Company: ZCARW
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076590
Chunk: 22

Company: Zoomcar Holdings, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 22
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 the discount and issue expenses.

17

ZOOMCAR HOLDINGS, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Issuance costs on Debt

Debt issuance costs consist primarily
of initial discount provided, arrangement fees paid to placement agent, professional fees and legal fees. These costs are netted off with
the related debt and are being amortized to interest expense over the term of the related.

The debt has been classified into
current or non-current based on the payment terms of the debt instruments. Non-current obligations are those scheduled to mature beyond
twelve months from the date of the Company’s Condensed Consolidated Balance Sheets.

xxii.Warrants

When
the Company issues warrants, it evaluates the balance sheet classification of the warrant to determine whether the warrant should be
classified as equity or as a derivative liability on the Condensed Consolidated Balance Sheets. In accordance with ASC 815- 40,
Derivatives and Hedging - Contracts in the Entity’s Own Equity (ASC 815-40), the Company classifies a warrant as equity so
long as it is “indexed to the Company’s equity” and several specific conditions for equity classification are met.
A warrant is not considered indexed to the Company’s equity, in general, when it contains certain types of exercise
contingencies or adjustments to exercise price. If a warrant is not indexed to the Company’s equity or it has net cash
settlement that results in the warrants to be accounted for under ASC 480, Distinguishing Liabilities from Equity, or ASC 815-40, it
is classified as a derivative liability which is carried on the Condensed Consolidated Balance Sheets at fair value with any changes
in its fair value recognized currently in the Condensed Consolidated Statements of Operations.

(a)Warrants issued towards the November 2024 and December
2024 offering:

During the year ended March 31,
2025, the Company issued shares of Common Stock, pre- funded, Series A and Series B warrants in the November 2024 and December 2024 offering
and as consideration to the placement agents for the issuance. The Common stock and pre- funded warrants were classified as equity in
accordance with ASC 815-40. The Series A warrants and Series B warrants were initially classified as derivative financial instruments
in accordance with ASC 815-10-15-83.

Subsequently,
during the year ended March 31, 2025