Company: ZCARW
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001213900-25-059675
Chunk: 1642

Company: Zoomcar Holdings, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 5
Chunk 1642
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 2024 the Company issued Notes and SSCPN. The Company evaluated the balance sheet classification for these instruments either as liabilities
or equity, and accounting for conversion feature. As per ASC 480-10-25-14, the Notes and SSCPN were classified as liabilities because
the Company intended to settle them by issuing variable number of shares with a fixed and known monetary value at the time of inception.
However, the Company had elected fair value option for these Notes and SSCPN, as discussed below and thus did not bifurcate the embedded
conversion feature.

Fair Value Option (“FVO”) Election

The Company accounted for
Notes and SSCPN under the fair value option election of ASC 825, Financial Instruments (“ASC-825”) as discussed below.

The Notes and SSCPN accounted
under the FVO election which were debt host financial instruments containing conversion features which otherwise would be required to
be assessed for bifurcation from the debt-host and recognized as separate derivative liabilities subject to measurements under ASC 815.
Notwithstanding, ASC 825-10-15-4 provides for the “fair value option” (“FVO”) election, to the extent not otherwise
prohibited by ASC 825-10-15- 5, to be afforded to financial instruments, wherein bifurcation of an embedded derivative is not necessary,
and the financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated
fair value on a recurring basis at each reporting period date.

The estimated fair value
adjustment, as required by ASC 825-10-45-5, was recognized as a component of other comprehensive income (“OCI”) with respect
to the portion of the fair value adjustment attributed to a change in the instrument-specific credit risk, with the remaining amount
of the fair value adjustment recognized under Finance costs shown as “Change in fair value of Notes” and “Change in
fair value of SSCPN” in the accompanying Consolidated Statement of Operations. With respect to the above Notes and SSCPN, as provided
for by ASC 825-10-50- 30(b), the estimated fair value adjustments were presented as a separate line item in the accompanying Consolidated
Statement of Operations, since the change in fair value of the Notes and SSCPN payable were not attributable to instrument specific credit
risk.

81

During the year ended March
31, 2024, as a result of consummation of the Business Combination by way of Reverse Recapitalization, the Notes