WORLDWIDE WEBB(WWAC) - 2025 Q4 - Annual Report

PART I Business Aeries Technology provides global professional and technology consulting, specializing in Global Capability Centers (GCCs) for private equity and mid-market firms, focusing on AI-driven efficiency and strategic growth despite intense competition and client concentration - Aeries specializes in providing Global Capability Center (GCC) services, designed as seamless extensions of a client's organization, offering cost savings, operational control, and access to global talent[22][23][24] - The company's growth strategy focuses on expanding within the private equity ecosystem, cross-selling advanced technology solutions (AI, RPA), entering the mid-market enterprise segment, and pursuing strategic acquisitions[40][41] Client Concentration | Fiscal Year | Top 5 Clients' Revenue % | No. of Clients > 10% Revenue | Individual Client % | | :--- | :--- | :--- | :--- | | 2025 | 57% | 2 | 21%, 12% | | 2024 | 50% | 2 | 14%, 12% | - As of March 31, 2025, the company had approximately 1,400 full-time employees, with employee count fluctuating due to client contracts allowing direct hiring, as evidenced by a transfer of 303 employees for a $3.0 million payment during the fiscal year[63] - The company completed a business combination with Worldwide Webb Acquisition Corp. (WWAC) on November 6, 2023, resulting in a reverse recapitalization where AARK was the accounting acquirer, subsequently renamed Aeries Technology, Inc. and trading under 'AERT'[82][83][84] Risk Factors The company faces substantial doubt about its ability to continue as a going concern due to significant losses, a working capital deficit, and the loss of a major customer, alongside risks from competition, international operations, and internal control weaknesses - The company has identified conditions raising substantial doubt about its ability to continue as a going concern, due to a net loss of $21.6 million, a working capital deficit of $11.1 million as of March 31, 2025, and obligations under Forward Purchase Agreements (FPAs)[104] - A significant customer provided a non-renewal notice, expected to result in an annual revenue loss of approximately $11.5 million, which includes a one-time buyout payment of about $3.0 million to the company, significantly impacting future revenue stability[106][142] - The company faces heightened risk of non-collection on receivables, particularly in the Middle East and Asia Pacific, having written off $9.5 million in receivables and recorded an allowance for doubtful accounts of $3.6 million in fiscal year 2025, up from $1.3 million the previous year[132][134] - Aeries is a 'controlled company' under Nasdaq rules due to the voting power of its Class V Shareholder, which can influence matters like director elections and hostile takeovers, exempting the company from certain corporate governance requirements, such as having a majority-independent board[212][213] - Material weaknesses in internal control over financial reporting have been identified, primarily related to improper segregation of duties, inadequate processes for recording transactions, and poor design of communication and monitoring procedures, which led to a restatement of previously issued financial statements[218][219] Unresolved Staff Comments The company has no unresolved staff comments from the SEC - None[240] Cybersecurity The company's cybersecurity risk management, overseen by the board and a dedicated committee, involves regular assessments, third-party experts, and employee training, aligning with ISO 27001 and NIST CSF standards - The Board of Directors oversees cybersecurity risk as part of its general oversight, receiving at least an annual report from the cybersecurity committee[244] - The company's cybersecurity program includes regular risk assessments, employee training, and engagement with external consultants, with policies periodically assessed against frameworks like ISO 27001 and NIST CSF[241][246] - To date, the company does not believe that risks from cybersecurity threats have materially affected its strategy, operations, or financial condition[243] Properties Aeries operates from its Mumbai corporate office, with global delivery centers across India and Mexico, a Singapore headquarters, and U.S. sales offices, designed as client extensions Global Delivery Centers | Location | Number of Centers | | :--- | :--- | | Hyderabad | 2 | | Bengaluru | 4 | | Mumbai | 3 | | Pune | 1 | | Mexico (Guadalajara) | 3 | - The company's headquarters is in Singapore, with a corporate office in Mumbai, India, and U.S. offices in Raleigh, North Carolina, and Salt Lake City, Utah[247][249] Legal Proceedings The company is not currently aware of 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 business[251] Mine Safety Disclosures This item is not applicable to the company - Not applicable[252] PART II Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Aeries Technology's Class A shares and warrants trade on Nasdaq, with 47.15 million shares outstanding as of July 1, 2025, and no anticipated cash dividends, alongside details of unregistered security sales - The company's Class A ordinary shares and warrants are traded on Nasdaq under the symbols 'AERT' and 'AERTW'[254] - As of July 1, 2025, there were 47,152,626 Class A ordinary shares outstanding held by approximately 43 holders of record[255] - The company has never declared or paid cash dividends and does not plan to in the foreseeable future[256] - On April 5, 2024, Mr. Kumar exchanged 9,500 AARK ordinary shares for 21,337,000 Class A ordinary shares in a transaction exempt from registration[264] Management's Discussion and Analysis of Financial Condition and Results of Operations For FY2025, Aeries Technology reported a $21.6 million net loss, a 3% revenue decrease, and a 23% gross profit decline, driven by surging SG&A expenses, raising substantial doubt about its going concern ability Results of Operations (FY 2025 vs. FY 2024) | Metric | FY 2025 (in thousands) | FY 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Revenues, net | $70,198 | $72,509 | (3)% | | Gross Profit | $16,720 | $21,641 | (23)% | | Gross Profit Margin | 24% | 30% | -600 bps | | (Loss) / income from operations | $(28,770) | $2,987 | (1,063)% | | Net (loss) / income | $(21,595) | $17,256 | (225)% | - Revenue decreased by $2.3 million (3%) due to the closure of certain consulting projects and ramp-downs, partially offset by new clients and increased business from existing ones[298] - Selling, general and administrative (SG&A) expenses increased by $26.8 million (144%), primarily driven by an $11.1 million increase in stock-based compensation, $9.1 million in bad debt write-offs, and a $1.7 million impairment loss[303] Adjusted EBITDA Reconciliation (Non-GAAP) | Metric | FY 2025 (in thousands) | FY 2024 (in thousands) | | :--- | :--- | :--- | | Net (loss) / income | $(21,595) | $17,256 | | Adjustments | $16,943 | $(8,064) | | Adjusted EBITDA | $(4,652) | $9,192 | | Adjusted EBITDA margin | (6.6)% | 12.7% | - The company's ability to continue as a going concern is in substantial doubt due to a net loss of $21.6 million, a working capital deficit of $11.1 million, liabilities from FPAs, a $9.5 million receivable write-off, and the loss of a significant customer[311][314] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Aeries Technology is not required to provide this information - The company is not required to provide this information as it qualifies as a smaller reporting company[348] Financial Statements and Supplementary Data Audited financial statements for FY2025 and FY2024 are presented, with the auditor expressing substantial doubt about the company's going concern ability due to operating losses, a working capital deficiency, and a growing shareholders' deficit - The report from the independent registered public accounting firm, Manohar Chowdhry & Associates, includes a 'Going Concern Uncertainty' paragraph, highlighting that the company's operating losses, significant working capital deficiency, accumulated deficit, and negative cash flows from operations raise substantial doubt about its ability to continue as a going concern[538] Consolidated Balance Sheet Highlights (in thousands) | Metric | As of March 31, 2025 | As of March 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $21,327 | $32,836 | | Total Current Liabilities | $32,420 | $38,125 | | Working Capital (Deficit) | $(11,093) | $(5,289) | | Total Liabilities | $45,937 | $50,587 | | Total Shareholders' Deficit | $(6,062) | $(1,914) | Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Year Ended March 31, 2025 | Year Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,009) | $(4,299) | | Net cash used in investing activities | $(858) | $(1,740) | | Net cash provided by financing activities | $2,432 | $7,056 | | Cash at the end of period | $2,764 | $2,084 | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure On August 11, 2024, the company changed its independent auditor from KNAV CPA LLP to Manohar Chowdhry & Associates, prompted by KNAV's expanded audit scope for revenue recognition and prior discussions on internal control weaknesses - On August 11, 2024, the company dismissed KNAV CPA LLP and appointed Manohar Chowdhry & Associates as its new independent registered public accounting firm[350][356] - The change was initiated after KNAV advised the company of a need to expand the audit scope related to revenue recognition for certain contracts in the Middle East and APAC region[353] - The company previously disclosed material weaknesses in internal controls, which was a 'reportable event' under SEC rules and was discussed with KNAV[355] Controls and Procedures As of March 31, 2025, management deemed disclosure controls and procedures ineffective due to material weaknesses in internal control over financial reporting, leading to a financial statement restatement and ongoing remediation efforts - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were not effective[359] - Material weaknesses were identified in internal control over financial reporting, primarily due to improper segregation of duties, inadequate processes for timely recording of significant transactions, and inadequate design of communication and monitoring activities[365] - These weaknesses resulted in the need to restate previously issued carve-out consolidated financial statements of AARK to correct misreporting of EPS and the number of common stock[364] - A remediation plan is underway to address the material weaknesses, but there is no assurance it will be successful, and as an emerging growth company, its independent auditor is not required to attest to the effectiveness of its internal controls[367][368][369] Other Information During the fiscal quarter ended March 31, 2025, none of the company's 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 fourth fiscal quarter[372] PART III Directors, Executive Officers and Corporate Governance The company's leadership includes Chairman Venu Raman Kumar and CEO Bhisham (Ajay) Khare, with a staggered board operating as a 'controlled company' under Nasdaq rules, exempt from certain governance requirements, and adhering to a Code of Ethics - The company's executive team includes Bhisham (Ajay) Khare as CEO and Daniel S. Webb as CFO & CIO, with Venu Raman Kumar serving as Chairman of the Board[375] - The Board is divided into three staggered classes of directors, and following the resignation of Ramesh Venkataraman, the Board no longer consists of a majority of independent directors[406][408] - Aeries is a 'controlled company' under Nasdaq rules, exempting it from certain governance requirements, including the need for a majority-independent board and fully independent compensation and nominating committees[412] Executive Compensation FY2025 executive compensation was heavily influenced by stock and option awards, with a significant management transition in February 2025, and no annual cash incentives paid to NEOs due to market challenges FY 2025 Summary Compensation Table (in thousands) | Name and Principal Position | Salary ($) | Stock/Option Awards ($) | All Other Comp. ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | Bhisham (Ajay) Khare (CEO) | 389 | 3,460 | 257 | 4,105 | | Sudhir Appukuttan Panikassery (Former CEO) | 565 | 7,314 | 165 | 8,044 | | Daniel S. Webb (CFO & CIO) | 400 | 1,047 | 15 | 1,462 | | Unnikrishnan (Unni) Balakrishnan Nambiar (CTO) | 283 | 925 | - | 1,209 | - In February 2025, Bhisham (Ajay) Khare was appointed CEO, Sudhir Appukuttan Panikassery resigned as CEO and became Vice Chairman, and Daniel S. Webb was appointed CFO[433][435] - The Compensation Committee determined not to pay any annual cash incentives to NEOs for fiscal year 2025, citing market challenges and a focus on aligning compensation with shareholder value[445] - The Board approved temporary base salary reductions for Messrs. Khare (20%), Panikassery (29%), and Nambiar (17%) from December 1, 2024, to April 1, 2025, as part of cost optimization efforts[441] Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters As of June 25, 2025, company ownership is highly concentrated, with Chairman Venu Raman Kumar holding 58.2% of Class A shares and a Class V share providing special voting rights, reinforcing its 'controlled' status Beneficial Ownership as of June 25, 2025 | Name / Group | Class A Shares Beneficially Owned | % of Class A Shares | | :--- | :--- | :--- | | Venu Raman Kumar (Chairman) | 28,098,530 | 58.2% | | Sudhir Appukuttan Panikassery | 5,151,005 | 10.9% | | All executive officers and directors as a group (9 individuals) | 38,106,533 | 79.2% | - The company has a dual-class share structure, where a single Class V share has voting rights that can increase to 51% during 'Extraordinary Events' such as a hostile change of control or the appointment/removal of a director[491] - As of March 31, 2025, there were 8,048,265 securities remaining available for future issuance under the company's equity compensation plans[496] Certain Relationships and Related Transactions, and Director Independence The company engages in numerous related-party transactions with entities controlled by its Chairman, Venu Raman Kumar, and his son, including management services and loans, all subject to audit committee approval for transactions over $120,000 - The company has a policy requiring audit committee approval for related party transactions exceeding $120,000[500] - The company has multiple financial arrangements with entities controlled by its Chairman, Venu Raman Kumar, and his son, Vaibhav Rao, including intercompany deposits, loans, and service agreements[501][502] - For the year ended March 31, 2025, the company provided management consulting services totaling $2.86 million to related parties Aark II and TSLC[507] - The company has an outstanding loan from Vaibhav Rao (son of the Chairman) with a balance of $812,000 as of March 31, 2025, at a 10% annual interest rate[506] Principal Accountant Fees and Services Manohar Chowdhry & Associates served as the independent auditor for FY2025 and FY2024, billing $48,000 and $60,000 respectively for audit fees, with all services pre-approved by the audit committee Accountant Fees (in thousands) | Fee Type | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Audit Fees | $48 | $60 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | - The company's audit committee has a policy to pre-approve all auditing and permitted non-audit services provided by its auditors[521] PART IV Exhibits, Financial Statement Schedules This section provides a comprehensive list of exhibits filed with the 10-K, including foundational corporate documents, material contracts, and required certifications - This section provides a comprehensive list of all exhibits filed with the 10-K, including foundational corporate documents, material contracts, and required certifications[523][525] Form 10-K Summary This section is noted as not applicable in the report - Not applicable[528]