Company: ZCARW
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001213900-25-059675
Chunk: 150

Company: Zoomcar Holdings, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 1
Chunk 150
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classified at their respective exercise date at their respective fair value on such date and warrants exercised after the
reclassification were directly adjusted with additional paid in capital. 

Warrants issued along with Redeemable Promissory
Note:

During the year ended March
31, 2025, the Company issued warrants along with Redeemable Promissory Note and as consideration to placement agents for the issuance
of the Redeemable Promissory Note.

These warrants were classified
as equity in accordance with ASC 815-40 since all the conditions required for equity classification are met. Upon issuance of the warrant,
the Company had allocated a portion of the proceeds from the issuance of its Redeemable Promissory Note to the warrant based on the relative
fair values of warrants and Redeemable Promissory Note in accordance with ASC 820.

Warrants to be converted into Common Stock:

The Company’s warrants
to purchase Common Stock were classified as equity. Upon issuance of the warrant, the Company had allocated a portion of the proceeds
from the issuance of its preferred stock to the warrant based on the relative fair values of warrants and preferred stock.

Financial liabilities measured at fair value

Convertible Promissory notes (“Notes”),
Senior Subordinated Convertible Promissory Note (“SSCPN”) and Unsecured Convertible Note (“Atalaya Note”)

During the year ended March
31, 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”