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Aeries Technology(AERT) - 2022 Q4 - Annual Report
AERTAeries Technology(AERT)2023-03-31 21:26

Financial Position and Capital Requirements - The company has approximately 1,200,000availableoutsidethetrustaccountforworkingcapitalrequirements[186].−ThecompanymayneedtoseekadditionalfinancingifthenetproceedsfromtheIPOandprivateplacementwarrantsareinsufficientfortheinitialbusinesscombination[187].−ThecompanyplanstoinvesttrustaccountproceedsonlyinU.S.governmentsecuritiesormoneymarketfundstoavoidbeingdeemedaninvestmentcompany[198].−ThenetproceedsfromtheIPOandprivateplacementwarrantsamountto1,200,000 available outside the trust account for working capital requirements[186]. - The company may need to seek additional financing if the net proceeds from the IPO and private placement warrants are insufficient for the initial business combination[187]. - The company plans to invest trust account proceeds only in U.S. government securities or money market funds to avoid being deemed an investment company[198]. - The net proceeds from the IPO and private placement warrants amount to 233,500,000, which includes 8,050,000ofdeferredunderwritingcommissionsheldinthetrustaccount[318].−Thecompanymayonlycompleteonebusinesscombinationwiththeproceeds,leadingtodependencyonasinglebusinesswithlimitedproductsorservices[318].RisksRelatedtoBusinessCombination−Theindependentregisteredpublicaccountingfirm′sreportexpressessubstantialdoubtaboutthecompany′sabilitytocontinueasa"goingconcern"duetoexpectednegativecashflows[190].−Thecompanymayfaceincreasedcostsanddecreasedavailabilityofdirectorsandofficersliabilityinsurance,impactingtheabilitytonegotiateaninitialbusinesscombination[192].−Thecompanymaybecompelledtoabandonabusinesscombinationifadditionalfinancingisnotavailableonacceptableterms[187].−Thecompanymaypursueacquisitionopportunitieswithearly−stageorfinanciallyunstablebusinesses,whichcarryinherentrisks[202].−Thecompany’sabilitytocompleteitsinitialbusinesscombinationmaybeadverselyaffectedbyvariousexternalfactors,includingchangesinregulatoryrequirementsandeconomicconditions[214].ShareholderRedemptionandTrustAccount−Iftheinitialbusinesscombinationisnotcompletedwithintherequiredtimeperiod,publicshareholdersmayreceiveonlyapproximately8,050,000 of deferred underwriting commissions held in the trust account[318]. - The company may only complete one business combination with the proceeds, leading to dependency on a single business with limited products or services[318]. Risks Related to Business Combination - The independent registered public accounting firm's report expresses substantial doubt about the company's ability to continue as a "going concern" due to expected negative cash flows[190]. - The company may face increased costs and decreased availability of directors and officers liability insurance, impacting the ability to negotiate an initial business combination[192]. - The company may be compelled to abandon a business combination if additional financing is not available on acceptable terms[187]. - The company may pursue acquisition opportunities with early-stage or financially unstable businesses, which carry inherent risks[202]. - The company’s ability to complete its initial business combination may be adversely affected by various external factors, including changes in regulatory requirements and economic conditions[214]. Shareholder Redemption and Trust Account - If the initial business combination is not completed within the required time period, public shareholders may receive only approximately 10.10 per share upon liquidation[194]. - If the company does not complete the initial business combination, public shareholders may only receive their pro rata portion of the funds in the trust account, potentially less than 10.10pershare[200].−Thecompany’strustaccountmaybesubjecttoclaimsfromthirdparties,potentiallyreducingtheper−shareredemptionamountbelow10.10 per share[200]. - The company’s trust account may be subject to claims from third parties, potentially reducing the per-share redemption amount below 10.10[217]. - If the company does not complete its initial business combination within the specified timeframe, public shareholders may have to wait longer for redemption from the trust account[223]. - The company’s sponsor has agreed to indemnify for claims that reduce trust account funds below 10.10perpublicshare,butthereisnoguaranteethatthesponsorhassufficientfundstocovertheseobligations[220].RegulatoryandComplianceChallenges−CompliancewiththeSarbanes−OxleyActmayincreasethetimeandcostsnecessarytocompleteacquisitions,particularlyfortargetbusinessesthatmaynotmeetinternalcontrolrequirements[206].−ThecompanymayfaceadditionalburdensandriskswhenpursuinginitialbusinesscombinationswithcompaniesoutsidetheUnitedStates,includingduediligencechallengesandregulatoryapprovals[207].−Changesinlawsandregulationsmayadverselyaffectthecompany′sabilitytonegotiateandcompleteitsinitialbusinesscombination[328].−ThecompanymayfacechallengesrelatedtocompliancewithU.S.securitieslawsifnewmanagementisunfamiliarwiththeseregulations[329].ManagementandOperationalRisks−Thecompanydoesnotintendtohaveanyfull−timeemployeespriortocompletingitsinitialbusinesscombination,whichmayleadtoconflictsofinterestamongdirectorsandofficers[291].−Theremaybepotentialconflictsofinterestasdirectorsandofficersareaffiliatedwithotherentitiesengagedinsimilarbusinessactivities[292].−Thecompanymaypursuebusinesscombinationswithaffiliatedentities,whichcouldraiseadditionalconflictsofinterest[298].−Thedepartureofkeypersonnelcouldnegativelyimpactoperationsandprofitabilitypost−businesscombination[312].−Thecompanymayhavelimitedabilitytoassessthemanagementofaprospectivetargetbusiness,whichcouldleadtoincorrectassessmentsandnegativelyimpactoperations[324].MarketandEconomicFactors−Thecompanymayfaceincreasedcostsandriskswhenattemptingtocompletemultiplebusinesscombinationssimultaneously,whichcouldnegativelyimpactoperationsandprofitability[322].−Thepotentialfornegativeinterestratescouldreduceinterestincomefromthetrustaccount,impactingtheoverallvalueofassetsheld[227].−Thetradingpriceofthecompany′ssecuritiesmaybemorevolatileduetorelianceonexemptionsfromdisclosurerequirements[278].−Thecompanymayfaceregulatoryinvestigationsthatcouldincursubstantialcostsorrequirechangesinbusinesspractices[314].ShareholderControlandGovernance−Theinitialshareholdersandanchorinvestorswillcontroltheappointmentoftheboardofdirectorsuntiltheinitialbusinesscombinationiscompleted,holding2010.10 per public share, but there is no guarantee that the sponsor has sufficient funds to cover these obligations[220]. Regulatory and Compliance Challenges - Compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete acquisitions, particularly for target businesses that may not meet internal control requirements[206]. - The company may face additional burdens and risks when pursuing initial business combinations with companies outside the United States, including due diligence challenges and regulatory approvals[207]. - Changes in laws and regulations may adversely affect the company's ability to negotiate and complete its initial business combination[328]. - The company may face challenges related to compliance with U.S. securities laws if new management is unfamiliar with these regulations[329]. Management and Operational Risks - The company does not intend to have any full-time employees prior to completing its initial business combination, which may lead to conflicts of interest among directors and officers[291]. - There may be potential conflicts of interest as directors and officers are affiliated with other entities engaged in similar business activities[292]. - The company may pursue business combinations with affiliated entities, which could raise additional conflicts of interest[298]. - The departure of key personnel could negatively impact operations and profitability post-business combination[312]. - The company may have limited ability to assess the management of a prospective target business, which could lead to incorrect assessments and negatively impact operations[324]. Market and Economic Factors - The company may face increased costs and risks when attempting to complete multiple business combinations simultaneously, which could negatively impact operations and profitability[322]. - The potential for negative interest rates could reduce interest income from the trust account, impacting the overall value of assets held[227]. - The trading price of the company's securities may be more volatile due to reliance on exemptions from disclosure requirements[278]. - The company may face regulatory investigations that could incur substantial costs or require changes in business practices[314]. Shareholder Control and Governance - The initial shareholders and anchor investors will control the appointment of the board of directors until the initial business combination is completed, holding 20% of the issued shares[242]. - The company may amend certain agreements related to the IPO without shareholder approval, which could adversely affect the value of investments[241]. - Amendments to the company's memorandum and articles of association require approval from at least two-thirds of ordinary shares attending and voting at a general meeting, which is a lower threshold compared to some other blank check companies[248]. - The company may seek to amend its governing instruments to facilitate the completion of an initial business combination, which some shareholders may not support[245]. Financial Instruments and Securities - The company issued 11,500,000 warrants to purchase Class A ordinary shares at a price of 11.50 per share, which could complicate future business combinations[233]. - The company has issued a total of 20,400,000 warrants in connection with its IPO, which includes 11,500,000 warrants in units and 8,900,000 private placement warrants[257]. - The company expects to account for the warrants as a warrant liability, recording them at fair value upon issuance, which may adversely affect the market price of its Class A ordinary shares[257]. - The company may redeem the warrants even if it is unable to register or qualify the underlying Class A ordinary shares for sale under applicable state securities laws[253]. Tax and Investment Considerations - The company may be classified as a Passive Foreign Investment Company (PFIC), potentially resulting in adverse U.S. federal income tax consequences for U.S. investors[275]. - The company may face tax liabilities for shareholders or warrant holders if the initial business combination involves a jurisdiction that imposes taxes[276]. - The nominal purchase price for founder shares was 25,000,implyingacostofapproximately25,000, implying a cost of approximately 0.004 per share, which may significantly dilute the value of public shares upon consummation of a business combination[299]. Emerging Growth Company Status - The company is classified as an "emerging growth company" and may take advantage of exemptions from certain disclosure requirements, which could affect the attractiveness of its securities to investors[277]. - The market value of the company's ordinary shares held by non-affiliates must remain below 700milliontomaintainitsstatusasanemerginggrowthcompany[277].−Thecompanyisalsoa"smallerreportingcompany,"allowingittoprovideonlytwoyearsofauditedfinancialstatementsaslongasitsmarketvalueremainsbelow700 million to maintain its status as an emerging growth company[277]. - The company is also a "smaller reporting company," allowing it to provide only two years of audited financial statements as long as its market value remains below 250 million or annual revenues are below $100 million[280]. - The company qualifies as an "emerging growth company" under the JOBS Act, allowing it to delay the adoption of new or revised accounting standards[384].