美国
证券交易委员会
华盛顿特区20549
表格
(MARk ONE)
截至2024年6月30日季度结束
从__________至过渡期 __________
委员会文件号码：
（根据其组织宪章规定的正式名称）
| (依据所在地或其他管辖区) | (国税局雇主识别号码) | |
| 的注册地或组织地点) | 识别号码) |
| (总部办公地址) | （邮政编码） |
(注册人电话号码，包括区号)
无可奉告
(如与上次报告不同，列明前名称、前地址及前财政年度)
根据法案第12(b)条登记的证券：
| 每种类别的名称 | 交易标的（s） | 每个注册交易所的名称 | ||
| 辉瑞公司面临数起分开的诉讼，这些诉讼仍在进行中，需等待第三项索赔条款的裁决。2023年9月，我们与辉瑞公司同意合并2022和2023年的诉讼，并将审判日期从2024年11月推迟至2025年上半年，具体时间将由法院确定。 股票市场 | ||||
| 辉瑞公司面临数起分开的诉讼，这些诉讼仍在进行中，需等待第三项索赔条款的裁决。2023年9月，我们与辉瑞公司同意合并2022和2023年的诉讼，并将审判日期从2024年11月推迟至2025年上半年，具体时间将由法院确定。 股票市场 |
请以勾选表示，登记者（1）是否在过去12个月内按照证券交易法第13或15(d)条的规定提交了所有应提交的报告（或对于登记者必须提交这些报告的较短期间，以及（2）是否在过去90天内一直受到此类提交要求的规定。
请勾选指示序号，证明登记者已依照S-T法规第232.405节（本章节第232.405条）的第405条款规定，在过去12个月内（或者在要求提交此类档案的较短期间内）已经递交了每一个互动数据档案。
请勾选是否公司是大型加速发行人、加速发行人、非加速发行人、较小的报告公司或新兴成长型公司。请参阅《交易所法》第120亿2条对「大型加速发行人」、「加速发行人」、「较小的报告公司」和「新兴成长型公司」的定义。
| 大型加速归档人 | ☐ | 加速归档人 | ☐ |
| ☒ | 小型报告公司 | ||
| 新兴成长型企业 |
若为新兴成长型公司，请勾选该选项以指示公司选择不使用依据第13(a)条的《交易所法》提供的任何新的或修订的财务会计标准的延长过渡期进行遵循。
请标记是否登记申报人为外壳公司（根据《交易所法》第120亿2章之定义）。是 ☐
截至2024年10月15日，已经有 A类普通股，面值$0.0001，以及1股V类普通股，面值$0.0001，已核发并流通。
AERIES科技公司, INC.
表格10-Q
截至2024年6月30日季度结束
目 录
i
关于前瞻性声明的注意事项
本报告中的某些陈述可能构成《联邦证券法》的「前瞻性陈述」。我们的前瞻性陈述包括但不限于，关于我们或我们管理团队对未来期望、希望、信念、意图或策略的陈述。此外，任何提及未来事件或情况的投影、预测或其他描述，包括任何基本假设的陈述，均为前瞻性陈述。「预期」、「相信」、「继续」、「可能」、「估计」、「期望」、「打算」、「可能」、「未来的」、「有潜力的」、「预测」、「计划」、「可能的」、「潜力」、「预测」、「应该」、「将」等类似表述可能识别出前瞻性陈述，但没有这些字眼并不意味著该陈述不是前瞻性的。
本报告中所载的前瞻性陈述基于目前对未来发展及其对我们可能产生的影响的期望和信念。 我们无法保证对我们产生影响的未来发展将是我们预期的。 这些前瞻性陈述涉及多个风险、不确定因素（其中一些超出我们的控制）或其他假设，可能导致实际结果或表现与这些前瞻性陈述所表达或暗示的实际结果或表现有重大不同。 其他因素等可能导致实际结果和事件时间与前瞻性陈述中表达的预期结果或其他期望存在重大差异：
| ● | Aeries的市场机遇； | |
| ● | 我们能否保持纳斯达克上级普通股和认股权证的上市地位，以及这些证券的潜在流动性和交易； | |
| ● | 我们是否能够认识到业务合并预期的好处，这可能受到竞争等因素的影响，我们能否有利可图地实现增长和管理增长，并保留我们的关键员工； | |
| ● | 我们的业务拓展努力，以最大限度地发挥我们的潜在价值，并保留和扩大我们的客户基础； | |
| ● | 我们对于费用、未来营业收入、资本需求和额外融资需求的估算； | |
| ● | 我们的财务表现; | |
| ● | 我们能否继续作为一直营业的实体； | |
| ● | 我们现有的现金及现金等价物足以支付我们的营业费用和资本支出要求； | |
| ● | 我们成功保留或招聘高级职员、主要员工或董事，或对这些职位进行必要的更改； | |
| ● | 美国和外国司法管辖区适用法律或法规的变化； | |
| ● | 我们开发和保持有效内部控制的能力； | |
| ● | 与网络安全概念和数据隐私相关的风险； | |
| ● | 一般经济和政治环境，如俄乌冲突和以哈莫斯冲突的影响，以及COVID-19爆发等大流行病，经济衰退，利率期货，通货膨胀，本地和全国选举，燃料价格，国际货币波动，外交和贸易关系变化，政治不稳定，战争或恐怖主义行为以及自然灾害；和 | |
| ● | 本报告中讨论的其他因素。 |
如果这些风险或不确定性之一或多个实现，或者我们的任何假设证明不正确，实际结果可能与这些前瞻性陈述中所预测的结果在实质方面有所不同。这些风险和不确定性中的一些在未来可能会被放大，而且可能会有我们目前认为不重大或未知的其他风险。无法预测或识别所有此类风险。我们不承担任何义务来更新或修订任何前瞻性陈述，除非根据适用的证券法律可能需要。
ii
第一部分 ——财务信息中期报告
第1项。基本报表简明合并财务报表
利瑞科技有限公司及其附属公司
缩表合并资产负债表
截至2024年6月30日和2024年3月31日
(以千美元计算，股份和每股价位除外)
| |
|
六月30日, 2024 |
|
|
三月31日, 2024 |
| ||
| (未经查核) | ||||||||
| 资产 | ||||||||
| 流动资产: | ||||||||
| 现金及现金等价物 | $ | $ | ||||||
| 应收帐款，扣除$3,934和$3,564的折让金额，分别截至2024年6月30日和2023年12月31日。 |
||||||||
| 预付费用及其他流动资产，扣除$准备金， |
||||||||
| 全部流动资产 | $ | $ | ||||||
| 物业及设备，扣除折旧后净值 | ||||||||
| 经营租赁资产权利 | ||||||||
| 递延税款贷项 | ||||||||
| 长期投资，减除1,006,029元的呆帐 |
||||||||
| 其他资产，减除1,006,029元的呆帐 |
||||||||
| 资产总额 | $ | $ | ||||||
| 负债、可赎回的非控制权益和股东权益（赤字） | ||||||||
| 流动负债： | ||||||||
| 应付账款 | $ | $ | ||||||
| 应计的酬劳及相关福利，流动 | ||||||||
| 营运租赁负债，流动 | ||||||||
| 短期借款 | ||||||||
| 看跌采购协议买方选权负债 | ||||||||
| 其他流动负债 | ||||||||
| 流动负债合计 | $ | $ | ||||||
| 长期负债 | ||||||||
| 营业租赁负债，非流动 | ||||||||
| 衍生权证负债 | ||||||||
| 递延所得税负债 | ||||||||
| 其他负债 | ||||||||
| 总负债 | $ | $ | ||||||
| 合同和应付之可能负债（注10） | ||||||||
| 可赎回非控制权益 | ||||||||
| 股东权益（赤字） | ||||||||
| 优先股，$ 面额为0.0001； 授权股份为 已发行或流通 | ||||||||
| A类普通股，每股 $ 面额为0.0001； 授权股份为 截至2024年6月30日，已发行流通股本为 截至2024年3月31日，已发行并流通的股份数。 | ||||||||
| V级普通股，$ 面额为0.0001； 已许可、发行并流通的股份 | ||||||||
| 净股东投资与额外已实收资本 | ||||||||
| 累积其他全面损失 | ( |
) | ( |
) | ||||
| 累积亏损 | ( |
) | ( |
) | ||||
| Total Aeries Technology, Inc.股东资本赤字 | $ | ( |
) | $ | ( |
) | ||
| 非控制权益 | ||||||||
| 股东权益总额 (赤字) | ( |
) | ||||||
| 总负债、可赎回非控制权益和股东权益（赤字） | $ | $ | ||||||
相关附注是这些基本报表的一个不可或缺的部分。
1
利瑞科技有限公司及其附属公司
综合营业损益汇缩陈述
截至2024年6月30日和2023年6月30日的三个月。
(以千美元计算，股份和每股价位除外)
(未经查核)
| 结束于三个月的期间 6月30日 2024 |
结束于三个月的期间 6月30日 2023 |
|||||||
| 净收益 | $ | $ | ||||||
| 营业成本 | ||||||||
| 毛利润 | ||||||||
| 营业费用 | ||||||||
| 销售、一般及行政费用 | ||||||||
| 营业费用总计 | ||||||||
| 营业收入 | ( |
) | ||||||
| 其他收入/（费用） | ||||||||
| 看跌期权负债公允价值变动 | ( |
) | ||||||
| 衍生权证负债公允价值变动 | ||||||||
| 利息收入 | ||||||||
| 利息费用 | ( |
) | ( |
) | ||||
| 其他收益/(费用)，净额 | ( |
) | ||||||
| 其他收益/(费用)，净额 | ( |
) | ||||||
| 营业税前利润（亏损） | ( |
) | ||||||
| 所得税支出/利益 | ( |
) | ||||||
| 净利润 / （亏损） | $ | ( |
) | $ | ||||
| 减：归属于非控制权益的净利润（亏损） | ( |
) | ||||||
| 减：归属于可赎回非控制权益的净利润 | ||||||||
| 归属于Aeries Technology, Inc.股东的净利润（亏损） | $ | ( |
) | $ | ||||
| 普通A股加权平均流通股数，基本和稀释(1) | ||||||||
| 普通A股基本和稀释每股净亏损(1) | $ | ) | ||||||
| (1) |
相关附注是这些基本报表的一个不可或缺的部分。
2
利瑞科技有限公司及其附属公司
综合收益/损益简明合并财务报表
截至2024年6月30日和2023年6月30日的三个月。
(以千美元计算，股份和每股价位除外)
(未经查核)
| 结束于三个月的期间 六月三十日， 2024 |
结束于三个月的期间 六月三十日， 2023 |
|||||||
| 净利润 / （亏损） | $ | ( |
) | $ | ||||
| 其他全面收入/(损失)，税后 | ||||||||
| 外汇转换调整 | ( |
) | ||||||
| 员工福利计划义务未被认可的精算利益/(损失) | ( |
) | ( |
) | ||||
| 其他综合损失，税后净数。 | ( |
) | ( |
) | ||||
| 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 | $ | ( |
) | $ | ||||
附注是这些未经审计的简明综合财务报表的一个组成部分。
3
利瑞科技有限公司及其附属公司
可赎回款项的简明综合变动表
非控股权益和股东权益（资本）
截至2024年6月30日和2023年6月30日的三个月。
(以美元千位计，除股份和每股金额外)
(未经查核)
| 可赎回的 | 普通A类股份/ | 普通股 | 净值 股东的 投资 及 其他 |
其他未分配盈余 | 总Aeries Technology, Inc. | 总计 股东权益 |
||||||||||||||||||||||||||||||||||||||
| 非控制权 | 普通股 | V类 | 实收资本 | 累计 | 全面性 | 股东 | 非控制权益 | 股权 | ||||||||||||||||||||||||||||||||||||
| 利息 | 股份 | 金额 | 股份 | 金额 | 资本 | 赤字 | 损失 | 赤字 | 利息 | （赤字） | ||||||||||||||||||||||||||||||||||
| 截至2024年4月1日的结余 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||||||||||||||||
| 股份交易前期间的净亏损 | - | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| 股份交易前综合亏损的其他项 | - | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| 根据股份交易协议发行A类普通股 | - | ( |
) | |||||||||||||||||||||||||||||||||||||||||
| 与定向增发相关的A类普通股发行 | - | |||||||||||||||||||||||||||||||||||||||||||
| 通过发行A类普通股解决应付账款 | - | |||||||||||||||||||||||||||||||||||||||||||
| 股票给予报酬 | - | |||||||||||||||||||||||||||||||||||||||||||
| 股份交易后期间的净利润/(亏损) | - | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| 该期间其他全面亏损后发帖交易所分享 | ( |
) | - | - | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
| 2024年6月30日的结余 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||||
普通股类A/ 普通股 |
净值 股东的投资和额外 已实收资本 |
保留收益 | 赤字 其他 Cumulative effect of the adoption of ASU 2023-08 |
总计
Aark 新加坡有限公司的 股东的 |
非控制权益 | 总计 股东的 |
||||||||||||||||||||||||||
| 分享* | 金额 | 资本 | 盈余 | 损失 | 股东权益 | 利息 | 股东权益 | |||||||||||||||||||||||||
| 结余 截至2023年4月1日 | $ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
| 根据ASC 326条款进行的过渡期调整，税后净额 | - | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||
| 调整后截至2023年4月1日的余额 | ( |
) | ||||||||||||||||||||||||||||||
| 本期净收益 | - | |||||||||||||||||||||||||||||||
| 其他 全面亏损 | - | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||
| 股票-based 补偿 | - | |||||||||||||||||||||||||||||||
| 净股东投资变动 | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
| 截至2023年6月30日的结余 | $ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
附注是这些未经审计的简明综合财务报表的一个组成部分。
4
利瑞科技有限公司及其附属公司
简明财务报表现金流量表
截至2024年6月30日和2023年的三个月
(以美元千位计算，除股份和每股金额外)
(未经查核)
| 结束于三个月的期间 6月30日 2024 |
结束于三个月的期间 6月30日 2023 |
|||||||
| 来自经营活动的现金流量 | ||||||||
| 净利润 / （亏损） | $ | ( |
) | $ | ||||
| 调整以协调净利润/（亏损）与营运活动中使用的/提供的净现金： | ||||||||
| 折旧和摊销费用 | ||||||||
| 以股份为基础之报酬支出 | ||||||||
| 递延税（利益）/费用 | ( |
) | ||||||
| 长期投资应收收入 | ( |
) | ( |
) | ||||
| 预期信用损失准备 | ||||||||
| 出售房地产和设备之盈利 | ( |
) | ||||||
| 其余余额撇清 | ( |
) | ||||||
| 看跌期权负债公允价值变动 | ( |
) | ||||||
| 衍生权证负债公允价值变动 | ||||||||
| 发行股份损失抵销应付帐款 | ||||||||
| 未实现的汇兑（利得）/ 损失 | ( |
) | ||||||
| 营运资产和负债的变化： | ||||||||
| 应收帐款 | ( |
) | ||||||
| 预付费用及其他流动资产 | ( |
) | ( |
) | ||||
| 经营租赁资产权利 | ( |
) | ||||||
| 其他资产 | ( |
) | ( |
) | ||||
| 应付账款 | ( |
) | ||||||
| 应计的酬劳及相关福利，流动 | ( |
) | ( |
) | ||||
| 其他流动负债 | ||||||||
| 营业租赁负债 | ( |
) | ||||||
| 其他负债 | ||||||||
| 营运活动产生的净现金（流出）/流入 | ( |
) | ||||||
| 来自投资活动的现金流量 | ||||||||
| 购置财产和设备 | ( |
) | ( |
) | ||||
| 物业和设备的出售 | ||||||||
| 向联属公司发放贷款 | ( |
) | ( |
) | ||||
| 收取向联属公司的贷款款项 | ||||||||
| 投资活动中使用的净现金 | ( |
) | ( |
) | ||||
| 财务活动中的现金流量 | ||||||||
| 短期借款的净收益 | ( |
) | ||||||
| 支付保险融资负债 | ( |
) | ||||||
| 长期负债的筹资 | ||||||||
| 还债长期借款 | ( |
) | ( |
) | ||||
| $ | ( |
) | ( |
) | ||||
| 支付递延交易成本 | ( |
) | ( |
) | ||||
| 净股东权益的净变动 | ( |
) | ||||||
| 发行A类普通股的收入，扣除发行成本后的净额 | ||||||||
| 筹资活动提供的净现金 | ||||||||
| 汇率变动对现金及现金等价物的影响 | ( |
) | ||||||
| 现金及现金等价物净增加 | ||||||||
| 期初现金及现金等价物余额 | ||||||||
| 本期现金及现金等价物余额 | $ | $ | ||||||
| 补充现金流量披露： | ||||||||
| 支付利息的现金 | $ | $ | ||||||
| 支付的现金所得税，扣除退款后净额 | $ | $ | ||||||
| 补充揭露与非现金投资及融资活动有关之事项： | ||||||||
| 包括应付帐款和其他流动负债中未支付的递延交易成本 | $ | $ | ||||||
| 按融资租赁义务取得的设备 | $ | $ | ||||||
| 包括应付帐款中的财产和设备购买 | $ | $ | ||||||
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
准备基础
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
这些简明综合财务报表是在2023年5月24日之前按照拆分方式从AARk的会计记录中提取的，包括截至2022年12月31日的中期期间，即这些简明综合财务报表不包括与合并协议根据的与ATI无关的金融科技和投资业务的财务结果。这些简明综合财务报表是从Aark Singapore Pte. Ltd.、Aeries Technology Group Business Accelerators Pvt Ltd.（ATGBA）、其附属公司和受控信托的历史会计记录中衍生出来的。仅包括与管理咨询业务活动明确可识别的那些资产和负债在公司的简明综合资产负债表中。公司的简明综合损益表和综合收益表包括所有管理咨询业务活动的营业收入和费用，排除了排除的金融科技和投资业务活动的某些费用的分摊。这些分摊是基于管理认为合理的方法进行的；然而，由拆分实体取消认的金额未必代表若排除的业务独立于拆分实体经营时将反映在简明综合财务报表中的金额。
拆分交易前期的综合基本报表不包括以下内容： (a) 仅用于资助AARk投资业务所进行的活动的现金及现金等价物， (b) 与金融科技和投资业务融资相关的长期债务及相关应付利息/费用， (c) 金融科技和投资业务相关的应收关联方款项， (d) 投资业务所进行的投资， (e) 金融科技业务的交易及其他应收款项，和 (f) 归因于金融科技和投资业务的营业收入、销售成本、其他收入、咨询费用、银行手续费和扣缴税款，以及被排除业务某些费用的分配；这些分配基于管理层认为合理的方法进行；然而，AARk否认的金额未必代表若被排除的业务独立于AARk经营时将反映在综合基本报表中的金额。
8
基本报表的简明综合损益表和简明综合资产负债表之间的分配差异，于基本报表的「净股东投资及资本公积」部分体现在权益中。
非控制权益代表公司未拥有的股权，并记录于公司拥有少于100%股权的简明合并实体中。当母公司保留其控制权时，对母公司所有权益的变动将被视为股权交易。
拆股交易后的时期。
从2023年5月25日开始至2024年6月30日止，在金融科技和投资业务分拆后，ATI的简明综合基本报表已根据Aark Singapore Pte. Ltd.、ATGBA及其子公司和受控信托的财务记录，在简明综合基本报表的基础上准备。
新兴成长公司
该公司是一家“新兴成长型公司”，根据证券法第2(a)条的定义，受到2012年《启动我们业务创业法案》（“JOBS Act”）的修改，该公司可以利用某些豁免措施，避开其他公开公司适用但新兴成长型公司不必遵守的各种报告要求，包括但不限于不需要遵守《萨班斯-奥克斯利法案》第404条的审计保证要求，减少在其定期报告和代理声明中对高管薪酬的披露义务，以及豁免对高管薪酬进行不具约束力意见投票和股东批准未经批准的任何黄金降落伞支付要求。
此外，JOBS法案第102(b)(1)条款豁免新成长公司须遵守新制定或修订的财务会计准则，直到私人公司（即那些尚未生效证券法登记声明或没有证券在交易所登记的公司）必须遵守新制定或修订的财务会计准则。JOBS法案规定，新成长公司可以选择退出延长过渡期并遵守适用于非新成长公司的要求，但一旦选择退出，则无法撤回。公司选择不退出该延长过渡期，这表示当制定或修订准则对公开公司或私人公司有不同的应用日期时，作为新兴增长公司的公司可以在私人公司采纳新制定或修订的准则时采纳新制定或修订的标准。这可能会使得比较公司的简明合并财务报表与另一家既非新兴增长公司也没有选择退出使用延长过渡期的公开公司变得困难或不可能，因为所使用的会计准则可能存在潜在的差异。
经营概念
附录的未经审核的简明合并基本报表是使用持续经营基础会计方法准备的，该方法预期资产的实现和偿还业务正常进行中的债务。报告的持续经营基础假设公司在这些基本报表发布后的一年内继续运作，并能够实现其资产并在正常业务过程中履行其债务和承诺。
截至2024年6月30日止三个月，公司已报告净损失。这可能对公司在这些基本报表可通过提交美国证券交易委员会之日起至少12个月内能否持续营业构成重大疑虑。截至2024年6月30日，公司拥有现金及现金等价物余额 $
公司过去通常是通过从业务中产生的现金、从Kotak Mahindra 银行的循环信贷和来自相关方的贷款来为其业务和扩张提供资金。管理层预期将来12个月以及可预见的未来，将有足够的现金来源、现金储备和债务能力来资助我们的业务、成长和扩张计划。
9
公司继续作为持续经营体之能力，取决于成功执行我们的减灾计划等因素，其中包括：(i)从现有或新的信贷安排筹集额外的所有基金类型、(ii)通过FPAs或私下配售筹集资金，以及(iii)将目前的负债重组为权益或长期负债。公司希望通过这些措施在预期的时间范围内达成其目标，并且预期透过上述安排可获得的资金将足以消除有关公司持续经营体能力的怀疑。合并基本报表未包括任何调整，关于已记录资产的收回或负债的分类，如果公司无法作为持续经营体，可能需要进行调整。
这些基本报表是根据持续营运基础来准备的，假设公司将继续经营可预见的未来并能够在业务正常运作过程中实现其资产并偿付其负债。
估计的使用
根据US GAAP，编制简明综合财务报表需要管理层进行影响简明综合财务报表日期资产和负债金额及报告营业收入和费用数额的估计和假设。受这些估计和假设影响的重要项目包括但不限于营业收入确认、信用损失准备、以股份为基础的薪酬、FPA看跌期权负债和私人认股权负债的公平估值、固定资产和设备的有用寿命、所得税会计、用于营运租赁负债和使用权资产的增量借贷利率的确定、与员工福利相关的义务以及财务报表的割离，包括资产、负债和费用的分配。管理层认为其依赖的估计和判断是合理的，这些估计和判断是根据公司当时可得到的信息作出的。实际结果可能会有所不同。
板块报告
该公司营运为一个营运部门。该公司的首席营运决策者是其首席执行官，他检视以综合基础呈现的财务资讯，以作营运决策、评估财务表现和分配资源之用。
预先购买协议
2023年11月3日和2023年11月5日，WWAC与Sandia Investment Management LP、sea Otter Trading, LLC、YA II PN, Ltd和Meteora Capital Partners, LP（统称「FPA持有人」）签订了一份场外交易股权预付转让协议。同时还与FPA持有人签署了一份认购协议（「认购协议」），用于通过新增股份发行或从现有持有人购买股份（「回收股份」）来认购FPA持有人持有的底层FPA股份。提及FPAs和认购协议已被分开核算。
FPAs条款规定新发行 A类普通股股份给FPA持有人以赎回价（即每股10.69美元），并通过赎回逆转购买 循环股份。 ATI将从FPA持有人处收取约3,711,667股的发行股份，该股份被视为提前支付给FPA持有人，涉及履约转期合同。 根据FPA，ATI有义务支付预付款额为美元
| ● | $ |
| ● | $ |
10
在一年的合同期限结束时，对于FPA持有人持有的每一股未售出的股份，ATI有责任支付给FPA持有人一笔金额$。
由FPA持有人持有的可选终止权使预付转股契约在经济上类似于一种具有FPA持有人权利的写看跌期权，有权将所有或部分普通A类股票出售给ATI。 ATI在12个月到期期间有权选择把预付款退还或基础股票交还，而FPA持有人将根据ATI股价的变动情况自行决定。 ATI有权在12个月到期期间选择要求预付款退还或基础股票，而FPA持有人将根据ATI股价的波动情况自行决定。
2024年4月8日，公司完成了一笔公开股本私人投资（PIPE）交易，当时A类普通股的报价约为每股2.21美元。公司与Sandia Investment Management LP、海獭交易商LLC、YA II PN有限公司和Meteora Capital Partners, LP（合称「FPA持有人」）签订了预先购买协议。这些协议包含了一项价格重设功能，可根据特定的预定条件进行股价调整，包括由PIPE交易触发的条件。截至报告日期，此价格重设功能已启动，导致场外交易（OTC）股权预付协商交易的新股价为每股2.21美元。
这项调整对初次记录在资产负债表上的衍生负债的公允价值有影响。未来的公允价值波动将会反映在收益中。更多详细资讯，请参考附注13：公允价值衡量。
金融性资产包（FPAs）由两个独立的金融工具组成，其会计处理如下：
| 1) | 总预付款项为$42,760（「预付款项金额」），包括上述讨论的$3,083的净现金流出。预付款项金额已被列入负债中，以反映整体安排的实质，即再购股票的净回购和根据订阅协议向FPA持有人出售新发行股票的情况，而没有收到$39,678的基础交易对象。 |
| 2) | 「FPA看跌期权」包括实质上书面的看跌期权和预期到期考虑。FPA看跌期权是一项衍生工具，公司按照ASC 480-10记录为负债并以公平价值计量。该工具需在每个资产负债表日进行重新计量，公平价值变动则在简明综合损益表中予以确认。请参见附注13。 |
衍生金融工具和FPA看跌期权负债
公司根据ASC 815-40指引，按照下文所定义的认股权（以下称「认股权」）处理，其中仪器（如下文所定义）不符合权益处理标准，必须记录为负债。公司根据ASC 480-10指引，将FPA看跌期权负债记为金融负债。认股权和FPA共同称为「仪器」。仪器在每个资产负债表日期受到再测量，直至行使，任何公平价值变动均会在公司的简明综合经营报告中确认。有关认股权相关条款的进一步讨论请参见附注11，关于确定认股权和FPA价值的方法请参见附注13。
2023年12月，公司通过发行普通A类股，偿付到达成的供应商结余，金额达 给某些供应商欠款。 如果在协议日期前三个交易日内的普通A类股成交量加权平均价格（“VWAP”）高于与协议日期六个月周年日前三个交易日内的VWAP，需要为差额发行ATI的额外普通A类股。这代表公司所编制的衍生财务工具，按照ASC 815-40中包含的指南进行会计处理，包括后续按公允价值重新计量，变动将在公司的简明综合损益表中予以认定。
11
对于按负债会计的衍生金融工具，衍生工具最初按其公允价值于创始时记录，并在每个报告日期重新估值，公平价值变动在综合损益表中报告。 衍生金融工具的分类，包括此类工具应当记录为负债还是权益，每个报告期末进行评估。 衍生负债按是否在资产负债表日起算12个月内可能需要净现金结算或转换工具进行分类为流动或非流动。
公允价值衡量
公平值被定义为在计量日期，在资产的主要或最有利市场中，市场参与者之间进行有秩序交易时，资产可获得的交易价格或移转负债时支付的价格（退出价格）。用于计量公平值的估值技术应该最大程度利用可观察输入，并最小化未观察输入的使用。在缩表综合财务报表中以公平值记录的资产和负债根据用于计量其公平值的输入所涉及的判断程度进行分类。
与估值资产或负债相关的主观性程度相关的层次如下所示：
一级 - 资产或负债的未调整报价，该报价是在测量日期当天于活跃市场中针对相同的资产或负债所报价。
二级- 可观察的输入，可以直接或间接地观察到。这些价格可能基于在活跃市场中对于相同或类似证券的报价价格，或是在非活跃市场上未被报价但经市场数据证实的输入。
第3级 - 受到少量或没有市场活动支持，并反映管理层在计量日定价该资产或负债时最佳估计，考虑到估值技术和模型输入中固有的风险。
一项金融工具在估值层次中的分类是基于对公允价值衡量具有重大影响的最低层级。
金融工具的公允价值
除了上述的认股权和FPA外，公司资产和负债的公允价值，符合财务会计准则委员会（“FASB”）ASC 820“公允价值衡量和披露”，接近于简明综合资产负债表中所表示的携带金额。
现金及现金等价物
现金包括公司的现金和银行存款。公司认为现金等价物是具有原始到期期限不超过三个月的高流动性投资。
信用集中风险
公司可能面临信用风险的财务工具主要包括现金及现金等价物、应收账款、对联属公司的贷款和投资。公司将现金存在公司认为信用质素较高的金融机构，并限制与任何一家银行的信用风险扩大，并持续评估与其往来的银行的信用质素。截至2024年6月30日和2024年3月31日，有一个客户占公司应收账款余额的10%或以上。公司预期其长期投资产生的信用风险有限，因为这些投资主要涉及公司的联属公司，其信用评级高于公司投资政策中所定义的最低允许信用评级。作为风险管理流程的一部分，公司通过定期评估其投资对手方的信用状况来限制与长期投资相关的信用风险。
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就公司的营业收入而言，在截至2024年6月30日和2023年的三个月中，分别有四个和三个客户的收入超过了总收入的某个比例。
| 结束于三个月的期间 6月30日 |
||||||||
| 2024 | 2023 | |||||||
| 客户一 | % | % | ||||||
| 客户二 | % | % | ||||||
| 客户三 | % | % | ||||||
| 客户四 | % | n/a | ||||||
应收帐款净额
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.
在公司采用ASU 2016-13前，「金融工具-信用亏损（Topic 326）」，应收帐款余额是以公司对客户账户收款可回收性的评估为基础减少的应收帐款，根据Topic 326，应收帐款以开立金额记录，扣除信用亏损准备金。公司定期检讨信用亏损准备金的充分性，考虑了多个因素。在确定任何所需的准备金时，管理层考虑了根据当前市场条件调整的历史损失、目前应收帐款的逾期情况、目前付款条款和对未来损失预估的期望。截至2024年3月31日，信用亏损准备金为$，并分类在「应收帐款净额」的简明合并资产负债表内。有关采纳Topic 326的相关资讯，请参见下面的「采纳的最近会计准则声明」部分。
以下表格提供了公司呆帐准备情况的详细资料（以千为单位）：
| 三个月结束 6月30日 |
||||||||
| 2024 | 2023 | |||||||
| 截至4月1日的期初余额 | $ | $ | ||||||
| 根据ASC 326对应收帐款进行的过渡期调整（通过保留收益） | ||||||||
| 截至4月1日的调整余额 | $ | $ | ||||||
| 费用和支出中新增的过帐 | ||||||||
| 截至6月30日的期末余额 | $ | $ | ||||||
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损失准备金的详细资料：
| 三个月结束 6月30日 |
||||||||
| 2024 | 2023 | |||||||
| 截至4月1日的期初余额 | $ | $ | ||||||
| 根据ASC 326对长期投资（通过保留收益）的过渡期调整 | ||||||||
| 截至4月1日的调整余额 | $ | $ | ||||||
| 增加计入信用损失变动项目 | ( |
) | ||||||
| 截至6月30日的期末余额 | $ | $ | ||||||
公司在简明合并账目表中将这些长期投资列入「长期投资」。
基本每股净损利是借由将适用于普通股东的收入/亏损除以期间内普通股平均已发行股份数以计算。稀释每股净损利是通过使用期间内普通股和潜在的稀释普通股的加权平均已发行股份数来计算。由于这些工具并非具稀释性，公司在计算每股稀释净损利时未考虑在其首次公开发行（“首次公开发行”）中售出的认股权证和定向增发购买普通股的影响，以及FPA看跌期权负债的影响。
最近已采纳的会计准则
2016年6月，FASB发布了ASU 2016-13《金融工具-信用亏损》（“主题326”）：金融工具的信用亏损测量。主题326要求对以摊销成本衡量的金融资产以及某些资产负债表外承诺（贷款承诺、保函、金融担保以及其他类似工具）进行预期信用亏损的测量和确认。公司在2023年4月1日的采用日期（请参阅第10号附注-承诺和条件）。对于此担保的预期信用亏损是使用违约机率方法估算的。公司在2023年4月1日通过采用了ASU 2016-13，使用修改后的追溯方法。从2023年4月1日开始的报告期的结果以会计准则”ASC“ 326呈现，而以前的金额持续按照以前适用的美国通用会计准则报告。
与信用损失相关的支出在简明综合营运报告的「销售、一般及行政支出」中进行分类。
尚未采纳的最近会计准则
在2020年8月，FASB发布了新的标准（ASU 2020-06），以降低会计处理可换股债务和其他权益连结工具的复杂性。对于具有现金换股功能的某些可换股债务工具，这些变化在会计模型中是简化的折衷方案（不分离“股权”组成部分以推定市场利率，和更简单分析嵌入式股权特征），并可能对摊薄后每股收益产生不利影响，因为需要使用换股方法。这个新标准也将影响公开和私人公司普遍发行的其他金融工具。例如，有利转换特征的分离模型被取消，简化了发行可换股债务和可换优先股的发行人分析。此外，为了达到股权分类和/或符合对与实体自身股权挂钩的合约豁免的特定要求被移除，从而使更多独立工具和嵌入式特征避免按市价计入会计。新标准对于SEC申报者（除了小型报告公司）在2021年12月31日后开始的财政年度和该年内的中期期间生效，而对于其他公司则晚两年。公司可以在2020年12月15日后开始的财政年度初采用这一标准。这一标准可以采用修正追溯法或全面追溯法。公司目前正在检讨已发布的标准，并且认为这不会对公司产生重大影响。
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2023年10月，财务会计准则委员会发布了ASU 2023-06，揭示改进：对SEC披露更新和简化倡议的编码修订，修订了与财务会计准则编码（“Codification”）中各个子主题相关的披露或展示要求。每项修订的有效日期将是SEC从S-X法规或S-k法规中删除相关披露的日期，不得提前采纳。如果到2027年6月30日，SEC尚未将相关要求从S-X法规或S-k法规中删除，则相关修订的待定内容将从Codification中删除，并不会对任何实体生效。公司正在评估这项ASU对基本报表和相关披露将产生的影响。
2023年12月，FASB发布了ASU 2023-09，有关所得税（第740条）改善所得税披露，要求上市公司在每年度揭示比率调节中的具体类别，并提供满足定量阈值的调解项目所需的额外信息。 ASU 2023-09对于截至2025年3月31日结束的公司的财政年度生效。公司目前正在评估更新的影响。
2024年3月，FASb发布了ASU 2024-01号，有关股票报酬（“ASC 718”）范畴利益激励和类似奖励的应用，旨在解决在确定利益分享和类似奖励是否应按照题目718还是题目710来记录的实务多样性问题。该更新并未改变题目718或题目710的范围；然而，它提供了实施指南和示例，以帮助实体确定利益分享或类似奖励是否属于题目718的范围内。该ASU将对从2025年4月1日开始的年度期间生效，包括这些年度内的中期期间。公司目前正在评估该ASU对其未经审计的综合基本报表的影响。
公司目前正在评估更新的影响。
Note 3 - Short-term borrowings
| June 30, 2024 |
March 31, 2024 |
|||||||
| Short-term borrowings | $ | $ | ||||||
| Current portion of vehicle loan | ||||||||
| $ | $ | |||||||
2023 年 5 月，本公司修订其循环信贷款安排（「修订信贷设施」），从印度卢比增加总借贷能力
在结束日期前，WWAC修改了应支付给Shearman＆Sterling LLP的付款条件，后者是一家为WWAC提供法律咨询服务的跨国律师事务所。这导致WWAC向Shearman＆Sterling LLP应支付的金额从$4,800应付帐款减少为$4,000的期票，可在四个等额分期支付。随后，在支付$1,500的情况下对期票进行修改，剩余的$2,500承诺分为两个等额分期支付。 Sherman＆Sterling LLP欠款$2,500被披露为短期债务，因为ATI有无条件的义务在从2024年6月30日起的不到十二个月的期间内解决这笔债务。
有关车辆贷款的额外资讯，请参阅附注4- 长期负债。
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注记4 - 长期负债
长期债务包括以下项目：
|
六月三十日， 2024 |
3月31日 2024 |
|||||||
| ATGBA的董事贷款 | $ | $ | ||||||
| 联属公司贷款 | ||||||||
| 车辆贷款的非流动部分 | ||||||||
| $ | $ | |||||||
如需了解有关ATGBA董事Rao先生向附属公司提供的贷款以及从联属公司取得的贷款的详细资讯，请参阅相应的附注8-相关方交易-分别为(g)和(d)。
汽车贷款
2022年12月7日，公司进行了一笔车辆贷款，由车辆抵押，金额为11,450印度卢比（或约等于2024年6月30日汇率下的$
截至2024年6月30日，未来各财政年度的债务到期情况如下：
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 债务总到期时间 | $ |
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 | $ | $ | ||||||
17
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.
19
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 $
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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 | ||||||
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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.
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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.
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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.
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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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