Company: ZCARW
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001213900-25-059675
Chunk: 671

Company: Zoomcar Holdings, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 1B
Chunk 671
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 values of warrants and preferred stock. These warrants were converted into common stock on the date of reverse recapitalization during the year ended
March 31, 2024.

xxiii.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” (“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 Statements of Operations. With respect to the above Notes and SSCPN, as provided for by ASC