligible employees in one or more tranches. The company granted options to eligible employees during the year ended March 31, 2023.
The options issued under the ESOP generally are subject to service conditions. The service condition is typically one year. The stock-based compensation expense is recognized in the condensed consolidated statements of comprehensive income using the straight-line attribution method over the requisite service period.
The following table summarizes the ESOP stock option activity for the three months ended June 30, 2024:
| Shares | Weighted average exercise price |
Weighted-average remaining contractual term (in years) |
Aggregate intrinsic value |
|||||||||||||
| Options outstanding at April 1, 2024 | $ | - | $ | |||||||||||||
| Options granted | - | - | - | |||||||||||||
| Options exercised | - | - | ||||||||||||||
| Options canceled, forfeited or expired | - | - | - | |||||||||||||
| Options outstanding at June 30, 2024 | $ | $ | ||||||||||||||
| Vested and exercisable at June 30, 2024 | $ | $ | ||||||||||||||
Aeries Management Stock Option Plan, 2019
On September 23, 2019, ATGBA’s board of directors approved and executed the Aeries Management Stock Option Plan 2019 (“MSOP”), which was subsequently amended on December 31, 2022. Under MSOP, ATGBA has authorized to grant up to options to eligible employees in one or more tranches.
The options issued under the MSOP generally are subject to both service and performance conditions. The service condition is typically one year, and the performance conditions are based on the condensed consolidated revenue and adjusted profit before tax of ATGBA. The stock-based compensation expense is recognized in the condensed consolidated statements of comprehensive income using the straight-line attribution method over the requisite service period if it is probable that the performance target will be achieved.
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The following table summarizes the MSOP stock option activity for the three months ended June 30, 2024:
| Shares | Weighted average exercise price |
Weighted-average remaining contractual term (in years) |
Aggregate intrinsic value |
|||||||||||||
| Options outstanding at April 1, 2024 | $ | - | $ | |||||||||||||
| Options granted | - | - | - | - | ||||||||||||
| Options exercised | - | - | - | - | ||||||||||||
| Options canceled, forfeited or expired | - | - | - | - | ||||||||||||
| Options outstanding at June 30, 2024 | $ | $ | ||||||||||||||
| Vested and exercisable at June 30, 2024 | $ | $ | ||||||||||||||
The Company uses the BSM option-pricing model to determine the grant-date fair value of stock options. The determination of the fair value of stock options on the grant date is affected by the estimated underlying share price, as well as assumptions regarding a number of complex and subjective variables. These variables include expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates, and expected dividends. The grant date fair value of the Company’s stock options granted to employees were estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:
| 2022 Grants |
||||
| Expected term | years | |||
| Expected volatility | % | |||
| Risk free interest rate | % | |||
| Annual dividend yield | % | |||
During the three months ended June 30, 2024, and 2023, the Company recorded stock-based compensation expense of $
As of June 30, 2024, there was
Note 10 - Commitments and Contingencies
Corporate Guarantees
The Company had an outstanding guarantee of INR (approximately $
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Indemnification obligations
In the normal course of business, the Company is a party to a variety of agreements under which it may be obligated to indemnify the other party for certain matters. These obligations typically arise in contracts where the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations or covenants for certain matters, infringement of third-party intellectual property rights, data privacy violations, and certain tortious conduct in the course of providing services. The duration of these indemnifications varies, and in certain cases, is indefinite.
The Company is unable to reasonably estimate the maximum potential amount of future payments under these or similar agreements due to the unique facts and circumstances of each agreement and the fact that certain indemnifications provide for no limitation to the maximum potential future payments under the indemnification. Management is not aware of any such matters that would have a material effect on the condensed consolidated financial statements of the Company.
Legal Proceedings
From time to time, the Company may be involved in proceedings and litigation, claims and other legal matters arising in the ordinary course of business. Some of these claims, lawsuits, and other proceedings may involve highly complex issues that are subject to substantial uncertainties, and could result in damages, fines, penalties, nonmonetary sanctions, or relief. Management is not currently aware of any material pending legal proceedings, except for ordinary routine litigation incidental to the business, in which we or any of our subsidiaries are involved, or where our property is subject to such proceedings.
Exchange Agreements
Upon consummation of the Business Combination, the holders of AARK ordinary shares and ATGBA ordinary shares each entered into the Exchange Agreements. Pursuant to the Exchange Agreements, from and after the date of the Exchange Agreements and prior to April 1, 2024 and subject to certain exercise conditions, each holder of AARK ordinary shares and ATGBA ordinary shares may exchange up to 20% of the number of AARK ordinary shares and ATGBA ordinary shares, as applicable, held by such holder for Class A ordinary shares of the Company or cash, in each case as provided in the Exchange Agreements. From and after April 1, 2024 and subject to certain exercise conditions, the Company shall have the right to acquire all of the AARK or ATGBA ordinary Share for Class A ordinary shares or cash. In addition, after April 1, 2024 and subject to certain exercise condition, each shareholder of ATGBA and AARK ordinary shares shall have the right to require the Company to provide Class A ordinary shares or cash in exchange for up to all of the AARK or ATGBA ordinary share. Each share of AARK may be exchanged for 2,246 Class A ordinary shares the Company and each ATGBA ordinary share may be exchanged for 14.40 Class A ordinary shares of the Company, in each case subject to certain adjustments. The cash exchange payment may only be elected in the event approval from the Reserve Bank of India is not obtained for exchange of shares and provided that the Company has reasonable cash flow to be able to pay the cash exchange payment and such payment would not be prohibited by any then outstanding debt agreements or arrangements of the Company.
Class A ordinary shares issuance to certain vendors
As set out in the section on Derivative Financial Instruments and FPA Put Option Liability under Note 2, in December 2023, ATI settled the amounts owed to certain vendors by issuance of Class A ordinary shares. If the VWAP of the Class A ordinary shares over the three trading days immediately preceding the agreement date is higher than the VWAP over the three trading days immediately preceding the six-month anniversary from the agreement date, ATI would need to issue additional Class A ordinary shares for the difference.
This represents a derivative financial instrument, fair value of which as at June 30, 2024 has been assessed to be insignificant. Refer Note 13 for details on Fair Value Measurements.
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Note 11 - Warrant Liabilities
On October 22, 2021, pursuant to
The Company accounted for the Warrants in accordance with the guidance contained in ASC 815-40 given that certain provisions within the warrant agreement either preclude the warrants from being considered indexed to the ATI’s own stock or the fixed-for-fixed option criteria are not met. On this basis the Public and Private Placement Warrants are classified as a liability and are measured at fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s condensed consolidated statement of operations.
Each whole Warrant entitles the holder thereof to purchase one Class A ordinary share of the Company, par value $0.0001 per share, for $
the Company may redeem the outstanding Warrants:
| ● | in whole and not in part; |
| ● | at a price of $0.01 per Public Warrant; |
| ● | upon not less than 30 days’ prior written notice of redemption to each Warrant holder; and |
| ● | if, and only if, the last reported sales price of the Class A ordinary shares for any 20 trading days within a 30-trading day period ending on third trading day prior to the date on which the Company sends the notice of redemption to the Warrant holders (the “Reference Value”) equals or exceeds $ |
The Company may also redeem the outstanding Warrants:
| ● | in whole and not in part; |
| ● | at $0.10 per warrant |
| ● | upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the Class A ordinary shares; |
| ● | if, and only if, the Reference Value equals or exceeds $10.00 per Class A ordinary share (as adjusted); provided that if the Reference Value equals or exceeds $ |
No fractional Class A ordinary shares will be issued upon redemption. If, upon redemption, a holder would be entitled to receive a fractional interest in a share, the Company will round down to the nearest whole number of the number of Class A ordinary shares to be issued to the holder.
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Note 12 - Redeemable Noncontrolling Interest and Shareholders’ Equity (Deficit)
The condensed consolidated statements of changes in Redeemable Noncontrolling Interest and Shareholders’ Equity (Deficit) reflect the reverse recapitalization and Business Combination as mentioned in Note 1, on Demerger and Business Combination, and Reverse Recapitalization. As AARK was deemed to be the acquirer in the Business Combination, all periods prior to the completion of the Business Combination reflect the balances and activity of AARK. The consolidated balances as of March 31, 2023 from the audited financial statements of AARK as of that date, share activity (Class A ordinary shares) and per share amounts in the condensed consolidated statement of change in shareholders’ equity (deficit) were not retroactively adjusted given that the exchange of all the shares held by the owners of AARK as contemplated under the Exchange Agreements as set out in Note 10 has not been completed.
Preference shares
The Company is authorized to issue shares of preference shares, par value $ per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of June 30, 2024, there were no shares of preference shares issued or outstanding.
Class A ordinary shares
The Company is authorized to issue Class A ordinary shares with a par value of $ per share. As of June 30, 2024, there were Class A ordinary shares issued and outstanding, including Class A ordinary shares subject to the FPAs. Each Class A ordinary share carries one vote and entitles the shareholders’ to ratable rights in dividends and distributions as well as in the event of liquidation.
Class V ordinary shares
The Company is authorized to issue Class V ordinary share with a par value of $ per share. As of June 30, 2024, there was Class V ordinary share issued and outstanding. The Class V share does not carry any direct economic rights in dividends and other distributions or in an event of liquidation. It does carry voting rights equal to 1.3% which will ratchet up to 51% voting rights upon occurrence of “extraordinary events” at the ATI level.
Common stock
Pre-combination AARK had only one class of ordinary shares having no par value. Holders of ordinary shares were entitled to one vote per share held. As of June 14, 2023 (immediately prior to the effective date of a stock split), there were ordinary shares outstanding, and the number of ordinary shares outstanding after a stock split was . As a result of stock split, AARK’s shares were retroactively restated as if the transaction occurred at the beginning of the earliest periods presented. Consequently, as of April 1 2023 and 2022, the AARK’s ordinary shares consisted of shares, all of which were issued and fully paid. Upon the liquidation, dissolution or winding up of AARK, ordinary shareholders were entitled to receive a ratable share of the available net assets of AARK after payment of all debts and other liabilities. The ordinary shares had no preemptive, subscription, redemption or conversion rights.
Equity financing
On April 8, 2024, the Company entered into a private placement transaction (the “Private Placement”), pursuant to a Share Subscription Agreement (the “Subscription Agreement”) with an institutional accredited investor (the “Investor”) for aggregate gross proceeds of $
25
As of the closing of the Private Placement, the Company issued an aggregate of Class A ordinary shares at a purchase price of $ per share and reserved 320,820 Class A ordinary shares in adherence to the Beneficial Ownership Limitation. On July 10, 2024, the Company issued an additional shares from the previously reserved shares.
Exchange Pursuant to Exchange Agreement
Upon consummation of the Business Combination, the holders of AARK ordinary shares and ATGBA ordinary shares each entered into the Exchange Agreements. Pursuant to the Exchange Agreements, from the date of the Exchange Agreements and after April 1, 2024, and subject to certain exercise condition, each shareholder of AARK ordinary shares shall have the right to require the Company to provide Class A ordinary shares or cash in exchange for up to all of the AARK ordinary share. Each share of AARK may be exchanged for Class A ordinary shares the Company subject to certain adjustments.
Pursuant to the Exchange Agreements, on April 5, 2024,
Shares issued to vendors
In December 2023, ATI settled the amounts owed to certain vendors by issuance of Class A ordinary shares. If the VWAP of the Class A ordinary shares over the three trading days immediately preceding the agreement date is higher than the VWAP over the three trading days immediately preceding the six-month anniversary from the agreement date, ATI would need to issue additional Class A ordinary shares for the difference.
Pursuant to the abovementioned clause, the Company has issued in total Class A ordinary shares to the vendors on May 24, 2024.
Redeemable noncontrolling interest
As of June 30, 2024, the prior investors of AARK owns
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Note 13 - Fair Value Measurements
As of June 30, 2024, the Company had financial instruments which were measured at fair value on a recurring basis using significant unobservable inputs (Level 3). Significant changes in the inputs could result in a significant change in the fair value measurements. See each respective footnote for information on the assumptions used in calculating the fair value of financial instruments.
The following tables present information about the Company’s liabilities that are measured at fair value on a recurring basis as of June 30, 2024 and March 31, 2024, including the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
Summary of Liabilities Measured at Fair Value on a Recurring Basis
| June 30, 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Liabilities: | ||||||||||||||||
| Forward Purchase Agreement put option liability | $ | $ | $ | $ | ||||||||||||
| Public Warrants | ||||||||||||||||
| Private Placement Warrants | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
| March 31, 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Liabilities: | ||||||||||||||||
| Forward Purchase Agreement put option liability | $ | $ | $ | $ | ||||||||||||
| Public Warrants | ||||||||||||||||
| Private Placement Warrants | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
The change in the fair value of the forward purchase agreement put option liability of $
The valuation of the forward purchase agreement put option liability was made using the following assumptions as of June 30, 2024:
| Expected Term (Years) | ||||
| Risk free Interest Rate | % | |||
| Volatility | % | |||
| Reference Price for one Class A ordinary share | $ |
| Note: | The private placement announced and completed on April 8, 2024. Quoted share price of Class A ordinary shares of the Company when PIPE (Private Investment in Public Entity) transaction took place was $2.21 approx. |
Given that the Public Warrants have a listed price available, the Company classified them as Level 1. The Company has classified the privately placed warrants within Level 3 of the hierarchy as the fair value derived using the Black-Scholes option pricing model, which uses a combination of observable (Level 2) and unobservable (Level 3) inputs. There were no transfers between fair value levels during the three months ended June 30, 2024.
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The valuation of the liability for the Private Placement Warrants was made using the following assumptions as of June 30, 2024:
| Term (years) | ||||
| Risk-free interest rate | % | |||
| Stock price at measurement date | $ |
The following table presents a summary of the changes in the fair value of Derivative Liabilities:
| Forward Purchase Agreement Put Option Liability |
Public Warrant Liability |
Private Placement Liability |
Total | |||||||||||||
| Fair value at April 1, 2024 | $ | $ | $ | $ | ||||||||||||
| Change in fair value (gain) / loss | ( |
) | ( |
) | ( |
) | ||||||||||
| Fair value as of June 30, 2024 | $ | $ | $ | $ | ||||||||||||
Based on the expected VWAP as at inception as well as June 30, 2024 it is not expected that ATI would be required to issue additional Class A ordinary shares to certain vendors. On this basis, fair value of the derivative financial instrument representing ATI’s obligation to issue additional Class A ordinary shares has been determined to be insignificant on initial recognition as well as at June 30, 2024 and accordingly the quantitative disclosures in relation to the fair value have not been provided.
Basic consolidated net loss per share (“EPS”) is calculated using the Company’s share of its subsidiaries earnings/ net loss as well as ATI stand-alone earnings/ net loss and the weighted number of shares outstanding during the reporting period. Diluted consolidated EPS includes the dilutive effect of vested and unvested stock options of the Company’s subsidiaries.
The Company analyzed the calculation of net loss per share for periods prior to the Business Combination on November 6, 2023 and determined that it resulted in values that would not be meaningful to the users of the condensed consolidated financial statements, as the capital structure completely changed as a result of the Business Combination. Therefore, net loss per share information has not been presented for periods prior to the Business Combination.
The Company’s Class V ordinary share does not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted net loss per Class V ordinary share under the two-class method has not been presented.
The following table sets forth the computation of basic and diluted net loss per share for the period from April 1, 2024 through June 30, 2024 (in thousands, except share and per share amounts):
| Numerator: | ||||
| Net Loss attributable to controlling interest for the period from April 1, 2024 through June 30, 2024 | $ | ( |
) | |
| Denominator: | ||||
| Weighted average shares outstanding of Class A ordinary shares, basic and diluted for the period from April 1, 2024 through June 30, 2024 | ||||
| Net earnings per share Ordinary Shares – Basic and Diluted | $ | ) |
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Note 16 - Subsequent Events
Notice from The Nasdaq Stock Market LLC
On September 5, 2024, the Company received a notice from The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, the Company did not comply with Nasdaq Listing Rule 5250(c)(1), because the Company had not filed its Form 10-K for the fiscal year ended March 31, 2024 (the “Form 10-K”) and Form 10-Q for the period ended June 30, 2024 (the “Form 10-Q”), respectively. The Company filed the Form 10-K on September 27, 2024, and thus the Company has partially regained compliance with the rule. Further, based on further review and the materials submitted on September 30, 2024 by the Company, Nasdaq has granted additional time until October 15, 2024, for the Company to file the Form 10-Q and regain full compliance with the rule.
Change of Auditors
On August 11, 2024, the Audit Committee of the Board of Directors of the Company approved the dismissal of, and dismissed, KNAV CPA LLP (“KNAV”) as the Company’s independent registered public accounting firm. KNAV was the independent registered public accounting firm of the Company since February 1, 2024. Prior to the completion of the Company’s business combination with AARK, KNAV had been the independent registered public accounting firm of AARK since 2022.
On the same day, the Audit Committee appointed Manohar Chowdhry & Associates (“MCA”) as the successor independent registered public accounting firm. MCA will serve as the Company’s independent registered public accounting firm for the fiscal years ended March 31, 2024 and 2023.
Equity financing
On April 8, 2024, the Company entered into a private placement transaction, pursuant to a Share Subscription Agreement with an institutional accredited investor for aggregate gross proceeds of $
As of the closing of the Private Placement, the Company issued an aggregate of Class A ordinary shares at a purchase price of $ per share. The Company reserved Class A ordinary shares in adherence to the Beneficial Ownership Limitation. On July 10, 2024, the Company issued an additional shares from the previously reserved shares.
Shares issued to vendors
In September 2024, the Company issued Class A ordinary shares and Class A ordinary shares, each valued on the relevant dates of the respective agreements, to two separate vendors, as compensation for their respective services.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis together with our condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q. Among other things, the condensed consolidated financial statements include more detailed information regarding the basis of presentation for the financial data than included in the following discussion.
In addition to historical information, the following discussion contains forward-looking statements, including, but not limited to, statements regarding our expectations for future performance, liquidity and capital resources that involve risks, uncertainties and assumptions that could cause actual results to differ materially from our expectations. Our actual results may differ materially from those contained in or implied by any forward-looking statements. Factors that could cause such differences include those identified below and those described under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” discussed in this quarterly report and our Annual Report on Form 10-K for the fiscal year ended March 31,2024. You should consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on such statements, which speak only as of the date of this quarterly report. It is impossible for us to predict new events or circumstances that may arise in the future or how they may affect us. Unless otherwise required by law, we undertake no obligation to update forward looking statements to reflect events or circumstances occurring after the date of this quarterly report.
Unless the context otherwise requires, references in this section to “we,” “us,” “our,” “Aeries,” “Aeries Technology,” and “the Company” refer to the business and operations of AARK and its consolidated subsidiaries prior to the Business Combination (excluding the associated legacy financial technology and investing business activities) and to Aeries Technology, Inc. and its consolidated subsidiaries, following the consummation of the Business Combination.
Overview
Aeries Technology is a global provider of professional and management services and technology consulting, specializing in the establishment and management of dedicated delivery centers known as “Global Capability Centers” (“GCCs”) for portfolio companies of private equity firms and mid-market enterprises. Our engagement models are designed to provide a mix of deep vertical specialty, functional expertise, and digital systems and solutions to scale, optimize and transform a client’s business operations. By leveraging AI, implementing process improvements, and recruiting talent in cost-effective geographies, we are positioned to deliver significant cost savings to our clients. With over a decade of experience, we are committed to delivering transformative business solutions that drive operational efficiency, innovation, and strategic growth.
We support and drive our clients’ global growth by providing a range of services, including professional advisory services and operations management services, to build and manage GCCs in suitable and cost-effective locations based on client business needs. With a focus towards digital enterprise enablement, these GCCs are designed to act as seamless extensions of the client organization, providing access to top-tier resources. We believe this empowers our clients to remain competitive and nimble and to achieve their goals of enduring cost efficiencies, operational excellence, and value creation, without sacrificing functional control and flexibility.
Our advisory services involve the active participation of senior leadership, recommending strategies and best practices related to operating model design, consultation on various areas, market availability for resources with appropriate skillsets required for specific roles contemplated in the service model, regulatory compliance, optimization of tax structure, and more. Our clients can customize the services based on options we provide, and we subsequently firm up the execution plan with the clients.
A key aspect of our service is our focus on digital transformation. We aim to leverage cutting-edge technologies, including AI, to drive innovation and streamline operations. Our technology services are designed to enhance decision-making, automate processes, and deliver significant business value. We believe this approach through GCC set-up improves operational efficiencies, enabling us to deliver digital transformation services that align with our clients’ growth strategies and support their competitiveness in an evolving digital landscape.
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Our clients also use our services to manage their organizational operations, including software development, information technology, data analytics, cybersecurity, finance, human resources, customer service and operations. We hire appropriate talent and personnel on our payroll for deployment on client operations. We work with our clients collaboratively to select the appropriate candidates and create functional alignment with the clients’ organizations. While our talent becomes an extension of our clients’ team, Aeries continues to provide them with the opportunity for promotion, recognition and career path progression, which we believe results in higher employee satisfaction and lower voluntary attrition rates. We manage the regulatory, tax, recruiting, human resources compliance and branding for each of our GCCs.
Our purpose-built business model aims to create a more flexible and cost-effective talent pool for deployment on clients’ operations, while fostering innovation through strategic alignment at senior levels and visibility across the organization. The model also aims to insulate our clients from regulatory and tax issues and provides flexibility in scaling teams up or down based on their changing business needs. We are committed to delivering best practices and success factors by leveraging our visibility into successful strategies from multiple companies, addressing many of the deficiencies associated with the traditional outsourcing and offshoring models.
As of June 30, 2024, Aeries had more than 30 clients spanning across industry segments, including companies in the industries of e-commerce, telecom, security, healthcare, engineering and others.
Key Factors Affecting Performance and Comparability
Market Opportunity
Our current markets are North America, Asia Pacific, and the Middle East, with a primary focus on the United States. Within these regions we are focused on two primary areas, the private equity ecosystem and the mid-market enterprises.
Companies are looking out for service providers who not only have the experience and expertise in providing the right-sized solution in this age of ever shortening business cycles but also a trusted partner with a transparent engagement model to lead the customers through the digital transformation journey. Aeries’ model is purpose-built to provide this experience, expertise and transparent engagement model to accelerate and enhance our clients’ businesses.
Private Markets
As private market investing evolves and the landscape of venture-backed and late-stage private growth companies transforms, our service offerings will adapt accordingly, aligning with the shifting dynamics of potential investors and portfolio companies seeking our expertise. While periods of macroeconomic growth in the United States, particularly in private equity markets, typically foster an upsurge in overall investment activity, any economic slowdowns, downturns, or volatility in the broader market and private equity landscape could potentially dampen this growth momentum.
Macro-economic headwinds
Our operational performance is influenced by prevailing economic conditions, including macroeconomic conditions, the overall inflationary climate, and business sentiment. During the three months ended June 30, 2024, there was persistent economic and geopolitical uncertainty in many markets around the world, including concerns over wage inflation, the potential of decelerating global economic growth, and increased volatility in foreign currency exchange rates. These factors have impacted and may continue to impact our business operations.
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Customer Retention and Early Termination of Long-Term Contracts
Maintaining long-term customer relationships is important to our business, as a significant portion of our revenue is derived from these contracts. Although we have auto-renewal service agreements with clients, they may choose to terminate or not renew, in which case they must provide a notice period, typically ranging from 90 to 180 days, and pay a termination fee based on the commercial margin if termination occurs without cause. There is an increasing likelihood that clients may choose to terminate our service agreements after we have established and operated delivery centers for them, as it becomes more feasible and cost-efficient for them to take over. While the above-described contractual provisions provide some financial protection, the termination fee may not fully offset the long-term revenue loss, and replacing clients can be challenging due to the lengthy customer acquisition cycle. To mitigate this risk, we focus on maintaining strong relationships, expanding our customer base, diversifying service offerings, and delivering high-quality service to encourage renewals or alternative service arrangements when terminations occur. Our operational results and financial condition may still be negatively affected if multiple key customers terminate their agreements around the same time, as replacing this revenue can take time.
Income Taxes
We are incorporated in the Cayman Islands and have operations in India, Mexico, Singapore and the United States. Our effective tax rate has historically varied and will continue to vary from year to year based on the tax rate in the jurisdiction of our organization, the geographical sources of our earnings and the tax rates in those countries, the tax relief and incentives available to us, the financing and tax planning strategies employed by us, changes in tax laws or the interpretation thereof, and movements in our tax reserves, if any.
Currently, the Company is liable to pay income tax in India, Mexico, Singapore, and the United States. In India, the Company has chosen to pay taxes according to the newly introduced tax regime in 2019 while forgoing some exemptions and deductions. Consequently, the Company calculates its consolidated provision for income taxes based on the asset and liability method. This involves determining deferred tax assets and liabilities based on temporary differences between the condensed consolidated financial statements and income tax bases of assets and liabilities. These deferred tax assets and liabilities are measured using the enacted tax rates that are expected to apply to taxable income in the year in which these temporary differences are anticipated to be settled or recovered. If there is evidence that indicates some portion or all of the recorded deferred tax assets will not be realized in future periods, the deferred tax assets are recorded net of a valuation allowance. The Company evaluates uncertain tax positions to determine if they are likely to be sustained upon examination, and a liability is recorded when such uncertainties fail to meet the “more likely than not” threshold.
Financing Costs
We regularly evaluate our variable and fixed-rate debt obligations. We have historically used short and long-term debt to finance our working capital requirements, capital expenditures and other investments. In May 2023, Aeries amended its revolving credit facility (“Amended Credit Facility”), whereby the total borrowing capacity was increased to $3.8 million (at the exchange rate in effect on June 30, 2024), with Kotak Mahindra Bank. The revolving facility is available for Aeries’ operational requirements. The interest rate is equal to the 6 months Marginal Cost of Funds based Lending Rate (“MCLR”) plus a margin of 0.80% as of June 30, 2024 and March 31, 2024, respectively. Aeries is required to pay interest on the outstanding balance of the credit facility at this financing cost basis, calculated based on the actual number of days for which the funds are utilized. Any changes in the prevailing MCLR rates and the interest rate charged by the bank will affect the financing cost basis and the overall cost of borrowing.
Aeries also has an outstanding unsecured loan from director of Aeries Technology Group Business Accelerators Pvt Ltd., Mr. Vaibhav Rao, amounting to $0.8 million at an interest rate of 10% per annum. The principal amount of the loan was outstanding in entirety as of and for the period ended June 30, 2024 and 2023, and year ended March 31, 2024.
The Company also has an outstanding four-year vehicle loan of $0.1 million at the exchange rate in effect on June 30, 2024 at 10.75% per annum.
Refer to the notes to our condensed consolidated financial statements titled “Short-term borrowings” and “Long-term debt” included elsewhere in this Quarterly Report on Form 10-Q for additional information on our indebtedness.
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Results of Operations
Overview
The Company has one operating segment and presents and discusses revenues by customer location. The Company believes this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors.
The following table shows the disaggregation of the Company’s revenues by major customer location. Substantially all of the revenue in our North America region relates to business with customers in the United States.
| Three months Ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| North America | $ | 15,507 | $ | 12,487 | ||||
| Asia Pacific and Other | 1,160 | 3,843 | ||||||
| Total revenue | $ | 16,667 | $ | 16,330 | ||||
Our revenues were primarily earned in U.S. dollars. Our costs were primarily incurred in Indian rupees, U.S. dollars and Mexican pesos. We bear a substantial portion of the risk of inflation and fluctuations in currency exchange rates, and therefore our operating results could be negatively affected by adverse changes in inflation rates and foreign currency exchange rates.
Comparison of the Three Months Ended June 30, 2024 and June 30, 2023
The following table presents selected financial data for the three months ended June 30, 2024, and 2023 (in thousands, except percentages):
| Three months Ended June 30, |
||||||||||||||||
| 2024 | 2023 | $ Change | % Change | |||||||||||||
| Revenues, net | $ | 16,667 | $ | 16,330 | $ | 337 | 2 | % | ||||||||
| Cost of Revenue | 12,657 | 11,883 | 774 | 7 | % | |||||||||||
| Gross Profit | $ | 4,010 | $ | 4,447 | $ | (437 | ) | (10 | )% | |||||||
| Gross Profit Margin | 24 | % | 27 | % | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general & administrative expenses | 20,430 | 3,670 | 16,760 | 457 | % | |||||||||||
| Total operating expenses | $ | 20,430 | $ | 3,670 | $ | 16,760 | 457 | % | ||||||||
| Income from operations | $ | (16,420 | ) | $ | 777 | $ | (17,197 | ) | (2,213 | )% | ||||||
| Other income (expense) | ||||||||||||||||
| Change in fair value of derivative liabilities | 61 | - | 61 | 100 | % | |||||||||||
| Interest income | 79 | 64 | 15 | 23 | % | |||||||||||
| Interest expense | (147 | ) | (123 | ) | (24 | ) | 20 | % | ||||||||
| Other income, net | 19 | (6 | ) | 25 | (417 | )% | ||||||||||
| Total other income (expense) | 12 | (65 | ) | 77 | (118 | )% | ||||||||||
| Income / (loss) before income taxes | (16,408 | ) | 712 | (17,120 | ) | (2,404 | )% | |||||||||
| Income tax (expenses) / benefit | 1,091 | (218 | ) | 1,309 | (600 | )% | ||||||||||
| Net income / (loss) | $ | (15,317 | ) | $ | 494 | $ | (15,811 | ) | (3,201 | )% | ||||||
| Less: Net income / (loss) attributable noncontrolling interest | (506 | ) | 73 | (579 | ) | (793 | )% | |||||||||
| Less: Net income attributable to redeemable noncontrolling interests | 10 | - | 10 | 100 | % | |||||||||||
| Net income / (loss) attributable to the shareholders’ of Aeries Technology, Inc. | $ | (14,821 | ) | $ | 421 | $ | (15,242 | ) | (3,620 | )% | ||||||
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Revenue, net
For the three months ended June 30, 2024, our revenue on a consolidated basis increased by $0.3 million or 2%, to $16.7 million from $16.3 million for the three months ended June 30, 2023. We experienced revenue growth of $3.3 million primarily due to the addition of new clients, which was offset by a $2.9 million decrease in revenue due to the ramp-down in our existing client engagements and the completion and closure of certain consulting projects.
Cost of Revenue
For the three months ended June 30, 2024, our cost of revenue increased by $0.8 million or 7%, to $12.7 million from $11.9 million for the three months ended June 30, 2023. The primary drivers of the increase included a $1.6 million increase in employee compensation and benefits, reflecting an expansion in client-serving headcount to support revenue growth. These cost increases were offset by a $0.9 million decrease in cost related to fees to external consultants.
Gross Profit
For the three months ended June 30, 2024, our gross profit decreased by $0.4 million or 10%, compared to the three months ended June 30, 2023. The lower gross profit was primarily due to flat revenue showing 0.3 million increase, against increase of $0.8 million in cost of revenue mainly due to the increased compensation costs and benefits offset by decrease in cost related to fees to external consultants.
Gross Profit Margin
For the three months ended June 30, 2024, our gross profit margin decreased by 300 basis points compared to the three months ended June 30, 2023. The decrease was primarily attributed to decrease in business from the project-based consulting business, which typically yield higher margins due to billing being based on fixed hourly rates.
Selling, general and administrative expenses
Selling, general and administrative expenses (“SG&A expenses”) increased by $16.8 million, or 457% to $20.4 million for the three months ended June 30, 2024, compared to $3.7 million for the three months ended June 30, 2023. This significant increase was primarily driven by a $11.4 million increase in stock-based compensation related expense, a $1.5 million increase in legal and professional charges related to the Business Combination, and a $1 million provision for expected credit loss on customer receivables. Additionally, employee compensation and benefits increased by $2.8 million due to the expansion of operations, which required increased hiring, resulting in increased personnel related costs, and travel expenses.
Total Other Income (expense), net
Total other income / (expense), net was $0.01 million for the three months ended June 30, 2024 compared to total other expense, net of $(0.07) million for the three months ended June 30, 2023, a $0.08 and 118% change.
Income tax expenses / (benefit)
Income tax expense / (benefit) for the three months ended June 30, 2024, was $(1.1) million, a $1.3 million or 600% decrease compared to provision of income taxes of $0.2 million for the three months ended June 30, 2023. The decrease was primarily due to significant increase in recognition of deferred tax benefit on losses in certain subsidiaries having a lower jurisdictional tax rates along with a reduction in taxable income resulting in lower current tax.
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Non-GAAP Financial Measures
We use non-GAAP financial information and believe it is useful to investors as it provides additional information to facilitate comparisons of historical operating results, identify trends in our underlying operating results and provide additional insight and transparency on how we evaluate the business. We use non-GAAP financial measures to budget, make operating and strategic decisions, and evaluate our performance. We have detailed the non-GAAP adjustments that we make in our non-GAAP definitions below. The adjustments generally fall within the categories of non-cash items, other than costs related to the Business Combination. We believe the non-GAAP measures presented herein should always be considered along with, and not as a substitute for or superior to, the related US GAAP financial measures. We have provided the reconciliations between the US GAAP and non-GAAP financial measures below, and we also discuss our underlying US GAAP results throughout the Management’s Discussion and Analysis of Financial Condition and Results of Operations section. The non-GAAP financial measures we present may differ from similarly captioned measures presented by other companies. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.
Adjusted EBITDA
We define Adjusted EBITDA as net income from operations before interest, income taxes, depreciation and amortization, further adjusted to exclude stock-based compensation, business combination-related costs, and changes in fair value of derivative liabilities. Adjusted EBITDA is a key performance indicator that we use to evaluate our operating performance and in making financial, operating, and planning decisions.
We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue for the reporting period.
We believe these non-GAAP measures are useful insight to investors by offering a clearer view of Aeries’ operating performance. This information is frequently utilized by securities analysts and other stakeholders as a measure of financial information and debt service capabilities, and it has been used by our management for internal reporting and planning procedures, including aspects of our consolidated operating budget and capital expenditures.
The following table provides a reconciliation from net income (US GAAP measure) to Adjusted EBITDA and Adjusted EBITDA margin (Non-GAAP measures) for the three months ended June 30, 2024, and 2023 (in thousands):
| Three Months Ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| Net income | $ | (15,317 | ) | $ | 494 | |||
| Income tax expense | (1,091 | ) | 218 | |||||
| Interest income | (79 | ) | (64 | ) | ||||
| Interest expenses | 147 | 123 | ||||||
| Depreciation and amortization | 374 | 327 | ||||||
| EBITDA | $ | (15,966 | ) | $ | 1,098 | |||
| Adjustments | ||||||||
| (+) Stock-based compensation | 12,746 | 1,374 | ||||||
| (+) Business Combination and transaction related costs | 3,682 | 430 | ||||||
| (+) Change in fair value of derivative liabilities | (61 | ) | - | |||||
| Adjusted EBITDA | $ | 401 | $ | 2,902 | ||||
| (/) Revenue | 16,667 | 16,330 | ||||||
| Adjusted EBITDA Margin | 2.4 | % | 17.8 | % | ||||
Some of the limitations of adjusted EBITDA include: it does not reflect (i) our cash expenditures or future requirements for capital expenditures or contractual commitments or foreign exchange gain/loss; (ii) changes in, or cash requirements for, working capital; (iii) significant interest expense or the cash requirements necessary to service interest or principal payments on our outstanding debt; (iv) payments made or future requirements for income taxes; and (v) cash requirements for future replacement or payment in depreciated or amortized assets; (vi) stock based compensation costs, (vii) Business Combination and transaction related costs, which represent non-recurring legal, professional, personnel and other fees and expenses incurred in connection with potential mergers and acquisitions related activities for the three months ended June 30, 2024, and Business Combination related costs for the three months related June 30, 2023, and (viii) change in fair value of derivative liabilities.
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Liquidity and Capital Resources
The accompanying condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. For the three months ended June 30, 2024, the Company has reported a net loss of $15.3 million. This may raise substantial doubt regarding the Company’s ability to continue as a going concern for at least 12 months from the date when these financial statements are available to be filed with the SEC.
The Company acquired approximately $8.7 million in cash shortly following the closing of the Business Combination. The outflow of cash since the closing is primarily attributed to payments of transaction expenses related to the Business Combination. In addition, pursuant to the FPAs entered in connection with the closing of the Business Combination, at the end of the contract period of one year under the FPAs, we may be required to pay the maturity consideration (approximately up to $8 million in cash or a number of Class A ordinary shares valued at $2.50 per share, at the option of the FPA holders) in respect of the FPA Shares held by the FPA holders. We may not have sufficient cash from operations or cash reserves to pay the maturity consideration in the event the FPA holders elect to receive the maturity consideration in cash. Therefore, we may need to rely on our available debt capacity to pay some or all of the maturity consideration. Payment of the maturity consideration in cash would reduce the amount of cash on hand or available debt capacity to fund our operations, which could adversely affect our ability to make necessary investments, and, therefore, could affect our results of operations.
Our working capital needs are primarily to finance our payroll and other administrative and information technology expenses in advance of the receipt of accounts receivable, as well as increased expenses due to being a public reporting company. Our primary capital requirements include expanding existing operations to support our growth, financing acquisitions and enhancing capabilities, including building certain digital solutions.
The Company has historically financed its operations and expansions with cash generated from operations, the revolving credit facility from Kotak Mahindra Bank, and loans from related parties. As of June 30, 2024, the Company had $4.2 million in cash and cash equivalents, and the Company also generated overall positive cash flows totalling $2.1 million for the three months ended June 30, 2024. Management expects to have sufficient cash from the operations, cash reserves and debt capacity for the next 12 months and for the foreseeable future to finance our operations, our growth and expansion plans. In addition, we may attempt to raise additional funds through public or private debt or equity financing. In April 2024, we received net proceeds of $4.68 million by selling 2,261,778 newly issued Class A ordinary shares in a private placement at a purchase price of $2.21 per share. Also, we are in ongoing negotiations with relevant parties to potentially restructure the current liabilities into equity or long-term liabilities. The Company is hopeful of accomplishing its objectives through these measures in the anticipated time frame and also expects that the funds available through the above-mentioned arrangements will be sufficient to alleviate the doubts about the Company’s ability to continue as a going concern. However, there is no guarantee that these measures will achieve the desired objectives, and these is no assurance that we may raise additional financing on terms acceptable to us or at all.
Cash Flow for the Three Months ended June 30, 2024, and 2023
The following table presents net cash provided by operating activities, investing activities and financing activities for the three months ended June 30, 2024, and 2023 (in thousands):
| Three Months Ended June 30, |
||||||||||||
| 2024 | 2023 | $ Change | ||||||||||
| Cash at the beginning of period | $ | 2,084 | $ | 1,131 | $ | 953 | ||||||
| Net cash (used in) / provided by operating activities | (1,720 | ) | 101 | (1,821 | ) | |||||||
| Net cash used in investing activities | (608 | ) | (566 | ) | (42 | ) | ||||||
| Net cash provided by financing activities | 4,385 | 1,006 | 3,379 | |||||||||
| Effects of exchange rates on cash | 56 | (8 | ) | 64 | ||||||||
| Cash at the end of period | $ | 4,197 | $ | 1,664 | $ | 2,533 | ||||||
36
Analysis of Cash Flow Changes between the three months ended June 30, 2024, and 2023
Operating Activities - The decrease of $1.8 million in net cash used in operating activities for the three months ended June 30, 2024 was primarily due to decrease in net income by $15.8 million as a result of higher cost of revenue and selling, general and administrative expenses; partially offset by increase in adjustment by $11.1 million mainly pertaining to stock-based compensation, and increase due to better working capital management by $2.9 million.
Investing Activities - Net cash used in investing activities during the three months ended June 30, 2024 was $0.6 million, of which $0.4 million was used for the purchase of property and equipment and $0.3 million was used for the issuance of loans to affiliates, offset by $0.04 million generated from loan repayments received from affiliates.
Net cash used in investing activities during the three months ended June 30, 2023 was $0.6 million, of which $0.3 million was used for the purchase of property and equipment and $0.7 million was used for the issuance of loans to affiliates, offset by $0.4 million generated from loan repayments received from affiliates.
Financing Activities - Net cash provided by financing activities during the three months ended June 30, 2024 was $4.4 million, primarily from proceeds of the PIPE transaction of $4.7 million, and proceeds from long-term debt of $0.2 million; offset by the repayment of short-term debt of $0.2 million, payment of insurance financing liability of $0.2 million and payment of finance lease obligation of $0.1 million.
Net cash provided by financing activities during the three months ended June 30, 2023, was $1 million, primarily due to net proceeds from short-term borrowings of $1.2 million, proceeds from long-term debt of $0.5 million; partially offset by payment of deferred transaction costs of $0.4 million and payment of finance lease obligations and long-term debt of $0.3 million.
Off-balance Sheet Arrangements
As of June 30, 2024 and currently, we do not have any material off-balance sheet arrangements, other than as disclosed in “Commitments and Contingencies” in the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
New Accounting Pronouncements
See “Summary of Significant Accounting Policies”, in the notes to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Application of Significant Accounting Policies and Estimates
General
The following is a summary of the basis of preparation and significant accounting policies which have been applied in the preparation of the accompanying condensed consolidated financial statements. The accounting policies have been applied consistently in preparation of these condensed consolidated financial statements. A full description of significant accounting policies is provided in our consolidated carve-out financial statements for the fiscal years ended March 31, 2024 and 2023.
Critical Accounting Policies and Management Estimates
Our discussion and analysis of financial condition and results of operations are based upon our condensed consolidated financial statements included elsewhere in this Quarterly Report. The preparation of our condensed consolidated financial statements in accordance with US GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Our critical accounting policies are those that materially affect our condensed consolidated financial statements and involve difficult, subjective or complex judgments by management. A thorough understanding of these critical accounting policies is essential when reviewing our condensed consolidated financial statements. We believe the current assumptions, judgments and estimates used to determine amounts reflected in our condensed consolidated financial statements are appropriate; however, actual results may differ under different conditions. This discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included in this document. Refer to “Critical Accounting Policies and Estimates” contained in Part II, Item 7 of our annual report on Form 10-K for the year ended March 31, 2024 (the “2024 Form 10-K”) for a complete discussion of our critical accounting estimates. There have been no material changes to the Company’s critical accounting estimates since the 2024 Form 10-K.
37
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required to provide this information.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the fiscal quarter ended June 30, 2024. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2024, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting described below.
Material Weaknesses in Internal Control Over Financial Reporting
On December 11, 2023, the Company concluded that it should restate certain of its previously issued carve-out consolidated financial statements of AARK and subsidiaries to correct the misreporting of basic and diluted earnings per share and number of issued and paid-up common stock, resulting from one of the material weaknesses described below.
In connection with this restatement, our management identified material weaknesses in internal control over financial reporting that are primarily attributable to improper segregation of duties, inadequate processes for timely recording of significant events and material transactions, and inadequate design and implementation of information and communication policies, procedures, and monitoring activities.
Remediation Plan
In light of these facts, our management, including our Chief Executive Officer and Chief Financial Officer, is in the process of implementing processes and controls and other post-closing procedures and has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting described above, the unaudited interim condensed consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with US GAAP.
To address our material weaknesses, we are improving our processes of reviewing financial statements, increasing our communication with third-party service providers and implementing additional procedures to ensure that the review of the Company’s financial statements is supported by sufficient documentation to determine accuracy. We will not be able to fully remediate these material weaknesses until these steps have been completed and the controls have been operating effectively for a sufficient period of time.
Inherent Limitations on Effectiveness of Controls
While management is working to remediate the material weaknesses, there is no assurance that these remediation efforts, when economically feasible and sustainable, will successfully remediate the identified material weaknesses. If we are unable to establish and maintain an effective system of internal control over financial reporting, the reliability of our financial reporting, investor confidence in us and the value of our Class A ordinary shares could be materially and adversely affected and the Company could be subject to sanctions or investigations by the SEC or other regulatory authorities. Effective process and controls over financial reporting is necessary for us to provide reliable and timely financial reports and are designed to reasonably detect and prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. For as long as we are a “smaller reporting company” under the U.S. securities laws, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404. An independent assessment of the effectiveness of internal control over financial reporting could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal control over financial reporting could lead to financial statement restatements and require us to incur the expense of remediation.
38
Moreover, we do not expect that process and controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. The failure of our control systems to prevent error or fraud could materially adversely impact us.
Changes in Internal Control Over Financial Reporting
In light of the material weaknesses described above, we are taking the actions described above to remediate such material weaknesses. Except as described above, there was not any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may be involved in various proceedings and litigation, claims and other legal matters arising in the ordinary course of business. Some of these claims, lawsuits, and other proceedings may involve highly complex issues that are subject to substantial uncertainties, and could result in damages, fines, penalties, nonmonetary sanctions, or relief. Management is not currently aware of any material pending legal proceedings, except for ordinary routine litigation incidental to the business, in which we or any of our subsidiaries are involved, or where our property is subject to such proceedings.
ITEM 1A. RISK FACTORS.
Summary Risk Factors
A description of the risk factors associated with our business is contained in the “Risk Factors” section of the 2024 Form 10-K. There have been no material changes to our Risk Factors as therein previously reported.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Unregistered Sales of Equity Securities
The following list sets forth information as to all of our securities sold in the quarter ended June 30, 2024 that were not registered under the Securities Act.
Recent Private Placement
On April 8, 2024, the Company entered into a Share Subscription Agreement with an institutional accredited investor, pursuant to which the Company agreed to sell an aggregate of 2,261,778 newly issued Class A ordinary shares at a purchase price of $2.21 per share; provided, that the issuance of delivery of the shares thereunder shall be subject to a 4.99% beneficial ownership limitation as describe in the agreement, as elected by the investor. At the closing of the private placement, the Company received net proceeds of approximately $4.68 million, after deducting a 6.5% commission paid to a placement agent. The issuance of the shares to the investor pursuant to the Share Subscription Agreement has been conducted in reliance on an exemption from registration provided by Section 4(a)(2) of the Securities Act.
Issuance of Adjustment Shares
In December 2023, the Company settled vendor balances amounting to $0.9 million owed to certain vendors by issuing 361,338 Class A ordinary shares. If the VWAP of the Class A ordinary shares over the three trading days immediately preceding the agreement date is higher than the VWAP over the three trading days immediately preceding the six-month anniversary from the agreement date, additional Class A ordinary shares of the Company would need to be issued for the difference (the “Adjustment Shares”). Following the six-month anniversary, the Company issued 54,074 Adjustment Shares to the vendors, in reliance on an exemption from registration provided by Section 4(a)(2) of the Securities Act.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
40
ITEM 5. OTHER INFORMATION.
| (a) | None. |
| (b) | None. |
| (c) | Rule 10b5-1 Trading Plans. |
During the quarter ended June 30, 2024,
ITEM 6. EXHIBITS
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| Exhibit | Incorporation by Reference | |||||||||
| Number | Exhibit Title | Form | File No. | Exhibit | Filing Date | |||||
| 3.1 | Amended & Restated Memorandum and Articles of Association of Aeries Technology, Inc.. | 8-K | 001-40920 | 3.1 | 11/13/2023 | |||||
| 10.1 | Share Subscription Agreement, dated April 8, 2024, by and between Aeries Technology Inc. and Oyster Bay Fund Limited. | 8-K | 001-40920 | 10.1 | 4/12/2024 | |||||
| 10.2† | Amendment No. 1 to the 2023 Equity Incentive Plan. | 8-K | 001-40920 | 10.1 | 6/11/2024 | |||||
| 31.1 | Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith | ||||||||
| 31.2 | Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith | ||||||||
| 32.1* | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Furnished herewith | ||||||||
| 32.2* | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Furnished herewith | ||||||||
| 101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | Filed herewith | ||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | Filed herewith | ||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | Filed herewith | ||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | Filed herewith | ||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | Filed herewith | ||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | Filed herewith | ||||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). | Filed herewith | ||||||||
| † | Indicates management contract or compensatory plan or arrangement. |
| * | The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in such filing. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AERIES TECHNOLOGY, INC. | ||
| Date: October 15, 2024 | By: | /s/ Rajeev Nair |
| Name: | Rajeev Nair | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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