PART 1 – INTERIM FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Unaudited condensed consolidated financial statements reveal a significant net loss, working capital deficit, and substantial going concern doubts Condensed Consolidated Balance Sheets The balance sheets show total liabilities exceeding assets, leading to a shareholders' deficit as of September 30, 2024 Balance Sheet Summary (in thousands USD) | Balance Sheet Item | Sep 30, 2024 (Unaudited) | Mar 31, 2024 (Audited) | | :--- | :--- | :--- | | Total Assets | $51,960 | $49,407 | | Cash and cash equivalents | $3,627 | $2,084 | | Accounts receivable, net | $18,477 | $23,757 | | Total Liabilities | $53,274 | $50,587 | | Forward purchase agreement put option liability | $9,563 | $10,244 | | Total Shareholders' Deficit | ($1,999) | ($1,914) | | Accumulated deficit | ($28,679) | ($11,668) | - Total liabilities of $53.3 million exceed total assets of $52.0 million, resulting in a total shareholders' deficit of $2.0 million as of September 30, 202416 Condensed Consolidated Statements of Operations The statements of operations show a significant net loss for the six months ended September 30, 2024, primarily due to increased operating expenses Statement of Operations Summary (in thousands USD) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Six Months Ended Sep 30, 2024 | Six Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue, net | $16,873 | $17,578 | $33,540 | $33,908 | | Gross profit | $3,575 | $4,824 | $7,585 | $9,271 | | Selling, general & administrative expenses | $7,670 | $3,338 | $28,100 | $7,008 | | Income / (Loss) from operations | ($4,095) | $1,486 | ($20,515) | $2,263 | | Net income / (loss) | ($2,306) | $927 | ($17,623) | $1,421 | | Basic and diluted net loss per Class A share | ($0.05) | N/A | ($0.42) | N/A | - For the six months ended September 30, 2024, the company reported a net loss of $17.6 million, a sharp reversal from a net income of $1.4 million in the prior year period, primarily driven by a substantial increase in Selling, General & Administrative expenses to $28.1 million from $7.0 million year-over-year19 Condensed Consolidated Statements of Cash Flows Cash flow statements indicate positive operating cash flow despite a net loss, with financing activities providing additional capital Cash Flow Summary for Six Months Ended Sep 30 (in thousands USD) | Cash Flow Category | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $205 | $1,387 | | Net cash used in investing activities | ($988) | ($809) | | Net cash provided by financing activities | $2,249 | $195 | | Net increase in cash and cash equivalents | $1,543 | $751 | | Cash and cash equivalents at end of period | $3,627 | $1,882 | - Despite a net loss of $17.6 million, the company generated positive cash flow from operations of $0.2 million for the six months ended Sep 30, 2024, aided by non-cash expenses like stock-based compensation ($12.7 million)28 - Financing activities provided $2.2 million in cash, primarily from $4.7 million in net proceeds from the issuance of Class A ordinary shares, which offset debt repayments28 Notes to Condensed Consolidated Financial Statements Notes to financial statements detail substantial doubt about the company's ability to continue as a going concern - The company has identified conditions that raise substantial doubt about its ability to continue as a going concern, including a net loss of $17.6 million for the six-month period, a working capital deficit of $9.8 million, significant liabilities from Forward Purchase Agreements (FPAs), and the non-renewal of a contract with a significant customer4548211 - Management's mitigation plan includes raising additional funds, restructuring liabilities, and reducing non-core expenses, however, there is no guarantee of success4647 - The company received a non-renewal and buyout notice from a significant customer, effective March 31, 2025, expected to cause an annual revenue loss of approximately $11.5 million, partially offset by a one-time buyout payment of about $3.1 million143144 - Stock-based compensation expense was $12.7 million for the six months ended September 30, 2024, a significant increase from $1.6 million in the prior-year period113 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses decreased revenue, a substantial net loss from increased SG&A, and reiterates going concern risks from FPA liabilities and customer loss Results of Operations Results of operations show a slight revenue decrease and a significant surge in SG&A expenses, leading to a substantial operating and net loss Comparison of Six Months Ended Sep 30, 2024 and 2023 (in thousands USD) | Metric | 2024 | 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $33,540 | $33,908 | ($368) | (1)% | | Gross Profit | $7,585 | $9,271 | ($1,686) | (18)% | | SG&A Expenses | $28,100 | $7,008 | $21,092 | 301% | | Income from operations | ($20,515) | $2,263 | ($22,778) | (1,007)% | | Net loss | ($17,623) | $1,421 (income) | ($19,044) | (1,340)% | - Revenue for the six months ended Sep 30, 2024, decreased by 1% as revenue growth of $9.3 million from new and existing clients was offset by a $9.6 million decrease from ramp-downs and project completions194 - Selling, general and administrative (SG&A) expenses surged by 301% to $28.1 million for the six-month period, primarily driven by an $11.4 million increase in stock-based compensation, a $2.0 million increase in legal/professional charges for the Business Combination, and a $3.6 million provision for expected credit losses198 Non-GAAP Financial Measures This section provides a reconciliation of net income to Adjusted EBITDA, highlighting non-GAAP performance metrics Reconciliation to Adjusted EBITDA (in thousands USD) | Metric | Six Months Ended Sep 30, 2024 | Six Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net income / (loss) | ($17,623) | $1,421 | | Adjustments (Taxes, Interest, D&A) | ($423) | $1,623 | | EBITDA | ($18,380) | $3,044 | | Stock-based compensation | $12,746 | $1,626 | | Business Combination costs | $5,052 | $1,171 | | Change in fair value of derivative liabilities | ($1,312) | - | | Adjusted EBITDA | ($1,894) | $5,841 | | Adjusted EBITDA margin | (5.6)% | 17.2% | Liquidity and Capital Resources Liquidity and Capital Resources section details substantial doubt about going concern, citing FPA liabilities and customer contract non-renewal - Management has identified substantial doubt about the company's ability to continue as a going concern, with key factors including a net loss of $17.6 million for the six-month period, a working capital deficit of $9.8 million, and the non-renewal of a significant customer contract expected to result in an annual revenue loss of approximately $11.5 million208211 - The company has a remaining liability of $7.5 million under its Forward Purchase Agreements (FPAs) due in November 2024, and does not have sufficient cash from operations or reserves to pay this amount, which could adversely affect operations211 - Management's mitigation plan involves raising additional capital, restructuring liabilities, and implementing targeted cost-cutting measures, with one FPA holder agreeing to a share settlement, reducing the liability by $0.5 million212213 Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the 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 quantitative and qualitative disclosures about market risk224 Controls and Procedures Management concluded disclosure controls and procedures were ineffective due to material weaknesses in internal control over financial reporting, with a remediation plan underway - The CEO and CFO concluded that disclosure controls and procedures were not effective as of September 30, 2024225 - Material weaknesses were identified in internal control over financial reporting, attributed to improper segregation of duties, inadequate processes for timely recording of significant transactions, and inadequate design of information and communication policies227 - Management is implementing a remediation plan to address the weaknesses by improving review processes and communication with third-party service providers228229 PART II – OTHER INFORMATION Legal Proceedings The company reports no material pending legal proceedings beyond routine litigation incidental to its business operations - As of the filing date, the company reports no material pending legal proceedings outside the ordinary course of business234 Risk Factors New risk factors highlight substantial doubt about going concern, citing FPA obligations and the termination of a significant customer contract - A new material risk is the substantial doubt about the company's ability to continue as a going concern235 - A key factor is the FPA liability of $8 million due by November 6, 2024, where a potential cash liability of $7.5 million remains, which could strain liquidity236 - The company's financial condition is further impacted by a non-renewal notice from a significant customer, which is expected to result in an annual revenue loss of approximately $11.5 million237 Unregistered Sales of Equity Securities and Use of Proceeds The company issued 127,565 Class A ordinary shares to two vendors as compensation for services, which were unregistered sales of equity securities - In September 2024, the company issued 78,947 and 48,618 Class A ordinary shares to two vendors as compensation for services, with these issuances exempt from registration under Section 4(a)(2) of the Securities Act241 Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - The company reported no defaults upon senior securities during the period242 Mine Safety Disclosures This item is not applicable to the company's operations - This item is not applicable to the company243 Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading plan during the quarter ended September 30, 2024244 Exhibits This section lists exhibits filed with the Form 10-Q, including corporate documents and CEO/CFO certifications - The report includes required certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002247
WORLDWIDE WEBB(WWAC) - 2024 Q3 - Quarterly Report