Quarterly Report for Quarter Ending December 31, 2025 (Form 10-Q)

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 quarterly report on 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, 2025. 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 Aeries Technology, Inc. and its consolidated subsidiaries.

Overview

Aeries Technology is a global provider of professional and technology consulting services to portfolio companies of private equity firms and middle-market companies, specializing in the design, set-up and management of Global Capability Centers ("GCCs") for our clients. Our offerings are designed to provide a mix of deep vertical specialty, functional expertise, and digital systems and solutions offering end-to-end coverage for the entire GCC lifecycle to scale, optimize and transform a client's business operations. By leveraging artificial intelligence ("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, to positively impact value creation for our clients.

Our solutions are purpose-built to help clients unlock business value-enhancing revenue growth through accelerated innovation and improved customer experience, while also driving operating efficiency through optimized cost structures and scalable delivery. Aeries-built GCCs serve as strategic platforms through which clients can adopt and embed the latest technologies, including artificial intelligence, advanced analytics, and modern enterprise tools and practices. Clients maintain strategic oversight and operational control, with the flexibility to adapt GCC ownership structures as business needs evolve. Through our integrated model, Aeries enables organizations to move faster, serve customers better, and build long-term enterprise value.

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.

Our clients also use our services to manage their organizational operations, including application engineering, 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 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 December 31, 2025, 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

The markets that we currently operate in are North America and Asia Pacific, but our primary focus is North America, especially the private equity ecosystem and the mid-market enterprises.

Companies are looking for vendors who not only have the experience and expertise in providing the right-sized solution in this age of ever shortening business cycles but also serve as a trusted partner with a transparent engagement model to handhold them through their digital transformation journey. Aeries' model is designed to deliver this experience, expertise and transparent engagement approach to accelerate and enhance our clients' business.

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 and nine months ended December 31, 2025, 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, tariff war and increased volatility in foreign currency exchange rates. These factors have impacted and may continue to impact our business operations.

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 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. As of December 31, 2025, the Company had a revolving credit facility with Kotak Mahindra Bank of INR 320 million (or approximately $3.56 million at the exchange rate in effect on December 31, 2025). The revolving facility is available for Aeries' operational requirements. The interest rate is equal to the 3-months Repo Rate plus a margin of 3.90% and 6-months Marginal Cost of Funds based Lending Rate ("MCLR") plus a margin of 0.80% as of December 31, 2025 and March 31, 2025, 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 Repo rate 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. ("ATGBA"), Mr. Vaibhav Rao, amounting to $0.8 million at an interest rate of 12% per annum. The principal amount of the loan was outstanding in entirety as of and for the period ended December 31, 2025 and 2024, and year ended March 31, 2025.

On December 7, 2022, the Company entered into a vehicle loan, secured by the vehicle, for INR 11.5 million (or approximately $0.13 million at the exchange rate in effect on December 31, 2025) 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.

On August 2, 2024, the Company entered into a vehicle loan, secured by the vehicle, for INR 8.2 million (or approximately $0.09 million at the exchange rate in effect on December 31, 2025) 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.

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.

For information about the risks we face, see "Risk Factors."

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 December 31,								Nine Months Ended December 31,
		2025				2024				2025				2024
North America		$	15,785			$	16,430			$	45,066			$	47,665
Asia Pacific and Other			1,675				1,177				5,083				3,482
Total revenue		$	17,460			$	17,607			$	50,149			$	51,147

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 December 31, 2025 and 2024

The following table presents selected financial data for the three months ended December 31, 2025, and 2024 (in thousands, except percentages):

		Three months Ended December 31,
		2025				2024				$ Change				% Change
Revenues, net		$	17,460			$	17,607			$	(147	)			(1	)%
Cost of Revenue			14,118				13,565				553				4	%
Gross Profit		$	3,342			$	4,042			$	(700	)			(17	)%
Gross Profit Margin			19.1	%			23.0	%
Operating expenses
Selling, general & administrative expenses			2,570				9,199				(6,629	)			(72	)%
Total operating expenses		$	2,570			$	9,199			$	(6,629	)			(72	)%
Income / (loss) from operations		$	772			$	(5,157	)		$	5,929				115	%
Other income / (expense)
Change in fair value of derivative liabilities			(652	)			5,091				(5,743	)			(113	)%
Gain on settlement of forward purchase agreement put option liability			-				581				(581	)			(100	)%
Change in fair value of derivative warrant liabilities			57				-				57				100	%
Interest income			86				83				3				4	%
Interest expense			(76	)			(226	)			150				66	%
Other income, net			1,413				236				1,177				499	%
Total other income / (expense), net			828				5,765				(4,937	)			(86	)%
Income / (loss) before income taxes			1,600				608				992				163	%
Income tax (expenses) / benefit			(366	)			1,440				(1,806	)			(125	)%
Net income / (loss)		$	1,234			$	2,048			$	(814	)			(40	)%
Less: Net income / (loss) attributable noncontrolling interest			77				(383	)			460				120	%
Less: Net income / (loss) attributable to redeemable noncontrolling interests			81				(622	)			703				113	%
Net income / (loss) attributable to the shareholders of Aeries Technology, Inc.		$	1,076			$	3,053			$	(1,977	)			(65	)%

Revenue, net

For the three months ended December 31, 2025, our revenue on a consolidated basis decreased by $0.15 million or 1%, to $17.46 million from $17.61 million for the three months ended December 31, 2024. This change in revenue was primarily driven by a $1.32 million increase attributable to higher strengthened demand for our services from our existing clients and a $4.79 million increase in revenues generated from new clients acquisitions. This increase was offset by a $6.26 million decline in revenue from the ramp-down of our existing client engagements and the completion or closure of select consulting projects.

Cost of Revenue

For the three months ended December 31, 2025, our cost of revenue increased by $0.55 million or 4%, to $14.12 million from $13.57 million for the three months ended December 31, 2024. The primary drivers for the increase included a $0.37 million increase on account of rent and recruitment expenses, $0.23 million increase in employee compensation and benefits on account of new client acquired and $0.12 million increase on account of fees paid to external consultants, communication charges and computer expenses. These costs increase were offset by a $0.17 million decrease in depreciation.

Gross Profit

For the three months ended December 31, 2025, our gross profit decreased by $0.70 million or 17%, compared to the three months ended December 31, 2024. The lower gross profit was primarily driven by a $0.15 million decrease in revenue, along with an increase in cost of revenue of $0.55 million mainly due to the increased rent, recruitment expense, compensation costs and other expenses associated with fulfilling our contracts with customers.

Gross Profit Margin

Gross profit margin for three months ended December 31, 2025 decreased by 390 basis points compared to the three months ended December 31, 2024. The decrease in Margin is primarily due to increase in cost of revenue driven by increased rent, recruitment expenses and employee compensation costs.

Selling, general and administrative expenses

Selling and administrative expenses decreased by $6.63 million, or 72%, to $2.57 million for the three months ended December 31, 2025, compared to $9.20 million for the three months ended December 31, 2024. This significant decrease was primarily driven by $3.17 million reduction in expected credit loss provisioning during the current period, lower employee benefits costs of $0.95 million, and a $2.51 million decrease in professional and other administrative expenses.

Total Other Income (expense), net

Total other income / (expense), net for the three months ended December 31, 2025 was $0.83 million, a $4.94 million and 86% decrease, compared to other income, net of $5.77 million for the three months ended December 31, 2024. The decrease of $6.27 million in income is attributed to a change in the fair value of the forward purchase agreement put option liability and warrant liabilities. The above is offset by an increase of $1.18 million on account of write-back of sundry balances and reduction in interest expense by $0.15 million during the current period.

Income tax (expenses) / benefit

The income tax expense for the three months ended December 31, 2025 was $0.37 million, representing a decline of $1.81 million or 125% compared to the income tax benefit of $1.44 million for the three months ended December 31, 2024. For the three months ended December 31, 2025, the effective tax rate of 22.9% increased primarily due to the non-recognition of deferred tax benefits on losses incurred in certain lower-tax jurisdictions. In contrast, during the three months ended December 31, 2024 where the effective tax rate was (236.80%), such benefits were recognized, resulting in a comparatively lower effective tax rate.

Comparison of the Nine Months Ended December 31, 2025 and December 31, 2024

The following table presents selected financial data for the nine months ended December 31, 2025, and 2024 (in thousands, except percentages):

		Nine months Ended December 31,
		2025				2024				$ Change				% Change
Revenues, net		$	50,149			$	51,147			$	(998	)			(2	)%
Cost of Revenue			38,007				39,520				(1,513	)			(4	)%
Gross Profit		$	12,142			$	11,627			$	515				4	%
Gross Profit Margin			24.2	%			22.7	%
Operating expenses
Selling, general & administrative expenses			8,563				37,299				(28,736	)			(77	)%
Total operating expenses		$	8,563			$	37,299			$	(28,736	)			(77	)%
Income / (loss) from operations		$	3,579			$	(25,672	)		$	29,251				114	%
Other income (expense)
Change in fair value of derivative liabilities			243				5,772				(5,529	)			(96	)%
Gain on settlement of forward purchase agreement put option liability			-				581				(581	)			(100	)%
Change in fair value of derivative warrant liabilities			(160	)			631				(791	)			(125	)%
Interest income			235				250				(15	)			(6	)%
Interest expense			(339	)			(508	)			169				33	%
Other income, net			1,490				314				1,176				375	%
Total other income (expense), net			1,469				7,040				(5,571	)			(79	)%
Income / (loss) before income taxes			5,048				(18,632	)			23,680				127	%
Income tax (expenses) / benefit			(1,491	)			3,057				(4,548	)			(149	)%
Net income / (loss)		$	3,557			$	(15,575	)		$	19,132				123	%
Less: Net income / (loss) attributable noncontrolling interest			267				(979	)			1,246				127	%
Less: Net income / (loss) attributable to redeemable noncontrolling interests			456				(638	)			1,094				171	%
Net income / (loss) attributable to the shareholders' of Aeries Technology, Inc.		$	2,834			$	(13,958	)		$	16,792				120	%

Revenue, net

For the nine months ended December 31, 2025, our revenue on a consolidated basis decreased by $1.00 million or 2%, to $50.15 million from $51.15 million for the nine months ended December 31, 2024. We experienced a revenue reduction of $14.84 million due to the ramp-down of existing client engagements and the completion or closure of certain consulting projects. This decline was partially offset by an $11.90 million increase related to new client additions and higher business volumes from existing clients, along with $1.94 million of one-time revenue related to buy-out fees.

Cost of Revenue

For the nine months ended December 31, 2025, our cost of revenue decreased by $1.51 million or 4%, to $38.00 million from $39.52 million for the nine months ended December 31, 2024. The reduction was primarily driven by a $2.00 million decrease in employee compensation and benefits, and a $0.77 million decrease in depreciation, repairs and maintenance expenses, fees paid to external consultants and reduction in general insurance. These reductions were partially offset by a $1.26 million increase in rent, recruitment expenses, and other administrative costs associated with new client acquisitions.

Gross Profit

For the nine months ended December 31, 2025, our gross profit increased by $0.52 million or 4%, compared to the nine months ended December 31, 2024. Gross profit increased primarily due to a reduction in cost of revenues of $1.51 million, which offsets a modest decline in revenue of $1.00 million. The decrease in cost of revenues was mainly attributable to lower employee compensation costs.

Gross Profit Margin

For nine months ended December 31, 2025, our gross profit margin increased by 150 basis points compared to the nine months ended December 31, 2024. The increase in gross profit margin was primarily driven by one-time revenue of $1.94 million, which contributed to higher overall profitability. The margin improvement was further supported by a reduction in cost of revenues, mainly due to lower employee compensation costs.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased by $28.74 million, or 77% to $8.56 million for the nine months ended December 31, 2025, compared to $37.30 million for the nine months ended December 31, 2024. This significant decrease was primarily driven by a $12.45 million reduction in stock-based compensation expense, a $6.68 million decrease in expected credit loss provisioning during the current period, lower employee benefit costs of $2.85 million, $0.36 decrease in rates and taxes and a $6.40 million decline in professional and other administrative expenses.

Total Other Income (expense), net

Total other income (expense), net, was $1.47 million for the nine months ended December 31, 2025, compared to $7.04 million for the nine months ended December 31, 2024, a decrease of $5.57 million, or 79%. The decline of $6.90 million in income is attributed to a change in the fair value of the forward purchase agreement put option liability and warrant liabilities. The above is offset by an increase of $1.18 million on account of write-back of sundry balances and reduction in interest expense by $0.17 million during the current period.

Income tax expenses / (benefit)

The income tax expense for the nine months ended December 31, 2025 was $1.49 million, a $4.55 million or 149% decrease compared to the income tax benefit of $3.06 million for the nine months ended December 31, 2024. For the nine months ended December 31, 2025, the effective tax rate of 29.5% increased primarily due to the non-recognition of deferred tax benefits on losses incurred in certain lower-tax jurisdictions. In contrast, during the nine months ended December 31, 2024 where the effective tax rate was 16.4%, such benefits were recognized, resulting in a comparatively lower effective tax rate.

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 as to 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.

Adjusted EBITDA and Adjusted EBITDA Margin

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 provide useful insight to investors by offering a clearer view of Aeries' operating performance. This information has been used by our management for internal reporting and planning procedures, including aspects of our consolidated operating budget and capital expenditure planning.

The following table provides a reconciliation from net income / (loss) (US GAAP measure) to Adjusted EBITDA, and Adjusted EBITDA margin for the three and nine months ended December 31, 2025, and 2024 (in thousands):

		Three Months Ended December 31,								Nine Months Ended December 31,
		2025				2024				2025				2024
Net income / (loss)		$	1,234			$	2,048			$	3,557			$	(15,575	)
Income tax expense / (benefit)			366				(1,440	)			1,491				(3,057	)
Interest income			(86	)			(83	)			(235	)			(250	)
Interest expense			76				226				339				508
Depreciation and amortization			210				348				620				1,093
EBITDA		$	1,800			$	1,099			$	5,772			$	(17,281	)
Adjustments
(+) Stock-based compensation			-				-				293				12,746
(+) Business Combination and transaction related costs			-				1,858				-				6,910
(+) Severance Pay			63				678				63				678
(-) Change in fair value of derivative liabilities			595				(5,091	)			(83	)			(6,403	)
(-) Gain on settlement of forward purchase agreement put option liability			-				(581	)			-				(581	)
Adjusted EBITDA		$	2,458			$	(2,037	)		$	6,045			$	(3,931	)
Revenue			17,460				17,607				50,149				51,147
Adjusted EBITDA margin [Adjusted EBITDA / Revenue]			14.1	%			(11.6	)%			12.1	%			(7.7	)%

Some of the limitations of Adjusted EBITDA and Adjusted EBITDA margin 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; (v) cash requirements for future replacement or payment in depreciated or amortized assets; (vi) stock based compensation costs, (vii) 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 period ended December 31, 2025, and Business Combination related costs for the year ended related December 31, 2024, and (viii) change in fair value of derivative liabilities and FPA put option liabilities.

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. However, certain conditions as listed below raise substantial doubt about the Company's ability to continue as a going concern for this period:

	●	As of December 31, 2025, the Company had a working capital deficit of $7.12 million primarily due to current liabilities related to forward purchase agreements ("FPAs") of $4.09 million, short term borrowings of $3.08 million, and certain business combination related payable balances. These FPAs were liquidity arrangements entered into as part of the Business Combination consummated as of November 6, 2023. Under these liquidity arrangements, certain investors agreed not to redeem their holdings in WWAC in exchange for the Company entering into the FPAs. As of the date of this Form 10-Q report, the remaining balance owed to the FPA holders is approximately $4.09 million. The maturity consideration may be settled either in cash or equity at the option of the FPA holders. We do not have sufficient cash from operations or cash reserves to pay the maturity consideration in cash. Paying 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.
	●	Additionally, during the period ended December 31, 2025, the Company identified the risk of non-collection and recorded an allowance for doubtful accounts of approximately $3.50 million, compared to $3.57 million as of March 31, 2025.

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 primarily with cash generated from operations and the revolving credit facility from Kotak Mahindra Bank. As of December 31, 2025, the Company had a balance of $2.57 million in cash and cash equivalents and also generated positive operating cash flows for the period ended December 31, 2025. 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.

The Company has undertaken or completed the following actions to improve its available cash balances, liquidity, and cash generated from operations:

	●	Targeted cost cutting measures have been instituted, focusing on non-core expenses including those related to inorganic growth strategy, such as reductions in the use of outside vendors and professional services, as well as selective headcount and salary reductions, which are designed to improve our cash flow position without impacting core business operations.
	●	The Company and one of the FPA holders, Meteora Capital Partners LP, have settled the liability through the issuance of shares, and no further amount is owed to Meteora. The Company has revised settlement terms with the remaining FPA holders, with potential settlement at an overall price of $2.00 per share. Sandia agreed to the revised terms where the remaining liability will be settled by adjusting the proceeds from FPA share sales, either via cash or additional share issuance. Further, pursuant to Amendment No. 2 dated January 22, 2026 (Amendment No. 2") to the Letter Agreement with Sandia Investment Management LP ("Sandia") dated September 16, 2025 (the "Letter Agreement") commencing March 2026, the Company will make monthly cash payments toward the outstanding amount, subject to reductions in such outstanding amount resulting from sell-downs of shares in accordance with the terms of the Letter Agreement and Amendment No, 2. The outstanding amount will be subject to 15% per annum interest calculated monthly. Other FPA holders have sold their shares and the liabilities towards them have been fixed and the aggregate outstanding liability under all FPAs is valued at $4.09 million as of December 31, 2025. The Company is actively pursuing capital raising alternatives to pay the remaining balance due.

Management's plans to address these challenges include (i) raising additional funds through existing or new credit facilities, (ii) raising equity or equity-linked capital, (iii) restructuring current liabilities into equity or long-term obligations, and (iv) further reducing non-core expenses with a renewed focus on organic growth in the core geography we historically operate in, which is North America. There is no guarantee that these measures will be successful or that additional funding will be available on acceptable terms. Any future equity financing could significantly dilute existing shareholders' ownership. Moreover, we have generated positive operating cashflow of $4.7 million for the nine month ending and our future profitability depends on our ability to generate revenue in excess of our expenses, including costs relating to the maintenance of our business and debt service requirements. 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 of the success of these efforts.

On October 1, 2025, the Company entered into an "at-the-market" sales agreement (the "ATM Sales Agreement") and filed a shelf registration statement on Form S-3 and corresponding prospectus supplement with the SEC to permit sales under the ATM Sales Agreement. As of the date of this Report, the Company has not sold any shares under the ATM Sales Agreement.

Cash Flow for the nine months ended December 31, 2025 and 2024

The following table presents net cash provided by operating activities, investing activities and financing activities for the nine months ended December 31, 2025, and 2024 (in thousands):

		Nine Months Ended December 31,
		2025				2024				$ Change
Cash at the beginning of period		$	2,764			$	2,084			$	680
Net cash provided by / (used in) operating activities			4,762				(1,873	)			6,635
Net cash used in investing activities			(1,178	)			(1,274	)			96
Net cash (used in) / provided by financing activities			(3,703	)			3,343				(7,046	)
Effects of exchange rates on cash			(75	)			106				(181	)
Cash at the end of period		$	2,570			$	2,386			$	184

Analysis of Cash Flow Changes between the nine months ended December 31, 2025 and 2024

Operating Activities - There is a $6.64 million increase in net cash provided by operating activities for the nine months ended December 31, 2025 as compared to the nine months ended December 31, 2024. The overall increase is primarily attributable to increase in net cash profitability and adjustments related to change in fair value of derivative warrant liabilities, FPA put option liability, stock-based compensation expense, sundry balances written off, provision for expected credit loss, deferred tax and gain on settlement of forward purchase agreement put option liability by $8.32 million. The above increase is offset by a decline in working capital of $1.68 million.

Investing Activities - Net cash used in investing activities during the nine months ended December 31, 2025 was $1.18 million, of which $0.87 million was used for the purchase of property and equipment, $0.14 million loans was issued to affiliates and $0.61 million was placed as fixed deposit with banks. The outflows were offset by inflow from property, plant and equipment of $0.08 million, $0.10 million investment in wholly owned subsidiary, $0.11 million repayments received from loans to affiliates and $0.25 million proceeds from maturities of fixed deposits placed with banks.

Net cash used in investing activities during the nine months ended December 31, 2024 was $1.28 million, of which $1.36 million was used for the purchase of property and equipment and $1.36 million was used for the issuance of loans to affiliates, offset by $1.37 million generated from loan repayments received from affiliates.

Financing Activities - Net cash used in financing activities during the nine months ended December 31, 2025 was $3.70 million, primarily from net repayment of short-term borrowings of $3.24 million, payment of insurance financing liability of $0.16 million, repayment of long-term debt of $0.12 million, payment of finance lease obligation of $0.14 million and payment of deferred transaction costs of $0.04 million.

Net cash provided by financing activities during the nine months ended December 31, 2024 was $3.34 million, primarily from proceeds of the PIPE transaction of $4.68 million, and proceeds from long-term debt of $1.51 million; offset by the repayment of long term debt of $1.40 million and short-term debt of $0.66 million, payment of insurance financing liability of $0.49 million, payment of finance lease obligation of $0.27 million and payment of deferred transaction costs of $0.02 million.

Off-balance Sheet Arrangements

As of December 31, 2025 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 financial statements for the fiscal years ended March 31, 2025 and 2024.

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, 2025 (the "2025 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 date of the filing of the 2025 Form 10-K.