Company: ZCARW
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001213900-25-014437
Chunk: 1210

Company: Zoomcar Holdings, Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 4
Chunk 1210
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coverage to satisfy potential claims. As our business continues to grow, incidences of such claims may also increase and, unless we obtain
insurance coverage for such matters, we may choose or be required to absorb larger parts of such uninsured claims to avoid becoming subject
to legal proceedings that could be resolved against us, which could lead to business losses and adversely affect our business, financial
conditions and results of operations. Should uninsured losses occur, they could adversely affect our business, results of operations and
financial condition. Further, our being subject to claims of liability, we may be subject to negative publicity and incur additional expenses,
which could harm our business, financial condition, and operating results.

103

We are in the process of remediating identified
material weaknesses in our internal controls and if we fail to remediate these weaknesses, or if we experience additional material weaknesses
in the future, or otherwise fail to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act, we
may not be able to accurately or timely report our financial condition or results of operations, or comply with the accounting and reporting
requirements applicable to public companies, which may adversely affect investor confidence in the Company and the market price of our
stock. 

Zoomcar has identified certain
material weaknesses in Zoomcar’s internal controls over financial reporting more described under Item 4 above. These material weaknesses
primarily relate to the following matters that are relevant to the preparation of our unaudited condensed consolidated financial statements:

    (i)
    The Company designed and implemented process for identification, monitoring and regulatory compliance of transactions involving related parties. The Company’s process includes rolling out related party transaction questionnaires quarterly to the identified related parties. The management intends to continue to take steps and monitor the progress of the internal controls implemented.

    (ii)
    Significant reduction in the number of complex financial instruments post the reverse recapitalization. The management actively engages with valuation experts to communicate the underlying assumptions and terms of the financial instruments. The management intends to continue to monitor the progress of the internal controls implemented.

    (iii)
    Developing financial reporting manuals including Standard Operating Procedures for financial statement closure process to ensure compliance with US GAAP and SEC reporting requirements and monitoring controls over financial statement closure process.

    (iv)
    The Management is working on hiring, training, and retention of inhouse resources with requisite US GAAP knowledge. The management has also engaged external accounting professionals and developing process for sufficient managements reviews.

    (v)
    The Management