Company: ZCARW
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001213900-25-014437
Chunk: 250

Company: Zoomcar Holdings, Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 8
Chunk 250
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 2024, the Company issued warrants along
with Senior Subordinated Convertible Promissory Note (“SSCPN)” and as consideration to the placement agent for the issuance
of SSCPN.

These warrants were deemed derivative
instruments in accordance with ASC 815-10-15-83 since they contained an underlying, had cash less payment provisions, that could have
been net settled in shares and had a very minimal initial net investment. Accordingly, the derivatives were measured at fair value and
subsequently revalued at each reporting date until the close of Reverse Recapitalization consummated during year ended March 31, 2024.

16

ZOOMCAR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(d)Warrants issued to preferred
                                            stockholders:

Before the date
of reverse recapitalization, the Company had warrants issued to preferred stockholders convertible into shares of preferred stock
and common stock which were issued during the year ended March 31, 2022, and were classified as liabilities and equity
respectively.

Each unit of issued by the Company consisted
of one share of Series E preferred stock and a warrant which entitled the holder to purchase one share of common stock of the Company
on the satisfaction of certain conditions. Warrants were also issued to the placement agent of the Series E and Series E1 which included
the following two categories: a) warrants to purchase common stock of the company; and b) warrants to purchase Series E and Series E1preferred
shares.

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.

Warrants to
be converted into preferred stock (“Preferred stock warrant liability”):

The Company’s warrants to purchase
convertible preferred stock were classified as a liability and were held at fair value as the warrants were exercisable for contingently
redeemable preferred stock, which was classified outside of stockholders’ deficit.

The warrant instruments classified
as liabilities were subject to re-measurement at each balance sheet date, and any change in fair value was recognized as a component
of finance costs.

The Company continued to adjust the
liability classified warrant for changes in the fair value until the Reverse Recapitalization transaction at which time the warrants
were re