PART 1 – INTERIM FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Aeries Technology reported a net loss of $15.3 million for Q2 2024, driven by a surge in operating expenses, despite a slight revenue increase, with total assets at $51.8 million and cash increasing to $4.2 million from financing activities Condensed Consolidated Balance Sheets As of June 30, 2024, total assets increased to $51.8 million from $49.4 million at March 31, 2024, while total liabilities remained stable at $50.8 million, with shareholders' equity turning positive to $0.2 million from a deficit of $1.9 million | Financial Metric | June 30, 2024 (Unaudited) | March 31, 2024 | | :--- | :--- | :--- | | Assets (in thousands) | | | | Cash and cash equivalents | $4,197 | $2,084 | | Total current assets | $33,799 | $32,836 | | Total assets | $51,768 | $49,407 | | Liabilities & Equity (in thousands) | | | | Total current liabilities | $38,828 | $38,125 | | Total liabilities | $50,847 | $50,587 | | Total shareholders' equity (deficit) | $186 | $(1,914) | Condensed Consolidated Statements of Operations For the three months ended June 30, 2024, revenue grew slightly to $16.7 million from $16.3 million year-over-year, but a 457% increase in Selling, General & Administrative expenses to $20.4 million resulted in a net loss of $15.3 million, a significant downturn from a net income of $0.5 million in the prior year | Metric (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Revenue, net | $16,667 | $16,330 | | Gross profit | $4,010 | $4,447 | | Selling, general & administrative expenses | $20,430 | $3,670 | | Income from operations | $(16,420) | $777 | | Net income / (loss) | $(15,317) | $494 | | Basic and Diluted net loss per Class A ordinary share | $(0.39) | N/A | Condensed Consolidated Statements of Cash Flows For the three months ended June 30, 2024, the company used $1.7 million in cash from operating activities, while financing activities provided a substantial inflow of $4.4 million, primarily from $4.7 million in net proceeds from share issuances, resulting in a net increase in cash of $2.1 million and ending the quarter with $4.2 million in cash | Cash Flow Activity (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash (used in) / provided by operating activities | $(1,720) | $101 | | Net cash used in investing activities | $(608) | $(566) | | Net cash provided by financing activities | $4,385 | $1,006 | | Net increase in cash and cash equivalents | $2,113 | $533 | | Cash and cash equivalents at end of period | $4,197 | $1,644 | Notes to Condensed Consolidated Financial Statements The notes detail significant accounting policies, a going concern warning, a surge in stock-based compensation to $12.7 million, a $5 million private placement, issuance of 21.3 million shares, and fair value measurement of derivative liabilities, alongside subsequent events like a Nasdaq non-compliance notice - The company's ability to continue as a going concern is in doubt due to a net loss reported for the quarter. Management's mitigation plan includes raising additional funds and restructuring liabilities5052 - Revenue from North America increased to $15.5 million from $12.5 million YoY, while revenue from Asia Pacific and Other decreased significantly from $3.8 million to $1.2 million97 - Stock-based compensation expense surged to $12.7 million for the quarter, compared to $1.4 million in the same period last year, primarily due to a fully vested option grant to an executive that was exercised during the quarter113121 - In April 2024, the company raised approximately $4.7 million in net proceeds from a private placement of 1.94 million Class A ordinary shares. Additionally, 21.3 million Class A shares were issued to a prior investor of AARK pursuant to an exchange agreement140141144 - Subsequent to the quarter end, the company received a non-compliance notice from Nasdaq for late filings of its Form 10-K and 10-Q, and also changed its independent registered public accounting firm158159 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 2% revenue growth to new clients, while a 457% surge in SG&A expenses, primarily from $11.4 million in stock-based compensation, drove a significant net loss, raising going concern doubts despite a recent $4.7 million private placement and a sharp decline in Adjusted EBITDA to $0.4 million | Metric (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenues, net | $16,667 | $16,330 | 2% | | Gross Profit | $4,010 | $4,447 | (10)% | | Selling, general & administrative expenses | $20,430 | $3,670 | 457% | | Income from operations | $(16,420) | $777 | (2,213)% | | Net income / (loss) | $(15,317) | $494 | (3,201)% | - The 457% increase in SG&A expenses was primarily driven by: - A $11.4 million increase in stock-based compensation - A $1.5 million increase in legal and professional charges related to the Business Combination - A $1.0 million provision for expected credit loss on customer receivables - A $2.8 million increase in employee compensation and benefits due to operational expansion193 Reconciliation to Adjusted EBITDA (Non-GAAP) | Metric (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net income | $(15,317) | $494 | | EBITDA | $(15,966) | $1,098 | | (+) Stock-based compensation | $12,746 | $1,374 | | (+) Business Combination and transaction related costs | $3,682 | $430 | | Adjusted EBITDA | $401 | $2,902 | | Adjusted EBITDA Margin | 2.4% | 17.8% | - The company reported a net loss of $15.3 million for the quarter, raising substantial doubt about its ability to continue as a going concern. Management plans to mitigate this through cash from operations, existing cash reserves, debt capacity, and potential future equity or debt financing, citing the recent $4.68 million net proceeds from a private placement202205 Item 3. Quantitative and Qualitative Disclosures about Market Risk The company, as a smaller reporting company, is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Aeries Technology, Inc. is not required to provide the information for this item216 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2024, due to identified material weaknesses in internal control over financial reporting, for which a remediation plan is being implemented - The CEO and CFO concluded that as of June 30, 2024, disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting217 - Identified material weaknesses are primarily attributable to: - Improper segregation of duties - Inadequate processes for timely recording of significant events and material transactions - Inadequate design and implementation of information, communication, and monitoring policies219 - A remediation plan is underway to improve financial statement review processes, enhance communication with third-party providers, and implement additional procedures to ensure accuracy220221 PART II - OTHER INFORMATION Item 1. Legal Proceedings The company reports that it is not currently involved in any material pending legal proceedings outside of ordinary routine litigation incidental to its business - Management is not currently aware of any material pending legal proceedings, except for ordinary routine litigation incidental to the business227 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2024 - There have been no material changes to the Company's Risk Factors as previously reported in the 2024 Form 10-K228 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the quarter, the company conducted two unregistered sales of equity securities, including a private placement of 2,261,778 Class A ordinary shares for $4.68 million and the issuance of 54,074 'Adjustment Shares' to vendors - On April 8, 2024, the Company sold 2,261,778 Class A ordinary shares in a private placement for net proceeds of approximately $4.68 million230 - The Company issued 54,074 'Adjustment Shares' to vendors following a six-month anniversary of a settlement agreement from December 2023231 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported232 Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the company233 Item 5. Other Information During the quarter ended June 30, 2024, no directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter234 Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, and interactive data files (XBRL) - The report includes several exhibits, such as the Amended & Restated Memorandum and Articles of Association, a Share Subscription Agreement, and certifications required by the Sarbanes-Oxley Act of 2002237
WORLDWIDE WEBB(WWAC) - 2024 Q2 - Quarterly Report