Aeries Technology, Inc.

Previous wording

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 September 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 September 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.

Current wording

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 $3.7 million (at the exchange rate in effect on December 31, 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 December 31, 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.

Previous wording

On December 7, 2022, the Company entered into a vehicle loan, secured by the vehicle, for INR 11.5 (or approximately $0.1 at the exchange rate in effect on September 30, 2024) at 10.75% from Mercedes-Benz Financial Services India Pvt. Ltd. The Company is required to repay the loan in 48 monthly instalments beginning January 4, 2023.

Current wording

On December 7, 2022, the Company entered into a vehicle loan, secured by the vehicle, for INR 11.5 million (or approximately $0.1 at the exchange rate in effect on December 31, 2024) at 10.75% from Mercedes-Benz Financial Services India Pvt. Ltd. The Company is required to repay the loan in 48 monthly instalments beginning January 4, 2023.

Previous wording

On August 2, 2024, the Company entered into a vehicle loan, secured by the vehicle, for INR 8.2 (or approximately $0.1 at the exchange rate in effect on September 30, 2024) at 10.25% from Mercedes-Benz Financial Services India Pvt. Ltd. The Company is required to repay the loan in 48 monthly instalments beginning September 4, 2024.

Current wording

On August 2, 2024, the Company entered into a vehicle loan, secured by the vehicle, for INR 8.2 million (or approximately $0.1 at the exchange rate in effect on December 31, 2024) at 10.25% from Mercedes-Benz Financial Services India Pvt. Ltd. The Company is required to repay the loan in 48 monthly instalments beginning September 4, 2024.

Previous wording

For the three months ended September 30, 2024, our revenue on a consolidated basis decreased by $0.7 million or 4%, to $16.9 million from $17.6 million for the three months ended September 30, 2023. We experienced revenue growth of $4.6 million primarily due to the addition of new clients and increase in business from existing clients, which was offset by a $5.4 million decrease in revenue due to the ramp-down in our existing client engagements and the completion and closure of certain consulting projects.

Current wording

For the three months ended December 31, 2024, our revenue on a consolidated basis decreased by $1.3 million or 7%, to $17.6 million from $18.9 million for the three months ended December 31, 2023. We experienced revenue growth of $4.8 million primarily due to the addition of new clients and increase in business from existing clients, which was offset by a $6.1 million decrease in revenue due to the ramp-down in our existing client engagements and the completion and closure of certain consulting projects.

Previous wording

For the three months ended September 30, 2024, our cost of revenue increased by $0.6 million or 4%, to $13.3 million from $12.7 million for the three months ended September 30, 2023. The primary drivers of the increase included a $1.6 million increase in employee compensation and benefits, including bonuses and a $0.8 million increase in administrative cost, rent and legal & professional fees. These cost increases were offset by a $1.9 million decrease in cost related to fees to external consultants.

Current wording

For the three months ended December 31, 2024, our cost of revenue increased by $0.7 million or 6%, to $13.6 million from $12.9 million for the three months ended December 31, 2023. The primary drivers of the increase included a $1.6 million increase in employee compensation and benefits, including bonuses and a $0.3 million increase in administrative cost, rent and legal & professional fees. These cost increases were offset by a $1.2 million decrease in cost related to fees to external consultants.

Previous wording

For the three months ended September 30, 2024, our gross profit decreased by $1.2 million or 26%, compared to the three months ended September 30, 2023. The lower gross profit was primarily due to decline in revenue showing 0.7 million decrease, against increase of $0.5 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.

Current wording

For the three months ended December 31, 2024, our gross profit decreased by $2.0 million or 33%, compared to the three months ended December 31, 2023. The lower gross profit was primarily due to decline in revenue showing 1.3 million decrease, against increase of $0.7 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.

Previous wording

For the three months ended September 30, 2024, our gross profit margin decreased by 2,600 basis points compared to the three months ended September 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.

Current wording

For the three months ended December 31, 2024, our gross profit margin decreased by 900 basis points compared to the three months ended December 31, 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.

Previous wording

Selling, general and administrative expenses increased by $4.3 million, or 130% to $7.7 million for the three months ended September 30, 2024, compared to $3.3 million for the three months ended September 30, 2023. This significant increase was primarily driven by a $2.5 million provision for expected credit loss on customer receivables. Additionally, employee compensation and benefits increased by $2.1 million due to new hires and salary adjustment for senior management, and travel expenses, offset by a $0.1 million reduction in fees to external consultants and a $0.2 million reduction in ESOP expense

Current wording

Selling, general and administrative expenses increased by $3.9 million, or 73% to $9.2 million for the three months ended December 31, 2024, compared to $5.3 million for the three months ended December 31, 2023. This significant increase was primarily driven by a $2.1 million provisions for expected credit loss on customer receivables. Additionally, employee compensation and benefits increased by $1.4 million due to new hires and $0.4 million due to travel cost and other administrative cost.

Previous wording

Total other income / (expense), net was $1.3 million for the three months ended September 30, 2024 compared to total other expense, net of $0.1 million for the three months ended September 30, 2023, a $1.2 million and 953% change primarily due to a change in the fair value of the forward purchase agreement put option liability.

Current wording

Total other income / (expense), net was $5.8 million for the three months ended December 31, 2024 compared to $16.5 million for the three months ended December 31, 2023, a $22.2 million and 135% change primarily due to a change in the fair value of the forward purchase agreement put option liability.

Previous wording

Income tax expense / (benefit) for the six months ended September 30, 2024, was $(1.6) million, a $2.5 million or 280% decrease compared to provision of income taxes of $0.9 million for the six months ended September 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.

Current wording

Income tax expense / (benefit) for the three months ended December 31, 2024, was $(1.4) million, a $1.9 million or 359% decrease compared to provision of income taxes of $0.6 million for the three months ended December 31, 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, provision for vendor expenses on a higher side for three months ended December 31, 2024.

Previous wording

The following table presents selected financial data for the six months ended September 30, 2024, and 2023 (in thousands, except percentages):

Current wording

The following table presents selected financial data for the nine months ended December 31, 2024, and 2023 (in thousands, except percentages):

Previous wording

For the six months ended September 30, 2024, our revenue on a consolidated basis decreased by $0.3 million or 1%, to $33.5 million from $33.9 million for the six months ended September 30, 2023. We experienced revenue growth of $9.3 million primarily due to the addition of new clients and business from existing clients, which was offset by a $9.6 million decrease in revenue due to the ramp-down in our existing client engagements and the completion and closure of certain consulting projects.

Current wording

For the nine months ended December 31, 2024, our revenue on a consolidated basis decreased by $1.7 million or 3%, to $51.1 million from $52.8 million for the nine months ended December 31, 2023. We experienced revenue growth of $13.9 million primarily due to the addition of new clients and business from existing clients, which was offset by a $15.6 million decrease in revenue due to the ramp-down in our existing client engagements and the completion and closure of certain consulting projects.

Previous wording

For the six months ended September 30, 2024, our cost of revenue increased by $1.3 million or 5%, to $25.9 million from $24.6 million for the six months ended September 30, 2023. The primary drivers of the increase included a $3.3 million increase in employee compensation and benefits and a $0.4 million increase in rent, repairs and maintenance and administrative expenses. These cost increases were offset by a $2.4 million decrease in cost related to fees to external consultants.

Current wording

For the nine months ended December 31, 2024, our cost of revenue increased by $2.0 million or 5%, to $39.5 million from $37.5 million for the nine months ended December 31, 2023. The primary drivers of the increase included a $4.9 million increase in employee compensation and benefits and a $0.7 million increase in rent, repairs and maintenance and administrative expenses. These cost increases were offset by a $3.6 million decrease in cost related to fees to external consultants.

Previous wording

For the six months ended September 30, 2024, our gross profit decreased by $1.6 million or 18%, compared to the six months ended September 30, 2023. The lower gross profit was primarily due to flat revenue showing a $0.3 million decrease, coupled with a $1.3 million decrease in cost of revenue mainly due to the increased compensation costs and benefits, offset by decrease in cost related to fees to external consultants.

Current wording

For the nine months ended December 31, 2024, our gross profit decreased by $3.7 million or 24%, compared to the nine months ended December 31, 2023. The lower gross profit was primarily due to flat revenue showing a $1.7 million decrease, coupled with a $2.0 million increase in cost of revenue mainly due to the increased compensation costs and benefits, offset by decrease in cost related to fees to external consultants.

Previous wording

For the six months ended September 30, 2024, our gross profit margin decreased by 400 basis points compared to the six months ended September 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.

Current wording

For the nine months ended December 31, 2024, our gross profit margin decreased by 600 basis points compared to the nine months ended December 31, 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.

Previous wording

Selling, general and administrative expenses increased by $21.0 million, or 301% to $28.1 million for the six months ended September 30, 2024, compared to $7.0 million for the six months ended September 30, 2023. This significant increase was primarily driven by a $11.4 million increase in stock-based compensation related expense, a $2.0 million increase in legal and professional charges related to the Business Combination, and a $3.6 million provisions for expected credit loss on customer receivables. Additionally, employee compensation and benefits increased by $3.2 million due to increased hiring, resulting in increased personnel related costs, and travel expenses.

Current wording

Selling, general and administrative expenses increased by $25.0 million, or 203% to $37.3 million for the nine months ended December 31, 2024, compared to $12.3 million for the nine months ended December 31, 2023. This significant increase was primarily driven by a $11.1 million increase in stock-based compensation related expense, a $2.4 million increase in legal and professional charges, a $5.7 million provisions for expected credit loss on customer receivables and a $1.2 million increase due to director fees, insurance cost, rates and taxes. Additionally, employee compensation and benefits increased by $4.6 million due to increased hiring, resulting in increased personnel related costs, and travel expenses.

Previous wording

Total other income / (expense), net was $1.3 million for the six months ended September 30, 2024 compared to total other expense, net of $0.05 million for the six months ended September 30, 2023, a $1.2 million and 2,218% change.

Current wording

Total other income / (expense), net was $7.0 million for the nine months ended December 31, 2024 compared to $(16.4) million for the nine months ended December 31, 2023, a $23.5 million and 143% change.

Previous wording

Income tax expense/ (benefit) for the three months ended September 30, 2024, was $(0.5) million, a $1.2 million or 177% decrease compared to provision of income taxes of $0.7 million for the three months ended September 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.

Current wording

Income tax expense / (benefit) for the nine months ended December 31, 2024, was $(3.0) million, a $4.5 million or 310% decrease compared to provision of income taxes of $1.5 million for the nine months ended December 31, 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.

Previous wording

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 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. 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.

Current wording

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 and M&A 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. 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.

Previous wording

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.

Current wording

We define Adjusted EBITDA as net income from operations before interest, income taxes, depreciation and amortization, further adjusted to exclude stock-based compensation, M&A transaction-related costs, and changes in fair value of derivative liabilities.

Previous wording

The following table provides a reconciliation from net income (US GAAP measure) to Adjusted EBITDA, Core Adjusted EBITDA and Adjusted EBITDA margin for the three and six months ended September 30, 2024, and 2023 (in thousands):

Current wording

The following table provides a reconciliation from net income (US GAAP measure) to Adjusted EBITDA, Core Adjusted EBITDA and Adjusted EBITDA margin for the three and nine months ended December 31, 2024, and 2023 (in thousands):

Previous wording

Some of the limitations of Adjusted EBITDA and Core Adjusted EBITDA include: each of these measures 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 and six months ended September 30, 2024, and Business Combination related costs for the three and six months related September 30, 2023, (viii) change in fair value of derivative liabilities. Additionally, the Core Adjusted EBITDA does not reflect the provision for expected credit loss / (profit) from non-core business.

Current wording

Some of the limitations of Adjusted EBITDA and Core Adjusted EBITDA include: each of these measures 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) severance pay, (viii) Business Combination and M&A 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 and nine months ended December 31, 2024, and Business Combination related costs for the three and nine months related December 31, 2023, (ix) change in fair value of derivative liabilities. Additionally, the Core Adjusted EBITDA does not reflect the provision for expected credit loss / (profit) from non-core business.

Previous wording

The Company has historically financed its operations and expansions primarily with cash generated from operations and the revolving credit facility from Kotak Mahindra Bank. As at September 30, 2024, the Company had a balance of $3.6 million in cash and cash equivalents, and also generated overall positive cash flows for the six months ended September 30, 2024. The Company reported a net operating cash inflow of $0.2 million for this period. 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, growth, expansion plans. However, this expectation assumes that the FPA liabilities will not require immediate cash settlement. If an immediate cash settlement is required for the remaining FPA liabilities, the Company may lack the necessary financial resources to sustain operations during this period.

Current wording

The Company has historically financed its operations and expansions primarily with cash generated from operations and the revolving credit facility from Kotak Mahindra Bank. As at December 31, 2024, the Company had a balance of $ 2.4 million in cash and cash equivalents, and also generated overall positive cash flows for the nine months ended December 31, 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, growth, expansion plans. However, this expectation assumes that the FPA liabilities will not require immediate cash settlement. If an immediate cash settlement is required for the remaining FPA liabilities, the Company may lack the necessary financial resources to sustain operations during this period.

Previous wording

Cash Flow for the Six Months ended September 30, 2024 and 2023

Current wording

Cash Flow for the Nine Months ended December 31, 2024 and 2023

Previous wording

The following table presents net cash provided by operating activities, investing activities and financing activities for the Six months ended September 30, 2024, and 2023 (in thousands):

Current wording

The following table presents net cash provided by operating activities, investing activities and financing activities for the Nine months ended December 31, 2024, and 2023 (in thousands):

Previous wording

Analysis of Cash Flow Changes between the six months ended September 30, 2024 and 2023

Current wording

Analysis of Cash Flow Changes between the nine months ended December 31, 2024 and 2023

Previous wording

Investing Activities - Net cash used in investing activities during the six months ended September 30, 2024 was $0.9 million, of which $0.9 million was used for the purchase of property and equipment and $0.8 million was used for the issuance of loans to affiliates, offset by $0.8 million generated from loan repayments received from affiliates.

Current wording

Investing Activities - Net cash used in investing activities during the nine months ended December 31, 2024 was $1.3 million, of which $1.3 million was used for the purchase of property and equipment and $1.4 million was used for the issuance of loans to affiliates, offset by $1.4 million generated from loan repayments received from affiliates.

Previous wording

Net cash used in investing activities during the six months ended September 30, 2023 was $0.8 million, of which $0.7 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 $0.7 million generated from loan repayments received from affiliates.

Current wording

Net cash used in investing activities during the nine months ended December 31, 2023 was $1.1 million, of which $1.1 million was used for the purchase of property and equipment and $1.7 million was used for the issuance of loans to affiliates, offset by $1.7 million generated from loan repayments received from affiliates.

Previous wording

Financing Activities - Net cash provided by financing activities during the six months ended September 30, 2024 was $2.3 million, primarily from proceeds of the PIPE transaction of $4.7 million, and proceeds from long-term debt of $0.9 million; offset by the repayment of short-term debt of $1.9 million, payment of insurance financing liability of $0.4 million and payment of finance lease obligation of $0.2 million.

Current wording

Financing Activities - Net cash provided by financing activities during the nine months ended December 31, 2024 was $3.3 million, primarily from proceeds of the PIPE transaction of $4.7 million, and proceeds from long-term debt of $1.5 million; offset by the repayment of long term debt of $1.4 million and short-term debt of $0.7 million, payment of insurance financing liability of $0.4 million and payment of finance lease obligation of $0.3 million.

Previous wording

Net cash provided by financing activities during the six months ended September 30, 2023 was $0.2 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 $1.4 million and payment of finance lease obligations and long-term debt of $0.2 million.

Current wording

Net cash provided by financing activities during the nine months ended December 31, 2023 was $6.5 million, primarily from proceeds from Business Combination of $8.7 million, the net proceeds from short-term debt of $1.7 million and proceeds from long-term debt of $0.6 million; offset by the repayment of long-term debt of $0.4 million, payment of deferred transaction costs of $2.1 million, payment of promissory note liability of $1.5 million, payment of insurance financing liability of $0.2 million and payment of finance lease obligation of $0.3 million.