Company: ZCARW
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001213900-25-014437
Chunk: 118

Company: Zoomcar Holdings, Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 1
Chunk 118
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825-10-50- 30(b), the estimated fair value adjustments were presented as a separate line item in the accompanying
Condensed Consolidated Statement of Operations, since the change in fair value of the Notes and SSCPN payable were not attributable to
instrument specific credit risk.

During the year
ended March 31, 2024, as a result of consummation of the Business Combination by way of Reverse Recapitalization, the Notes and SSCPN
outstanding were converted into 59,757 shares (5,975,686 shares prior to the Reverse Stock Split) of the Company’s Common Stock.

The SSCPN and Notes
were adjusted for their carrying value through Condensed Consolidated Statement of Operations as on date of Reverse Recapitalization and
credited at carrying value to the capital accounts upon conversion to reflect the stock issued.

During the year
ended March 31, 2024, the Company issued an unsecured convertible note (“Atalaya Note) which had features similar to that of SSCPN
and were accounted accordingly as enumerated above.

Troubled debt restructuring

As per ASC 470-60 Troubled
Debt Restructuring (TDR) refers to a situation where the creditor, grants concessions to a borrower experiencing financial difficulties.
These concessions may include modifications to the terms of the payable, such as reducing the interest rate, extending the repayment period,
or forgiving a portion of the payable. Such restructuring is done with the intent to provide relief to the borrower and to maximize the
potential for payable recovery by the Company.

In accordance with ASC 470-60,
when the total future cash payments under the new terms are less than the carrying amount of the payable at the date of restructuring,
the difference between the carrying amount and the total future cash payments is recognized as a ‘Gain on Troubled Debt Restructuring’
in the Condensed Consolidated Financial Statements. This gain is recorded immediately in the period the restructuring occurs.

If the total future cash
payments under the new terms exceed the carrying amount of the payable at the date of restructuring, no adjustment to the carrying amount
of the payable is made. Instead, the company calculates a New Effective Interest Rate (EIR) based on the revised terms of the restructured
payable. The debt is then amortized over the remaining life of the payable using the new EIR, with interest expense recognized based on
this rate in future periods.

76

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As